FIREside Chats

Willow1983

Ahh thank you so much - it does say that so we can pack the jobs in before we are 67 🥳 

Suffolk_lass

My State Pension forecast also says I have the requisite number of years for a full state pension and so they have not told me I have incomplete years for the 3 years since I stopped work. It also tells me that I cannot get the full new state pension, and my total is dropping with each year that passes because I was oped out from mid 1986 until April 2016, and the forecast was predicated on me paying until the April before I get to SPA (66). I plan to buy the four available contribution years as the increase will pay for itself in under four years (assuming I don't die) - here's hoping

elantan

Hi Ed, 

great idea for a thread, hope you dont mind if i join in. 

Why am i investing: we want to retire early, we are both burned out from work, have been for a while and want to start living our life our way. 

How much will i need : I reckon at least 1 million to live the life we want but that aint gonna happen, maybe i need to start the lottery. £1m is 40k a year, between 2 that aint a lot after tax etc gets paid. Incidentally i think unlike most people we will need more in retirement than we do in work life, what people say they wont have to pay when retired we already dont pay whilst working, coffee's, clothes etc, and we plan on adventuring as much as we can so more for diesel, food etc.  

How am i getting there :  Well OH has a DB pension which we intend on trying to cash in within the next few years, his last offer was just shy of £350k he has one he has already sold which was valued at £300k but has recently lost money ( along with a lot of other peoples) so we are hoping maybe £600/£700k there, I am hoping to have £200k in my pension with a small £4k pension that will kick in at state retirement age for me, we have some ISA savings just shy of £40k,, The plan is to try and find a way to reduce OH's income tax bill from his pension as we will be drawing down the majority of our money using his pension. We also will keep trying to reduce our outgoings but it is a struggle. 

How long do we have : less than 5 years, OH will be 60 I will be 55, if we could afford to go quicker we would  

Willow1983

Hi Suffolk-lass - soooo do you think if we stop at say 63 we would need to buy the remaining 4 years to get full state pension even though we have no gaps and paid into it for 46 years? 🤔

edinburgher

@elantan - it sounds like you're relatively close to a million? That's fantastic but yes, I absolutely know what you're saying about it not going nearly as far as people think. Still, it must be a wonderful source of peace of mind to know that it's there

Remember that you both have a personal allowance to use each year. I am sure I read on Monevator? possibly that one of the authors who retired early planned on drawing in the region of £16,500 each year to avoid as much tax as possible (his PA + 25% of the balance tax free). I'll try and track down the thing I was looking for. That said, won't really work for your OH with those sorts of sums.

elantan

edinburgher said:

@elantan - it sounds like you're relatively close to a million? That's fantastic but yes, I absolutely know what you're saying about it not going nearly as far as people think. Still, it must be a wonderful source of peace of mind to know that it's there

Remember that you both have a personal allowance to use each year. I am sure I read on Monevator? possibly that one of the authors who retired early planned on drawing in the region of £16,500 each year to avoid as much tax as possible (his PA + 25% of the balance tax free). I'll try and track down the thing I was looking for. That said, won't really work for your OH with those sorts of sums.

It hopefully will be within kicking distance of 1 million but not sure, alot will depend on the stock market and also we plan on taking the 25% tax free amounts. We have work to be done on the house and hopefully a motorhome or something to purchase

 Yep thats the problem, i can give him 10% of my allowance but that mounts to a couple of hundred a year, the bulk of the money will come from his account so it aint great, i think we will take the lump sums as well which of course adds a wee bit of a twist, was thinking we may take his 25% from one of his accounts and drip feed it into mine to increase my pension amounts, obviously not more than i earn, but last year i landed up paying the big tax ( did a bit of agency work due to doing some work on house) i wont be earning that this year due to covid recovery and my unwillingness to push myself, but maybe next year i may go back to it which if we take Mr El's first tax free lump sum i could put into my pension which should reduce the amount we need to draw down from his ( thus less tax paid) and increase the amount in mine thus getting closer to my tax threshold and the amount we need to live off of, its a plan were kicking about just now, need to find out if it is legal etc and certainly wouldn't do anything illegal so need to research it some more. There could be much worse problems to have   

edinburgher

@elantan - sounds fine: https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/pensions-recycling?utm_source=legacyurls&utm_medium=301&utm_campaign=/knowledge-literature/knowledge-library/pensions-recycling/&icid=banner_articles

elantan

edinburgher said:

@elantan - sounds fine: https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/pensions-recycling?utm_source=legacyurls&utm_medium=301&utm_campaign=/knowledge-literature/knowledge-library/pensions-recycling/&icid=banner_articles

interesting, thanks Ed 

elantan

Ed and anyone else from Scotland ... Do u claim the 1% back from Scot gov or do u leave it ? is it more hassle than it's worth? 

edinburgher

elantan said:

Ed and anyone else from Scotland ... Do u claim the 1% back from Scot gov or do u leave it ? is it more hassle than it's worth? 

Gave up after an hour on the phone as it would only have been £15 or so... Perhaps easier if you complete a tax return, which I don't.