Best way to save/invest for early retirement bridging?

ChocolateWombat

Thanks.  I will have a look at that.

Does  anyone have any thoughts on the issue of drawing down from SIPPs to max out tax free income, if you don’t actually need the money, vs just leaving it there and losing the tax free aspect?  Would you do that rather than take DB pension early at reduced actuarial rate?

DT2001

RetSol said:

Has anyone gone for really extreme taking benefits early, which have resulted in significant actuarial adjustment?  

Hello @ChocolateWombat.  I don't know how extreme this is but I took my civil service pension two years ago at 55 and a half (NRA 60).  I inversely commuted the lump sum which increased the actuarially reduced pension. 

I had been working on short-term contracts for a number of years (my choice) and, when it became feasible, decided that I wanted the security of a reliable income, particularly following a couple of age-related health scares. 

The pension went into payment two weeks into the first lockdown and I have been extremely grateful to have been able to sit out the pandemic without any job or income worries. 

Others on here are better qualified than me to discuss the purely financial aspects of an actuarially reduced pension but for me there is more to a decision like this than pounds, shillings and pence.  

It was time for me to move on, I had the means to do so and so I did it. 

I took my DB at 51 and a bit. NRA 60. Actuarial reduction was about 38/39% if memory serves me correctly. My reasons were the scheme was underfunded and I was house husband with small s/e income so most (90%) has been tax free and now children older I’m able to work more (if I want).

Audaxer

ChocolateWombat said:

Thanks.  I will have a look at that.

Does  anyone have any thoughts on the issue of drawing down from SIPPs to max out tax free income, if you don’t actually need the money, vs just leaving it there and losing the tax free aspect?  Would you do that rather than take DB pension early at reduced actuarial rate?

If you don't actually need the income, I think it makes sense to still draw as much as you can tax free out of the SIPP to use up your personal tax allowance, and just reinvest it in the same fund(s) within an S&S ISA providing you have not already used your ISA allowance.

ChocolateWombat

Audaxer, thank you.  That idea of taking it out, not to spend, but to put into ISA is a very good idea.

And combining 2 ideas on this thread, when Husband is working still but I’m not, Incould take out of my SIPP and he could then put it into his, and then later when we are living off my DB and lump sum, he could take out of the SIPP up to the tax limit and put it into his ISA.