Can I afford retire next year at 55 ?

buyhighselllow

lisyloo said:

buyhighselllow said:

lisyloo said:

buyhighselllow said:

lisyloo said:

SarahB16 said:

Dazed_and_C0nfused said:

DairyQueen said:

SarahB16 said:

Re crunching the numbers to see if you'd be better off living off the savings for a few years before claiming the pension so as to get a smaller reduction. I think you raise a really good suggestion p00hsticks as something to consider.   

Can I ask the pension experts on here.  If a person delays taking e.g. their DB pension by a few years in order to get a higher annual pension and instead lives off their savings for a few years instead they will not be using their tax allowance in those years. 

Can they carry forward that unused tax allowance to be used against future pension income which is greater than that year's tax allowance?  I'm thinking is this possible for say up to six years?      

'Fraid not. Use it each tax year or lose it.

But you could do the old trick of turning £2,880 into £3,600 and then get it all back without paying tax if you have unused Personal Allowances whilst being a non earner.

Or even front load a personal pension  or SIPP whilst still working and then take larger amounts without needing to pay tax because you have a lot of unused Personal Allowance.

What is this old trick please?  

I'm sure I'm not the only person who might be thinking ahead and wondering if in the first few years of retirement they could live off their savings and delay taking their pension.  In these circumstances the personal allowance would not be used.  

It depends what you want to use your savings for (especially if there might be 40 years to go).
living off them seems a bad idea to me in general, but if you have the sort of scheme that would give you a better deal and you then you could replenish from a lump sum then it sounds like a good idea.

if you want you savings to cover exceptional one-offs like car, house, dental implants, possible tests or private operation, house improvements over the next 40 years, the. You need to be cautious IMO

so as always the devil is in the detail

amounts like £200k sounds like a lot but for 2 people for 40 years, it’s not actually that much

 From my real life observations, increasingly of late,  life after 70 can be pretty unpredictable, and my observational experience is that quality of life diminishes greatly in a lot of cases. Being excessively thrifty or risk averse to hold onto money you increasingly have less use for as you start to decline seems like something I might live to regret ( assuming I live) .

Absolutely.
This is the big dilemma we all face.
enjoying ourselves now vs running our later.

Im trying to navigate that very dilemma.

there is some space between 55 and 70 though.

Absolutely. But I'm increasingly reflecting how the last 30 odd years of my working life have flown by, its very sobering and made me more resolute to try and enjoy the next few years ( more so after the pandemic etc)

Totally get where you’re coming from.
DH has just retired (hated his job).
I’m a different situation as I love my job so may go on a few more years, but it’s very much a trade off and apparently healthy people our age can just drop dead.

regarding the part time working (playing devils advocate here)
it will commit you and stop you doing things spontanoualy e.g. picnic on a nice day, and stop you booking holidays etc. And the work culture might be a PITA.
is getting a nice stress free part time job a pipe dream?

an alternate view  is that your reality is how you perceive it and if you don’t it all that seriously then maybe it’s not so stressful

I am struggling with the demands of my job and haven't enjoyed it for a long time, hence my desire to escape at the earliest opportunity. I'm doing some low level government funded courses in topics that interest me as it may provide a pathway/foundation for something, it may not but they are not that taxing. I have thought about doing things like Invigilating on exams as its seasonal , I take on board that many PT jobs are rubbish hours or restrictive wrt doing things spontaneously. Which we do like to do. We both have very elderly parents and frankly, its galvanizing me towards jacking it all in. 

p00hsticks

buyhighselllow said:

lisyloo said:

SarahB16 said:

Dazed_and_C0nfused said:

DairyQueen said:

SarahB16 said:

Re crunching the numbers to see if you'd be better off living off the savings for a few years before claiming the pension so as to get a smaller reduction. I think you raise a really good suggestion p00hsticks as something to consider.   

Can I ask the pension experts on here.  If a person delays taking e.g. their DB pension by a few years in order to get a higher annual pension and instead lives off their savings for a few years instead they will not be using their tax allowance in those years. 

Can they carry forward that unused tax allowance to be used against future pension income which is greater than that year's tax allowance?  I'm thinking is this possible for say up to six years?      

'Fraid not. Use it each tax year or lose it.

But you could do the old trick of turning £2,880 into £3,600 and then get it all back without paying tax if you have unused Personal Allowances whilst being a non earner.

Or even front load a personal pension  or SIPP whilst still working and then take larger amounts without needing to pay tax because you have a lot of unused Personal Allowance.

What is this old trick please?  

I'm sure I'm not the only person who might be thinking ahead and wondering if in the first few years of retirement they could live off their savings and delay taking their pension.  In these circumstances the personal allowance would not be used.  

It depends what you want to use your savings for (especially if there might be 40 years to go).
living off them seems a bad idea to me in general, but if you have the sort of scheme that would give you a better deal and you then you could replenish from a lump sum then it sounds like a good idea.

if you want you savings to cover exceptional one-offs like car, house, dental implants, possible tests or private operation, house improvements over the next 40 years, the. You need to be cautious IMO

so as always the devil is in the detail

amounts like £200k sounds like a lot but for 2 people for 40 years, it’s not actually that much

 From my real life observations, increasingly of late,  life after 70 can be pretty unpredictable, and my observational experience is that quality of life diminishes greatly in a lot of cases. Being excessively thrifty or risk averse to hold onto money you increasingly have less use for as you start to decline seems like something I might live to regret ( assuming I live) .

Playing devil's advocate, l'd perhaps argue the reverse - it's holding onto at least some of that money that can often greatly improve that quality of life in later years.

Getting joint replacements and cataract operations done privately rather than years long queues for the NHS, paying for gardeners, cleaners, care visits, stair lifts,  taxis when you are no longer able to drive etc all contribute to your comfort as you older, as does not having to worry about how high you can have the central heating without breaking the bank.

lisyloo

buyhighselllow said:

lisyloo said:

buyhighselllow said:

lisyloo said:

buyhighselllow said:

lisyloo said:

SarahB16 said:

Dazed_and_C0nfused said:

DairyQueen said:

SarahB16 said:

Re crunching the numbers to see if you'd be better off living off the savings for a few years before claiming the pension so as to get a smaller reduction. I think you raise a really good suggestion p00hsticks as something to consider.   

Can I ask the pension experts on here.  If a person delays taking e.g. their DB pension by a few years in order to get a higher annual pension and instead lives off their savings for a few years instead they will not be using their tax allowance in those years. 

Can they carry forward that unused tax allowance to be used against future pension income which is greater than that year's tax allowance?  I'm thinking is this possible for say up to six years?      

'Fraid not. Use it each tax year or lose it.

But you could do the old trick of turning £2,880 into £3,600 and then get it all back without paying tax if you have unused Personal Allowances whilst being a non earner.

Or even front load a personal pension  or SIPP whilst still working and then take larger amounts without needing to pay tax because you have a lot of unused Personal Allowance.

What is this old trick please?  

I'm sure I'm not the only person who might be thinking ahead and wondering if in the first few years of retirement they could live off their savings and delay taking their pension.  In these circumstances the personal allowance would not be used.  

It depends what you want to use your savings for (especially if there might be 40 years to go).
living off them seems a bad idea to me in general, but if you have the sort of scheme that would give you a better deal and you then you could replenish from a lump sum then it sounds like a good idea.

if you want you savings to cover exceptional one-offs like car, house, dental implants, possible tests or private operation, house improvements over the next 40 years, the. You need to be cautious IMO

so as always the devil is in the detail

amounts like £200k sounds like a lot but for 2 people for 40 years, it’s not actually that much

 From my real life observations, increasingly of late,  life after 70 can be pretty unpredictable, and my observational experience is that quality of life diminishes greatly in a lot of cases. Being excessively thrifty or risk averse to hold onto money you increasingly have less use for as you start to decline seems like something I might live to regret ( assuming I live) .

Absolutely.
This is the big dilemma we all face.
enjoying ourselves now vs running our later.

Im trying to navigate that very dilemma.

there is some space between 55 and 70 though.

Absolutely. But I'm increasingly reflecting how the last 30 odd years of my working life have flown by, its very sobering and made me more resolute to try and enjoy the next few years ( more so after the pandemic etc)

Totally get where you’re coming from.
DH has just retired (hated his job).
I’m a different situation as I love my job so may go on a few more years, but it’s very much a trade off and apparently healthy people our age can just drop dead.

regarding the part time working (playing devils advocate here)
it will commit you and stop you doing things spontanoualy e.g. picnic on a nice day, and stop you booking holidays etc. And the work culture might be a PITA.
is getting a nice stress free part time job a pipe dream?

an alternate view  is that your reality is how you perceive it and if you don’t it all that seriously then maybe it’s not so stressful

I am struggling with the demands of my job and haven't enjoyed it for a long time, hence my desire to escape at the earliest opportunity. I'm doing some low level government funded courses in topics that interest me as it may provide a pathway/foundation for something, it may not but they are not that taxing. I have thought about doing things like Invigilating on exams as its seasonal , I take on board that many PT jobs are rubbish hours or restrictive wrt doing things spontaneously. Which we do like to do. We both have very elderly parents and frankly, its galvanizing me towards jacking it all in. 

FWIW my opinion is you should go for it and cut your cloth to suit. You can do all the analysis in the world but at the end of the day life is just too short and too precious.

if you want to make it work you will.

We’re putting our money where our mouth is on that one as DH has just retired.

worst case you can change your mind.

lisyloo

p00hsticks said:

buyhighselllow said:

lisyloo said:

SarahB16 said:

Dazed_and_C0nfused said:

DairyQueen said:

SarahB16 said:

Re crunching the numbers to see if you'd be better off living off the savings for a few years before claiming the pension so as to get a smaller reduction. I think you raise a really good suggestion p00hsticks as something to consider.   

Can I ask the pension experts on here.  If a person delays taking e.g. their DB pension by a few years in order to get a higher annual pension and instead lives off their savings for a few years instead they will not be using their tax allowance in those years. 

Can they carry forward that unused tax allowance to be used against future pension income which is greater than that year's tax allowance?  I'm thinking is this possible for say up to six years?      

'Fraid not. Use it each tax year or lose it.

But you could do the old trick of turning £2,880 into £3,600 and then get it all back without paying tax if you have unused Personal Allowances whilst being a non earner.

Or even front load a personal pension  or SIPP whilst still working and then take larger amounts without needing to pay tax because you have a lot of unused Personal Allowance.

What is this old trick please?  

I'm sure I'm not the only person who might be thinking ahead and wondering if in the first few years of retirement they could live off their savings and delay taking their pension.  In these circumstances the personal allowance would not be used.  

It depends what you want to use your savings for (especially if there might be 40 years to go).
living off them seems a bad idea to me in general, but if you have the sort of scheme that would give you a better deal and you then you could replenish from a lump sum then it sounds like a good idea.

if you want you savings to cover exceptional one-offs like car, house, dental implants, possible tests or private operation, house improvements over the next 40 years, the. You need to be cautious IMO

so as always the devil is in the detail

amounts like £200k sounds like a lot but for 2 people for 40 years, it’s not actually that much

 From my real life observations, increasingly of late,  life after 70 can be pretty unpredictable, and my observational experience is that quality of life diminishes greatly in a lot of cases. Being excessively thrifty or risk averse to hold onto money you increasingly have less use for as you start to decline seems like something I might live to regret ( assuming I live) .

Playing devil's advocate, l'd perhaps argue the reverse - it's holding onto at least some of that money that can often greatly improve that quality of life in later years.

Getting joint replacements and cataract operations done privately rather than years long queues for the NHS, paying for gardeners, cleaners, care visits, stair lifts,  taxis when you are no longer able to drive etc all contribute to your comfort as you older, as does not having to worry about how high you can have the central heating without breaking the bank.

Definitely agree with this.
I waiting 6 weeks for a scan last year and date came up when I was going on holiday.
not strictly impossible to attend but would have been a very inconvenient and err…..  uncomfortable start to a holiday.
a new date meant a 10 week delay

so I paid £190 and booked it next day with a location, consultant and time of my choice.

there was nothing wrong but apart from the reassurance it could have delayed further tests and treatment,

I would not hesitate to pay privately again.

my mother lost the use of a leg due to delay by the nhs (it was a fast growing benign brain tumour).

NHS has got way worse during the pandemic.

QrizB

buyhighselllow said:

So my wife is 55, still working PT and earns well under the threshold for income tax. As this is unlikely to change if she retires, this would seem like a no brainer for her to do if I am understanding it correctly ? How quickly after paying in £2880 can you draw off the £3600? 

In your wife's case if she's earning more than £3600 pa she can pay more into a pension and get more benefit from the system.

If, for example, her gross pay is £6k pa she could pay £4800 into a pension and have £1200 added in tax relief. Then when she comes to withdraw it, it will still leave her below the Personal Allowance.

How quickly will depend on the pension provider. With some of them it takes a couple of months to have the tax relief credited to the account. This forum is full of threads about this, with suggested pension providers named.

Albermarle

How quickly will depend on the pension provider. With some of them it takes a couple of months to have the tax relief credited to the account. This forum is full of threads about this, with suggested pension providers named.

I think some providers are less than keen for this type of customer. A lot of admin for maybe a couple of quid in charges.

OP , you need to plough through that long thread linked earlier in the thread, and/or make sure you read the small print about charges, withdrawals etc from which ever provider you choose. There maybe a minimum charge for example.

 From my real life observations, increasingly of late,  life after 70 can be pretty unpredictable, and my observational experience is that quality of life diminishes greatly in a lot of cases.

Real life/personal observations can skew ones view of what might be in store for you .

A 55 year old man will live on average 30 years. That means 50% will live longer. As a couple the chances of one of you reaching your 90's is about 25% . I think if I was 90 I would feel better if I didn't have to worry about money.

buyhighselllow

Albermarle said:

How quickly will depend on the pension provider. With some of them it takes a couple of months to have the tax relief credited to the account. This forum is full of threads about this, with suggested pension providers named.

I think some providers are less than keen for this type of customer. A lot of admin for maybe a couple of quid in charges.

OP , you need to plough through that long thread linked earlier in the thread, and/or make sure you read the small print about charges, withdrawals etc from which ever provider you choose. There maybe a minimum charge for example.

 From my real life observations, increasingly of late,  life after 70 can be pretty unpredictable, and my observational experience is that quality of life diminishes greatly in a lot of cases.

Real life/personal observations can skew ones view of what might be in store for you .

A 55 year old man will live on average 30 years. That means 50% will live longer. As a couple the chances of one of you reaching your 90's is about 25% . I think if I was 90 I would feel better if I didn't have to worry about money.

As someone with parents that age , what they receive in pension and attenders allowance, plus works pensions they are certainly not short of money. However their quality of life is not especially great. If you live life based on what iffery, you probably won't enjoy it to the full. 

buyhighselllow

If we are both still alive at that age, still pulling up our works and SP I think we will have more than enough

Albermarle

buyhighselllow said:

If we are both still alive at that age, still pulling up our works and SP I think we will have more than enough

I was forgetting that you had a decent works pension, so if the £200K is spent then not such a big deal.

However as mentioned before, in the current high inflation, low interest rate, negative investment growth environment, you just have to be careful that the value of that £200K does not get whittled down too quickly in the first two or three years. 

Notepad_Phil

QrizB said:

buyhighselllow said:

So my wife is 55, still working PT and earns well under the threshold for income tax. As this is unlikely to change if she retires, this would seem like a no brainer for her to do if I am understanding it correctly ? How quickly after paying in £2880 can you draw off the £3600? 

In your wife's case if she's earning more than £3600 pa she can pay more into a pension and get more benefit from the system.

If, for example, her gross pay is £6k pa she could pay £4800 into a pension and have £1200 added in tax relief. Then when she comes to withdraw it, it will still leave her below the Personal Allowance.

How quickly will depend on the pension provider. With some of them it takes a couple of months to have the tax relief credited to the account. This forum is full of threads about this, with suggested pension providers named.

Though as soon as she took 1p of taxable income (rather than the 25% tax-free lump sum) she would fall under MPAA rules and be restricted to putting in £3200 herself, plus £800 from the government, making a total of £4000 pa.