Pension dilemma

Silverbird65

Reading about all the big amounts some have my husband's little bit sounds trivial however alittle advice please. He is due to retire JULY 23.He has a small pension with GMP of 1416pa and lump sum 5200 which is being offered now as his original retirement would have been 65. We just don't know whether to take it now or wait a year. Would the current stock market affect it. He has never paid into since he left work at the company in 1992. We have just saved in ISA for retirement so have a little pot. We don't live the high life. IAM an OAP.
Thanks

[Deleted User]

Has you husband a state pension forecast? What income do you get from the ISA? What annual income do you need to have? Sorry about all the questions, just being curious. Also have a look at this thread where a number of people with smaller/average pensions post to discuss plans etc… it is a good read.
https://forums.moneysavingexpert.com/discussion/6228191/how-much-to-live-on/p1

Silverbird65

Yes state pension forecast with Cope ammt 17.13. SP 185.95p.
We have substantial amount of savings to spread across at least 25yrs.we only need around 15000 and that's being generous. We have a quiet life style I am disabled .
Thanks

Albermarle

We have substantial amount of savings to spread across at least 25yrs.we only need around 15000 

If you mean cash savings then have you taken inflation into account? For example .

If you had £15K on January 1st this year in a savings account earning 1 %, then due to high inflation then in terms of spending power the £15K will  only be worth £13,800 at the end of the year ( in terms if what it can buy) Now 2022 is probably an exceptional year but most years inflation is higher than savings rates , and typically you might lose say 2 % a year. So in 10 years time your £15K can now only buy around £11K in goods and services and in 25 years it can only buy around £7.5K worth.

To maintain £15K income in real terms for 25 years you would need something like £500K to start with ( just a guess) 

The usual way to try and beat inflation is to invest some of the money for the long term.

Sorry to go off the original question !

Silverbird65

We can acct for inflation. As your guess at least 25yrs. We will both be in receipt of SP and small GMP. So really need only small amount from savings to top up. Between us with SP and GMP around18000.Not interested in stock markets been badly bitten in past. 

dunstonh

Would the current stock market affect it. 

If the fund is insufficient to meet the GMP then no it will not.  However, it does look like that is an excess pot. So, potentially yes it would.

We have just saved in ISA for retirement so have a little pot. 

Pensions have beaten ISA for a number of years now.  Its not too late to gain some more of that increase.

bluenose1

Silverbird65 said:

Reading about all the big amounts some have my husband's little bit sounds trivial however alittle advice please. He is due to retire JULY 23.He has a small pension with GMP of 1416pa and lump sum 5200 which is being offered now as his original retirement would have been 65. We just don't know whether to take it now or wait a year. Would the current stock market affect it. He has never paid into since he left work at the company in 1992. We have just saved in ISA for retirement so have a little pot. We don't live the high life. IAM an OAP.
Thanks

It sounds like a Defined Benefit pension which I don’t think has anything to do with stock market performance.
I suppose you need to think about whether if he takes it now is that £1416 per annum with an actuarial reduction for taking it early?  

I am due to retire in next year or so and my oh has already retired. He puts £2880 per annum into a cash SIPP with HL, as even if you already have taxable income over the basic allowance you still make £180 per annum -6.25% risk free.

Albermarle

Not interested in stock markets been badly bitten in past. 

Same comment my in laws used to make. Usually there is two reasons;

1) The investment was unsuitable/too risky/badly chosen in the first place.

2) The investment was OK ,but there was a panicky cashing in of the investments when markets had dropped a lot.

My in laws did the second point ( instead of waiting for it to recover ) and then kept it all in cash for the next 25 years. Missed out on a good £100K by doing that. 

Silverbird65

I might not live another 25years,😂 I am in 70th year.Happy with what I have.

Silverbird65

Some of the pension is in units and some in a dreaded with profits. Its not been touched since 1992 when it was transferred from the company pension scheme which closed. We were younger and didn't understand the ins and outs. The GMP is payable at 65 which my hubby's  is in July but for SP is 66.