Juggling lots of balls to handle debt

enthusiasticsaver

What will be your situation when you retire? Will you have a good income if you remove £40k from your pension (ignoring the tax situation for now)? Are you going to be able to cover your expenses in retirement?  I assume your state pension kicks in when you are 66?  Have you checked how much that will be given you are a contractor? If you are due to have £1400 more each month when the mortgage finishes then you could use that to repay the debt.  As you are paying more interest on the cards it might make more sense to restructure the mortgage giving you more available to pay off the credit cards. 

I think you need a proper soa as others have said to see whether this is something which can be sorted by paying off the outstanding debt either by downsizing or withdrawing a lump sum from your pension or if this will seriously jeopardise your retirement.  If you have been struggling to pay this debt off for 15 years it may be time to look at something more drastic like a DMP. Certainly you need advice before withdrawing from your pension so pensionwise is a good suggestion. 

gforum91

Thanks to everyone so far. How do I add the pension stuff to the SOA ?

I'm not too downhearted as my wife and I want to downsize in the next few years so I won't be in debt after that. However I am looking to see what I can do with my pension etc to reduce the cash outflow for the next year to two

Floss

The thing to bear in mind about drawdown of your pension pot to give you a lump sum is that yes, it might fix things now, but in 5/10/15 years you will be on a lower income because you cashed in some of your pot.

Also, if you start drawing a pension early to increase your income you will not get as much as it will be adjusted to take into account the extra years being paid.

gforum91

Floss said:

The thing to bear in mind about drawdown of your pension pot to give you a lump sum is that yes, it might fix things now, but in 5/10/15 years you will be on a lower income because you cashed in some of your pot.

Also, if you start drawing a pension early to increase your income you will not get as much as it will be adjusted to take into account the extra years being paid.

Not sure what you mean by that. When I did draw some money out last year my pension advisor said there would be no effect on my pension income. I will talk to pensionwise about that. cheers

katsu

gforum91 said:

Floss said:

The thing to bear in mind about drawdown of your pension pot to give you a lump sum is that yes, it might fix things now, but in 5/10/15 years you will be on a lower income because you cashed in some of your pot.

Also, if you start drawing a pension early to increase your income you will not get as much as it will be adjusted to take into account the extra years being paid.

Not sure what you mean by that. When I did draw some money out last year my pension advisor said there would be no effect on my pension income. I will talk to pensionwise about that. cheers

Money isn't magic. If you take it out of a pension there's less to generate future income. I would definitely get advice about taking lump sums from it, as the advice you quote below sounds odd.

I would also agree it may be helpful to look at the full SOA format and also maybe start to think about the income you will want after you downsize. Will you have more income than you need or is there a gap?