Fed up with working

Krakkkers

So i want to retire. coming up to 58, single, own my own home outright (4 bed detached £320k ish), £195k in savings, no debts.
2 pensions, first is a pot with £138k in it, second is a DB which pays £12560 a year plus £83700 lump sum (at 60) and indexed each year at a fixed 5%. 
Or i could take the DB now at £11k a year and £73k lump sum, only 3% penalty per year for taking early, 60 is the scheme retirement age.
I have a state pension forecast of £182 per week, i am 1 year short of the max new pension of £185.
Outgoings are around £700 a month as everything i have is paid for and my hobbies are cheap, walking, cycling, etc.
What would you do and how would you best combine the above options?

calcotti

Regardless of anything else it would seem sensible to at least work until next April to get the final year needed to qualify for full pension.

arthurdick

If it were me, I would use my savings to bridge the gap until I could take the DB pension without reduction, but I'm only saying what I would do because it would suit me, and I could manage on the figures you are quoting, but could you?

Marcon

Krakkkers said:

So i want to retire. coming up to 58, single, own my own home outright (4 bed detached £320k ish), £195k in savings, no debts.
2 pensions, first is a pot with £138k in it, second is a DB which pays £12560 a year plus £83700 lump sum (at 60) and indexed each year at a fixed 5%. 
Or i could take the DB now at £11k a year and £73k lump sum, only 3% penalty per year for taking early, 60 is the scheme retirement age.
I have a state pension forecast of £182 per week, i am 1 year short of the max new pension of £185.
Outgoings are around £700 a month as everything i have is paid for and my hobbies are cheap, walking, cycling, etc.
What would you do and how would you best combine the above options?

Assuming you are fed up with working at all, as opposed to fed up with your current job...

I'd sit down and make a spreadsheet of my projected outgoings now, and how they are likely to rise in the future - allowing for horrendous rises in energy bills and double digit inflation. 

Project out for however long you think you might live (minimum of 30 years is no bad idea) and then see if your income would be likely to allow you to have the standard of living you'd like for the rest of your life.

Yes, lots of crystal ball gazing - but if you want to retire at such a young age (and these days 58 is young), there's no realistic alternative. Once you've retired it will be extremely hard to get back into the workforce, especially at your current salary, so depends how willing you are to take the risk of an impoverished old age with no provision for either private medical care or a private care home if your health fails as you get older.

33scott

Well done, it looks like you have done the hard work.

When you say you need 1 more year for full SP, do you mean to the tax year ending March 2023, that's only 7 months. If so I would increase my DC contribution to the max and just count the days, it'll fly by.

Are you on one month notice terms at work?

Thumbs_Up

What about retiring abroad? Where is our country going? I let you join the dots..

SarahB16

Krakkkers said:

So i want to retire. coming up to 58, single, own my own home outright (4 bed detached £320k ish), £195k in savings, no debts.
2 pensions, first is a pot with £138k in it, second is a DB which pays £12560 a year plus £83700 lump sum (at 60) and indexed each year at a fixed 5%. 
Or i could take the DB now at £11k a year and £73k lump sum, only 3% penalty per year for taking early, 60 is the scheme retirement age.
I have a state pension forecast of £182 per week, i am 1 year short of the max new pension of £185.
Outgoings are around £700 a month as everything i have is paid for and my hobbies are cheap, walking, cycling, etc.
What would you do and how would you best combine the above options?

What are the figures in terms of pension per year if you don't take the lump sum?

If I were in your shoes knowing I'd get a fixed 5% increase on my annual pension I think I'd prefer not to take the lump sum but instead have a larger pension.   

Bravepants

SarahB16 said:

Krakkkers said:

So i want to retire. coming up to 58, single, own my own home outright (4 bed detached £320k ish), £195k in savings, no debts.
2 pensions, first is a pot with £138k in it, second is a DB which pays £12560 a year plus £83700 lump sum (at 60) and indexed each year at a fixed 5%. 
Or i could take the DB now at £11k a year and £73k lump sum, only 3% penalty per year for taking early, 60 is the scheme retirement age.
I have a state pension forecast of £182 per week, i am 1 year short of the max new pension of £185.
Outgoings are around £700 a month as everything i have is paid for and my hobbies are cheap, walking, cycling, etc.
What would you do and how would you best combine the above options?

What are the figures in terms of pension per year if you don't take the lump sum?

If I were in your shoes knowing I'd get a fixed 5% increase on my annual pension I think I'd prefer not to take the lump sum but instead have a larger pension.   

+1 for this.

NedS

SarahB16 said:

Krakkkers said:

So i want to retire. coming up to 58, single, own my own home outright (4 bed detached £320k ish), £195k in savings, no debts.
2 pensions, first is a pot with £138k in it, second is a DB which pays £12560 a year plus £83700 lump sum (at 60) and indexed each year at a fixed 5%. 
Or i could take the DB now at £11k a year and £73k lump sum, only 3% penalty per year for taking early, 60 is the scheme retirement age.
I have a state pension forecast of £182 per week, i am 1 year short of the max new pension of £185.
Outgoings are around £700 a month as everything i have is paid for and my hobbies are cheap, walking, cycling, etc.
What would you do and how would you best combine the above options?

What are the figures in terms of pension per year if you don't take the lump sum?

If I were in your shoes knowing I'd get a fixed 5% increase on my annual pension I think I'd prefer not to take the lump sum but instead have a larger pension.   

I agree, as you have a good amount of savings plus a decent chunk on DC pension, I'd try to maximise your DB pension by not taking it early (use your savings to bridge the gap) and then as suggested above, see if you can commute any lump sum for extra DB pension (if the rates are favourable). It doesn't look like you need the lump sum given you have no debts and £195k in savings.

Again, as suggested above, I would at least hang it out long enough to ensure you have earned the LEL (£6396) and paid enough NI to get that missing year of State Pension entitlement.

Albermarle

 £195k in savings, no debts.
2 pensions, first is a pot with £138k in it, 

I would say there is an imbalance here, in that you have too much in cash, and not enough invested in the pension pot.

If you want the savings + pension pot to last you a long time, to supplement the DB pension and state pension, then you need to have more investments to get the growth to at least keep up with inflation in the long term. Savings nearly always lose out to inflation and especially at the moment.

During your last  year(s) of employment, you should consider making lump sum contributions from your savings to this pension( or even a new DC pension/SIPP) to maximise tax relief whilst you can, whilst at the same time making a better balance between cash and investments.

As we do not know you or your full situation, this can only be a suggestion to consider, but it is something that stood out for me. 

Marcon

SarahB16 said:

Krakkkers said:

So i want to retire. coming up to 58, single, own my own home outright (4 bed detached £320k ish), £195k in savings, no debts.
2 pensions, first is a pot with £138k in it, second is a DB which pays £12560 a year plus £83700 lump sum (at 60) and indexed each year at a fixed 5%. 
Or i could take the DB now at £11k a year and £73k lump sum, only 3% penalty per year for taking early, 60 is the scheme retirement age.
I have a state pension forecast of £182 per week, i am 1 year short of the max new pension of £185.
Outgoings are around £700 a month as everything i have is paid for and my hobbies are cheap, walking, cycling, etc.
What would you do and how would you best combine the above options?

What are the figures in terms of pension per year if you don't take the lump sum?

If I were in your shoes knowing I'd get a fixed 5% increase on my annual pension I think I'd prefer not to take the lump sum but instead have a larger pension.   

I'd also check if that really is a fixed 5% (exceptionally rare if so, but great if it is), or a 5% maximum increase? If it's a 5% fixed increase, the commutation rate should be well above average. Could you confirm the commutation rate i.e. how much tax free cash do you get for each £1 of pension given up?