Advice required

Brie

I haven't read your pension thread and can't see anything here about how old you are.  Is it possible to put any pensions into payment and lob all of that income at the debt?  (while also tackling why there is debt too of course).

I suggest this as it was a comment made to me from an IFA who wondered why I had delayed getting my pensions.  This is particularly pertinent if it's a defined benefit scheme with a normal retirement age of 60.  You're talking about taking your lump sum so I'm assuming you are at least 55 but if you are already 60 you might want to see what other options with the pension are available.  Will it continue to increase in value?  Can you take it now?  If it's a defined contribution scheme you may need to be more cautious as it may affect the tax relief you get on your current occupational pension contributions.  

Grumpy_chap

Brie said:

I haven't read your pension thread and can't see anything here about how old you are.  Is it possible to put any pensions into payment and lob all of that income at the debt?  (while also tackling why there is debt too of course).

That is exactly what the OP wanted to do in the other thread.
OP is 55 and wanted to take 25% tax free lump sum to clear the debts.
It was generally considered a bad idea as the OP had no idea how they'd spent to get the debt in the first place and had inadequate pension provision to meet their retirement life-style (although the OP disagreed on that point).  The OP really wanted to be able to spend the pension fund twice - now to clear debt and at retirement to live.

zAndy1

Grumpy_chap said:

Brie said:

I haven't read your pension thread and can't see anything here about how old you are.  Is it possible to put any pensions into payment and lob all of that income at the debt?  (while also tackling why there is debt too of course).

That is exactly what the OP wanted to do in the other thread.
OP is 55 and wanted to take 25% tax free lump sum to clear the debts.
It was generally considered a bad idea as the OP had no idea how they'd spent to get the debt in the first place and had inadequate pension provision to meet their retirement life-style (although the OP disagreed on that point).  The OP really wanted to be able to spend the pension fund twice - now to clear debt and at retirement to live.

With respect I disagree with the 2 comments about having no idea how I've got into debt and having inadequate pension provision to meet my retirement life-style. I've had debts for as long as I can remember and servicing those debts has led to having less spare income and that's led to putting things on cards etc etc. When this debt is cleared it's obvious looking at our income and expenditure figures that there will be no need to resort to credit again. And I've already said that I think £45k pa is enough for retirement , we're paying £26k a year at least paying our mortgage and servicing debts so without those in the picture and with money saved up that we will be able to save up once our debts are cleared we'll be fine. Also at least if I clear the debt now I can start overpaying the mortgage now and get that cleared asap and if I do that it will obviously have a massive impact on the standard of living in retirement if we don't have to pay a mortgage or rent which we could we do if we leave the mortgage for another few years and get into a position where it's simply not feasible to pay it off, although of course we could always sell the house and rent or buy somewhere smaller. I've heard what everyone has said about dipping into the pension pots but trust me when you have this level of debt it's mentally really tough to deal with, it's depressing. I've kind of had my mind set on using my pensions to clear these debts once I turned 55 for a while now and that's what's kind of kept me going in a way. To not do that and live with the prospect of still paying debts off for years to come is a difficult thing to get my head round. My brother died suddenly at 48 years old 3 years ago , my mum died earlier this year, I'm very aware of my own mortality and the fact I don't know how long I have left and in a way I'd rather enjoy my money now while I'm young enough and fit enough to enjoy it than suffer now so I can have more left in 15-20 years time when I probably won't care anyway. 
Let me be clear, I don't think I need the money I was planning on taking from my pension funds now in order to have a comfortable retirement. If I clear debts off , firstly credit cards saving me £800pm ish and then the loan saving me another £400pm , use that money for something more useful like actually clearing the mortgage especially with interest rates as they are now and still leave us with enough to have a comfortable standard of living now in our 50s , to me that's more appealing than chipping away at the credit card debt for the next 2 years and making no in-roads into the mortgage. I don't think people are taking into consideration the pension pot reduction in value (and what that might translate to in annual pension income) vs the savings in interest on cards / loans / mortgage and savings in retirement by not having to pay for a mortgage or rent. I'm sure I could probably work out which is the better option if I did some sums, might do that actually. It will be interesting to see what pensionwise suggest when I tell them about my situation. I would be quite surprised actually if they don't suggest using some of my pension pot to take tax free lump sums to pay off my debts, from where I'm sitting it just seems to make sense but I'm not a financial advisor and my emotions are probably clouding my judgement. I desperately want to be debt free , quite frankly that's far more important to me than my future retirement income.
Might sound like I've made my mind up that I'm taking my tax free lump sums, I haven't made my mind up and I'm still willing to listen to advice on this but please don't make assumptions that I will just get into this same mess again and use that as a basis for recommending not to take the lump sums because trust me, I will not get into debt again once this mess is sorted out and I can say that quite categorically. 

eastcorkram

Surely with 40 or 50k of debt, you must have some idea what it got spent on? 

SusieT

Honestly, a lot of us here have been it a LOT more debt than you have got, that is why so many are speaking from experience and having come out the other side after paying it off.  If you hit the debt hard you can be clear of the cards in under 2 years, then let the loans clear naturally and hit the mortgage hard, once those numbers start to drop and the amount of cards decrease you will see the huge advantage to doing it that way. We know how hard it is to admit that we are in the poo and need to change, we know how that horrible tight feeling in the gut feels, and we know the sleepless nights and the panic that any letter could be a really nasty one, and we so wish we could find a magical easy way out. You have a huge advantage over me (and a lot of others) in that you are in a position to clear yours with a bit of work. Please hear what people are saying, and leave the pension alone, your retirement income is VERY important, you just do not realise that yet, when you are 68-70 you will understand what people are saying now.

thriftychick

Having read your thread on here this morning and your other threads dating back to 2005, I feel very sad that you did not take the advice offered to you before your bankruptcy.  You said at the time that it would take 17 years to pay off your original £74k debt but, here we are in 2022 and you are back where you started.  Some of the financial decisions you have taken, against all advice on here: bankruptcy, equity release and now using your pension have/will be all been in vain.  You have robbed from your past, present and now looking to take from your future.

Clearing debt is 20% knowledge and 80% behaviour.  The people on this site have given you the knowledge.  In another ten year's time, where do you want to be financially because, if you don't change your behaviour, you will be in the same position again.  You have not had your lightbulb moment.  Your mindset has not changed.

Does your wife know about the debts?  Is she on board to change the way you live so that you have a debt free retirement?

My advice (for what it's worth):
1. Save an emergency fund of £1000.
2. Cut up your credit cards.
3. Make a proper budget that you and your wife agree to stick to.
4. Snowball your debts until they are gone.
5. Save up to pay off your mortgage principal amount.

You have time, just, due to your substantial income.  You will both need to be committed to it and if you are, you will never look back with regret.  We are all rooting for you!

Brie

Grumpy_chap said:

Brie said:

I haven't read your pension thread and can't see anything here about how old you are.  Is it possible to put any pensions into payment and lob all of that income at the debt?  (while also tackling why there is debt too of course).

That is exactly what the OP wanted to do in the other thread.
OP is 55 and wanted to take 25% tax free lump sum to clear the debts.

What I'm talking about is something else.  If the pension could be put into payment without taking the tax free lump and then that pension income be used to clear the debt while they are still working and earning.  But if he's "just" 55 I would say that's too early.  And if it's a DC scheme I certainly wouldn't suggest taking that to buy an annuity at this time given the stock market.  And if it's a DB it would likely be subject to a significant reduction due to being taken early.  

I think that getting quotes on whatever pensions are available would be a good idea for financial planning but given the OP is on the relatively youthful side to leave things for the time being.  

zAndy1

Brie said:

Grumpy_chap said:

Brie said:

I haven't read your pension thread and can't see anything here about how old you are.  Is it possible to put any pensions into payment and lob all of that income at the debt?  (while also tackling why there is debt too of course).

That is exactly what the OP wanted to do in the other thread.
OP is 55 and wanted to take 25% tax free lump sum to clear the debts.

What I'm talking about is something else.  If the pension could be put into payment without taking the tax free lump and then that pension income be used to clear the debt while they are still working and earning.  But if he's "just" 55 I would say that's too early.  And if it's a DC scheme I certainly wouldn't suggest taking that to buy an annuity at this time given the stock market.  And if it's a DB it would likely be subject to a significant reduction due to being taken early.  

I think that getting quotes on whatever pensions are available would be a good idea for financial planning but given the OP is on the relatively youthful side to leave things for the time being.  

I'm 55 in December. Taking pension income doesn't seem like a good idea seeing as I'm a 40% tax payer, I'll just lose most of that income to tax. As far as the DB scheme is concerned I have no plans to do anything with that, the normal retirement age for the DB pension is 60 and I plan to manage without touching that until at least then..

Sea_Shell

You can do things the "easy" way, or the "hard" way.

Instant gratification v. delayed gratification.

I just hope you don't make any decisions you regret in 10+ years time.

Grumpy_chap

zAndy1 said:

Grumpy_chap said:

Brie said:

I haven't read your pension thread and can't see anything here about how old you are.  Is it possible to put any pensions into payment and lob all of that income at the debt?  (while also tackling why there is debt too of course).

That is exactly what the OP wanted to do in the other thread.
OP is 55 and wanted to take 25% tax free lump sum to clear the debts.
It was generally considered a bad idea as the OP had no idea how they'd spent to get the debt in the first place and had inadequate pension provision to meet their retirement life-style (although the OP disagreed on that point).  The OP really wanted to be able to spend the pension fund twice - now to clear debt and at retirement to live.

With respect I disagree with the 2 comments about having no idea how I've got into debt and having inadequate pension provision to meet my retirement life-style.

I've had debts for as long as I can remember and servicing those debts has led to having less spare income and that's led to putting things on cards etc etc. When this debt is cleared it's obvious looking at our income and expenditure figures that there will be no need to resort to credit again. And I've already said that I think £45k pa is enough for retirement , we're paying £26k a year at least paying our mortgage and servicing debts so without those in the picture and with money saved up that we will be able to save up once our debts are cleared we'll be fine.

Also at least if I clear the debt now I can start overpaying the mortgage now and get that cleared asap and if I do that it will obviously have a massive impact on the standard of living in retirement if we don't have to pay a mortgage or rent which we could we do if we leave the mortgage for another few years and get into a position where it's simply not feasible to pay it off, although of course we could always sell the house and rent or buy somewhere smaller. I've heard what everyone has said about dipping into the pension pots but trust me when you have this level of debt it's mentally really tough to deal with, it's depressing. I've kind of had my mind set on using my pensions to clear these debts once I turned 55 for a while now and that's what's kind of kept me going in a way. To not do that and live with the prospect of still paying debts off for years to come is a difficult thing to get my head round.

My brother died suddenly at 48 years old 3 years ago , my mum died earlier this year, I'm very aware of my own mortality and the fact I don't know how long I have left and in a way I'd rather enjoy my money now while I'm young enough and fit enough to enjoy it than suffer now so I can have more left in 15-20 years time when I probably won't care anyway. 

Let me be clear, I don't think I need the money I was planning on taking from my pension funds now in order to have a comfortable retirement. If I clear debts off , firstly credit cards saving me £800pm ish and then the loan saving me another £400pm , use that money for something more useful like actually clearing the mortgage especially with interest rates as they are now and still leave us with enough to have a comfortable standard of living now in our 50s , to me that's more appealing than chipping away at the credit card debt for the next 2 years and making no in-roads into the mortgage. I don't think people are taking into consideration the pension pot reduction in value (and what that might translate to in annual pension income) vs the savings in interest on cards / loans / mortgage and savings in retirement by not having to pay for a mortgage or rent. I'm sure I could probably work out which is the better option if I did some sums, might do that actually. It will be interesting to see what pensionwise suggest when I tell them about my situation. I would be quite surprised actually if they don't suggest using some of my pension pot to take tax free lump sums to pay off my debts, from where I'm sitting it just seems to make sense but I'm not a financial advisor and my emotions are probably clouding my judgement. I desperately want to be debt free , quite frankly that's far more important to me than my future retirement income.

Might sound like I've made my mind up that I'm taking my tax free lump sums, I haven't made my mind up and I'm still willing to listen to advice on this but please don't make assumptions that I will just get into this same mess again and use that as a basis for recommending not to take the lump sums because trust me, I will not get into debt again once this mess is sorted out and I can say that quite categorically. 

I certainly did not mean to be disrespectful or cause offence - I was trying to provide a very short precis of the other thread for those that had not read it.

It is good that you understand how you got into this debt, as that will be the first step to preventing a recurrence.  It was not clear from what has been said in the thread that was the case and you said as much in the other thread:

zAndy1 said:

So yes I'm struggling to understand how we're in this situation but we are.

And appreciate the concern but there's no way I'm ending up in this situation again in 5 years time, not a chance

zAndy1 said:

Kim1965 said:

Out of interest, what have you bought on the cards?
Have you had periods of un employment, gambling? 
 Give us a clue. If i was in your position I would be confident on your také home i could sort it out. A period of austerity would be the way forward.
 Most people on this site spend less than they earn, thats it, in a nutshell. 

No unemployment, no gambling. Dining out, holidays , daft stuff like that really. 

As for your future pension needs, £45k is a good joint income level but also a long way below your current joint income level, which is clearly insufficient for your immediate past expenditure.  Irrespective of whether the £45k is sufficient, that is the very top optimistic future pension income level that the shared pension plans will yield.

I am sorry to hear about your losses.
You do need to plan for a financial future that assumes the survival of either or both of you and your wife to a "ripe old age" unless you have known medical reasons why that would not be the case.

It is good that you are taking advice from pensionwise and an IFA.  If pensionwise do suggest drawing down pension lump sums to clear debt, please update the forum (along with their thinking if possible) as there are several forumites here (including myself) that took a different view and we can all learn.

It is good you say your mind is not made up, though your comments do tend to steer towards taking the lump sums with frequency and alternatives seem to be dismissed.

It is good as well that you say you will definitely not repeat.  I have not read through your past posting prior to this week but there are others that seem to have known you for somewhat longer and they indicate that you had a previous bankruptcy.  This is therefore the second time around.  Once you clear these debts, what steps will you be taking to do things differently next time?

Again, sorry if any of what I said hit a raw nerve or caused upset - none is intended and everyone here is trying to suggest solutions that will be sustainable for now and the future retired @zAndy1