Escape to the country & living off savings

Skint_yet_Again

Thanks MF 😊

Had a wonderful Christmas Day with lovely family, gifts and dinner. Sensible eating went out the window 😆 Lots of walking done this week so not too worried. Spent the day helping Dsis prep dinner and watched some tv, played some card games and read a little of my book. 

We will be out for a walk later, Boxing Day tradition, then leftover cold meats and salad for dinner. Hope you all had a lovely time x

Skint_yet_Again

Home again. Left the east coast in the sun and travelled inland all the way home in thick fog. Called off at morresons and got a few food items for over the weekend plus 3 cans hairspray & 3 hair mousse, 10p parsnips & 50p cauli for NY day. Also brought home 8 packs of goose mince from b-in-law which are now in the freezer. Just like beef mince so will make some lovely meals.
I will do a proper shop on Monday. 

My pension statement has arrived while I’ve been away so I now have just over 3 years to decide which option to take from the Mc loud remedy. Will need to sit down and work it out. 

~FlowerPot~

Glad you had a lovely Christmas and lots of walks. 
I am determined to get out and walk a bit more, I've got very lazy!! I'm also going to try eat a bit better,! 

Skint_yet_Again

Saturday was thick fog and cold. Spent the morning working through my pension figures. I have an idea which option I will choose but I don’t have to do anything until I claim my pension in about 3 years. Went to DF’s for a cuppa and talk through my options & he agreed with my current reasoning so will try to park it here and put it out of my mind now. If anyone can see something I have missed? 

OPTION A
Lump sum £20129
pension 1 age 60 £6709
pension 2 age 67 £408.        

OPTION B
Lump sum £15367
pension 1 age 60 £5122
pension 2 age 67 £3640

I am currently living off savings £10000 a year. 

From age 60 I will be living off pension 1 plus savings to boost to £10000 a year up to age 67 when I will receive pension 2 and a full state pension.  

Choosing option A will give me more income for 7 years (60-67) than option B and so I will use less savings & it also pays a larger lump sum. 

Option B would give me less income at 60-67 and so I would need to use more savings, the lump sum is less and it would take many years from age 67 onwards (with the larger pension 2 but smaller pension 1) to make up the difference. 

[Deleted User]

Have you allowed for inflation and any index linking in your figures? Realistically you will be spending more than £10000 a year owing to inflation. I take it Pensions A and B are the same scheme with two parts. 

I am amazed at the huge difference between the ages of 60 and 67 of Option B. Taking Option B would give you an income of £2000 a year more from 67 with the state pension. Even more so if it is index linked. You may be able to save some money annually to replace savings.

If you went for option B what would your savings at age 67 compared to taking option A. 

Just my thoughts . 

jwil

If you take option 1, you need to top up your pension by £3291 per year to get to £10k, which will be £23,037 from your savings until 67.

Option 2, it will be £4878 which totals £34,146 needed until 67.

I think financially, the better option is B where you'll have a higher income long term and you could soon replenish those savings, you could technically live off the state pension and save your other pensions.  However, if the money is more needed now then later, then, I can see the appeal of option 1 in the short term.

Skint_yet_Again

Thanks for your thoughts @[Deleted User]

Pensions 1&2 are showing as different schemes on the statements. I believe Pension 1 is final salary and Pension 2 is career average. A & B are different years of service/ reckonable service due to mc cloud? 

I have not allowed for inflation or index linking and do not know how to so I may need to look into that. 

Difference in A and B at 67 is £1644.37pa
Difference in lump sum is £4761.86
Difference in A and B 60-67 is £11111.03 so this should be the difference in savings used unless state pension age is raised to 68 (or more?!)

May need a new car & new boiler by 67 & would have more cash available with option A (plus any interest)

I may need to contact my union for some help understanding the difference 

Skint_yet_Again

Thanks jwil 

I was thinking the difference between the pension from 60-67 is £11111 and difference in lump sum is £4761 = 15872

Difference between pensions at 67 = £1644 so would take over 9 years to make back the difference? That’s if I live to 76 🤔 

[Deleted User]

On balance I would also lean towards adoption B. However the decision has to be yours and which one best fits your planning and needs.
With your lifestyle I think you can look forward to many years after 76!

SuzeQStan

As the others say it only matters what you think SYA - I suppose if it was me I would be tempted to go for the larger lump sum as your state pension kicks in at 67.  But that’s just me based on my circumstances.  Xx