Cash out retirement plans?

Organgrinder

I've been looking at one of these instead of an annuity. I have a mix of DB and DC funds.

With regard my DC funds the annuity rate is currently is £8,500 single life (i'm 57 next birthday). Or I could take a 20 year cash out retirement plan taking me to 77 which pays out £12,500 and continues to pay out in the event I die.

At 77 without the cashout funds, my overall net income is about 10% higher than my current earnings (I still have a mortgage which I can pay off with part of the DC pot). I'm aware my DB pots may not keep up with inflation but the majority of it is the teachers pension scheme which currently at least tracks cpi.

In other words I'm thinking of front loading my retirement to enjoy a bit of travel etc. 

Has anyone got any other ideas? Or has anyone planned or done similar?

bolwin1

Why are you looking at buying an annuity at all ? The usual advice is that a mix of DB & DC pensions is the sweet spot (providing they are big enough). 

There's not enough info in your post to be specific, but in your position, I'd probably be looking at drawing down from the DC pot & front-loading the withdrawals accordingly. This gives you the ultimate flexibility. 

If the cashout plan is the one from L&G, it's at a flat rate - that £12,500 will look a lot less after 10 years of inflation have eaten away at it. Also, do you need it to continue to pay out after your death ? 

Organgrinder

Why an annuity? Because I want to consider all options. Also some of these products pay out over the whole term regardless on whether I die. 

So i'm exploring everything including drawdown.

Basically, at 67 my DB schemes plus state pension will on their own give me a greater net income than my current salary. 

I'm looking at semi retiring this year with full retirement at 60. 

Yes inflation erodes the investment. 3% over 10 years means it's worth 74% of it's value, so £9,250 in today's money. Over 20 years down to £6,900. 

Lots to consider.

Pat38493

Organgrinder said:

Basically, at 67 my DB schemes plus state pension will on their own give me a greater net income than my current salary. 

Depending what DB scheme you are in, I suggest that you make sure the figure you are being given is comparable to your current salary i.e. in real terms.  The DB scheme that I have a deferred pension in, tends to give you an future estimate which adds 2.5% estimated inflation per year so the number they are giving you might not be comparable to your today salary (they don't even make it clear that they do this on the estimate so you may have to request further information from them to be sure, at least with mine).

Organgrinder

yes already checked that but thanks.