Which way to go

Bimbly

Astronut5 said:

maybe I should just buy a Porsche.

Sounds fair...

wjr4

Are you paying any more money into your pension from the money outside of a pension? 

Dunky62

Are you sure it increases by 5% every year.  Or is it 'Capped' at 5% which is more common.

Albermarle

I am living off a drawdown pension at the moment which has £88000 in it and and I draw at the tax threshold of £12570 so I get about £1047 tax free

Presume you have already had the 25% tax free from this DC pension?

So I also have a FS pension that pays £12641 plus £84250 cash at 60 (18 months time)
Or if I took it now £11676 plus £77800 cash

Do you have to take the lump sum? Usually ( not always) you have a choice to not take the lump sum and get a bigger annual pension.

Astronut5

Not paying in to any other pensions, FS is fixed at 5 percent increases in deferment and retirement, not capped, not up to not more than.

Astronut5

The £12641 increases to £16250 ish without lump sum.

Albermarle

El_Torro said:

Astronut5 said:

I will get £200 a week state pension.
Taking the FS now will preserve the £88000 in the drawdown, is that not a good thing?
Also I would get at least one 5 percent rise before 60 if I take the FS early and the lump sum early as well to invest.

Regarding your points about your DB pension, good points on this.

One thing to consider though is that you are currently accessing your DC pension tax free. Once you start taking your DB pension this will no longer be an option for you. So that's 20% income tax off any money removed from the DC pension.

I don't think that either option is particularly bad, just go with what you are happiest with. Assuming your costs don't increase significantly in the future it looks like you'll be OK financially.

Another thing to consider is that stocks have taken a hammering in recent years. You may want to access the DB pension now so that your funds in the DC pension have the chance to grow. Exactly when and how fast they will grow is anybody's guess.

 For sure markets have been down since December 2021, but prior to that there were some good years, even despite Covid.
The bellweather S&P 500 is up over 50% in the last 5 years, and a typical medium risk 60:40 fund is up 22/25% over the same period. The previous 5 years were better still.
Even the downturn in 2022 was not that bad compared to some drops in the past.
Although it feels worse due to their being high inflation at the same time.

El_Torro

Albermarle said:

El_Torro said:

Astronut5 said:

I will get £200 a week state pension.
Taking the FS now will preserve the £88000 in the drawdown, is that not a good thing?
Also I would get at least one 5 percent rise before 60 if I take the FS early and the lump sum early as well to invest.

Regarding your points about your DB pension, good points on this.

One thing to consider though is that you are currently accessing your DC pension tax free. Once you start taking your DB pension this will no longer be an option for you. So that's 20% income tax off any money removed from the DC pension.

I don't think that either option is particularly bad, just go with what you are happiest with. Assuming your costs don't increase significantly in the future it looks like you'll be OK financially.

Another thing to consider is that stocks have taken a hammering in recent years. You may want to access the DB pension now so that your funds in the DC pension have the chance to grow. Exactly when and how fast they will grow is anybody's guess.

 For sure markets have been down since December 2021, but prior to that there were some good years, even despite Covid.
The bellweather S&P 500 is up over 50% in the last 5 years, and a typical medium risk 60:40 fund is up 22/25% over the same period. The previous 5 years were better still.
Even the downturn in 2022 was not that bad compared to some drops in the past.
Although it feels worse due to their being high inflation at the same time.

You're right, my comment that "stocks have taken a hammering in recent years" was an exaggeration. Even so an 18 month period of relatively stagnant / gradually declining funds is unusual and suggests we're due a growth spurt. I wouldn't be surprised if the decline continues for another 12 months or so, but the usual behaviour of funds suggests that now isn't a great time to sell, if that can be avoided.

Beddie

Albermarle said:

El_Torro said:

Astronut5 said:

I will get £200 a week state pension.
Taking the FS now will preserve the £88000 in the drawdown, is that not a good thing?
Also I would get at least one 5 percent rise before 60 if I take the FS early and the lump sum early as well to invest.

Regarding your points about your DB pension, good points on this.

One thing to consider though is that you are currently accessing your DC pension tax free. Once you start taking your DB pension this will no longer be an option for you. So that's 20% income tax off any money removed from the DC pension.

I don't think that either option is particularly bad, just go with what you are happiest with. Assuming your costs don't increase significantly in the future it looks like you'll be OK financially.

Another thing to consider is that stocks have taken a hammering in recent years. You may want to access the DB pension now so that your funds in the DC pension have the chance to grow. Exactly when and how fast they will grow is anybody's guess.

 For sure markets have been down since December 2021, but prior to that there were some good years, even despite Covid.
The bellweather S&P 500 is up over 50% in the last 5 years, and a typical medium risk 60:40 fund is up 22/25% over the same period. The previous 5 years were better still.
Even the downturn in 2022 was not that bad compared to some drops in the past.
Although it feels worse due to their being high inflation at the same time.

My "fear" is geopolitical - where is the Russia/Ukraine war going? Will it carry on escalating and where does it stop? Then there's China/Taiwan, with the Americans and us promising to get involved. Although I think the Chinese will ultimately be too pragmatic to take the path of military aggression, you never know. 

I know these fears should be ignored, as in the long term things seem to work out, but it is my main anxiety about investing just now, more than interest rates, US bank failures and the like.

Anyway, just rambling really, not expecting anyone to have all the answers!

Albermarle

Beddie said:

Albermarle said:

El_Torro said:

Astronut5 said:

I will get £200 a week state pension.
Taking the FS now will preserve the £88000 in the drawdown, is that not a good thing?
Also I would get at least one 5 percent rise before 60 if I take the FS early and the lump sum early as well to invest.

Regarding your points about your DB pension, good points on this.

One thing to consider though is that you are currently accessing your DC pension tax free. Once you start taking your DB pension this will no longer be an option for you. So that's 20% income tax off any money removed from the DC pension.

I don't think that either option is particularly bad, just go with what you are happiest with. Assuming your costs don't increase significantly in the future it looks like you'll be OK financially.

Another thing to consider is that stocks have taken a hammering in recent years. You may want to access the DB pension now so that your funds in the DC pension have the chance to grow. Exactly when and how fast they will grow is anybody's guess.

 For sure markets have been down since December 2021, but prior to that there were some good years, even despite Covid.
The bellweather S&P 500 is up over 50% in the last 5 years, and a typical medium risk 60:40 fund is up 22/25% over the same period. The previous 5 years were better still.
Even the downturn in 2022 was not that bad compared to some drops in the past.
Although it feels worse due to their being high inflation at the same time.

My "fear" is geopolitical - where is the Russia/Ukraine war going? Will it carry on escalating and where does it stop? Then there's China/Taiwan, with the Americans and us promising to get involved. Although I think the Chinese will ultimately be too pragmatic to take the path of military aggression, you never know. 

I know these fears should be ignored, as in the long term things seem to work out, but it is my main anxiety about investing just now, more than interest rates, US bank failures and the like.

Anyway, just rambling really, not expecting anyone to have all the answers!

It inevitably is worrying, would be not human to sometimes think about what if , WW3 etc

However there have been similar crisis in the past . Cuban missile crisis, Korean war, Vietnam war, WW2, Cold War etc and I remember as a young adult, regular adverts on the TV on how to shelter from a nuclear blast.

AFAIK  during some of these times, markets actually went up .