No pension plans at 58 years old

QrizB

NurseMoneySaver1122 said:

I am a TOTAL novice when it comes to pensions/investing...but given pensions can go up and down and you can get back less than what you put in, is this risk not higher when taking a pension out at such a late stage (over a shorter period)?

We're talking about someone who is 58? On average he might expect to live for another 30 years. That's his investment horizon, not state pension age of 67.

Exactly what he plans to do with his pension fund when he decides to retire (leave it invested and draw an income from it, buy an annuity or spend it all on a round-the-world cruise) will influence how he invests it between now and then.

NurseMoneySaver1122

dunstonh said:

 Presumably, just a highest paying interest account would be the only option at this point?

No. Pension beats savings easily.

However, whilst he hasn't got a pension, what has he actually got. Sometimes people mistakenly miss off the tax wrappers and keep their money in a savings account.  Has he got anything?

Luckily, he is a winner under the new single state pension.  

He is also self employed, so he can continue working into his 70s.

If he has a house, he can consider using equity release.

He has nothing, literally. 

He is a self employed builder with a new-ish diagnosis of COPD, hence my REAL worry for him. He's struggling now, and for the fittest and healthiest of builders, working into their 60's and 70's would be a real challenge, so I know he won't be able to do it!

They (mother and father) do own their home and I think are considering downsizing further down the line, although typically we are near London so house prices are high (relative to country wide prices), so not sure how much they will get from doing that/how much that will help. But I'm thankful they at least have that (even though Dad is adamant he wants to leave that for me and brother!)

NurseMoneySaver1122

LHW99 said:

And having got the top-ups from HMRC on whatever the puts in, he then gets 25% of the pot back tax-free. Effectively ~6.25% so even now, better than most savings accounts.

If he has enough savings, he can put in up to his after tax income (so if he earns £10k pa, he could put in £7.5k pa, and get the tax top-up to make it £10k), and use the savings to cover living expenses for a while.

He also has almost 10 years until his SPA, and hopefully another 20 after that, so well worth while putting at least some of the money into investments in a SIPP / personal pension, rather than leaving it all in cash.

He has zero savings

NurseMoneySaver1122

SouthCoastBoy said:

I think the interesting conundrum if you have no pension in your late 50s is it worth bothering if you can get pension credit on retirement? This happened to my mum and she ended up getting other benefits such as no council tax to pay, if I remember correctly I think she also got a free boiler installed. Therefore there maybe a sweet spot where one is better off having less pension than more. 

Not unsurprisingly I think the new state pension just takes you above the threshold for pension credit if you get the full amount.

He's married too, albeit to my Mother who is also self employed and also has no private pension.

But presumably (if of course the government don't change the rules on future benefit entitlement), he may not be entitled to any benefit support anyway if there is another person to consider?

"Not unsurprisingly I think the new state pension just takes you above the threshold for pension credit if you get the full amount". - Have I understood that correctly; so now he has paid £2000/£3000 in buying more NI contribution years to entitle him to full state pension, he has now voided any entitlement to any benefit top-up/support?

prowla

I'm not sure about the tax relief on payments in if you're taxed on the pension payments.

However, I've no plans to retire anyway, so it's a bit moot.

xylophone

Your mother is of similar age?

Will she be entitled to full NSP?

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs48_pension_credit_fcs.pdf may be of interest.

NurseMoneySaver1122

@xylophone Thanks, I'll have a read

Yes, my mother is actually 3 years older (61). She will be entitled to full state pension.

SouthCoastBoy

NurseMoneySaver1122 said:

SouthCoastBoy said:

I think the interesting conundrum if you have no pension in your late 50s is it worth bothering if you can get pension credit on retirement? This happened to my mum and she ended up getting other benefits such as no council tax to pay, if I remember correctly I think she also got a free boiler installed. Therefore there maybe a sweet spot where one is better off having less pension than more. 

Not unsurprisingly I think the new state pension just takes you above the threshold for pension credit if you get the full amount.

He's married too, albeit to my Mother who is also self employed and also has no private pension.

But presumably (if of course the government don't change the rules on future benefit entitlement), he may not be entitled to any benefit support anyway if there is another person to consider?

"Not unsurprisingly I think the new state pension just takes you above the threshold for pension credit if you get the full amount". - Have I understood that correctly; so now he has paid £2000/£3000 in buying more NI contribution years to entitle him to full state pension, he has now voided any entitlement to any benefit top-up/support?

Here are the details about pension credit, including an eligibility section https://www.gov.uk/pension-credit. Arthurian had posted the link earlier in the thread