Bold leap into retirement

katejo

https://forums.moneysavingexpert.com/discussion/comment/81924260#Comment_81924260

I have just arrived in the Peak District for a 3 day walking break. On days when I am at home and not working, i do prefer to be out somewhere. I feel that I am 'killing or wasting time' if I potter about at home

cfw1994

Open air is the answer to most things, I always feel 💪

We are now starting our second week in the Alps: a four-week skiing holiday is barely much more than two weeks (two week lift pass covers the season, one drive out and one back, lower home energy bills, discount Airbnb accommodation…maybe that is all man-maths, but it makes sense to us 🫣).
We’ve aren’t black run demons, but have managed 7 actual days skiing so far (one has to have a break for limbs to recover!): averaging 25km a day, and thoroughly enjoying the adventure ⛷️😎👍

Roger175

https://forums.moneysavingexpert.com/discussion/comment/81925216#Comment_81925216

Very envious! Haven't been for a few years (well apart from a day in Scotland this year) and miss it like hell.

bjorn_toby_wilde

https://forums.moneysavingexpert.com/discussion/comment/81925099#Comment_81925099

Lovely. Hope you enjoy it. Looks like some decent walking weather too.

We’re within easy driving distance of the Peaks so do a lot of our walking there.

katejo

https://forums.moneysavingexpert.com/discussion/comment/81925521#Comment_81925521

I am now back but was extremely lucky with the weather. I was staying near Thorpe in an HF House. I had 3 days walking and the sun shone the whole time. I was even in a t shirt and my coat stayed in my rucksack.

katejo

Has anyone on a DB pension had any regrets regarding the percentage size of the lump sum taken? I am waiting for my final confirmed pension info to arrive. I am currently thinking of reducing the basic lump sum by about 50% to increase my index linked income. I only want to slightly increase my immediately accessible funds (for holiday treats/future home improvement projects). Thanks

Nebulous2

By a quirk of transferring my pension I didn't have an automatic lump sum, and I chose not to take one at all. I've been a wage slave all my life and liked the thought of that monthly sum continuing to drop into my bank account.

I've also got an acquaintance who has been drawing an NHS pension for over 30 years, so I know it is possible.

We do have a cash buffer however, which was intended to see us through to State Pension Age, and it looks as though it is going to do more than that, so lumpy expenditure is already covered.

Edit to add: I've been drawing my pension for almost 5 years, and have already had two quite decent increases, due to high inflation, so I've no regrets about my decision.

katejo

https://forums.moneysavingexpert.com/discussion/comment/81933230#Comment_81933230

Yes I also want to still have a steady income arriving in my bank account. I also have reserve funds invested in a S & S ISA and feeding account. I just want to slightly top up my accessible funds.

Smudgeismydog

https://forums.moneysavingexpert.com/discussion/comment/81933211#Comment_81933211

I think it depends on your other pots. If these are enough to fund your ad hoc costs, then yes, I would be tempted to take the higher pension income, it can provide a real sense of security

Secret2ndAccount

https://forums.moneysavingexpert.com/discussion/comment/81933211#Comment_81933211

If you had a specific need for the lump sum, you wouldn’t be asking the question, so presumably your thinking is ‘which pays the most money?’ In this case it mostly comes down to commutation rate.

Get two otherwise identical quotes, one with a large lump sum, and one with a small lump sum.

Calculate the difference in lump sum. Calculate the difference in the annual pension. Divide the difference in lump sum by the difference in annual pension. That’s your commutation rate.

If it’s 12, that’s dire and you should take a small lump sum and a large pension.

If it’s 25, that’s very good and you should take a large lump sum and less pension.

If it’s 19, then you have to look more carefully:

How long will you be receiving the pension: are you starting early (e.g 60)? Do you have any reason to expect a lifespan particularly longer or shorter than the typical 84 ish? Will you be paying 40% tax on the pension?

What are the annual increases in pension? If it’s uncapped inflation, that’s great, and leans towards taking more pension. If it’s capped at 2.5% your pension will gradually fall behind prices, so you might consider trading for more lump sum if you have something useful you can do with it.

It’s part simple maths, part crystal ball gazing, and part personal decision. Run the numbers, make an informed choice, and don’t look back.