Pension or holiday

djr2031

Having discussion with wife and kids about claiming part of pension (tax free) to go on a once in a lifetime holiday to disneyland orlando (could never afford it otherwise. Kids are 9 and 13 and both have additional needs.  I think it is madness to use the money this way bur starting to wonder if i am just being boring and grumpy.  Has anyone else got any thoughts?  Many thanks 

lisyloo

djr2031 said:

Having discussion with wife and kids about claiming part of pension (tax free) to go on a once in a lifetime holiday to disneyland orlando (could never afford it otherwise. Kids are 9 and 13 and both have additional needs.  I think it is madness to use the money this way bur starting to wonder if i am just being boring and grumpy.  Has anyone else got any thoughts?  Many thanks 

How old are you?
can you afford it I.e. do you have enough in your pension to provide an income in retirement.

personally I think it’s madness if you don’t have enough to provide for your retirement, so unless you have loads in it or have a good reason to think you won’t last that long.

dunstonh

If the modelling of your retirement plan shows that draw is sustainable then no harm.  If it is harmful to your retirement plan then you should consider whether it is sensible.

It all comes down to the impact on your planning.

NoMore

Without any detail on your retirement requirements and current pension/savings provision, I'm not sure what you expect people to say. 

Phossy

I don't think it is madness, certainly not in principle. It sounds a lovely thing to do for the family and Disney take good care of those with additional  needs. Run the numbers. Whether taking money from a pension is possible or is the best way or not can only be calculated by you. By my reckoning, If it costs £12k for example, that equates to an annuity of about £40 per month for life in pension terms. 

Marcon

djr2031 said:

Having discussion with wife and kids about claiming part of pension (tax free) to go on a once in a lifetime holiday to disneyland orlando (could never afford it otherwise. Kids are 9 and 13 and both have additional needs.  I think it is madness to use the money this way bur starting to wonder if i am just being boring and grumpy.  Has anyone else got any thoughts?  Many thanks 

Are at least age 55? If not, you can't access your pension to fund the trip (or anything else).

If you can't afford this trip without raiding your retirement provision, it sounds a risky idea, but if your kids have additional needs, I can understand why your wife in particular might be in favour if much of the care burden falls on her, or if the additional needs are also life limiting.

Could you compromise and go to Disneyland Paris, which might be cheaper?

penners324

Would this amount be over 25% of your pension pot?

You could well trigger MPAA. Which then restricts pension contributions to £10k a year. Which will definitely hurt in later life.

Stubod

...HOLIDAY...!!!!!!

hugheskevi

The consequences of these sort of decisions are straightforward. You have to choose from one or a combination of:

a) Working longer
b) Saving more prior to retirement (ie consume less)
c) Being poorer in retirement

Balance the benefit of the holiday against the combination of consequences from the above list you would choose were you to take the holiday, and see if it is worth it to you.

djr2031

I'm 56 and at moment will only get about £6000 per year retirement which isn't a lot, hence reason my wife wants to use some of the money for a once in lifetime holiday while we can enjoy it, it just doesn't seem to make sense as I would much rather pay money towards reducing mortgage.  Just so confused which is why I posted originally 

p00hsticks

djr2031 said:

I'm 56 and at moment will only get about £6000 per year retirement which isn't a lot, hence reason my wife wants to use some of the money

The way you describe it as so much per year suggests that this might be a defined benefit pension ? In which case it's usual not to be able to get the lump sum without also starting the pension, and any commencement lump sum will depend on the rules of the particular scheme and may not be as much as 25%

It's a personal view, but that fact that it 'isn't a lot' would be suggesting to me that you should, if possible, be putting more in rather than being a good reason for taking money out.