Retired at 64 and wondering what to do with the money I have

NeverOutOfWork

I have recently retired at 64 and my wife is retired at 66.  My severance pay and her Full State Pension means we have sufficient funds to keep us in our normal moderate lifestyle until my Company Pension (DB) kicks in at 65 and adds £12k pa to our income and through until I'm 66 when my Full State Pension kicks in. Additionally I have a DC Pension fund which has £160k in it, I have not taken 25% tax free, we have less than £20k in a personal pension I set up in 1983 and pretty much forgot about, we also have four £20k ISA's and various other small savings.

Our mortgage is paid, we have an almost new car fully paid off and we have less than £1k debt.

Should I just sit on the DC Pension total and see what happens ?  Any other advice greatly appreciated
Thanks Bob

Eldi_Dos

Do you intend to stay in your existing property or have you thoughts on downsizing  or moving to another area.

NeverOutOfWork

We are planning to stay where we are although it's too big for us, a few years ago anticipating retirement we moved into a more rural area where its nice and quiet.

born_again

Do you like to travel?

Albermarle

NeverOutOfWork said:

I have recently retired at 64 and my wife is retired at 66.  My severance pay and her Full State Pension means we have sufficient funds to keep us in our normal moderate lifestyle until my Company Pension (DB) kicks in at 65 and adds £12k pa to our income and through until I'm 66 when my Full State Pension kicks in. Additionally I have a DC Pension fund which has £160k in it, I have not taken 25% tax free, we have less than £20k in a personal pension I set up in 1983 and pretty much forgot about, we also have four £20k ISA's and various other small savings.

Our mortgage is paid, we have an almost new car fully paid off and we have less than £1k debt.

Should I just sit on the DC Pension total and see what happens ?  Any other advice greatly appreciated
Thanks Bob

If you do not need the money from the DC fund, you can just leave it where it is. However a couple of pointers.
1) Between retiring and getting your £12Kpa  DB pension, presumably you have no taxable income. In this case you could 'waste' your £12570 personal tax allowance, and it could be a good idea to just take enough from the DC pension to use up this allowance.
If you had a whole tax year with no income, you could take a UFPLS payment from the DC pension. This is 25% tax free and 75% taxable. So £4190 tax free and £12570 taxable .
If your income free period is split over two tax years, it could get more complicated depending on exactly when you stopped earning employment income.
2) You should make sure your DC  pension is invested appropriately.
3) It is maybe easier just to transfer the old £20K pension into the bigger one, probably an old pension like that maybe a bit inflexible on how you can withdraw from it.

Eldi_Dos

I think what type of house is going to suit your retirement is a area that does not always get the attention it deserves.
Ourselves we opted for staying in the same area and downsizing, it suited our plans better. Hopefully less bills and upkeep and easier to leave the property on the spur of the moment if we fancied a couple of days away.The budget chain hotels can be very good value on a Sunday if you fancy a couple of nights break somewhere.

gwynlas

It is all very well living in  rural area that is nice and quiet however you need to make some decisions whilst you are young enough. Ideally you need to live in an area with good public transport in case you are unable to drive for any reason with access to basic shopping facilities etc. On line shopping is all very well but does not work if you ave forgotten to order one or two basics. You also need to consider how you will fill your time and whether you wish to socialise with similarly aged people or volunteer your time helping others

NeverOutOfWork

Many thanks all.  I used to travel world wide for work and we did a number of long distance holidays over the years, now we tend to stay with family in Germany or friends in Normandy. We don't have big outlays there. My wife fancies spending £10 - £15k on a kitchen.
 
Albemarle -  excellent information thank you - I worked exactly 6 months of the 2023/4 tax year receiving my severance allowance 1st Oct 2023 and have had/will have no income of any kind for the second 6 months, we're living off the settlement allowance although my wife does get her State Pension to supplement it.  

In the 2024/5 tax year I shall have no income other than continuing the above "life style" until Nov 2024 when the Company DB Pension commences.

From that point we shall have her State Pension and my Company DB Pension (plus the DC money) until Nov 2025 when my State Pension should commence.

Khaderbhai

You may now want to consider changing your username   

Bostonerimus1

Albermarle said:

NeverOutOfWork said:

I have recently retired at 64 and my wife is retired at 66.  My severance pay and her Full State Pension means we have sufficient funds to keep us in our normal moderate lifestyle until my Company Pension (DB) kicks in at 65 and adds £12k pa to our income and through until I'm 66 when my Full State Pension kicks in. Additionally I have a DC Pension fund which has £160k in it, I have not taken 25% tax free, we have less than £20k in a personal pension I set up in 1983 and pretty much forgot about, we also have four £20k ISA's and various other small savings.

Our mortgage is paid, we have an almost new car fully paid off and we have less than £1k debt.

Should I just sit on the DC Pension total and see what happens ?  Any other advice greatly appreciated
Thanks Bob

If you do not need the money from the DC fund, you can just leave it where it is. However a couple of pointers.
1) Between retiring and getting your £12Kpa  DB pension, presumably you have no taxable income. In this case you could 'waste' your £12570 personal tax allowance, and it could be a good idea to just take enough from the DC pension to use up this allowance.
If you had a whole tax year with no income, you could take a UFPLS payment from the DC pension. This is 25% tax free and 75% taxable. So £4190 tax free and £12570 taxable .
If your income free period is split over two tax years, it could get more complicated depending on exactly when you stopped earning employment income.
2) You should make sure your DC  pension is invested appropriately.
3) It is maybe easier just to transfer the old £20K pension into the bigger one, probably an old pension like that maybe a bit inflexible on how you can withdraw from it.

Pay off any debt you have and don't feel you have to spend on holidays or your house - the loft conversion and it's incongruous dormers is a blight on UK suburban architecture - sorry needed to vent. Just don't go on any spending sprees as your money might have to last for over 30 years. Leave your money to grow tax free for as long as you can.
 
While your taxable income is low use the 25% tax free amount and your personal allowance to make non taxable DC withdrawals and fund an S&S ISA...I'd put it in a low cost global equity index fund. 

agent69

I was in a similar situation several years ago. Took early retirement thinking I would tour the world on exotic holidays. Got as far as Tenerife and Covid struck.

As others have said, it is importnt to work out what your taxable income is and then max out any SIPP withdrawl that you can make tax free. Also, if you are not too close to 65 you can take a 25% tax free lump sum from your DB pension at 65 (you need to look at what the 25% is worth, and what anual income you would loose).