Husband retires officially in 2026 - Looking at our options for retirement.

Freedomforever

We have saved towards a personal pension and transferred this to current employers pot. 

Not big earners, this pension will pay round about £6,700 per annum, possibly £7,000.
The pension has not been amalgamated to this current job. This additional pension would be around £2,000 if hubby works until September 2026.
When we work the figures out hubby could choose to take lump sum say between £10 - £15 thousand. This obviously reduces the annual income by between say £800 - £1,200 (not exact figures, but you get the picture)
We are in good health currently, what do we do, what do, did forum members do? 

If hubby retired say in next six months we could live frugally/comfortably on savings, waiting to draw pension in 2026. However we are wondering as many retirees don’t always get to enjoy their retirement or benefits carefully saved for. Will it be worth retiring and drawing pension in near future and not waiting to add a small amount to what we’ve already accumulated.

I think we may be just above pension credit level when all is said and done.

Final thoughts…
So do we take a lump sum or keep the annual income as high as possible or do we take the hit and retire asap?
Really appreciate your thoughts so we can move forwards with making a decision, thanks! 🤔

Bostonerimus1

What type of pensions do you have and have you done a detailed budget? If you have Defined Contribution pensions how are they invested and what percentage of your pension pot do you plan to spend each year? Have you done a state pension forecast and how old are you both?

2nd_time_buyer

In terms of the lump sum, you say:
- you are in good health.
- either way, you will have a relatively low guaranteed income
- For the lump sum of £10-15k you will forego £800 to £1200 i.e. you would break even in only 12 years from not taking the lump sum (perhaps even sooner of there is index linking on the annual pension). 

From the information you have provided it wound point towards maintaining as much annual income as possible. 

Albermarle

We have saved towards a personal pension and transferred this to current employers pot. 

Not big earners, this pension will pay round about £6,700 per annum, possibly £7,000.

Can you just clarify exactly.

You ( or he ) contributed to a Defined Contribution personal pension ( it is not possible for 'we' to contribute to a pension)?
Then he bought extra guaranteed pension income by transferring this pension pot to his employers Defined Benefit scheme? 

Can you confirm that both of you will be eligible for a full state pension?

xylophone

Could you clarify

How old are you?

How old is your husband?

Have you both obtained State Pension Forecasts?

https://www.gov.uk/check-state-pension

What exactly is shown at estimate to 5/4/23?

Do you personally have any pension provision outside of your state pension?

Do you have an emergency savings pot?

We have saved towards a personal pension and transferred this to current employers pot. 
The pension has not been amalgamated to this current job. This additional pension would be around £2,000 if hubby works until September 2026.

Not big earners, this pension will pay round about £6,700 per annum, possibly £7,000.

I can't quite work out what has happened.

Do you mean that your husband had a DB pension and was expecting to receive about £6/7,000 a year but with the amalgamation of the DC pot can expect around £9000 a year?

Marcon

Freedomforever said:

We have saved towards a personal pension and transferred this to current employers pot. 

Not big earners, this pension will pay round about £6,700 per annum, possibly £7,000.
The pension has not been amalgamated to this current job. This additional pension would be around £2,000 if hubby works until September 2026.
When we work the figures out hubby could choose to take lump sum say between £10 - £15 thousand. This obviously reduces the annual income by between say £800 - £1,200 (not exact figures, but you get the picture)
We are in good health currently, what do we do, what do, did forum members do? 

If hubby retired say in next six months we could live frugally/comfortably on savings, waiting to draw pension in 2026. However we are wondering as many retirees don’t always get to enjoy their retirement or benefits carefully saved for. Will it be worth retiring and drawing pension in near future and not waiting to add a small amount to what we’ve already accumulated.

I think we may be just above pension credit level when all is said and done.

Final thoughts…
So do we take a lump sum or keep the annual income as high as possible or do we take the hit and retire asap?
Really appreciate your thoughts so we can move forwards with making a decision, thanks! 🤔

What are you trying to achieve - ie what are your priorities? Asking what other people have done is completely unhelpful if their objectives and circumstances differ from yours, and only gives false comfort (or needless alarm!).

LHW99

Also consider - how would the survivor cope if the proverbial bus came for the other? The major part of any SP would be lost (perhaps all, depending onhow much additional pension is available). DB pensions often pay a reduced surivor's income, and being left with a largish DC pot could be problematic in old age, if the survivor isn't au fait with managing it.

Freedomforever

LHW99 said:

Also consider - how would the survivor cope if the proverbial bus came for the other? The major part of any SP would be lost (perhaps all, depending onhow much additional pension is available). DB pensions often pay a reduced surivor's income, and being left with a largish DC pot could be problematic in old age, if the survivor isn't au fait with managing it.

Thanks for your response. What does SP - DC mean? 

My husband is part of a Career Average Revalued Earnings (CARE) it is a government pension. 

He does not have a defined benefit pension.

Yes spouses pension payable on death is currently £2,254.39 per annum.
Would be slightly more as the original pension will be amalgamated with his current employer.
Your points give food for thought thank you.

NoMore

SP - State Pension
DC - Defined Contribution

Your husbands CARE scheme IS a defined benefit pension. The amount he contributes is not related to the amount he will receive, unlike a DC pension.

Freedomforever

NoMore said:

SP - State Pension
DC - Defined Contribution

Your husbands CARE scheme IS a defined benefit pension. The amount he contributes is not related to the amount he will receive, unlike a DC pension.

I see thanks for explaining. 

When seeking free advice from Pension wise we were informed 

“You need to have a UK based defined contribution pension (not a final salary or career average pension).”

Marcon

Freedomforever said:

NoMore said:

SP - State Pension
DC - Defined Contribution

Your husbands CARE scheme IS a defined benefit pension. The amount he contributes is not related to the amount he will receive, unlike a DC pension.

I see thanks for explaining. 

When seeking free advice from Pension wise we were informed 

“You need to have a UK based defined contribution pension (not a final salary or career average pension).”

Your husband has a career average pension, but do you have any defined contribution pensions? If so, you could have a PensionWise appointment, which would increase your general understanding of the pensions minefield!