Itchy Trigger Finger

leosayer

Marcon said:

Sarahspangles said:

rudebh0y said:

katejo said:

rudebh0y said:

I plan to reitre in May 2025 when I will be 59. I have a DB pension that commences at age 65 and also have a SIPP with current value £370k. This SIPP will allow me to retire and be stop gap until DB and then State pension kick in .  I am starting to get a little nervous that the value in my SIPP  may tank (probably irrational but could happen) before next May and hence scupper my retirement plans and perhaps forcing me to postpone it.  One thing I am considering is taking full 25% tax free now so 92.5K and have about three years living money guaranteed. So if market was to tumble in next 10 months I could live off that.  But the popular advice is not to take full lump sum as you most likely lose out in tax free cash in long run which I understand and agree with.  So one hand I guarantee I can retire next May but other hand I'm losing money in long run.

Just wanting people thoughts on what they would do? Or is there anything else I may have missed.

Slightly surprised that your DB pension starts at 65. I am 61 and will have access to the majority of mine by 65 but small  parts of it won't be available in full if I retire before 66/67. My official retirement date is in Feb 2029.

When you put it that way , it doesn't start at 65 but yearly forecast figures  gives 65 as normal retirement date. But I guess  I can  ask for  figures  for any year. I definitely need to do this and weigh up options.

I used to believe that people who ‘took’ early retirement were ‘penalised’ but I don’t think that’s actually the case, or at least not for all schemes. Some aim to pay out the same amount, just over a different time profile. 

It was, and still is, common to refer to the early retirement reduction as a 'penalty'. That ignores the fact that the pension is being paid sooner and for longer than if you accessed your DB pension at the scheme's normal retirement date. Reduction factors are reviewed regularly and the objective is to be 'cost neutral' over the member's whole period of retirement. Clearly they rarely are, so it's more 'best guesstimate' by the actuary than anything more precise - but whether your get more or less by the time you die, it's a bit late to complain!

The other point is that many people with a DB pension also have other investments in pensions and ISAs. By taking DB early you will use less of those other savings allowing more time for them to grow.

From a psychological perspective, it can be hard to switch ones frame of mind from saving to spending when retiring, particularly during the important first few years of retirement. Having guaranteed income coming in could make that transition easier to handle and avoid a situation where you don't spend enough in the early years and get too much income in the later years.

katejo

leosayer said:

Marcon said:

Sarahspangles said:

rudebh0y said:

katejo said:

rudebh0y said:

I plan to reitre in May 2025 when I will be 59. I have a DB pension that commences at age 65 and also have a SIPP with current value £370k. This SIPP will allow me to retire and be stop gap until DB and then State pension kick in .  I am starting to get a little nervous that the value in my SIPP  may tank (probably irrational but could happen) before next May and hence scupper my retirement plans and perhaps forcing me to postpone it.  One thing I am considering is taking full 25% tax free now so 92.5K and have about three years living money guaranteed. So if market was to tumble in next 10 months I could live off that.  But the popular advice is not to take full lump sum as you most likely lose out in tax free cash in long run which I understand and agree with.  So one hand I guarantee I can retire next May but other hand I'm losing money in long run.

Just wanting people thoughts on what they would do? Or is there anything else I may have missed.

Slightly surprised that your DB pension starts at 65. I am 61 and will have access to the majority of mine by 65 but small  parts of it won't be available in full if I retire before 66/67. My official retirement date is in Feb 2029.

When you put it that way , it doesn't start at 65 but yearly forecast figures  gives 65 as normal retirement date. But I guess  I can  ask for  figures  for any year. I definitely need to do this and weigh up options.

I used to believe that people who ‘took’ early retirement were ‘penalised’ but I don’t think that’s actually the case, or at least not for all schemes. Some aim to pay out the same amount, just over a different time profile. 

It was, and still is, common to refer to the early retirement reduction as a 'penalty'. That ignores the fact that the pension is being paid sooner and for longer than if you accessed your DB pension at the scheme's normal retirement date. Reduction factors are reviewed regularly and the objective is to be 'cost neutral' over the member's whole period of retirement. Clearly they rarely are, so it's more 'best guesstimate' by the actuary than anything more precise - but whether your get more or less by the time you die, it's a bit late to complain!

The other point is that many people with a DB pension also have other investments in pensions and ISAs. By taking DB early you will use less of those other savings allowing more time for them to grow.

From a psychological perspective, it can be hard to switch ones frame of mind from saving to spending when retiring, particularly during the important first few years of retirement. Having guaranteed income coming in could make that transition easier to handle and avoid a situation where you don't spend enough in the early years and get too much income in the later years.

I am in that position. I haven't taken my DB yet but am deciding when to. I want to spend some of it on slightly more expensive holidays which I haven't allowed myself so far but the switch of frame of mind is really hard. Part of me feels that I would be over indulging myself. 

Marcon

katejo said:

leosayer said:

Marcon said:

Sarahspangles said:

rudebh0y said:

katejo said:

rudebh0y said:

I plan to reitre in May 2025 when I will be 59. I have a DB pension that commences at age 65 and also have a SIPP with current value £370k. This SIPP will allow me to retire and be stop gap until DB and then State pension kick in .  I am starting to get a little nervous that the value in my SIPP  may tank (probably irrational but could happen) before next May and hence scupper my retirement plans and perhaps forcing me to postpone it.  One thing I am considering is taking full 25% tax free now so 92.5K and have about three years living money guaranteed. So if market was to tumble in next 10 months I could live off that.  But the popular advice is not to take full lump sum as you most likely lose out in tax free cash in long run which I understand and agree with.  So one hand I guarantee I can retire next May but other hand I'm losing money in long run.

Just wanting people thoughts on what they would do? Or is there anything else I may have missed.

Slightly surprised that your DB pension starts at 65. I am 61 and will have access to the majority of mine by 65 but small  parts of it won't be available in full if I retire before 66/67. My official retirement date is in Feb 2029.

When you put it that way , it doesn't start at 65 but yearly forecast figures  gives 65 as normal retirement date. But I guess  I can  ask for  figures  for any year. I definitely need to do this and weigh up options.

I used to believe that people who ‘took’ early retirement were ‘penalised’ but I don’t think that’s actually the case, or at least not for all schemes. Some aim to pay out the same amount, just over a different time profile. 

It was, and still is, common to refer to the early retirement reduction as a 'penalty'. That ignores the fact that the pension is being paid sooner and for longer than if you accessed your DB pension at the scheme's normal retirement date. Reduction factors are reviewed regularly and the objective is to be 'cost neutral' over the member's whole period of retirement. Clearly they rarely are, so it's more 'best guesstimate' by the actuary than anything more precise - but whether your get more or less by the time you die, it's a bit late to complain!

The other point is that many people with a DB pension also have other investments in pensions and ISAs. By taking DB early you will use less of those other savings allowing more time for them to grow.

From a psychological perspective, it can be hard to switch ones frame of mind from saving to spending when retiring, particularly during the important first few years of retirement. Having guaranteed income coming in could make that transition easier to handle and avoid a situation where you don't spend enough in the early years and get too much income in the later years.

I am in that position. I haven't taken my DB yet but am deciding when to. I want to spend some of it on slightly more expensive holidays which I haven't allowed myself so far but the switch of frame of mind is really hard. Part of me feels that I would be over indulging myself. 

It's fascinating how many people have just this problem. I can't find the link to an article I read several years ago, where financial advisers were asked about the piece of advice clients were most likely to have trouble following. The overwhelming response was that people (including very wealthy ones) really struggled with the advice to spend their money!

k6chris

Great thread.  I accidentally retired 5 years ago at the age of 55 when I decided to take the summer off and look for another job with less politics.  Summer turned to winter, turned to spring, and then Covid hit!  By the time the job market picked up, I was happily economically inactive and remain so today.  It is only thanks to the knowledge on this forum that I had the luxury of being able to do so.  Even now, I’m not entirely happy with calling myself retired.

Like other, having spent many years accumulating, we are struggling to spend.  We did manage a 4-day last minute break in January, but even then, we took a lower cost option!  All advice welcome.

Not working can be tough mentally, but someone has to do it!

Albermarle

Like other, having spent many years accumulating, we are struggling to spend.  

I am in a similar situation. Partly due to my 'non spending' personality ( although more relaxed than when younger) but also due to family circumstances.

However I do not really worry about it . In my view better to be a moderate spender with good financial resources, than a big spender without those resources. I might end up the 'richest man in the graveyard' but before then hopefully many years of not worrying about money, which I am sure many people would see as a blessing.

SouthCoastBoy

I'm definitely in the struggle to spend my money camp. After 35 years of saving it is so difficult to change that philosophy and see the pot decrease in size.

And there are so many what ifs I need to worry about...

jaypers

The spending money thing is really difficult for me too. I have a very healthy pension pot and I struggle with anything other than the idea that I don’t want to draw to an extent where the overall pot starts eroding away. The salary I’m taking is plenty but I could probably take and spend more. Sure the beneficiaries of my estate won’t mind so much! 

Yorkie1

Really interesting to read all of these comments. I'm a few years away from likely retirement (53 now), but I suspect that I will also find it difficult to believe that whatever funds I have by then, will suffice. It's probably also relevant that I'm not in a long term relationship, so have only my own resources to fall back upon.

But these types of threads are also realy useful to start getting one's head into a psychological readiness for the next chapter!

katejo

Albermarle said:

Like other, having spent many years accumulating, we are struggling to spend.  

I am in a similar situation. Partly due to my 'non spending' personality ( although more relaxed than when younger) but also due to family circumstances.

However I do not really worry about it . In my view better to be a moderate spender with good financial resources, than a big spender without those resources. I might end up the 'richest man in the graveyard' but before then hopefully many years of not worrying about money, which I am sure many people would see as a blessing.

I don't want to spend my early retirement years 'not spending' and then find all my cash swallowed up in residential care (maybe next to someone who has spent all their money on expensive trips and has little left). 

Albermarle

Yorkie1 said:

Really interesting to read all of these comments. I'm a few years away from likely retirement (53 now), but I suspect that I will also find it difficult to believe that whatever funds I have by then, will suffice. It's probably also relevant that I'm not in a long term relationship, so have only my own resources to fall back upon.

But these types of threads are also realy useful to start getting one's head into a psychological readiness for the next chapter!

Although you are probably better financially than someone with a partner with little resources, and having to fund the Bank of Mum and Dad at the same time !