How to plan for retirement with tiny pension pot

Angeltome

I was always very sceptical about pensions after the Mr Maxwells well documented disaster many moons ago... so I bought my own home which is now mortgage free. 

I am 65 this year and have been living off my savings for the past year which will last me until I receive my state pension next year.  I have a very small private pension pot hardly worth mentioning.

Is it worth me paying for an independent financial advisor to help me plan for my retirement and to maybe consider Equity Release on my home?

Thank you... anything you wish to share will be gratefully received.

FlorayG

Hi. Im in a very similar position, or will be once I stop fulltime work. I think FAs are only interested in how to invest your money when you have loads of it, not on how to live on very little. That's the experience I've had of them.

Albermarle

Angeltome said:

I was always very sceptical about pensions after the Mr Maxwells well documented disaster many moons ago... so I bought my own home which is now mortgage free. 

I am 65 this year and have been living off my savings for the past year which will last me until I receive my state pension next year.  I have a very small private pension pot hardly worth mentioning.

Is it worth me paying for an independent financial advisor to help me plan for my retirement and to maybe consider Equity Release on my home?

Thank you... anything you wish to share will be gratefully received.

Financial advisor would be more appropriate if you had a big pension pot to manage.
There are companies who specialise in equity release.

AlanP_2

Angeltome said:

I was always very sceptical about pensions after the Mr Maxwells well documented disaster many moons ago... so I bought my own home which is now mortgage free. 

I am 65 this year and have been living off my savings for the past year which will last me until I receive my state pension next year.  I have a very small private pension pot hardly worth mentioning.

Is it worth me paying for an independent financial advisor to help me plan for my retirement and to maybe consider Equity Release on my home?

Thank you... anything you wish to share will be gratefully received.

The first thing I would suggest you do is post the details on here of what you have and what you NEED / WANT to live on once retired and get some tips and guidance on optimising things.

What type of pension is it? Defined Benefit or Defined Contribution (pot of invested money)

At the moment it sounds like you aren't using your full personal tax allowance as you are not withdrawing from your pension but are living off savings.

Once you start to receive SP the amount you can withdraw without paying tax would be reduced by the SP amount.

This tax year you could take out around £12,570 taxable + 25% tax free lump sum (£16,760) from a DC pot before any income tax would be paid.

Next year that will reduce to around £1,425 as SP will use up most of your personal allowance.


Have you checked your State Pension forecast carefully, not just the headline number? Will you get the full New SP without buying any more NI credits?

 

Moonwolf

AlanP_2 said:

Angeltome said:

I was always very sceptical about pensions after the Mr Maxwells well documented disaster many moons ago... so I bought my own home which is now mortgage free. 

I am 65 this year and have been living off my savings for the past year which will last me until I receive my state pension next year.  I have a very small private pension pot hardly worth mentioning.

Is it worth me paying for an independent financial advisor to help me plan for my retirement and to maybe consider Equity Release on my home?

Thank you... anything you wish to share will be gratefully received.

The first thing I would suggest you do is post the details on here of what you have and what you NEED / WANT to live on once retired and get some tips and guidance on optimising things.

What type of pension is it? Defined Benefit or Defined Contribution (pot of invested money)

At the moment it sounds like you aren't using your full personal tax allowance as you are not withdrawing from your pension but are living off savings.

Once you start to receive SP the amount you can withdraw without paying tax would be reduced by the SP amount.

This tax year you could take out around £12,570 taxable + 25% tax free lump sum (£16,760) from a DC pot before any income tax would be paid.

Next year that will reduce to around £1,425 as SP will use up most of your personal allowance.


Have you checked your State Pension forecast carefully, not just the headline number? Will you get the full New SP without buying any more NI credits?

 

What Alan said.

Also, due to the way pension credit works, you might be better off spending your small pension pot as above than generating a small additional pension from equity release.

xylophone

What does your state pension forecast show?

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

You mention a very small private pension.

What kind of pension is this?

If you want to use equity release you will need to take advice.

https://www.moneyhelper.org.uk/en/homes/buying-a-home/what-is-equity-release

Marcon

Angeltome said:

I was always very sceptical about pensions after the Mr Maxwells well documented disaster many moons ago... so I bought my own home which is now mortgage free. 

I am 65 this year and have been living off my savings for the past year which will last me until I receive my state pension next year.  I have a very small private pension pot hardly worth mentioning.

Is it worth me paying for an independent financial advisor to help me plan for my retirement and to maybe consider Equity Release on my home?

Thank you... anything you wish to share will be gratefully received.

If you're looking at equity release, make sure you get advice from an independent financial adviser who specialises in this area. Helpful info: https://www.ageuk.org.uk/information-advice/money-legal/income-tax/equity-release/#:~:text=Always%20make%20sure%20you%20speak,plan%2C%20contact%20your%20provider%20first.

Angeltome

Thank you SO much everyone!  Your comments are greatly appreciated and I will investigate some of your advice.