Retiring early with a small "pot": can it be done?

QrizB

Buttercup15 said:

QrizB said:

I haven't seen anyone mention yet that there's an advantage in moving as much of your SSISA as you can into a SIPP.

You'll get a 25% uplift from the tax relief when you make the contribution, can have the same investments as your SSISA, then (due to your low income target) get most or all of it back out without paying tax on it.

If you'd started a few years ago, your £120k SSISA could instead have been a £160k SIPP.

I don't think you've said what your current self-employed earnings are, annually? You've still got a month or two to contribute to a SIPP this tax year?

I had considered moving some of the money to my DC pension but eventually decided against it. I got "scared" I might need some of that money before 55 and didn't want to lock it away.

You're in your early 50s now, though. You can estimate how much of your £120k you might possibly need between now and 57 (why 57, see below).

Buttercup15 said:

My earnings are under £20k.

OK, so you can probably move between £10k and £16k into a SIPP and get 25% tax relief this year (and in future years if you continue to work). That's an extra £2500 to £4000 to add to your pot.

Buttercup15 said:

I could have transfered the DC pension to a Vanguard SIPP with the same funds as the SSISA, but then I would have lost my protected age of 55 so decided against that too. 

You can have as many separate pensions as you want.

You might want to open a separate SIPP with eg. Vanguard where you can mirror your SSISA investments (or pick something else). This new SIPP will only be accessible from 57, but that won't affect the age-55 access to your old DC.

Buttercup15

Time2count said:

The other thing to consider is what happens if you lose your PIP/ it reduces in value/ doesn't increase in line with inflation etc.
Even if you regain it later, could you cope financially without it for a year-18 months if it's removed and you have to go to tribunal to have it reinstated? What if that happens more than once?

On the plus side, if you have a partner who is (I presume) paying half the bills/ outgoings, then I do wonder if £15k a year is possibly more than you need? I pay £12k a year in rent, the total outgoings without scrimping are approx £25k, that's with myself and another adult in the home. If you're not paying rent/ mortgage then you could live more cheaply than you imagine.

Unlikely that I will lose the PIP. My condition is irreversible and has a zero chance of improvement. The government could review the amounts etc., true. I would have to dig more into savings and/or cut expenses somewhere. 
Yes we do share outgoings so I could probably make it work with £12k. But I didn't want to base my calculations on an amount that is so low I can't cut anything from it or can never have a treat ever. Yes partner could pay a higher share of outgoings and has offered to, but I insist on paying my half. It's a question of pride and not feeling like you are a burden. 

Buttercup15

QrizB said:

Buttercup15 said:

QrizB said:

I haven't seen anyone mention yet that there's an advantage in moving as much of your SSISA as you can into a SIPP.

You'll get a 25% uplift from the tax relief when you make the contribution, can have the same investments as your SSISA, then (due to your low income target) get most or all of it back out without paying tax on it.

If you'd started a few years ago, your £120k SSISA could instead have been a £160k SIPP.

I don't think you've said what your current self-employed earnings are, annually? You've still got a month or two to contribute to a SIPP this tax year?

I had considered moving some of the money to my DC pension but eventually decided against it. I got "scared" I might need some of that money before 55 and didn't want to lock it away.

You're in your early 50s now, though. You can estimate how much of your £120k you might possibly need between now and 57 (why 57, see below).

Buttercup15 said:

My earnings are under £20k.

OK, so you can probably move between £10k and £16k into a SIPP and get 25% tax relief this year (and in future years if you continue to work). That's an extra £2500 to £4000 to add to your pot.

Buttercup15 said:

I could have transfered the DC pension to a Vanguard SIPP with the same funds as the SSISA, but then I would have lost my protected age of 55 so decided against that too. 

You can have as many separate pensions as you want.

You might want to open a separate SIPP with eg. Vanguard where you can mirror your SSISA investments (or pick something else). This new SIPP will only be accessible from 57, but that won't affect the age-55 access to your old DC.

You are right on all those points. I think I just have this "fear" of parting from my money and locking it away. You have encouraged me to considered shifting some to pension though.