What Am I Not Considering?

Jasper27_2

Just reset my password as I last posted in 2012! I have however continued to lurk and have learnt a lot from others posts.

My husband has just asked for his LGPS pension to be put into payment and whilst waiting for exact figures we’ve been thinking a lot about our future plans. We were going to only go for the automatic lump sum but as his decision is final are considering all options first. I’d appreciate any input, suggestions, comments as we are at the beginning of the process and could possibly have not looked at all factors.

Husband 63 (64 by the time LGPS will be paid) approx £19000 pa and £45000 lump sum, will get full state pension at 67.

Me 56 have Civil Service pension if I wait until 60 approx £10000 pa and £28000 lump sum, will get full state pension at 67.

We both gave up work 4 years ago have been living on savings and now down to our last £50000 so need some income. Going back to work is not really an option. I quit before I was fired due a health condition that is much improved with not working. My husband was mentally and physically burnt out caring for a terminally ill parent whose care package just fell apart during Covid so had to step up and become their carer. 9 months after they died my very fit and healthy husband was told he had cancer. The chance circumstances that lead to my husband’s cancer being found would not have happened if he had been working. As he had no symptoms in spite of a large tumour containing some aggressive grade cells he is very lucky his consultant considered him “curable” as it was found in time. I might easily be posting saying my husband is terminally ill how I can manage on one income.

Anyway, we have no concerns about future income. We have had some big bucket list holidays the last few years but our basic annual spend has only been about £20000 otherwise. We feel lucky to be back in decent health and are happy with a modest lifestyle. If we had more money it would only go on holidays.

Our only concern is our home. It’s fine now but in the next 10 years it’ll need a new kitchen, bathroom, boiler and rewiring so we’ve been looking at a few options.

1)      Move into a new build that won’t need anything doing to it in a cheaper area so we don’t need to borrow money (we are mortgage free)

2)      As above but get a small mortgage so we have more options as to location maybe £30000 over 10 years

3)      Borrow the money to do all in the work on our current home in one go (seeing as rewiring will make such a mess)

I think we’d need to wait a few years until we have more income and get a mortgage broker to look at our options if we went for options 2 or 3. We will need some of my husbands lump sum to supplement our income for a few years but I am open to taking my pension early in spite of the reduction. We are not in a hurry and are just starting to look into this. But if we are going to move or have major work done we want to do it whilst relatively young and able. Sadly I’ve seen too many elderly relatives let their homes fall into disrepair and be unwilling to move at an advanced age.

Any thoughts?

molerat

One thing that jumps out there is

Husband 63 ............  LGPS ............ will get full state pension at 67.

Me 56 .......... Civil Service .............. will get full state pension at 67.

We both gave up work 4 years ago ......

Is that with making additional contributions because it seems unlikely, although not impossible, you would have full state pensions with that contracted out history and relatively short post 2016 contribution history.  If you are just looking at the big green box at the top of the forecast then that is often what you could get and not necessarily what you will get based on current contributions.  You need to take note of the text below that big green box.

Jasper27_2

Yes we have paid voluntary contributions to get the full pension. Once we'd decided we were not going back to work we checked our NI records and as I had to pay two years but only one for my husband it seemed to be a no brainer. I used to work for HMRC so am confident in tax and NI related matters (good job as it's so hard to speak to them!)

squirrelpie

Jasper27_2 said:

Our only concern is our home. It’s fine now but in the next 10 years it’ll need a new kitchen, bathroom, boiler and rewiring so we’ve been looking at a few options.

1)      Move into a new build that won’t need anything doing to it in a cheaper area so we don’t need to borrow money (we are mortgage free)

2)      As above but get a small mortgage so we have more options as to location maybe £30000 over 10 years

3)      Borrow the money to do all in the work on our current home in one go (seeing as rewiring will make such a mess)

I think we’d need to wait a few years until we have more income and get a mortgage broker to look at our options if we went for options 2 or 3. We will need some of my husbands lump sum to supplement our income for a few years but I am open to taking my pension early in spite of the reduction. We are not in a hurry and are just starting to look into this. But if we are going to move or have major work done we want to do it whilst relatively young and able. Sadly I’ve seen too many elderly relatives let their homes fall into disrepair and be unwilling to move at an advanced age.

Some fairly random thoughts. Firstly I'm impressed that your basic spend has only been £20,000! But mainly about your house - you didn't say how old it is or where you are. Actually I now see from another post that you live in a flat, unless you've moved, so maybe that accounts for low outgoings. If you buy a new build from a housebuilder, I think you're likely to have to spend money making it as you like it. Maybe fixing problems; maybe making the inside exactly as you wish; maybe fixing the grounds. Some of it depends on how much DIY you like or can do. Much the same goes for anywhere else that you buy.

So although rewiring etc will be disruptive, so will anything else you do. When you need a new boiler you might want to consider a heat pump instead, and that might need some new radiators.

Do think carefully before making any major changes.

JayRitchie

Just as a thought regarding housing - is your current home suitable for getting older? I've seen relatives really struggling through having kept hold of family houses where they could have had a lot more independence for longer had them moved into a ground floor flat, a bungalow or just somewhere with a downstairs bathroom.

Might be one to ponder before spending money on the current place.

Jasper27_2

We are in a second floor flat but if we moved I'd be looking at the ground floor even though we are fit and healthy now. I think we'd adapt to a new home or area much easier whilst we are still in good shape. Our current home was built in the early 80's so not old but still in need of upgrades. In answer to Squirrelpie - we are DIY averse which is why a new build appeals so we'd only have to do basic decorating no big jobs! Previous experience of DIY indicates we are likely to end up in A & E or divorced! Our current property is unsuitable for a heat pump as we are on the second floor, I suppose a new build might have one. As I say it's early days and I was just hoping for people to make me realise what I may be overlooking. As we are in no rush we are going to investigate what's available to buy as our flat is quite big and I'm not sure how we'd cope with less space. We are also going to check out a few different areas to see what transport and amenities are like. It's a big decision either way so I only want to do it once and get it right.

SarahB16

Jasper27_2 said:

Just reset my password as I last posted in 2012! I have however continued to lurk and have learnt a lot from others posts.

My husband has just asked for his LGPS pension to be put into payment and whilst waiting for exact figures we’ve been thinking a lot about our future plans. We were going to only go for the automatic lump sum but as his decision is final are considering all options first. I’d appreciate any input, suggestions, comments as we are at the beginning of the process and could possibly have not looked at all factors.

Husband 63 (64 by the time LGPS will be paid) approx £19000 pa and £45000 lump sum, will get full state pension at 67.

Me 56 have Civil Service pension if I wait until 60 approx £10000 pa and £28000 lump sum, will get full state pension at 67.

We both gave up work 4 years ago have been living on savings and now down to our last £50000 so need some income. Going back to work is not really an option. I quit before I was fired due a health condition that is much improved with not working. My husband was mentally and physically burnt out caring for a terminally ill parent whose care package just fell apart during Covid so had to step up and become their carer. 9 months after they died my very fit and healthy husband was told he had cancer. The chance circumstances that lead to my husband’s cancer being found would not have happened if he had been working. As he had no symptoms in spite of a large tumour containing some aggressive grade cells he is very lucky his consultant considered him “curable” as it was found in time. I might easily be posting saying my husband is terminally ill how I can manage on one income.

Anyway, we have no concerns about future income. We have had some big bucket list holidays the last few years but our basic annual spend has only been about £20000 otherwise. We feel lucky to be back in decent health and are happy with a modest lifestyle. If we had more money it would only go on holidays.

Our only concern is our home. It’s fine now but in the next 10 years it’ll need a new kitchen, bathroom, boiler and rewiring so we’ve been looking at a few options.

1)      Move into a new build that won’t need anything doing to it in a cheaper area so we don’t need to borrow money (we are mortgage free)

2)      As above but get a small mortgage so we have more options as to location maybe £30000 over 10 years

3)      Borrow the money to do all in the work on our current home in one go (seeing as rewiring will make such a mess)

I think we’d need to wait a few years until we have more income and get a mortgage broker to look at our options if we went for options 2 or 3. We will need some of my husbands lump sum to supplement our income for a few years but I am open to taking my pension early in spite of the reduction. We are not in a hurry and are just starting to look into this. But if we are going to move or have major work done we want to do it whilst relatively young and able. Sadly I’ve seen too many elderly relatives let their homes fall into disrepair and be unwilling to move at an advanced age.

Any thoughts?

My thoughts...

So your husband has not been using his personal allowance during the last four years?  Did he not consider drawing his LGPS pension sooner to ensure his personal allowance was not going to waste?  

Did you consider drawing both your LGPS pensions as soon as possible and therefore perhaps not need to draw down on your savings and therefore no need to take the tax free lump sum and you would therefore receive a higher LGPS pension each year.  

If you don't mind me saying would it have been better to have posted this question a few years ago as you say you have been a lurker and are therefore aware of this wonderful MSE forum.

My concern is any suggestions now can only be based on the situation that you are currently in and most (if not all) the people on here are extremely helpful and friendly but some of the responses you may receive might be 'did you not consider, etc'. 

Dazed_and_C0nfused

Husband 63 (64 by the time LGPS will be paid) approx £19000 pa and £45000 lump sum, will get full state pension at 67.

Me 56 have Civil Service pension if I wait until 60 approx £10000 pa and £28000 lump sum, will get full state pension at 67.

We both gave up work 4 years ago have been living on savings and now down to our last £50000 so need some income

Have you each been funding a SIPP/personal pension with £2,880 each year and benefitting from the tax relief and, from what you have said, the ability to take the whole lot out without incurring any tax liability?

The tax relief is worth £120/month so whilst you can get the money out using your unused Personal Allowances it seems an easy win.

And presumably you will be applying for Marriage Allowance once your husband starts to take his LGPS pension?

Jasper27_2

Sarah B16 thanks for your reply.  We took advice from an IFA who advised us to spend some of our savings first before taking LGPS pension. The rationale for this was the savings were being eroded by inflation but we wouldn't need huge savings as we were looking at a good pension income. My husband's pre 2008 pension would be payable in full but the rest would be reduced quite a bit if he'd taken it at 60.  We were then rather consumed with dealing with the cancer. Pension planning would be easy with a crystal ball or a time machine! I know we could have done things differently but just have to deal with where we are now.

SarahB16

Jasper27_2 said:

Sarah B16 thanks for your reply.  We took advice from an IFA who advised us to spend some of our savings first before taking LGPS pension. The rationale for this was the savings were being eroded by inflation but we wouldn't need huge savings as we were looking at a good pension income. My husband's pre 2008 pension would be payable in full but the rest would be reduced quite a bit if he'd taken it at 60.  We were then rather consumed with dealing with the cancer. Pension planning would be easy with a crystal ball or a time machine! I know we could have done things differently but just have to deal with where we are now.

I wish you both the very best healthwise.