Is retiring at 55 doable with this plan?

hildosaver

QrizB said:

hildosaver said:

QrizB said:

hildosaver said:

1: I can pay extra into my pension to enable me to access my pension 2 years earlier than is currently possible (57 at present) - to do this I would contribute an additional 2.88% from my salary for the next 7 years till I am 55.

I don't think that's possible?

Your earliest pension access age is 57, and (unless you've already got a pension with preserved rights to draw or earlier than that) it would take an Act of Parliament to change it?

Oh heck you are quite right  I just read it again and it says 'The agreement can be for early retirement 1, 2 or 3 years before your NPA but no earlier than age 65.' so that is no use to me - thanks for pointing that out!
I can however still pay £5000 per year extra into the pension and that is something I'll likely do.

No worries, we all do that from time to time!

Re. the £5k a year, £35k at 57 would buy you something like £1350 a year as an RPI-linked annuity.

See example rates here:

https://www.hl.co.uk/retirement/annuities/best-buy-rates

HL aren't currently publishing prices for age 57 in that summary table but they'll be in-between ages 55 and 60.

There is a calculator from my pension scheme that I have just found that currently states that if I wanted to increase my annuity by £3000 (should I take it at aged 67) then I would need to increase my pension payments by £503 pm for the next 7 years. Which I would think if I took it at 57 would actually be more like an additional £1050 pm annuity which would bring me up to (roughly) £13000 per annum.

So the question would be - is it worth paying £42285 over 7 years for an additional £1k per year annuity from 57?

This is of course depending on whether I have got my sums right - the other bonus from this would be the reduced tax I'd be paying on my income which should be included as well. Which I would assume equate to 40% of the £503 pm which is £200pm saved in tax? So if I take that away from the total paid out (£42285) then actually what I'd be paying if you include the tax saved is £25385 which looks much better value (assuming I live past 80)

Am I looking at this correctly?

hildosaver

Just bumping this to see if anybody has a response to my last post

AlanP_2

I don't know how additional payments into the NHS scheme work but I was in the Local Gov scheme and that offered two options:

1) Buy additional annual pension (the annuity as you are referring to it)
2) Pay into a separate, but linked, AVC which builds up a pot of invested money


Which option does the NHS scheme offer or does it offer both? Which one suits your needs?


The other option is a separate SIPP with no connection to the NHS scheme at all. Build up a pot, gaining tax relief at marginal rate along the way and withdraw as a when needed with a 25% tax free lump sum/


Would this flexibility be a better option for you?


What about your wife does she have a pension? If not, why not? 

Finally check State Pension forecasts for both of you and think about whether any additional contributions may need to be planned for before starting SP at 67'ish.

hildosaver

AlanP_2 said:

I don't know how additional payments into the NHS scheme work but I was in the Local Gov scheme and that offered two options:

1) Buy additional annual pension (the annuity as you are referring to it)
2) Pay into a separate, but linked, AVC which builds up a pot of invested money


Which option does the NHS scheme offer or does it offer both? Which one suits your needs?


The other option is a separate SIPP with no connection to the NHS scheme at all. Build up a pot, gaining tax relief at marginal rate along the way and withdraw as a when needed with a 25% tax free lump sum/


Would this flexibility be a better option for you?


What about your wife does she have a pension? If not, why not? 

Finally check State Pension forecasts for both of you and think about whether any additional contributions may need to be planned for before starting SP at 67'ish.

I'll look into AVC as it's not listed as an option that I can see but I'll see if I missed it.

The thing about a SIPP (from what I understand anyway) is that I wouldn't be able to draw upon it till SP age minus 10 years which currently is 57 but will likely rise to at least 58 so I'd need a few years worth of capital to use to bridge the gap (doable).

Wife has a tiny pension but doesnt currently pay into one - she has a minimum wage job 16 hours per week at the moment and will likely stop working for a few years till our daughter gets up a bit.

I should be ok re: SP contributions as I've already had a look, not sure about the wife but it's possible she will enter work again and she can claim contributions even if she is not working from what I understand through child benefit.