Making the most of a small pension pot

ferry

I am fast approaching 55 years of age and only have a small pension pot of £45k with Aegon One Retirement.
 I plan to take the 1st 25% tax free on my 55th birthday in June and feel its not worth reinvesting the the balance into an Annuity paying pennies. So the idea is to just withdraw it all , all be it subject to 20% tax making it even less attractive but using it paydown some residual debt.
I understand that any guidance here cannot be construed as direct advice but is there really any any other direction to take this other than making life a bit easier by using this as debt relief and treating the family to a well deserved holiday with the balance?

Your probably going to ask me about the plan going forward when we fully retire, but 'luckily' we own our home and will downsize to release funds to hopefully make us as comfortable as possible in later life.

Thanks as always

Dazed_and_C0nfused

ferry said:

I am fast approaching 55 years of age and only have a small pension pot of £45k with Aegon One Retirement.
 I plan to take the 1st 25% tax free on my 55th birthday in June and feel its not worth reinvesting the the balance into an Annuity paying pennies. So the idea is to just withdraw it all , all be it subject to 20% tax making it even less attractive but using it paydown some residual debt.
I understand that any guidance here cannot be construed as direct advice but is there really any any other direction to take this other than making life a bit easier by using this as debt relief and treating the family to a well deserved holiday with the balance?

Thanks as always

What other pensions do you have in place for your retirement?

ferry

I have just updated my post in hindsight to this question

af1963

What are you planning to live on when  you retire ?  How much do you think you'll need, and where will it come from ?

You say "debt relief" - the details of the "debt" will affect whether it's a good idea to raid the pension to pay it off. Most of the time, spending a pension fund before retirement is not a good choice. but it may depend on your debts.

( e.g. if your debts are owed to Big Eddie with a baseball bat ... )

Also, taking it all out at once - if you're working and earning at the time - may tip you into paying 40% tax on some of it. So even *if* you thought taking all of it out was a good idea, it could be worth spreading over more than one tax year.

Qyburn

ferry said:

I am fast approaching 55 years of age and only have a small pension pot of £45k with Aegon One Retirement.
 I plan to take the 1st 25% tax free on my 55th birthday in June and feel its not worth reinvesting the the balance into an Annuity paying pennies. 

Is that a DC pension? Wondering whether drawing taxable money will trigger MPAA and thus limit future contributions to other pensions.

QrizB

ferry said:

I am fast approaching 55 years of age and only have a small pension pot of £45k with Aegon One Retirement.

That makes me think that you should be adding more to your pension, not blowing what you've already got.

Are you employed? Are you in your employer's pension scheme?

Marcon

ferry said:

I am fast approaching 55 years of age and only have a small pension pot of £45k with Aegon One Retirement.
 I plan to take the 1st 25% tax free on my 55th birthday in June and feel its not worth reinvesting the the balance into an Annuity paying pennies. So the idea is to just withdraw it all , all be it subject to 20% tax making it even less attractive but using it paydown some residual debt.
I understand that any guidance here cannot be construed as direct advice but is there really any any other direction to take this other than making life a bit easier by using this as debt relief and treating the family to a well deserved holiday with the balance?

Your probably going to ask me about the plan going forward when we fully retire, but 'luckily' we own our home and will downsize to release funds to hopefully make us as comfortable as possible in later life.

Thanks as always

Looking at your previous posts:

• are you sure you don't have any other pensions https://forums.moneysavingexpert.com/discussion/6201274/how-do-i-find-any-all-of-my-pensions#latest 

• have you made any sort of realistic assessment of what funds might be released if you downsize? Looking at your post https://forums.moneysavingexpert.com/discussion/6520561/temp-switch-to-io-on-mortgage-to-clear-debt#latest says: My current mortgage situation- house value around £475k / mortgage balance £100k / debts around 7k, terrible credit history but all payments to Santander completely up to date but a major is there are arrears on a 2nd charge which is in an arrangement. The other debts are self managed on token payments until I can come up with a better plan.

• Your job is insecure - and indeed you were possibly recently made redundant (if it actually happened?) https://forums.moneysavingexpert.com/discussion/6518194/looming-redundancy-when-to-inform-mortgage-company#latest 

Given all the above, I can understand that a jolly good family holiday might have very considerable appeal on a 'what the hell' basis, but you are only 54. Spending what little you have by way of pension savings might give short term enjoyment, but there's nothing to suggest your plan to downsize will give you anything like a comfortable old age by the time you've paid all the associated fees to sell/buy/move, not to mention the cost of the property you'll be buying. Downsizing is rarely the long-last pot of gold people hope for.

QrizB

OP's stats show they have started more threads than posted comments, so their interest in prolonged discussion here might be limited.

Marcon

QrizB said:

OP's stats show they have started more threads than posted comments, so their interest in prolonged discussion here might be limited.

All too often the case where the answers aren't what someone wants to hear!

barnstar2077

Personally I would knuckle down on paying off any debt (excluding mortgage, which I would just continue to pay as usual) and leave the pension alone.

Would need some more info though, household income, details of debts, how much you need to live on etc.