Retirement , have I planned correctly or …not!?

indiasign

moral_shopworker said:

kimwp said:

Dogs are expensive, so you will need a higher income than you are currently paying yourself.

Unless you have never used the NHS, including GP, NHS dentist and never used a library, happy to not have firefighters, police etc, then you have benefited from the public pot in the same way that people who legitimately claim benefits do. 

Hi, thank you for your input… I have addressed the cost of caring for a pet in the thread and will certainly be paying myself more to do so… however as it stands I never spend £450 a month on  ‘variable outgoings’ that I listed , so at present  wage is as stated.
 I’m not sure what you were implying with the 2nd part of your reply - so I shall hold off responding to it , when you reply on a keyboard it doesn’t come with  intonation…  but please be aware I took it as a ‘dig’ .    

No doubt kimwp will respond if they see fit, but if I had to guess, it was probably a reaction to your somewhat holier-than-thou statement

“I quit work in May, chose not make a claim after the 13wks as I do have morals”

Morals have nothing to do with claiming benefits to which you are entitled. If you choose not to, that’s a matter for you, but don’t presume it makes you better than anyone who does claim.

And the wider point was that, even if you don’t claim benefits, you have still already benefited, either directly or indirectly, from the various other services on which our taxes are spent.

DRS1

moral_shopworker said:

MarlowMallard said:

An addendum to above: yes "UFPLS" stands for "Uncrystallised Funds Pension Lump Sum". 
This means say you take out £16k as UFPLS,  then £4k is tax-free (does not count as income)  and £12k counts as "income" which is potentially taxable, but if your total taxable income for the tax year is under £12.5k you won't actually pay any income tax. You also get a £1k savings allowance for interest on non-ISA cash, may be larger if your total income is under £17k.   
The rest left behind in the pension pot remains "uncrystallised" and you can do UFPLS over again each year,  25% of what's left remains tax-free. 
 
If you just took 16k "tax-free cash", then £48k of what's left behind would move into a "crystallised" pot and whatever you take out of the £48k later would be income-taxable, so that looks less efficient for you than the UFPLS chunks. 

Thanks, gosh.. eyeopener or what… my simple mind just assumed this;  Funds that you put in got tax relief so , you got have your pot…it’s been invested..it’s grown (thanks to the Gov input too) … you now ‘take’ it (any which way) but only 25% is tax free and the remaining 75% get taxed (because that’s the Gov getting a bit of payback from helping you out)    I do like a simple explanation .  I wrongly assumed it was a different ‘product’ (wrong word but..) that didn’t come under the umbrella of  income threshold. Which is why I’m going off with the idea of grab the lump sum tax free and it’ll help me out now and the remaining 75% remaining becomes taxable at SP age maybe as an annuity…of course it’s income..but in my head I’m paying the Gov back for the Tax relief and it’s not really income ….. Jeeze I’m so stupid.  I had a very late night reading up on UFPLS… and I’ll need to absorb it more because there’s things you shouldn’t do as in Crystallise etc..  and I’m now thinking about the £10kp.a MPAA alongside   … it’s would be from savings but clearly the tax relief would boost it (trumps available interest rates safely) , and it has potential to grow  - it seems counterproductive but can you see what I’m saying? 
 I’m feeling incredibly beep stupid and totally enlightened at the same time.   I absolutely can’t thank you enough for this, it is a game changer for me. 

Re the MPAA - triggering it is usually a bad thing.  But you should be aware that if you do not work and so have no earnings (or self employed earnings) then the amount you can contribute to a pension is £2880 net (£3600 gross after the tax relief is claimed by the pension scheme).  You can only contribute more than that if you have earnings which are more than that.  Don't think you can contribute £10k if you don't earn anything just because you have taken UFPLS.

Smudgeismydog

I’d echo earlier posters. 

It sounds like you have already retired, and why not? I stopped work last June, and whilst I remain open to the option of returning to paid employment, I now consider myself retired.

It would be sensible (and tax efficient) to make use of your personal allowance by drawing taxable income from your pension, particularly in this period before receiving your State pension. 

I agree that you are holding a lot of money in cash, this will not be your best option. Investing in a Stocks & Shares ISA does not have to mean high investment risk. This becomes more important if you are going to draw from your pension, and not fund yourself from cash reserves.

german_keeper

indiasign said:

moral_shopworker said:

kimwp said:

Dogs are expensive, so you will need a higher income than you are currently paying yourself.

Unless you have never used the NHS, including GP, NHS dentist and never used a library, happy to not have firefighters, police etc, then you have benefited from the public pot in the same way that people who legitimately claim benefits do. 

Hi, thank you for your input… I have addressed the cost of caring for a pet in the thread and will certainly be paying myself more to do so… however as it stands I never spend £450 a month on  ‘variable outgoings’ that I listed , so at present  wage is as stated.
 I’m not sure what you were implying with the 2nd part of your reply - so I shall hold off responding to it , when you reply on a keyboard it doesn’t come with  intonation…  but please be aware I took it as a ‘dig’ .    

No doubt kimwp will respond if they see fit, but if I had to guess, it was probably a reaction to your somewhat holier-than-thou statement

“I quit work in May, chose not make a claim after the 13wks as I do have morals”

Morals have nothing to do with claiming benefits to which you are entitled. If you choose not to, that’s a matter for you, but don’t presume it makes you better than anyone who does claim.

And the wider point was that, even if you don’t claim benefits, you have still already benefited, either directly or indirectly, from the various other services on which our taxes are spent.

And the evidence you need to supply to prove you are and have been genuinely looking for work is rather more than telling a fib.

moral_shopworker

@indiasign  Hi, sincerely, thanks for your point of view - it actually wasn’t a ‘holier than thou’ statement . I was jokingly saying why I wasn’t claiming so that I didn’t get an influx of “did you know blah,blah?” and repeatedly saying thank you to people who might only have that to say .  I don’t think I’m better than others…and actually morals do play apart in this case because I could quite easily have made a claim supplied plenty of applications , rocked up for interviews and flunked them and then supply decline letters, attended the work manager meetings even done some voluntary work etc etc and been just as legally entitled to that claim as the next person (afterall I have plenty of free time!) and then filled my bank account with a free £5k or so - but I see that as morally wrong - and there’s the rub…I appear to have morals.
I came on here for useful,valuable advice , which I have found  and hopefully thanked them all so far and shall continue to log in and do so for a while - what I didn’t come for was the post you used as reference .   

moral_shopworker

@german_keeper  Hi, you are welcome to read my response to ‘indiasign’ , your input is acknowledged and I shall file it under 

moral_shopworker

Smudgeismydog said:

I’d echo earlier posters. 

It sounds like you have already retired, and why not? I stopped work last June, and whilst I remain open to the option of returning to paid employment, I now consider myself retired.

It would be sensible (and tax efficient) to make use of your personal allowance by drawing taxable income from your pension, particularly in this period before receiving your State pension. 

I agree that you are holding a lot of money in cash, this will not be your best option. Investing in a Stocks & Shares ISA does not have to mean high investment risk. This becomes more important if you are going to draw from your pension, and not fund yourself from cash reserves.

Hi, thank you… yes… it’s gone from daunting to I can breathe !  Now I’ve had all the useful info for taking amounts and staying within the threshold, I will see the IFA and also check out investing some savings. You may have read my experience of 20k in S&S ISA for 7 yrs and getting £1k return…disappointing and I felt it could so easily of gone negative but, we’ll see.      

moral_shopworker

@DRS1 Thanks, I was reading Unbiased.co.uk for the UFPLS details - you’re probably right … but I remember reading my pensionwise booklet about paying into your pension even if you don’t work…and even on MSE about starting a pension for your child - I didn’t read the whole piece about MPAA on the site ,but I was already aware you couldn’t just keep funds going in a circle to get tax relief.  My next stop is an IFA , I will need some help! Thank you!  

Suzycoll

moral_shopworker said:

Hi, looking for some affirmation on my ‘plan’ or advice if I have missed something. I’ll list my situation and then ‘the plan’ .
60 retirement age 67
Not working -  left of own accord so am not claiming anything.(I know I could but..) 
Full NICs -  so done and dusted can’t improve on c£12.3k.
House - paid up  (current value £330k desireable location )
Savings- £225k ( inc £190k wrapped in fixed Cash ISA, 35k accessible/taxable savings)
Private Pension- current value £ 145k .
Outgoings- currently £350/m (variables like petrol/food/Hsekeep/fun not included)

I’ve saved since I was 14y.o and benefitted from high interest rates and first house purchase in ‘91  (he paid the deposit , not together now , he got the house and I took the endowment policy, cashed in for my own deposit in ‘96)  
I quit work in May, chose not make a claim after the 13wks as I do have morals, I have zero intention of working again , life’s too short , saving’s great but if you’re not alive to reap the benefits of a pension etc.
I’m frugal. I am paying myself an £800 wage/month - that’s roughly what I was earning for the last 7yrs and to be honest it’s sufficient . I never qualified for any benefits because ‘savings’ for a better life when you retire are frowned upon aren’t they??!! 
I’ve taken a ‘holiday’ from my pension payments ‘til Jan ‘26. 

The plan - to not work,to stop pension payments, take max lump sum from pension and make it work in accessible accounts/ISAs, and/or use the existing accessible savings that I’m already dibbing into (which potentially will last me 3yrs anyway even factoring in Min wage increases too)
That will leave me 3-4 yrs to pay myself  from the pension lump - and then at 67 it will be time for State Pension and purchase an annuity with what’s left in the ‘dormant’ PP (prob on a K tax code understood ) .I will still have the majority of original ISA money to supplement needs and the bricks&mortar which can sell if I get put in a home I suppose. There is only me in any planning.

Is this too simple ? Should I leave the PP alone ,loathe to because it’ll get eaten up in tax with the SP. Should I take the lump sum and ‘self save’ it or do a draw down , does that earmarked portion still potentially grow or even diminish - if it’s  going to diminish even a little   I feel I want it out . I know not paying in to the actual intact pension going forward will still cost me management fees , silly/not silly ? I’ve had the Pensionwise appt , I also had a free 1hr Indie.F.A  appt - ultimately 
I need to decide -any opinions? Also If I opt to take lumpsum in one hit I shall do that myself, but the IFA when I purchase an annuity  , the IFA said he could negotiate a better ‘price’ than I would be able to, is that true? Using him I know there’d be % fee for him regardless, I just feel the pension people could diddle me, trust issues but it needs to be right  .   * can’t remember the term but there’s no special clauses to the pension. 

PS … for those wondering, my boss really p**d me off for the last time after 16yrs, I went on SSP for 6wks to get my head sorted. I no longer belonged to USDAW but was told I stood a good chance of winning Constructive Dismissal by ACAS - but what was the point,fight or peace of mind? I feel vindicated and that’s good enough for me. I had a fantastic career for 32yrs elsewhere until this… ‘job’! I didn’t claim JSA because I’m not going to look for a job and I won’t fib that I am . Anything I have left is going to Animal charities ,  I want to do the garden,get a dog, walk, do jigsaws and I’m pretty good at carpentry so will make my own coffin which should fit in the loft. Happy days!       (not spell checked ,sorry for any blips)

Hi
I love your comments about your boss 🤣. I am roughly the same age as you & going through similar in work at the moment.

Unfortunately, I'm not in the position to finish work yet 😞

As for your question.....It all looks good to me & I personally would keep it as  simple as you can. I'm sure there will be much more knowledgeable people that can advise financials

May you enjoy a healthy & happy retirement 😄 

af1963

To summarise a couple of the main points that others have made:  a couple of key and fairly simple things you can do ( and you may not need to use/ pay an IFA to do these if you're clear about what they mean.)

Each year, you get an allowance of £12570 of taxable income that you can receive, without needing to pay tax on any of it.  When you turn 67, your full state pension will use up all of this allowance.  But between now and then, it makes sense to take taxable income from your pension to make full use of this allowance.  

Each year, that means you can take £16760 from the pension, 25% of it is a tax free sum and 75% of it covers the £12570 allowance ( taxable, but within the allowance).  Even if you can live on £800pm (about 10k per year) and don't need to spend all that money, you can put the extra into your ISA for later, and it stays tax free for when you do need it. Just tell your pension provider that you want to take a UFPLS withdrawal. 

Do that for 7 tax years and you could get up to £117k out of your pension while paying no tax on it. ( In the final year, you'll need to allow for the part-year state pension that you'll receive. And during this current year, allow for whatever you earned before you left work.)

Also each year: you're allowed to add £2880 to your pension, even if you have no income.  That gets made up to £3600 by tax relief ( which you get even if you haven't paid any tax.)  When you eventually take this money out, 25% of it will be tax free so you only pay £540 tax on £2700, which reduces the amount you receive to £3060.  So you gain £180 each year by doing this.  Usually takes just a few minutes to pay in the extra. Probably the easiest £180 you can make.