year before retirement - how did you get your ducks in a row?

mrklaw

not there yet, few years off. But wondering about practicalities. How did you get yourself sorted so hopefully day one of retirement was pretty smooth?

eg

• pension applications/payouts may take some time, so how early do you start getting that lined up?
• did you try and get different income sources timed to arrive fairly close together more like a salary
• did you assume it would be a PITA so prepared a years income in an ISA/savings account to live off while the bumps sort themselves out?

any lessons you’d pass on or things to be aware of that might catch people out? things you planned for that didn’t work as expected?

Moonwolf

• pension applications/payouts may take some time, so how early do you start getting that lined up?

If you have DB pensions and any are public sector check how soon you can claim those. I put in my NHS 100 days early based on reading up and still had to wait 5 months for one part. Also annoyingly I received back dated NHS pension in the new tax year which could have messed up my tax planning.

For my DC, I just asked them how long it would take, they told me a couple of weeks, I rang them at the start of the month and had my first drawdown on the 27th.

• did you try and get different income sources timed to arrive fairly close together more like a salary

I drew down extra from the DC in the first year and would have used my ISA if I had had an issue. That was the only one I could pick, and on picking the date I checked if the payment was before or after the weekend if the payment date fell on the weekend. The DB pensions (two NHS in one payment and one private sector) I had no choice on date but they fall at the end of the month with all my big bills going out at the start, just after the money has gone in.

• did you assume it would be a PITA so prepared a years income in an ISA/savings account to live off while the bumps sort themselves out?

Yes, I have tied up my cash ISAs in the past for better rates but I had a year’s money in an instant access ISA for the first year.

NoMore

Tends to be db pensions that can have signficant time required to claim. Dc pensions aren’t usually a problem. For diy it’s probably between 3 and 10 days average for payout from dc. Dunstonh will be along to say that an IFA can get it done same day

Wouldn’t bother with timing of multiple incomes, just budget around it. If you really want you can just have an account that’s only for receiving income and then make one monthly payout from that to your spending current account

I have Isa but not specifically for dealing with this, as I don’t think it’s a problem, just useful for tax planning.

MallyGirl

I consolidated pensions into one in preparation for retirement. Some transfers can be quite slow.

Non-financial prep was getting solar panels and a battery to bring down bills in retirement - capital expenditure while still working.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82091194#Comment_82091194

I like the dedicated holding account. We have a plan for separate travel budget so I might have that physically separated so the bills/daily stuff is more visible.

OldScientist

I second the suggestion abve that checking the time needed to get DB pensions into payment is worthwhile. Workplace advice was that they needed 6 months notice to pay the pension, while the pension provider said the time taken rarely exceeded three months (the actuality was that the first payment came when I wanted it and about three months after application).

My OHs DC pension (Vanguard) took about a month to get the first payment out (that included waiting for two telephone 'interviews' - essentially checking that we were aware of the consequences of drawing the pension).

In addition to our cash savings, in the event of any problems with the pensions the final month of my salary would have covered the first month or two of retirement.

otb666

We were both made redundant with over a years notice So hubby combined and converted all pensions to True Potential and I just stuck with my DB pension. Hubby was made redundant a year before me and we had the severences which helped we were both 55 at the time. Looking back it worked out well. After checking here on Pension Forum I thought hubby was a fool to do what he did with his pensions but the timing was good 2021 and he has done well. We thought we would have a foot in each camp doing it this way. So it all got taken out of our hands and there was really no planning involved apart from hubby wanting hands on his cash rather than orginal pension providers.

wjr4

https://forums.moneysavingexpert.com/discussion/comment/82091194#Comment_82091194

DC pensions still need to be disinvested so won’t pay out on the same day.

Albermarle

https://forums.moneysavingexpert.com/discussion/6678668/year-before-retirement-how-did-you-get-your-ducks-in-a-row

As mentioned in previous threads ( trying not to sound boring !) I applied for DB mid March, 4 months before retiring and after a lot of delays, complaints etc the first payment was eventually fixed for August, but no money actually arrived until October. Luckily I had enough cash to hand, partly from last few months of work with only minimal pension contributions.

I was in a job that supplied laptop/mobile/car. I could keep the phone, but had to start a new contract for data and a new phone number. I bought a new car before retiring, but did not take delivery until actually retired ( to stop any confusion over insurance) .

Tree_pipe99

Applying in plenty of time, particularly for DB pensions is essential. Also have a reserve of cash in case of delay.

There were a few things we got sorted out in the 2 years leading up to retirement. Any big items the house would next in the next few years got sorted, so new doors and windows, new boiler and a new bathroom. We also traded in 2 petrol cars for 1 electric car.

tacpot12

I made a written plan for my whole retirement with relevant dates and notes. The plan covered:

• Consolidating my DC pensions into a new SIPP
• Changing my retirement portfolio from an accumulation strategy to an income strategy (1 year before retirement so I could convince myself that the returns would actually arrive)
• Reviewing how much income I would need in retirement (1 year before retirement and again just before retirement)
• Determining an initial safe withdrawal rate (this was just a refresh of the financial model I used to determine that I could afford to retire)
• Applying to receive regular withdrawals from my SIPP (1 month before retirement)
• Amending the regular contributions to my SIPP (on retirement)
• Making any other changes to my finances for retirement (e.g. changing the amount I was saving)
• Reviewing when I wanted to pay Class 3 NICs to fill any holes in my NI Contrbutions to maximise my state penison and setting reminders to do so. (on retirement)
• Applying to recieve my DB pensions (2 months before they become payable)
• Checking that the DB Pension with a GMP payable at 65 goes up at the appropriate time
• Applying for my state pension / deciding whether to defer it (2 months before I reach my state retirement age)
• Deciding whether to make any additional withdrawals from by SIPP before my 75th birthday

This plan is still running, but it has a lot crossed off.