Shall I take my pension early?

rose28454

I am 54 years old and about to split from my husband ( albeit temporarily for now!). I am going to have to pay the mortgage for now and also have a lrage amount of credit card debt to deal with. My hubby is an alcoholic and that is reason for split. I have a pension worth about £13000 lump sum and £170.00 per month which I can take now and another smaller one I cant take till 60. I think I will probably remain on my own and maybe in 6-12 months will have to sell the house and move somewhere smaller.
I am thinking of taking this pension now to have extra income to pay the mortgage and to have some money to pay some of creditors and to have kitchen and bathroom updated. I was wondering what advice anyone can offer me. Thanks

EdInvestor

Sounds sensible, as long as there are no penalties for taking the pension early, or guarantees that you might lose by not waiting or extra taxes you might have to pay if the income pushes you into a higher band.

If the latter is a problem, there is now a way to take the 25% lump sum, but leave the rest invested, so the pot will hopefully provide a bigger pension later.

rose28454

EdInvestor wrote: »

Sounds sensible, as long as there are no penalties for taking the pension early, or guarantees that you might lose by not waiting or extra taxes you might have to pay if the income pushes you into a higher band.

If the latter is a problem, there is now a way to take the 25% lump sum, but leave the rest invested, so the pot will hopefully provide a bigger pension later.

I have the figures from my pension provider and think maybe leaving the income portion in for longer may be a good idea. How do you go about this?

EdInvestor

What kind of pension is it?If final salary it probably won't be advisable to do this.Probably better to stash the pension income in your stocks and shares ISA allowance and invest for later.

If it's a pension which involves buying an annuity, then it's a possibility - it usually involves transferring the money to a SIPP and then putting it into "income drawdown"..

Dithering_Dad

Do you know what your State pension and any State Second Pension are likely to be? Have you worked out how much money you would require for a reasonable retirement and if so, will your state pensions + occuptaional pensions provide this?

Before you start cashing in your occ pension, you really need to do these calculations. If you use your retirement cash to solve this immediate problem and leave yourself short, then all you're doing is creating a financial problem further down the line.

Have you looked at other ways to get past your current financial problems - such as going interest only on your mortgage until the house is sold, getting a full/part time job, etc.

You will have to manage about 9 years on your occ pension until your state pension kicks in and with the average female life expectancy at around 82 Yrs, you will have to manage a further 19 years (approx.) on your combined occ. & state pensions - a long time to live on a much reduced income.

chesky369

Are you working?

rose28454

chesky369 wrote: »

Are you working?

yes I am a self employed bookkeeper although due to my personal problems I have not got much work at present.

chesky369

I think that it would be better for you to find work - you're a bookkeeper, so you should be able to get something which would pay you a reasonable amount - and then get your own business together. This would (a) provide much-needed cash and (b) take your mind off your troubles.

And are you absolutely sure you can take your pension without any penalties - it's usually a loss of up to 4% p.a. I wouldn't think about spending out on the kitchen/bathroom project until I'd got everything else sorted.