The Great Hunt: Getting ready for retirement

bugibba · 6 August 2014 at 8:28PM

All of the "boring" advice is all very relevant, but when you have done all of that you must find a variety of things to keep yourself busy. I have done this &, quite frankly, cannot work out how I ever had time for a full time job. With golf & gardening at the top of my priorities, I also love to go to music gigs, eating out, [combining the two is good]. Weekends away visiting gardens & castles. This is 2for1 courtesy of the May edition of gardeners world magazine, which is still available as a back issue. It does not matter what your interests are, indulge yourself & do more of it. But most of all do not fall into the trap of becoming a couch potatoe.

missbiggles1 · 6 August 2014 at 9:24PM

bugibba wrote: »

All of the "boring" advice is all very relevant, but when you have done all of that you must find a variety of things to keep yourself busy. I have done this &, quite frankly, cannot work out how I ever had time for a full time job. With golf & gardening at the top of my priorities, I also love to go to music gigs, eating out, [combining the two is good]. Weekends away visiting gardens & castles. This is 2for1 courtesy of the May edition of gardeners world magazine, which is still available as a back issue. It does not matter what your interests are, indulge yourself & do more of it. But most of all do not fall into the trap of becoming a couch potatoe.

I don't think that's the case for everybody. I have friends who run themselves ragged living like this - I always say that if I wanted to be busy I'd've stayed at work and been paid for it!

We enjoy doing very little, which is fortunate as my husband's too disabled to do a lot, and that suits us. We are all different, after all.

cz7gdm · 7 August 2014 at 2:55AM

Make sure you include your Wife/Partner in planning for retirement (if you have one). Do things you both want to do rather than just your preference.

You should also discuss how to rebalance the housework/garden work now that you have a lot more time!

I'm a male, by the way. I did this when I retired and have a lot less stress in my life!

cz7gdm · 7 August 2014 at 3:04AM

25% pension pot TAX FREE is it hell!
Lilia - you need to go see a financial planner pronto. Various charities will have ones that help people like yourself to optimise retirement planning.

Also - not sure what you mean by getting caught out with an endowment mortgage, but I seem to recall MSE topics on endowment mortgages that would be worth reviewing.

steffi104 · 7 August 2014 at 8:17AM

livia wrote: »

There is no fool like an old fool. I am disabled and 5 years older than my husband and receive a small pension
My husband retires December has been on working tax credit as self employed and earning little or no money,Got caught out with endowment so left with £16,000 owing Build Soc; extended mortgage until Jan as we knew that he would receive 25% of his pension pot tax free, the rest towards an annuity. so we could pay off mortgage and have essential repairs done to the house and smaller pension.We also pay reduced council tax due to low income.
Contacted working tax credit to sort out when they had to be told etc.and during the conversation was appalled to hear that 25% of pension pot is NOT tax free but would be taxed at 20% and also any and all pensions from Dec until 6/4/15 would be added and after personal allowance the combination would be taxed with any over payment of tax refunded.which reduced our 25% (of£23,000) down to £18,400. I was heart broken but this was followed up with Oh and you will have to pay back all this years working tax credit as the moneys received count as income so can we stop paying now (leaving us with no
income).I said no but then was told that don't forget you will also have to pay your full council tax for the year as you will not be entitled to WTC.We were looking forward to retirement not now!!!!

I'm confused that you have been told that your 25% pension lump sum is taxed. As far as I know that is incorrect? I am just about to take my own private pension 25% lump sum and it is definitely tax free. I am assuming that your pension is a private or company one. I am sure that someone else with greater knowledge than I, will respond to you with a way to get this confirmed but I would suggest you contact a financial advisor about it. The new rules over pensions mean that you can actually take out all of your pension pot but you would be taxed at the appropriate banding for the remaining 75%. However if you do this you must think about how you are going to cope on just the state pension if you get one.

zygurat789 · 7 August 2014 at 8:19AM

livia wrote: »

Contacted working tax credit to sort out when they had to be told etc.and during the conversation was appalled to hear that 25% of pension pot is NOT tax free but would be taxed at 20% and also any and all pensions from Dec until 6/4/15 would be added and after personal allowance the combination would be taxed with any over payment of tax refunded.which reduced our 25% (of£23,000) down to £18,400. !

That is what happens to the deferred state pension. Private pension 25% lump sums are and always have been, tax free and will not be aggregated with your other income for tax purposes.
You have been talking to the tax credit people, they and you do not understand tax, I think there has been a great deal of misunderstanding between you both.

XRAT · 7 August 2014 at 8:19AM

livia wrote: »

There is no fool like an old fool. I am disabled and 5 years older than my husband and receive a small pension
My husband retires December has been on working tax credit as self employed and earning little or no money,Got caught out with endowment so left with £16,000 owing Build Soc; extended mortgage until Jan as we knew that he would receive 25% of his pension pot tax free, the rest towards an annuity. so we could pay off mortgage and have essential repairs done to the house and smaller pension.We also pay reduced council tax due to low income.
Contacted working tax credit to sort out when they had to be told etc.and during the conversation was appalled to hear that 25% of pension pot is NOT tax free but would be taxed at 20% and also any and all pensions from Dec until 6/4/15 would be added and after personal allowance the combination would be taxed with any over payment of tax refunded.which reduced our 25% (of£23,000) down to £18,400. I was heart broken but this was followed up with Oh and you will have to pay back all this years working tax credit as the moneys received count as income so can we stop paying now (leaving us with no
income).I said no but then was told that don't forget you will also have to pay your full council tax for the year as you will not be entitled to WTC.We were looking forward to retirement not now!!!!

Has your husband thought of asking his employer if he can continue working through until the new tax year starts on April 6th?
It sounds like it would be beneficial tax and benefits wise.

zygurat789 · 7 August 2014 at 8:23AM

bugibba wrote: »

All of the "boring" advice is all very relevant, but when you have done all of that you must find a variety of things to keep yourself busy. I have done this &, quite frankly, cannot work out how I ever had time for a full time job. With golf & gardening at the top of my priorities, I also love to go to music gigs, eating out, [combining the two is good]. Weekends away visiting gardens & castles. This is 2for1 courtesy of the May edition of gardeners world magazine, which is still available as a back issue. It does not matter what your interests are, indulge yourself & do more of it. But most of all do not fall into the trap of becoming a couch potatoe.

Boring advice it may be but to be able to afford such expensive pursuits you need to have lots of boring advice

zygurat789 · 7 August 2014 at 8:30AM

I am assuming that your pension is a private or company one.

Has your husband thought of asking his employer if he can continue working

self employed

It must be a private pension and there is no employer

JoP1 · 7 August 2014 at 9:00AM

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If you're fortunate to be be in a final salary pension scheme that also allows you to 'commute' a proportion of your pension into a lump sum; careful consideration needs to be applied to your decision.
The 'break-even' point between taking the maximum lump sum and investing it (though many spend a proportion of it paying off a mortgage, buying a new car, or having an expensive holiday; thus affecting their future income), versus taking the full pension amount and having the annual cost of living increases applied to this larger sum, is approximately 10 years, depending on stock market performance and/or interest rates.
This means that those not taking any lump sum will be financially ahead of those that did and invested it in a good savings account after 10 years, give or take.
So if you don't need a lump sum, or you've been able to plan ahead (e.g. mortgage term to finish at same time as retirement) to ensure this, then you'll be better off taking the full pension.
There are other considerations, however. If your spouse will receive 50% of your pension, whether you take the lump sum, or not, then they'll be worse off if you didn't take the lump sum and die early. So you need to take into account your age of retirement and how fit and well you are - I.e. will you be retiring at 55, or 60 and have no health problems and therefore can hope to receive your pension for a long time?
This would apply to local authority employees, such as firefighters and police, who work for a shorter span of years, (typically 30 years for a full pension), whilst paying in a very high percentage of salary to a pension scheme (e.g. 11-13%).
Hope this is of some help to the increasingly fewer folk in this fortunate position.

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The Great Hunt: Getting ready for retirement

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