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  • FIRST POST
    • MSE Martin
    • By MSE Martin 1st Aug 06, 12:38 PM
    • 8,111Posts
    • 42,248Thanks
    MSE Martin
    Great Things To Know Before You Retire Hunt
    • #1
    • 1st Aug 06, 12:38 PM
    Great Things To Know Before You Retire Hunt 1st Aug 06 at 12:38 PM
    What's it about?

    Well, it does what it says on the tin to be honest. I'd like to tap the wealth of knowledge of retired MoneySavers to see what tips you'd give those in their last few years before retirement. Is there something you've learnt since retirement that you wish you'd known before?

    What to do?

    Whether it's about pensions and annuities, selling up and moving abroad or simply down-sizing. Let other MoneySavers know any tips you have that would help those coming up to retirement.

    My starter for ten

    While Im not in retirement, my most important pointer would be ensure you choose the right annuity from your pension pot (if you get an annuity at all). This is one of the most important financial decisions you will make in your lifetime, as once you've got it - often it can't be changed - read more on annuities.
    Click reply to post your tips.


    Last edited by MSE Andrea; 02-08-2006 at 2:40 PM.
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
Page 1
    • Bogof_Babe
    • By Bogof_Babe 1st Aug 06, 9:08 PM
    • 10,160 Posts
    • 16,592 Thanks
    Bogof_Babe
    • #2
    • 1st Aug 06, 9:08 PM
    • #2
    • 1st Aug 06, 9:08 PM
    When my husband got a quote from his employers for his pension, while deciding whether to take vol redundancy/early retirement, he was given a fixed figure - either a certain fixed lump sum and so much per annum, or no lump sum and a greater amount per annum.

    No mention of annuities was made, or the need to sort one out. His pension was a final salary contributory scheme, so perhaps this is why it differs from the scenario of annuities?

    I've always been a bit confused by all this, and I bet I'm not the only one. Any clarification will be gratefully received.
    I haven't bogged off yet, and I ain't no babe


    • Ken68
    • By Ken68 2nd Aug 06, 9:15 AM
    • 6,431 Posts
    • 4,104 Thanks
    Ken68
    • #3
    • 2nd Aug 06, 9:15 AM
    • #3
    • 2nd Aug 06, 9:15 AM
    TIME will be a big asset when you retire. No deadlines to meet, even the smallest gain can be built into your daily routine.
    TIME to do gardening and get all that free produce. TIME to walk to the library instead of taking the car.Free books, free computer use, free newspapers.
    TIME to attend auctions, fetes, church bazaars. TIME to talk and make new friends.
    TIME to try out all the suggestions on this site, and save a fortune.
    TIME even to give away to others with less time.
    • margaretclare
    • By margaretclare 2nd Aug 06, 11:16 AM
    • 10,174 Posts
    • 17,230 Thanks
    margaretclare
    • #4
    • 2nd Aug 06, 11:16 AM
    • #4
    • 2nd Aug 06, 11:16 AM
    Hi Martin, a good topic for discussion.

    My most important tip? Do your darndest not to be in debt in the years coming up to retirement. Why do I say this? I've only recently heard of an instance in which a bloke was made redundant not long before he became 65. He's been struggling to live on redundancy money until his SRP kicks in, and he's recently topped-up a secured loan that he had, because 3 large items of household equipment all needed replacing at once. Surprise surprise, he had cards and loans already maxed-out and is concerned about his credit rating. He thinks that mortgage providers and loan providers are not so ready to repossess your home as they were a decade or so ago, so he'll be OK (he says).

    This is the kind of thing I mean. Do some planning in those last few years while you still have a regular source of earned income. Think where you want to live the rest of your life. You might not have to live where you do now, in easy reach of a job. If the family are all grown-up and flown the nest, do you really need a family-sized home with stairs, a large garden, a bath that you have to climb into? Think - knees and hips getting more unreliable. Think what may make life easier for you in 10, 20 or more years. If you need to modernise or even to downsize, do it while you're still (relatively) young and fit and have an income.

    Think also - energy-saving. Energy prices are going crazy, and switching may not be the answer because the energy providers are all in the same boat. If you think you might not be able to go on driving, think about convenient bus-routes.

    Just a few ideas that spring to mind, no doubt there'll be others.

    Best wishes

    Margaret Clare
  • scoder
    • #5
    • 2nd Aug 06, 11:16 AM
    The Value of Final Salary Pensions
    • #5
    • 2nd Aug 06, 11:16 AM
    When my husband got a quote from his employers for his pension, while deciding whether to take vol redundancy/early retirement, he was given a fixed figure - either a certain fixed lump sum and so much per annum, or no lump sum and a greater amount per annum.

    No mention of annuities was made, or the need to sort one out. His pension was a final salary contributory scheme, so perhaps this is why it differs from the scenario of annuities?

    I've always been a bit confused by all this, and I bet I'm not the only one. Any clarification will be gratefully received.
    by Bogof_Babe
    The major difference between final salary schemes (which I assume your husband has been quoted for) and personal pensions (requiring annuity purchase), is that a good final salary scheme will/should produce a far better return than any personal pension.
    There would therefore be no need for your husbands' employer to mention annuity rates as the two types of pension are different animals. Hope this helps a little.
  • merched99
    • #6
    • 2nd Aug 06, 12:41 PM
    Tax free redundancy
    • #6
    • 2nd Aug 06, 12:41 PM
    This might save you thousands if you are being made redundant and are lucky enough to have a final salary pension scheme. You can put any redundancy payment above £30,000 (which would normally be taxable) into your pension, and get it straight back again tax free under the rules about converting part of your pension to a lump sum -- but ONLY if you are eligible to draw your company pension. For some reason (at least with my scheme) they can't tell you about it unless you ask....... In my case I was going to leave a few months before turning 50, and would have had to pay tax at 40pc on the lump sum. Found out by chance about this, and have now got agreement to stay the extra few months until my 50th birthday so can take advantage of it.


    Last edited by Former MSE Natasha; 08-08-2006 at 1:49 PM.
    • KMK
    • By KMK 2nd Aug 06, 12:43 PM
    • 254 Posts
    • 187 Thanks
    KMK
    • #7
    • 2nd Aug 06, 12:43 PM
    • #7
    • 2nd Aug 06, 12:43 PM
    I am so thankful that I did not opt for the lesser NI stamp when I got married in 1970 as I am eligible for a full state pension in my own right soon, as well as my occupational pension. I would advise women in particular to get advice about pension saving well before retirement.

    I would echo the point about time and being able to use it wisely. Before I retired I never went to the libary.Now I do not buy books but read the reviews for the forthcoming books and then reserve them. Public librairies are wonderful, often unappreciated, institutions. I just did not have time to use them before retirement. Adult Ed too is worth pursuing.

    I can also search out the best offers etc on the net for a whole range of things. Going on holiday during term time is great!

    I do community work which is very interesting.
    • margaretclare
    • By margaretclare 2nd Aug 06, 1:41 PM
    • 10,174 Posts
    • 17,230 Thanks
    margaretclare
    • #8
    • 2nd Aug 06, 1:41 PM
    • #8
    • 2nd Aug 06, 1:41 PM
    I am so thankful that I did not opt for the lesser NI stamp when I got married in 1970 as I am eligible for a full state pension in my own right soon, as well as my occupational pension.
    by KMK
    Yes, absolutely. Making that choice - not to pay the lesser NI stamp, which only covered you for industrial injuries - was one of the best decisions I ever made in my life.

    If you don't get an occupational pension, paying the full rate NI also entitles you to SERPS, now S2P, and this is hugely valuable.

    I would advise women in particular to get advice about pension saving well before retirement.
    Yes, agreed again. Don't rely on someone else to make this provision, or to find out things, on your behalf - do it yourself!

    Margaret Clare
  • jassie
    • #9
    • 2nd Aug 06, 4:02 PM
    • #9
    • 2nd Aug 06, 4:02 PM
    I too would agree that paying the full rate NI was a good decision for me although I have not quite reached retirement yet, and won't get a full pension due to time off bringing up a child, I will still get more than if I relied on my husband's contributions. What I don't understand though is that although I have been working part time for the last few years and been credited with NI contributions I have been told that I have some years where I should make up a shortfall. I have earned over the annual limit but not the monthly limit. Many enquiries to the NI office have brought mixed advice!
    • margaretclare
    • By margaretclare 2nd Aug 06, 5:30 PM
    • 10,174 Posts
    • 17,230 Thanks
    margaretclare
    I too would agree that paying the full rate NI was a good decision for me although I have not quite reached retirement yet, and won't get a full pension due to time off bringing up a child, I will still get more than if I relied on my husband's contributions. What I don't understand though is that although I have been working part time for the last few years and been credited with NI contributions I have been told that I have some years where I should make up a shortfall. I have earned over the annual limit but not the monthly limit. Many enquiries to the NI office have brought mixed advice!
    by jassie
    Jassie, provided your time off bringing up a child was after April 1978 and you were receiving Child Benefit, you will have been awarded Home Responsibilities Protection for all of those years.

    I don't know about the possible shortfall. CIS is the expert on this one.

    Best wishes

    Margaret Clare
  • TARA
    Things I Wished I'd Known on Retirement
    You may have a secure envelope or box at your Bank. Therein you may keep for example your Will and House Deeds. My Bank charged £35 per annum. I found out by accident that once I reached 65 I did not have to pay this fee. I had reached age 67 and "lost" £ 70. Maybe your Bank will have different rules regarding the qualifying conditions. The saving whilst small perhaps will pay for something else!


    Last edited by Former MSE Natasha; 08-08-2006 at 1:51 PM.
  • BertieMeldrew
    I retired last September 3rd (48 weeks but who's counting ). Four weeks AFTER I retired I went on a "Planning for Retirement" course. Whilst this was paid for by my Company and was tremendously useful there are parts of it that (clearly) I would have benefitted from had I done the course, say, 12 months earlier.

    So, my one tip to would-be retirers is get yourself on a Retirement Planning course (preferably at your Company's expense...) at least 12 months before you plan to go.

    Some of the info given would have been useful 15 years before I retired... eg around you NI contributions. However, I reckon you can probably find all the stuff you need to know about that from other sources... but I'd definitely recommend making the time to research.
    • seven-day-weekend
    • By seven-day-weekend 3rd Aug 06, 3:56 AM
    • 31,437 Posts
    • 60,516 Thanks
    seven-day-weekend
    I 'retired' in 2004 (well, gave up work, at the age of 54) and went to live in Spain.

    I too am eternally grateful I paid the full insurance contributions. I have 25 years of NI contributions and 13 years Home Responsibility Protection (HRP). I need to pay voluntary contributions for one more year which I will do within the required time.

    As others have said, making pension provision for women is extremely important as their employment history is quite often a 'mixed bag' of full-time working, part-time working, not earning enough to pay NI, time off caring for children etc. etc.....if you get a pension forecast about 5-6 years before you reach pensionable age, then you have time to put right any shortfall.

    Having said that, we have to keep an eye on my husband's pension too, he is only 57 now so he had a shortfall of eight years on his State pension when he retired at 55. At the moment he is being credited with contributiions as he is on Incapacity Benefit, but if this ever stops, we will get him another pension forecast to see how much his shortfall is, and pay voluntary contributions accordingly.

    So, my advice, especially for women, is : always know what the state of your State (no pun intended!) Pension is.
    Member #10 of £2 savers club
    Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
    • seven-day-weekend
    • By seven-day-weekend 3rd Aug 06, 4:00 AM
    • 31,437 Posts
    • 60,516 Thanks
    seven-day-weekend
    Forgot to say, my husband and I both have Final Salary Occupational Pensions as well. (He is drawing his, I can't have mine until 60 at the earliest). Because of this we haven't had to hunt around for annuities (although my husband has a tiny annuity from Prudential from his AVCs), I agree with Martin, if you DO have to buy an annuity, take time looking around and don't take the first one offered.
    Member #10 of £2 savers club
    Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
    • al_yrpal
    • By al_yrpal 3rd Aug 06, 12:17 PM
    • 331 Posts
    • 158 Thanks
    al_yrpal
    Tips to enjoy retirement
    As you can see from my signature, I experienced a lot of financial hazards through my working life but still managed to retire comfortably with no money worries. Had I worked for a public service, or a huge company throughout my life that would probably be true anyway, but I didnít, although my wife did in latter years.

    My tips are:

    Aim for the biggest state pension you can, its inflation proof and Ďguaranteedí more than any other kind.

    If you or your partner works in public service thatís great. Look forward to a certain gold plated pension and gratuity!

    Donít put all your eggs in one basket, go for a pension, aim to buy a second property (and thus the wonderful benefit of a second life if itís a holiday home), some savings, and make some investments. A little bit of this and a little bit of that is far more sensible than having all your eggs in one basketÖ.. spread the risk.

    If you like antique furniture aim to furnish your home with some of it because unlike stuff from IKEA or MFI it isnít worth practically nothing the day after you bought it. You can change antiques at any time at less expense.

    A business that is not dependent on just you, has a value that you can capitalise on when you retire. If you fancy your chances go for it sooner rather than later

    Be very very sceptical of any bank, financial advisor and do your own research.

    Donít rely on your own home being your pension. Downsizing to a 2 bed bungalow from that grand house will be very painful. Better for us ordinary guys to have a modest house and a second home that can be sold to provide capital than at some stage rather than go through the pain of losing your home whilst needing to downsize.

    If you commute make sure you cultivate local friendships whilst you are working because being cut off from work friends and colleagues suddenly can be quite a shock.

    Reckon on giving much more of your time to supporting your kids and parents, they expect it.

    I am glad that some years before I retired 18 months ago that I thought about and wrote down my aims for retirement. I check my progress against that list from time to time. But, despite the list I still really miss the buzz of working and personally need to address how to keep myself busy and happy in the winter which I really hate.
    Survivor of debt, redundancy, endowment scams, share crashes, sky-high inflation, lousy financial advice, and multiple house price booms. Comfortably retired after learning to back my own judgement.
    This is not advice - hopefully it's common sense.
    .
    • seven-day-weekend
    • By seven-day-weekend 3rd Aug 06, 1:32 PM
    • 31,437 Posts
    • 60,516 Thanks
    seven-day-weekend
    My tips are:

    Aim for the biggest state pension you can, its inflation proof and Ďguaranteedí more than any other kind.

    If you or your partner works in public service thatís great. Look forward to a certain gold plated pension and gratuity!

    Donít put all your eggs in one basket, go for a pension, aim to buy a second property (and thus the wonderful benefit of a second life if itís a holiday home), some savings, and make some investments. A little bit of this and a little bit of that is far more sensible than having all your eggs in one basketÖ.. spread the risk.

    .
    by al_yrpal
    Agree. Our Spanish house is a second home (bought from the proceeds of an inheritance) which we can always sell if necessary, although we are living in it full-time at the moment. And we have cash in the bank through the sale of an investment property.
    Member #10 of £2 savers club
    Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
    • Ken68
    • By Ken68 3rd Aug 06, 1:57 PM
    • 6,431 Posts
    • 4,104 Thanks
    Ken68
    You really need to plan out your retirement, where you're going to live, what happens when one of you dies, what happens if you get really ill with no one to look after you.
    Little point in spending lots of money on the house then.
    Best sorted way before retiring.
    Assuming you're going to stay put, insulating the house to the nth degree would be worthwhile, laying out your garden to a simpler style would be useful.
    Get rid of ladder work, you won't be climbing about after retiring.Chimney pointing, roof checking, new guttering.
    Also as you near retirement age you will be a better judge of your health that the doctor or an annuity company.
    If your remaining pension or pensions is less than £15,000
    you have option to take it all in cash.
    And if you can still afford to run a car, something useful and easy to get into. A small MPV, like a Wagon R. type.
    Better still a free bus pass.
    • home_alone
    • By home_alone 3rd Aug 06, 4:08 PM
    • 750 Posts
    • 276 Thanks
    home_alone
    I took early retirement at 60 and my main worry (if you can call it that) is IHT, I do not want to become Gordon Browns best friend, it has been only since retirement that I have discovered that if I do not act know with hopefully at least 20 years to go, I will leave about 400K to the Chancellor, this is not bragging but with rising house prices and a fairly thrifty life this is what I or we are facing. I find with loopholes closing I am left with very little option but to give my 2 children their inheritance up front and also to downsize my home which I am reluctant to do so. Apart from employing the Rolling stones accountants (they paid just over 1 mill tax last year from over 83 mill income) this is what I intend to do. So for those coming up to retirement dont overdo the savings part you might not be able to spend it all.

    gary
    • Ken68
    • By Ken68 3rd Aug 06, 5:13 PM
    • 6,431 Posts
    • 4,104 Thanks
    Ken68
    You want to get a mistress, she'll soon spend it.
    • home_alone
    • By home_alone 3rd Aug 06, 5:32 PM
    • 750 Posts
    • 276 Thanks
    home_alone
    You want to get a mistress, she'll soon spend it.
    by Ken68
    my life expectancy would go from the hopefully further 20 years to at the best 20 mins, nice thought mind, no, I can not stand the sight of my own blood.

    gary
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