Ready for retirement

stephen0002002 wrote: »

Thank you for your thoughts. I am thinking a bit more cautious now.

(1) To defer at least 1 FS pension ( its worth 6K in 2021 )
Maybe? (also) defer second FS pensions ( worth 6K in 2021 )
(Leaving the int free alone in these).

(2) Using the int free 25% from the PP only.

(3) Using the 25% int free (just enough) to pay off the int-free credit cards. And thereby reducing that debt.

Hi Stephen0002002,


I think the cautionary advice about leaving the FS as a floor of safe income and the PP to i) reduce debt and ii) live on for 3 years until FS kicks in is a good plan.


We are not as close to final retirement as you but our plans are to draw FS pension and use PP to bridge gap until SP starts so maintaining income levels at a steady rate. We are just starting to build the PP aggressively at the moment.


I would check the following- i) SP forecasts and can you use any of the 25% TFLS from the PP to pay any missing contributions to ensure you both maximise your SP when it starts? ii) Can you pour any/ as much as possible into a PP for your wife? If she has any earnings then upto her earnings limit if none then the £2880 pa into a SIPP to get the £720 pa money from HMCR, this could be a cash SIPP, draw as needed?


My view (and Mrs CRV) is that all/ any little pots all add to the mix of income/ cash available and if not needed there and then it can be left until it is needed.


Depending on your plans for the 30k pa income balancing it so you pay the lowest possible income tax may need looking at- if most of the pension income is yours you will pay more tax, we too will have this imbalance which we are trying to address through building Mrs CRV pension up- drawdown up to her personal allowance when we start taking it, accept that my FS pension will be taxed regardless but take the lowest amount we need from my SIPP when we start taking it.


We intend putting the TFLS into ISAs, some as a cash reserve some invested for growth.


You may find ways to cut living costs for instance travel- last minute deals although not as numerous as they were are still there if you want some holidays and feel you can be flexible- we're testing this out later this month- going down travel agents and asking where can we go in the next 3 days for a week in the sun? When retired we'll look for deals on holiday cottages etc and go as and when we want. For DIY products I go to B&Q take my pensioner mother and buy things on a Tuesday when she gets her pensioner discount even if the project doesn't get started until a later date! Yes at 79 my mother still throws paving slabs about altering her garden and climb ladders to lop tree branches off, so you do need to plan a floor of reasonable income because you don't know the end date!


Just my thoughts, hope they help.


CRV

Thank you for the ideas on tax for my wife. I'm not sure we can cut anything in for her pension wise as I only have 2-3 months to go at work. And so not sure if it would still be worthwhile starting a pension for her now.

So that could be one contribution now for 2017-18 and one for 2018-19
Both with 20% tax paid back in. Not much, but could be left to grow with small additions over time, or used as an extra boost to defer her SP for 6 months or so to get an increased payment (or top up any missed years later on).

Based on great advice here, I did that in the last 18 months before I retired setting her up with a SIPP through H&L (she was earning about 8K then) and earnt about 2.5K on her small income. It took minutes to set up and do a bank transfer. Although she now only earns 3K I still did another £2880 contribution this year and will be looking forward to earning another £720 tax back for her.

A no brainer really!

If you use Hargreaves Lansdown you can do it quickly online as jerrysimon says and they would reclaim basic rate tax automatically.