Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • westie660
    • By westie660 9th Nov 18, 3:20 PM
    • 27Posts
    • 227Thanks
    westie660
    Help! 53 yrs old and needing Pension guidance please
    • #1
    • 9th Nov 18, 3:20 PM
    Help! 53 yrs old and needing Pension guidance please 9th Nov 18 at 3:20 PM
    Hi there

    I will try to keep this short, but I fear it is a bit of a rambling story!

    Having read through much of the Pension Forum, I am in a bit of a blind panic at the sight of the huge sized Pension pots quoted by so many of you savvy savers. My work situation is not standard, and as I am getting closer to retirement age, I really would appreciate some guidance/suggestions on how to best maximise my Pension income.

    My current situation is as follows:

    Female 53 yrs old - single/ no children
    Own my own home (no mortgage) value approx 200,000
    Own a rental property (no mortgage) value approx 90,000 (which gives a monthly income of 550 after costs)

    Pensions - 3 very small personal pensions totalling approx 55k
    (31k, 19k and 5k values)

    State Pension forecast - need to pay another 11 years of NI contributions to qualify for full state pension of 164 (currently shows 115 per week). Also shows a COPE figure of 21.63(??) due to being contracted out of serps for many years (the 19k pension pot)Not sure how COPE works?

    Savings - 20k Premium bonds
    35k S&S ISA
    30k Cash deposits

    I am currently working for 8 months of the year only as an outdoor instructor, and then spend the other 4 months of the year during Winter in Australia, where I help to care for a disabled relative. This is certainly not an ideal work situation, but one that can't really be changed at the moment - I am committed to the time in Australia and of course am not able to earn while there. So my current income is approx. 16,000 per year from the seasonal employment plus rental income from the second property. This has been my work pattern for the last 8 years, and as I don't earn for the full tax year, I have not been getting NI contributions towards State Pension. My current income level doesn't leave me with any spare to contribute to the private pensions, so they are all dormant at the moment (and no NI payments to state pension)

    So I would love to know if anyone has any thoughts or suggestions to offer based on these numbers and the info provided. How would I attempt to create the best possible retirement income from this situation?

    Thank you so much for reading my rambling post - As I said, I am in a complete panic about the future and would hugely appreciate any input.
Page 1
    • AlanP
    • By AlanP 9th Nov 18, 4:26 PM
    • 1,326 Posts
    • 982 Thanks
    AlanP
    • #2
    • 9th Nov 18, 4:26 PM
    • #2
    • 9th Nov 18, 4:26 PM
    Hi there

    I will try to keep this short, but I fear it is a bit of a rambling story!

    Having read through much of the Pension Forum, I am in a bit of a blind panic at the sight of the huge sized Pension pots quoted by so many of you savvy savers. My work situation is not standard, and as I am getting closer to retirement age, I really would appreciate some guidance/suggestions on how to best maximise my Pension income.

    My current situation is as follows:

    Female 53 yrs old - single/ no children
    Own my own home (no mortgage) value approx 200,000
    Own a rental property (no mortgage) value approx 90,000 (which gives a monthly income of 550 after costs)

    Pensions - 3 very small personal pensions totalling approx 55k
    (31k, 19k and 5k values)

    State Pension forecast - need to pay another 11 years of NI contributions to qualify for full state pension of 164 (currently shows 115 per week). Also shows a COPE figure of 21.63(??) due to being contracted out of serps for many years (the 19k pension pot)Not sure how COPE works?

    Savings - 20k Premium bonds
    35k S&S ISA
    30k Cash deposits

    I am currently working for 8 months of the year only as an outdoor instructor, and then spend the other 4 months of the year during Winter in Australia, where I help to care for a disabled relative. This is certainly not an ideal work situation, but one that can't really be changed at the moment - I am committed to the time in Australia and of course am not able to earn while there. So my current income is approx. 16,000 per year from the seasonal employment plus rental income from the second property. This has been my work pattern for the last 8 years, and as I don't earn for the full tax year, I have not been getting NI contributions towards State Pension. My current income level doesn't leave me with any spare to contribute to the private pensions, so they are all dormant at the moment (and no NI payments to state pension)

    So I would love to know if anyone has any thoughts or suggestions to offer based on these numbers and the info provided. How would I attempt to create the best possible retirement income from this situation?

    Thank you so much for reading my rambling post - As I said, I am in a complete panic about the future and would hugely appreciate any input.
    Originally posted by westie660

    First Thing - Don't Panic

    You are in too bad a position with 2 properties paid off, some pension savings and some other savings, there are many worse off than that.

    Second Thing - Don't worry about what others have got, these boards generally attract two types of people. Those who are interested in the topic because they're focused on saving for retirement and have larger post to their name. The second group have less and are looking for suggestions on what to do.

    OK, so when do you want to stop work and start drawing an income from "savings" whether pension or non-pension?

    How much do you needs / want in retirement?

    Are you self-employed or employed? If employed is there an employers pension scheme you can join?

    You may be able to make up the short NI years by paying voluntary contributions, not sure how it works when they are part years but someone will be along who knows.

    You could potentially cycle some of the non-pension savings through a pension to gain the tax relief which might help a bit but it would then be locked away until 55.

    The key is what do you want / need and when by as that objective sets out what you need to plan for.
    • xylophone
    • By xylophone 9th Nov 18, 4:26 PM
    • 27,292 Posts
    • 16,325 Thanks
    xylophone
    • #3
    • 9th Nov 18, 4:26 PM
    • #3
    • 9th Nov 18, 4:26 PM
    I have not been getting NI contributions towards State Pension.
    https://www.litrg.org.uk/tax-guides/employed/what-national-insurance-do-i-pay-employee

    https://forums.moneysavingexpert.com/showthread.php?t=5774173

    https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf
    • Albermarle
    • By Albermarle 9th Nov 18, 5:30 PM
    • 199 Posts
    • 99 Thanks
    Albermarle
    • #4
    • 9th Nov 18, 5:30 PM
    • #4
    • 9th Nov 18, 5:30 PM
    As already said the situation could be worse, some people have no assets at all .
    Of course would be good if you can top up NI contributions and add to your savings/pension but you say >
    My current income level doesn't leave me with any spare to contribute to the private pensions, so they are all dormant at the moment (and no NI payments to state pension)
    So sounds like you will have to increase your income/decrease your expenditure or just accept the status quo.
    Perhaps longer term you could downsize your home and sell the other property ( will be more difficult to manage as you get older) and use the capital to generate an income.
    • crv1963
    • By crv1963 9th Nov 18, 6:04 PM
    • 537 Posts
    • 1,155 Thanks
    crv1963
    • #5
    • 9th Nov 18, 6:04 PM
    • #5
    • 9th Nov 18, 6:04 PM
    Definitely don't panic.

    You're in a stronger position than a lot of others. You need to work out a few basics- when you want to retire, how much income you will need and then how to meet any shortfall between need and projected income.

    Look at your current pots- is any of it going to give an income- no matter how small, then is any of this index linked? Then look at the cost of making up your NI shortfall first as boosting SP would seem a good objective as it is index linked or at least raised each year and not dependent on the markets.

    Then look at either raising income level or cutting costs. Use extra income/ saved monies to pay the NI shortfall. If neither is possible then look to transfer from savings premium bonds to NI contributions while that is still possible.

    Full SP+ rental income should come close to your current income.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • tacpot12
    • By tacpot12 9th Nov 18, 6:23 PM
    • 1,491 Posts
    • 1,274 Thanks
    tacpot12
    • #6
    • 9th Nov 18, 6:23 PM
    • #6
    • 9th Nov 18, 6:23 PM
    If you have been earning 16K for eight months work then you have paid enough NI to qualify for a state pension in that year, and so I would expect this to be the case for the previous seven years.

    Have you considered taking in one or more lodgers and using the extra income to fund a pension? You are allowed to receive upto 7500 a year in rent before paying tax under the Rent a Room Scheme. Check your eligibility for the scheme here:

    https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2017--2

    You should make a budget as to what your living expenses are likely to be at retirement. I would do this in "today's money" and figure out what your retirement income might be on this same basis. Doing so on a spreadsheet (e.g. Microsoft Excel or Google Docs Spreadsheet) will allow you to look at the effect of different retirement dates. It's not clear whether you will be able to stop travelling to Australia by the time you retire, but I would only expect the cost of airfares to rise, so this may not be an expense you can afford if you want to give up work entirely.

    The small pots would be expected to grow between now and when you draw on them; the best idea might be to plan to draw on each one in turn until they are exhausted.
    • westie660
    • By westie660 9th Nov 18, 6:25 PM
    • 27 Posts
    • 227 Thanks
    westie660
    • #7
    • 9th Nov 18, 6:25 PM
    • #7
    • 9th Nov 18, 6:25 PM
    Thank you all so much for the suggestions - and I am very glad to hear that you don't yet consider it panic worthy!

    My preference of course would be to retire before state pension age (possibly 60). The nature of my work means that I don't know how long physically I will be able to do it. I could try to find alternative employment, but that also gets harder to find as one ages! So yes, is there any way you consider retirement a possibility before state pension?

    I would like to be able to retire on about 18k ideally, but could possibly manage on less if necessary. Any other suggestions?

    I will certainly look into making NI contributions for missing years, but someone mentioned that this is only worth doing for years since 2016? Not sure why? That would only give me 2 more years to add.

    Again, thanks so much for replies - very much appreciated.
    • crv1963
    • By crv1963 9th Nov 18, 7:02 PM
    • 537 Posts
    • 1,155 Thanks
    crv1963
    • #8
    • 9th Nov 18, 7:02 PM
    • #8
    • 9th Nov 18, 7:02 PM
    You have 85k savings one way of boosting them may be to transfer some of this into a personal pension of some sort possibly a SIPP. You can put 100% of earnings (not rental income) each year so your 16k- 6.6k rental income= 9.4k pa this would be topped up by HMRT to become 11280 pa in your pension pot.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • xylophone
    • By xylophone 9th Nov 18, 7:34 PM
    • 27,292 Posts
    • 16,325 Thanks
    xylophone
    • #9
    • 9th Nov 18, 7:34 PM
    • #9
    • 9th Nov 18, 7:34 PM
    I will certainly look into making NI contributions for missing years, but someone mentioned that this is only worth doing for years since 2016? Not sure why? That would only give me 2 more years to add.
    Read the Royal London link in my post above.
    • Mnd
    • By Mnd 9th Nov 18, 7:43 PM
    • 795 Posts
    • 978 Thanks
    Mnd
    I don't think anyone addressed the COPE query, you are right, ignore it in your calculations. It just a indicator of what you contracted out pensions may be worth
    • squirrelpie
    • By squirrelpie 9th Nov 18, 8:21 PM
    • 84 Posts
    • 37 Thanks
    squirrelpie
    Just to confirm: where are you planning to retire to? Here, Australia or somewhere else? Since that will affect your plans. I think everybody has been assuming you will retire here.
    • westie660
    • By westie660 9th Nov 18, 8:25 PM
    • 27 Posts
    • 227 Thanks
    westie660
    Yes, planning to retire in UK - thanks
    • Alexland
    • By Alexland 9th Nov 18, 8:58 PM
    • 3,615 Posts
    • 2,942 Thanks
    Alexland
    Sure the pensions are not that impressive but you have a fully paid second property and other assets so no need to panic. You have just taken a different path in life. Just make sure you have a realistic plan to meet realistic expectations on what will be possible. You sound resourceful so I have confidence you will get broadly what you want to achieve.

    It is worth considering if, in the very long term, you would want or be able to continue being a landlord and if not the potential future tax implications of eventually disposing of the second property.

    Alex
    Last edited by Alexland; 09-11-2018 at 9:07 PM.
    • Albermarle
    • By Albermarle 10th Nov 18, 11:15 AM
    • 199 Posts
    • 99 Thanks
    Albermarle
    Probably a retirement income of 18K at say age 66/67 is possible , if you include the rent; income from current savings/pensions ( that will have hopefully grown a bit in the meantime) and a full state pension.
    Unfortunately the reality is that if you want to retire before SP age , then it would have to be on significantly less, based on the info you supplied. Also it would mean starting to use your savings earlier so they would not last as long.
    Your overall financial position is not bad, and you have a home of your own but unless you can earn more/spend less and then save more, or be lucky with a premium bond/inheritance, then you will have to be realistic about what income you can achieve in retirement.
    • westie660
    • By westie660 10th Nov 18, 5:50 PM
    • 27 Posts
    • 227 Thanks
    westie660
    Again, thank you all so very much for the responses and suggestions.

    The Royal London link was very helpful on the subject of NI contributions, and I will definitely make it a priority to ensure that I have all years needed to give me the full state pension at 67.

    I will give some serious consideration to how I could possibly achieve earlier retirement, as I really think that 60 would be a better number for me and the type of work I do.

    I could certainly downsize on my home as I really don't need all the space I have, so that is a real possibility for freeing up some capital. Or I could even move into what is currently a rental property, as it is a very nice wee property and would work fine for me in retirement. That would give me another 200k or so from selling my main home. Lots to think about for me!!!

    Would love to hear any other thoughts or suggestions - all comments (good or bad) are much appreciated. Thanks everyone.
    • Alexland
    • By Alexland 10th Nov 18, 5:56 PM
    • 3,615 Posts
    • 2,942 Thanks
    Alexland
    Or I could even move into what is currently a rental property, as it is a very nice wee property and would work fine for me in retirement. That would give me another 200k or so from selling my main home.
    Originally posted by westie660
    If you are happy with that it could be a great way to avoid the future CGT implications of disposing of one of the properties as you could get primary residence relief on the one you are currently living in.

    Alex
    Last edited by Alexland; 10-11-2018 at 6:05 PM.
    • Albermarle
    • By Albermarle 11th Nov 18, 10:44 AM
    • 199 Posts
    • 99 Thanks
    Albermarle
    Normally if 200K is invested and there is no long term crisis in markets, then this should be able to generate an income around 8K pa, which could mean you could retire earlier I guess.
    • Alexland
    • By Alexland 11th Nov 18, 1:32 PM
    • 3,615 Posts
    • 2,942 Thanks
    Alexland
    Normally if 200K is invested and there is no long term crisis in markets, then this should be able to generate an income around 8K pa, which could mean you could retire earlier I guess.
    Originally posted by Albermarle
    Even with an adventurous asset allocation 4% increasing with inflation is a high drawdown rate when the forecasts for medium term growth are looking so gloomy. You would run a real risk of running out of money. I would suggest someone healthy planning to retire at a normal age in mid 60s considers 1/30th (under 3.5%) and as someone looking to go a bit early I am planning on 1/35th (under 3%).

    Alex
    • westie660
    • By westie660 11th Nov 18, 2:33 PM
    • 27 Posts
    • 227 Thanks
    westie660
    Thanks folks - it certainly is a complicated business!

    I have at least decided 2 things so far. I will maximise NI contributions to ensure full state pension. Plus I will have a cold hard stare at my current budget and find a way to start adding 200 per month to personal pension accounts. I am pretty frugal at the moment, but will just need to find a way to cut cloth accordingly. The Australia commitment is expensive and will probably continue for a long time (visiting and helping to care for sister who was paralysed in a riding accident, and I am more than happy to do that and don't in any way want to change). Compared to her life, my worries are pathetic, but I don't want to be penniless in my old age, so definitely need to figure some things out

    Any other thoughts peeps? Many thanks to you all
    Last edited by westie660; 11-11-2018 at 2:46 PM.
    • atush
    • By atush 11th Nov 18, 2:37 PM
    • 17,265 Posts
    • 10,833 Thanks
    atush
    get a state pension statement incl any partial years. Make partial years up after 2016 if there are any.

    Take a lodger and use that money for pension contribs or sell your home and live in the smaller rental property.

    Consider moving some savings into private pension now
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,408Posts Today

7,148Users online

Martin's Twitter
  • Watching Theresa May... seriously would anyone in their right mind truly want her job right now!

  • RT @thecheekypostie: @MartinSLewis Thanks to this, I have just skim read it. To those in Scotland - on page 548, Dounreay is mentioned by n?

  • Today's twitter poll: The 585 page draft agreement of the withdrawal of the UK from the EU has been published. A? https://t.co/8YLkPyzqYM

  • Follow Martin