I broke cover last week after reading all this. Announced I was going at 50, i was 47 that day so it seemed reasonable notice ! This will be my second retirement, hate me for this but I ‘retired’ at 34 when i sold my startup. I lasted about a week before i realised it was bloody boring at that age and I started a bunch of new things up. Fast forward 13 years and I I have acquired a wife and child and life has changed. I do an interesting job which is very demanding and relatively stressful, well as stressful as you make it really. In context i’m not saving lives or doing brain surgery so really not that stressful. Anyway, i want to go and do something totally different after 50 on my terms so will do that, i have 12 months notice anyway and a 6 month standown. Ironically post announcing that they’ve asked me to do an entirely different job because they know I am not ‘digging in’ for another 10 years ! So thanks all. I look forward to it when it arrives.

Switching out of final-salary pensions is usually not a good idea, no matter how much money is on offer.

Not necessarily. We have both been transferred out for a few years now. Lots of friends have too, many of whom have worked in the pensions industry, or financial services, for many years.

You certainly need to think long and hard, and be very careful about who you speak to, but we’ve no regrets.

Ref the transferring out thing – I think it depends:
My pension scheme is pretty good, but it is important to me that my OH and my (grown) children benefit from my pension (I’ve paid into it for 36 years). If I die my OH gets half my pension, and if she dies my children get nothing (if I leave it in the scheme). However if I transfer out then the pot is still there no matter who dies, and the pot stays in the family (and doesn’t get absorbed back into the scheme).

So it does depend what your objectives are for your pension, who your beneficiaries might be and what your attitude to stuff is.

I would hate to die at 65 and my pension gets lost (likewise I would hate to still be around at 95 with no pension left). Swings and roundabouts…..

I would hate to die at 65 and my pension gets lost (likewise I would hate to still be around at 95 with no pension left). Swings and roundabouts

I reckon the second option is better

Loving these retirement pension threads. Everyone s situation is different, if your parents died aged 70 cashing in a db pension and enjoying life is probably a decent call, if allowed.

I like to keep my income diversified so as above, state, private, passive income. So many people over the years have advised against pretty much every income source. Truth is, no one really knows but with 4 separate sources maybe 1 will underperform. Db stuff for me is the cornerstone though, its fixed and rises every year.

Main worry I have is the generation who don’t own property, where are they going to live in retirement? And lacking the opportunity to trade down.

Switching out of final-salary pensions is usually not a good idea, no matter how much money is on offer.

Some of the offers I have heard, notably in financial services, have been incredibly generous (think more than 40x annual award, compared to 20x for inland revenue). Some of us have not been given the option not to switch, as the scheme is being closed to existing (not new) members.

My offer was over 40 yrs worth. That plus how it’s increased inside its investment wrapper means that transferring was a great option for me.
My father is mid 70’s and is in the last stages of bone cancer. His advice on the matter was use the flexibility to enjoy more money when you are fit and able enough. They pretty much only spend their state pension nowadays so don’t need extra money for things they can no longer do.

This thread had lead to a little further reading and I’ve just found out …

If you are planning on retiring at 55 but 55 comes after 2028 you are going to have to wait until you 57 get get your hands on your pension pot.

Damn …. 8 years just moved out to 10 for me…. I’d been getting my head around 8, that time would fly but was long enough to ramp up savings and coincided with both kids being at Uni (hopefully) that seemed perfect timing.

Going to have to re-think, maybe start ramping up ISA contributions to fund those two years ??

Anyone in a similar situation ??

If you have enough money in your pension to fund your retirement earlier than you’re allowed to access it and also own property then you could remortgage to cover the intervening years and pay it back once you can access your pension.

If you are planning on retiring at 55 but 55 comes after 2028 you are going to have to wait until you 57 get get your hands on your pension pot.

According to the discussion below about the consultations, it seems that the increase in the minimum pension age may not apply for existing pensions. So fingers crossed you may still be able to retire at 55.

https://forums.moneysavingexpert.com/discussion/6240982/increase-to-minimum-pension-age-new-hmt-consultation

“Protection from the increase in NMPA will only apply to those individuals who have an existing right within their scheme rules at the date of this consultation to take pension benefits before age 57. In other words, a member’s protected pension age will be the age from which they currently have the right to take their benefits.”

According to the discussion below about the consultations, it seems that the increase in the minimum pension age may not apply for existing pensions. So fingers crossed you may still be able to retire at 55.

Is that going to apply to SIPPs though?

If you are planning on retiring at 55 but 55 comes after 2028 you are going to have to wait until you 57 get get your hands on your pension pot

Yep saw that a few weeks ago. I’ll be 57 7/12 when that rule kicks in. Thank God.

Anyone in a similar situation ??

Was in that situation a few years ago when you could retire at 50, which was my pipedream. When the government upped it to 55 I took out ISA’s to fund the 5 years between, but it’s difficult to keep your hands off money in ISA’s…

Is that going to apply to SIPPs though?

My superficial understanding says yes (as long as it/was started up before the end of this month)

enjoy more money when you are fit and able enough.

in reply the the post above, I was going to ask what you’d need a stash of money for at 95, when realistically you just need and would manage ok with the state pension for your living allowances. Maybe.

You would. Plenty I know get by on state pension alone and are happy enough

If you are planning on retiring at 55 but 55 comes after 2028 you are going to have to wait until you 57 get get your hands on your pension pot.

I’m 55 1 month after the pension date moves to 57……

From reading, it looks like the govt have not yet decided how they will implement the change, whether it will be a cliff edge or a gradual moving of the date depending on exactly when you were born.

Can’t wait to retire, but not sure how much money I’ll need, probably quite a lot I reckon, I do like my nice things. So I reckon that will be a problem and I’ll have to cut back on stuff.

what you’d need a stash of money for at 95

Maybe:
Money for visiting carers
Extra heating
Cleaner
Stair lift
Ramp
Taxis
Care home
Coffin

Yes thanks everyone for these pension threads. They’ve definitely prompted me to take a closer look at how things could pan out.
I’ve always put in the maximum matched pension amoint into the company DC schemes but more recently I’ve been shovelling lots more cash in for the tax breaks.

Anyway, I reckon if I can keep saving at the rate I am, I’ll have a tidy enough sum somewhere between age 50 and 55 (so in about 10 years time). Earlier the better obviously!

Have also therefore been wondering how to bridge the gap from potentially 50 to 55 or 57.

I came across this advice elsewhere on a money forum. Anyone done it?

If you have enough money in your pension to fund your retirement earlier than you’re allowed to access it and also own property then you could remortgage to cover the intervening years and pay it back once you can access your pension

I suppose the main thing is you need to borrow enough to fund the time you need, allowing for mortgage repayments and interest payments.
This must be cheaper than taking the tax hit to get money into an ISA to bridge the gap in advance?…but relies on actually being able to get a remortgage…

Is there guidance on what size of pot, accessed from what age, may give what type of annual return ?

Aged 55 here and would like to retire at 60 when kids are through Uni etc. Pension pot currently about £300k and am piling around 17% into it between employer and employee contributions and likely to, by age, 60 have another 300k of inheritance, plus maybe 100k of savings at most.

I have no real concept of what that would equate to as an annual ‘salary equivalent’.

Wife likely to retire at same time, with a meagre NHS pension. We could release a bit by house downsizing, but not much over £100k if even. No mortgage at present.

I remember when I first stared my first “real” job. One of the older guys said “early contributions make the dough rise.”

This really struck a chord with me and I was only 23 so pension contributions was low on my list of spending! I don’t have a huge pot but his advice has helped me 17 years later.

I’m trying not to allow “lifestyle creep” to occur too much and any pay rises I’m trying to syphon into the pension.

I’m also wrestling with paying off a low interest mortgage or paying more into pension. I know the maths says pension but hard to get the head around ignoring debt.

Is there guidance on what size of pot, accessed from what age, may give what type of annual return ?

Aged 55 here and would like to retire at 60 when kids are through Uni etc. Pension pot currently about £300k and am piling around 17% into it between employer and employee contributions and likely to, by age, 60 have another 300k of inheritance, plus maybe 100k of savings at most.

Invested well 5% drawdown should be easily achievable. So 35k per year on 700k pot.

^^^ thats useful, much appreciated indeed

@el_boufador

Have also therefore been wondering how to bridge the gap from potentially 50 to 55 or 57.

We sold our house and having a new house built somewhere cheaper and using the proceeds from the sale to fund the gap. We have a business that generates some income and will probably look at some seasonal part-time work. We have no kids, so we can do a draw-down on the house if needed – I’m not leaving anything for the taxman 😆 There won’t be much money for expensive holidays, but we have a campervan and living on a Scottish island.

lump sum paid in account, 1st working day after I finished. Tax man thought this was new monthly pay which was fun for a while with HMRC.

I think this can be avoided by taking a small lump sum to start with and the a month or 2 later thanks the balance.

Reading this thread has very much focussed the mind… 40 here, just dropped my mortgage from 28yrs to 16, but the reality is that that will go up again to 25 or so with an impending house move in the next year or so.

That aside… I do need to sit down and formulate a plan that is going to help me to retire at an age where I can still enjoy my relative youth and mobility (money doesn’t motivate me). I already have minimal outgoings beyond the usual mortgage and utility bills, I’ve got a standing order into a Vanguard ISA (albeit not for very much) and have been trading a little Crypto currency for the last few months (though am acutely aware of the volatility, and am ready to pull my investment out soon leaving just the profit in there to play with going forward), but I don’t see how I’d ever get to retire even by my early 60’s as it is, let alone any earlier…

Still… I really enjoy my current job, so it could be a lot worse I guess! I certainly don’t envy the lifers that are counting down the days to retirement…

It is very simple really:

1. Calculate what income you will need in retirement.

2. Calculate what income you’d get from your pension(s), ISA’s and other investments were you to retire right now.

3. If there’s a shortfall (and there likely will be) then you have identified the ‘gap’.

4. Formulate your plan to close the gap:
– max out your ISA allowances each year (if you can)
– contribute more to you pensions and choose carefully where it’s invested (the ‘underlying’)
– cut back on spending
– sell off any stuff you don’t need
– stop buying sh*t you don’t really need (or want) because you think it’ll make you happier (it won’t)
– reassess and adjust your lifestyle/level of outgoings
– investigate cheaper ways to get the exact same stuff you already get (mobile phone plans, monthly broadband subscriptions, car insurance, house insurance, electricity/gas, etc…). We’ve saved hundreds £££ p/a with zero impact on quality of services.

It’s as simple as that really.

The hardest thing is actually implementing the changes necessary to get you there. But once you’ve started the ball rolling it’s surprisingly easy to keep it going 🙂

This is a simple summary. For a more detailed explanation, see a more detailed version in the Retirement – what’s it really like? thread.

I think there are a few other tradeoffs to consider. Such as how much time.and money do you want to spend on experiences taken NOW vs. deferring to retirement.

E.g. doing a long around the world trip, or going down to 4 days a week at work

The trade-off there being

Experience now = more time before retirement, probably less money in retirement.

Experience after retirement = risk I might die or get ill before I get there

I’ve always put in the maximum matched pension amount into the company DC schemes but more recently I’ve been shovelling lots more cash in for the tax breaks.

This is still the best tax break available, especially if you are fortunate to be in the 40% tax bracket. The other thing to be aware of is the pension carry over allowance which means any unused amount from your £40k maximum annual pension contributions can be carried forward for up to 3 years. I get my payoff in May so will be putting a fair chunk of it in my pension and will start drawing down next tax year.

I see the government has recently updated their guidance on the transition for accessing pesonal pensions from 55 – 57. As usual the appear to be several nuances associated and they have started a consultation process.

For those wishing to access their pension from 55 and born between 1971-1973 there are some vagueries which I’m struggling to understand. Is there anyone here who can translate the information below? Particularly timely as we’ve just been informed our DB scheme is closing to future accrual..

https://www.ftadviser.com/pensions/2021/03/17/how-to-communicate-the-change-in-minimum-pension-age-to-clients/

So – is it better to push savings / spare income into a pension rather than a savings account?

I am 54, healthy Defined Benefit pension pot (now closed) and a “new” Defined Contribution scheme, and want to stop working at 55 (12 months time). Could save £1000/month but at 0.5% interest in a savings account the savings are not really doing any work.

I’m also wrestling with paying off a low interest mortgage or paying more into pension. I know the maths says pension but hard to get the head around ignoring debt.

Can anyone advise on this question? I’m in the same quandary in that my mortgage doesn’t really end in 3 years, but it’ll be out of a fixed rate period and I have the balance currently sitting in Premium Bonds ready to settle it.

In my view, I’ll be saving the interest at 1.5%, and if I didn’t settle it it’d take another 5 years to conclude. So, my measure is saving 1.5% vs earning 1.5% or more. I don’t see savings accounts being at that rate for a while which for me narrows it down to low risk stocks, with no guarantee it’ll make that much over the period, I could even lose.

So my plan; settle the mortgage and save the interest and put what would have been monthly mortgage payments as a DD into a passive investor account e.g. Vanguard within SIPP wrapper for tax economy.

I’m also wrestling with paying off a low interest mortgage or paying more into pension. I know the maths says pension but hard to get the head around ignoring debt.

Can anyone advise on this question? I’m in the same quandary in that my mortgage doesn’t really end in 3 years, but it’ll be out of a fixed rate period and I have the balance currently sitting in Premium Bonds ready to settle it.

The answer depends on your appetite for risk. On the one hand you have the mortgage, with either a fixed or tracker rate, and which requires regular payments, on the other you have Premium Bonds which aren’t guaranteed to provide any return, and certainly not a regular one, or other investments which can rise or fall in value. The safest option is to pay off the mortgage as quickly as possible. The riskiest but potentially highest reward is to pay off the minimum on the mortgage to put everything else it to stocks and shares (via pension, ISA, or a plain trading account).

The thing with a mortgage is that, for me anyway, just knowing it was gone and I owed no one anything was a very lovely feeling indeed and does free the mind to think of other options and things. The piece of mind alone was worth clearing it for me.

Anything you put into pension comes with 40% tax relief. That’s 40% for free. As long as you aren’t exceeding annual / lifetime allowances.

Anything you put into pension comes with 40% tax relief. That’s 40% for free

As long as that is your marginal rate

In my view, I’ll be saving the interest at 1.5%, and if I didn’t settle it it’d take another 5 years to conclude. So, my measure is saving 1.5% vs earning 1.5% or more

I will retire with a mortgage but the interest rate is so low I am happy to take the payments out of my SIPP/ISA rather than pay it off. I would expect to earn a lot more than 1.5% on it.

The thing with a mortgage is that, for me anyway, just knowing it was gone and I owed no one anything was a very lovely feeling indeed and does free the mind to think of other options and things. The piece of mind alone was worth clearing it for me.

If thats the way you feel then you should pay it off.

This came up on the other thread.

I think at first when your LTV is high then it’s worth overpaying the mortgage to get yourself access to the better rates, but it gets to a point where there is no real benefit to continuing to do that. On the pension side, if you are paying 40% tax and you can opt for salary sacrifice then instead of paying off £580 of your mortgage with your wages net of tax and NI you can pay £1000 into your pension and probably get a top up too.

As long as your mortgage balance is low enough that a rate increase wont break your cashflow then that’s the way to approach it

Anything you put into pension comes with 40% tax relief. That’s 40% for free.

You do gain, but it’s more complicated than that. You’re taxed when you take it out. If your marginal rate when working is 40%, your marginal rate drawing your pension is likely to be at least 20%. On the other hand, 25% can be tax free.

enough talk of money and all the boring shyte.

today i did what we all want to do when we retire. i rode my bike.
69 glorious miles on nearly empty roads. is it always this quiet midweek ??