Retirement

[backwoodsman]

Also depends on other pensions you have no? I mean that £5 can be taxed at 20% or 40% depending how much pension you receive so makes it less and less worth it

Not really. Although the state pension is not taxed, it does increase your taxable income. Each year bought at £800 gets you about £5 per week extra. Depending on your tax rate that will be a nett £5 @ 0%, £4 @ 20% or £3 @ 40% per week. Meaning the 'payback' rate on the original £800 paid will be just over 3 years at 0% up to 5 years at 40%. The only question you really need ask is 'will I be drawing my state pension for longer than that?' If you will, then it's worth it.

 

[Tashyboy]

When this was first pointed out to me BB. An ex colleague rang me and said” it shows on line I have over 35 years, but when I rang them they said I have not got the 35”. He decided not to pay for the extra years.

The bit I stand corrected on is that you have until 5th April next year to pay for extra years.

 

[Ross61]

I worked for the same company for almost 44 years with contributing out on company pension payments until the rules changed. When I retired early I assumed I was fully covered, but no despite 43 years of full NI I was still a short by one year. When I retired at the end of April that year my NI contribution of one month was enough for half a year’s qualification. So I paid £300 and something to get my full pension at 67.
I also have been slapped with another quirky rule on my pension. That is because of the contributing out. When I get my state pension I lose £1000 annually off my defined benefits pension called SPO (state pension offset) which is the one thing about my pension I have never got my head around. But suffice to say that there is nought I can do about it.

 

[PJ87]

Not really. Although the state pension is not taxed, it does increase your taxable income. Each year bought at £800 gets you about £5 per week extra. Depending on your tax rate that will be a nett £5 @ 0%, £4 @ 20% or £3 @ 40% per week. Meaning the 'payback' rate on the original £800 paid will be just over 3 years at 0% up to 5 years at 40%. The only question you really need ask is 'will I be drawing my state pension for longer than that?' If you will, then it's worth it.

Spent a little while last night going through my options, I've been doing Avcs since 27 and I noticed that my 25% lump sum max would be the value of my Avcs when I reach 58 (if I keep up payments and it grows as it has been)

I'll have 40 years in the pension by then and I can leave with 60% of my salary plus lump sum

My wife will be younger but could retire same year with 30% of her salary (her pension portal is impossible to follow as she has 4 different ones so going for just the current one)

Mortgage currently ends at 62 but now the aim is clear that by time I hit 58 then retire in the summer with the wife. Long way away but I like to have things to aim for long term.

As I put on here before my grandad and family friend both in 80s now with ill health so id like to enjoy my retirement like they did first.

With all the tax implications ATM anyways those wage drops would work out take home wise almost spot on what the mortgage is at present.

We both would have full state pensions by then as I have 14 more years to pay she has to do 17. But plenty of time. So by time we hit 68 10 years later we should get a nice bonus to pay for care homes or something lol

First thing to do when I retire I reckon a nice holiday but out of term times so doesn't cost the blooming earth.

 

[Doon frae Troon]

ONS state that one in four pensioners is now a millionaire.
.....and they are the ones who are still quite happy to take all the free benefits on offer.

 

[PNWokingham]

ONS state that one in four pensioners is now a millionaire.
.....and they are the ones who are still quite happy to take all the free benefits on offer.

what free benefits?

This "millionaire" refers to houselholds so likely a chunk lower individually - and includes houses and all assets

 

[The Fader]

I was able to retire early thanks to a combination of good pension schemes, forward planning and a bit of luck in the timing of a voluntary redundancy offer.

Not for a single minute have regretted it. Do I have less money than if I'd worked longer? Hell, yes - but I've had the benefit of something that the world's largest pension pot can't buy - time!! And time at an age when I am able to live life to the fullest.

In my experience - some of the astronomical income figures you see quoted has being needed for a comfortable retirement are an absolute crock.

I will just share something I did to boost my pension pot a little bit. We switched to an interest only deal for the last few years of our mortgage. The capital element of the mortgage payment was put in my pension pot instead with 40% tax relief. Adds up to quite a tidy sum over 5 - 10 years. Paid off my mortgage at maturity out of the 25% tax free drawdown.

Done under professional advice. Not just on a whim!

 

[clubchamp98]

I was able to retire early thanks to a combination of good pension schemes, forward planning and a bit of luck in the timing of a voluntary redundancy offer.

Not for a single minute have regretted it. Do I have less money than if I'd worked longer? Hell, yes - but I've had the benefit of something that the world's largest pension pot can't buy - time!! And time at an age when I am able to live life to the fullest.

In my experience - some of the astronomical income figures you see quoted has being needed for a comfortable retirement are an absolute crock.

I will just share something I did to boost my pension pot a little bit. We switched to an interest only deal for the last few years of our mortgage. The capital element of the mortgage payment was put in my pension pot instead with 40% tax relief. Adds up to quite a tidy sum over 5 - 10 years. Paid off my mortgage at maturity out of the 25% tax free drawdown.

Done under professional advice. Not just on a whim!

Could have wrote that myself.
Time ! Only thing you can’t buy.

 

[Tashyboy]

Could have wrote that myself.
Time ! Only thing you can’t buy.

Was talking to my cousin who deals with finance for the stinking rich. I once asked what “ asset rich cash poor means”. He said when it comes to the elderly rich and famous they say “ asset rich time poor”. They pay a lot for a service that is done in a quicker time as they don’t have a lot of time. Some work it out quicker than others.

 

[Crazyface]

Anyway....back to me...I'm getting closer to getting hold of the main pot of money. Forms completed by me and my new pension provider and sent off today. Fingers crossed that all will be well now. We will see

 

[PJ87]

My grandad and his boss (friend of the family) both retired from standard life around 1994. (Think they were both around 55) So the majority of my life they have both been retired. My grandad is now slowly falling apart and the family friend is in a home with dementia. (These are both the last couple years) They have lived retired to the full, played golf every week together. Holidays. Etc. if you can afford to go at 58 I'd say go for it and enjoy the lifestyle before you get to a time where you can't anymore.

See my grandad is now on end of life care and prob won't make next weekend. The poor health (apart from beating cancer) has only been last 5 years so I really fully recommend,if you can afford it, going as early as you can and enjoy life to the full.

 

[SwingsitlikeHogan]

One of life’s milestone today for me as my first State Pension payment has gone into our bank account. Not spending any time dwelling on what that implies…but rather thinking a bit more about what I…sorry my wife…will do with it.

Actually she’s already said that I can buy a new hybrid with it…bless her cotton socks…though she just hopes for less of the whinging she gets from me after yet another duff round - a misguided hope that a new hybrid will stop me whinging about a poor round…well it might help

And I’ll add…that over the last two weeks I’ve done quite a few things that I just couldn’t or wouldn’t have done were I still working. Some by myself…meeting up for midweek golf with mates of 40yrs who I only very occasionally see; going to two of three days of the Curtis Cup; going to all four days of the Women’s Open in StA - and with my wife…Hello Dolly in The London Palladium, and been able to book for Monday coming going to see Kiss Me Kate in the Barbican Theatre.

Now just need to help my wife get a release from her mother and brother cares and worries and we’ll be well sorted.

Life is for living. We don’t have a huge amount of income these days but we are very fortunate in that we have a bit more than sufficient - and for that I am truly grateful.

 

[PNWokingham]

A good short summary from James on the issues to consider on how to take income in retirement - although maybe wait until November before any upcoming changes (only negative probably) in the Budget. I reckon one is almost certainly to put pensions into inheritance tax but hopefully the tax free allowance will stay as it is as i think the fallout would be big, not least from those who have planned to use this to pay off mortgages

 

[Doon frae Troon]

I retired from full time work aged 55 years.
From 55 to 63 I worked in enjoyable part time 'nae brainer' jobs to protect my pension pot.
I worked max 4 days a week down to 2 days at the end. It was a nice feeling knowing that I could walk out of any job if I stopped enjoying it.
Bought a few extra years state pension [3 I think] so the extra 11 [8+3] years gave me a full state pension on top of my works pension.
I was never out of work, even for a single day for my entire working life from 15 to 63 years
Mortgage paid off at 57

It is surprising how cheaply you can live once your mortgage is paid off and without the expense of children and work related stuff.
In this area it is surprising how many early retirees earn a fair whack working in the golf trade as seasonal staff.
Many work hard all summer then go on extended winter cruises or holidays

 

[Red devil]

A good short summary from James on the issues to consider on how to take income in retirement - although maybe wait until November before any upcoming changes (only negative probably) in the Budget. I reckon one is almost certainly to put pensions into inheritance tax but hopefully the tax free allowance will stay as it is as i think the fallout would be big, not least from those who have planned to use this to pay off mortgages

One of the changes that I believe could happen is the disparity of tax relief on pension contributions. A more equalising of them would be more fair in my opinion and I say this as a 40% taxpayer.
But as everything, pure speculation at the moment

 

[Red devil]

Is it fair that I get 40% tax relief on my contributions and someone who is on less money and so consequently will struggle to build a substantial pension pot only gets 20% relief. A flat rate of tax relief across the board and the inclusion of pensions in inheritance seems a good idea to me

 

[PNWokingham]

Is it fair that I get 40% tax relief on my contributions and someone who is on less money and so consequently will struggle to build a substantial pension pot only gets 20% relief. A flat rate of tax relief across the board and the inclusion of pensions in inheritance seems a good idea to me

Just checking in and seems my response from earlier was deleted for "verging on Political" when it was purely on taxation and potential changes and what happens now or may happen, as are your messages. Hard to understand why, but as said on deleted post, tax relief on going in at your marginal rate means tou pay no tax. Totally fair and understandable as you pay tax coming out. Equalising relief at say 30% means some people get an extra 10% going in on top of tax free, and fair enough if we can afford it, but others should not have to pay for that and will discourage pension saving when we should encourage it. Again, not sure why my post on taxation was deleted but sums up the nanny state in general, when I did not say anything political and there are far more political comments in issues on most other posts.

 

[Robster59]

I've just got my letter from asking me to register for my State Pension as I reach 66 in January. I plan to work for another year after that on a 3 day week so that will be taxed along with my other pension that I will collect.
What is incredibly aggravating is my missus (who was born in 1962) will not receive her State pension till she is 67. So as she wants to finish work at the same time as me, she will have to wait another 4.5 years before she can get her State Pension.
Bearing in mind we have both worked all our lives (me since I was 16) and have paid full NI contributions, it really grates.

 

[Lord Tyrion]

I've just got my letter from asking me to register for my State Pension as I reach 66 in January. I plan to work for another year after that on a 3 day week so that will be taxed along with my other pension that I will collect.
What is incredibly aggravating is my missus (who was born in 1962) will not receive her State pension till she is 67. So as she wants to finish work at the same time as me, she will have to wait another 4.5 years before she can get her State Pension.
Bearing in mind we have both worked all our lives (me since I was 16) and have paid full NI contributions, it really grates.

That is equality though . It has to work both ways, this is it in action.

Both my wife and I are in the 67 camp incidentally, it is what it is.

 

[SwingsitlikeHogan]

I've just got my letter from asking me to register for my State Pension as I reach 66 in January. I plan to work for another year after that on a 3 day week so that will be taxed along with my other pension that I will collect.
What is incredibly aggravating is my missus (who was born in 1962) will not receive her State pension till she is 67. So as she wants to finish work at the same time as me, she will have to wait another 4.5 years before she can get her State Pension.
Bearing in mind we have both worked all our lives (me since I was 16) and have paid full NI contributions, it really grates.

My wife also - we are in same situation and it really does upset my Mrs.