[Misc] Retirement

Shropshire Seagull · Feb 6, 2025

Blue&WhiteSea said:
Why are you only taking the tax free element? Surely it would be better to leave that for when you have a higher income later in retirement due to the state pension kicking in? Or are you confident that you will not ever go over the higher rate threshold?

I'm not expecting a higher income in retirement. So taking it in tax-free drawdown (monthly) now, rather than a lump sum now, means I remain fully invested in the SIPP.

Obviously, the future is uncertain, but when I start my State Pension next year I expect to be able to stop my SIPP drawdown.

I'm also hopeful (no chickens being counted) that I may have a legacy that I can stuff into savings and drawdown on that rather than the SIPP, thus avoiding PAYE exposure.

I'm meeting my SIPP (Wealth Management) Advisor next week and I'm keen to hear his advice now that SIPPs are rolled into IHT. I suspect it may also be good to understand what happens in 10 years time when I pass 75 as I think it means the beneficiaries will have to pay tax (twice) on it too. So drip-feeding out the 25% tax-free element rather than lump-sum suits me better.

alanfp · Feb 6, 2025

dazzer6666 said:
I’d rather give the money to the kids now so they can use it

I like this approach. Provided there is a little slack, absolutely do this.
1.IN GENERAL... life exp say 87, but typically your kids won't inherit until 2nd spouse dies. Children probably 60+ by then, probably mgge paid off, possibly retired - hopefully won' NEED the money then, but why not let them move up to a 4 bed detached from a 3 bed semi now, while their children are at home.
2. You get the enjoyment of seeing them use the funds. Similar re giving to charities - you might have a favourite and/or local charity at the moment - your views on how a particular charity is run may change over the next 30 yrs. You don't want to have to keep changing your will.
3. Assuming you're a home owner, don't ignore equity release - even if (like me) you merely have it in the back of your mind as a potential additional funds if required. But say you release £100k (and pass it on) estate reduces by say £200k with interest But your beneficiaries would only have got £120k of that anyway if IHT is payable.

LamieRobertson · Feb 6, 2025

Shropshire Seagull said:
The reason for deferring is often due to existing income. Especially for those (fools?) who carry on working beyond normal retirement age. They don't **need** the state pension income (as they're still working) and if they took it along with their pay, might have PAYE implications like putting their marginal rate into a higher bracket.

Like most, I'll take it from day-1 eligibility (Mar-26 for me), but there are some who love their job / work so much they'd rather keep working ....

Oh, if only we had a crystal ball!

This fool? will be carrying on working for financial reasons, structure to day..opportunity to meet people ..exercise etc …BUT I will be cutting my hours down to take account of my decision to take the state pension from day one …obvs I will lose 20% of it in tax keep Rach happy

BrightonCottager · Feb 6, 2025

Shropshire Seagull said:
The reason for deferring is often due to existing income. Especially for those (fools?) who carry on working beyond normal retirement age. They don't **need** the state pension income (as they're still working) and if they took it along with their pay, might have PAYE implications like putting their marginal rate into a higher bracket.

Like most, I'll take it from day-1 eligibility (Mar-26 for me), but there are some who love their job / work so much they'd rather keep working ....

Oh, if only we had a crystal ball!

Thank you, and to @Daddies_Sauce , @dazzer6666 and others who chipped in on this (& the St James Place / Ascot Lloyd and Norwegian cruise issues). One of my acquaintances is in their 70s and has deferred their state pension, because theyre taking a salary and I think has a flat they used to live but now rents out.

I can't recall if it's been covered on this thread, but the cost of social care is horrendous. There've been a couple of MoneyBox programmes on R4 this week. My mum is burning through her savings at ~£8200 / month. The social care review HAS to address this with an aging population. Perhaps the subject of another thread.

South Stand Bonfire · Feb 6, 2025

timbha said:
Minimising tax is one objective. Another is having fun. Both should be in your planning.

The plan will be spending a couple of weeks each Spring and late Summer down in Southwest France and a splurge long haul holiday each year, until at least my early 70s. As someone said on here, you spend your whole life saving, so when I know I’m retiring, I plan to have a few decent trips abroad. I think I’m comfortable on the financial planning side of things but know I will need to do something to keep my mind stimulated such as volunteering, charity work etc say a day a week. That’s my next hurdle, working out what I need to do with my spare time so I don’t just end up doing f all.

Professor Plum · Feb 6, 2025

South Stand Bonfire said:
The plan will be spending a couple of weeks each Spring and late Summer down in Southwest France and a splurge long haul holiday each year, until at least my early 70s. As someone said on here, you spend your whole life saving, so when I know I’m retiring, I plan to have a few decent trips abroad. I think I’m comfortable on the financial planning side of things but know I will need to do something to keep my mind stimulated such as volunteering, charity work etc say a day a week. That’s my next hurdle, working out what I need to do with my spare time so I don’t just end up doing f all.

Check out U3A and local colleges for adult education courses. I’ve done several plus I took up lawn bowls which is a superb way of spending summer days. I’ve also joined a local hiking group and walk at least one day a week. I’m also working through that huge pile of bought-but-not-read books accumulated over a lifetime. I’ve never been a keen gardener but I’ve started to find growing vegetables quite a fascinating hobby. Plus holidays of course and most Albion away matches. Hoping to go to Oz for the Ashes series next winter.

In short, I’ve never been so busy, and that’s without consciously trying.

South Stand Bonfire · Feb 6, 2025

Professor Plum said:
Check out U3A and local colleges for adult education courses. I’ve done several plus I took up lawn bowls which is a superb way of spending summer days. I’ve also joined a local hiking group and walk at least one day a week. I’m also working through that huge pile of bought-but-not-read books. I’m never been a keen gardener but I’ve started to find growing vegetables quite a fascinating hobby. Plus holidays of course and most Albion away matches. Hoping to go to Oz for the Ashes series next winter.

In short, I’ve never been so busy, and that’s without consciously trying.

I’d like to do a photography course. I have all the gear but no idea! Maybe that’s my calling!

Professor Plum · Feb 6, 2025

South Stand Bonfire said:
I’d like to do a photography course. I have all the gear but no idea! Maybe that’s my calling!

Yes, I did one of those at evening classes! Really enjoyed it and learnt a lot. Retirement means (if you want to) you can get out during the ‘golden hour’ just after dawn and just before sunset when the light is most appealing. Photography is a great retirement hobby though the last camera is complicated enough to make me retreat back to basic SLR and iPhone for most pics!

Cheshire Cat · Feb 6, 2025

BrightonCottager said:
Thank you, and to @Daddies_Sauce , @dazzer6666 and others who chipped in on this (& the St James Place / Ascot Lloyd and Norwegian cruise issues). One of my acquaintances is in their 70s and has deferred their state pension, because theyre taking a salary and I think has a flat they used to live but now rents out.

I can't recall if it's been covered on this thread, but the cost of social care is horrendous. There've been a couple of MoneyBox programmes on R4 this week. My mum is burning through her savings at ~£8200 / month. The social care review HAS to address this with an aging population. Perhaps the subject of another thread.

See the various threads on dementia.

Care home costs around here are c£1500 a week.

So for all you out there boasting about what you will do in your retirement, make sure you stay healthy because if you become ill life can deteriorate very fast and your savings will disappear faster than you imagine.

Dave the OAP · Feb 6, 2025

Cheshire Cat said:
See the various threads on dementia.

Care home costs around here are c£1500 a week.

So for all you out there boasting about what you will do in your retirement, make sure you stay healthy because if you become ill life can deteriorate very fast and your savings will disappear faster than you imagine.

Unless you plan correctly

and no one is boasting. People are just enjoying life after many years of struggling with shit jobs etc.

sorry if that upsets you

North of Robertsbridge · Feb 6, 2025

South Stand Bonfire said:
I’d like to do a photography course. I have all the gear but no idea! Maybe that’s my calling!

Yes. I started with a great teacher at ACRES (adult courses in rural East Sussex) at Crowborough, but sadly they moved the second term to Uckfield, which is too far from me. There should be good options around Brighton

Mancgull · Feb 6, 2025

BrightonCottager said:
Any views on deferring state pension for a few years? You get more if you do, but presumably have to live longer to justify it?

It used to be worth doing but the factors changed a few years ago and now probably not.

East Staffs Gull · Feb 6, 2025

Shropshire Seagull said:
Nice to do that but NOT a good plan if you are in a defined benefit occupational pension scheme as this will adversely impact what you get when you eventually start to take it.

Ignore this message if you're not in a DB scheme.

Absolute b******s. Reducing to four days will not affect any DB pension earned to date. The reduction in days will only affect pension earned after the change.

dazzer6666 · Feb 6, 2025

East Staffs Gull said:
Absolute b******s. Reducing to four days will not affect any DB pension earned to date. The reduction in days will only affect pension earned after the change.

Totally depends on the scheme doesn’t it ? Some now are using average salaries over a time period for example, so could be impacted.

Shropshire Seagull · Feb 6, 2025

dazzer6666 said:
Totally depends on the scheme doesn’t it ? Some now are using average salaries over a time period for example, so could be impacted.

Indeed, and was the case with both of my DB schemes, so absolute b******s to say that it was absolute b******s.

Going to a 4-day week would have been a 20% cut in my final salary, which multiplied by the 60ths earned for each completed year was worth heeding the advice I got ....

alanfp · Feb 6, 2025

Shropshire Seagull said:
Going to a 4-day week would have been a 20% cut in my final salary, which multiplied by the 60ths earned for each completed year was worth heeding the advice I got ....

Need to check the respective scheme rules very carefully as this is NOT typically the case. In the schemes that I know about, your 'final salary' remains the same - but you only accrue 80% of that year as 'service'. This seems to be logical and fair, so I believe this is the norm for all DB schemes. But as I say, worth double-checking.
I'm not so familiar with CARE schemes but I would have thought that a similar approach would be taken, i.e. that the 80% service for that year would go into the equation when calculating the 'average salary'.

Also in a lot of schemes, certainly the Local Govt PS, your 'final salary' is actually the highest salary that you've earned in the last three years of service.

alanfp · Feb 6, 2025

Mancgull said:
It used to be worth doing but the factors changed a few years ago and now probably not.

Break even point appears to be that you want to survive for 17.2 years after taking your enhanced pension.

Wes Tupper · Feb 7, 2025

dazzer6666 said:
Totally depends on the scheme doesn’t it ? Some now are using average salaries over a time period for example, so could be impacted.

No. It doesn’t depend on the scheme. Even with average salary schemes a full time equivalent earnings figure is used for part-timers. It is the year’s pensionable service that is adjusted in the case of a part time worker. If you work half the normal full time hours for say 10 years, you will be credited with 5 years pensionable service for that period.
Reducing your hours cannot by law impact the pension that you have already built up.

Wes Tupper · Feb 7, 2025

Shropshire Seagull said:
Indeed, and was the case with both of my DB schemes, so absolute b******s to say that it was absolute b******s.

Going to a 4-day week would have been a 20% cut in my final salary, which multiplied by the 60ths earned for each completed year was worth heeding the advice I got ....

I’m sorry, but in that case you were very poorly advised. Legislation protects pensions already built under up in DB schemes in the case of hours reducing in people’s final years of work.

dazzer6666 · Feb 7, 2025

Wes Tupper said:
I’m sorry, but in that case you were very poorly advised. Legislation protects pensions already built under up in DB schemes in the case of hours reducing in people’s final years of work.

I suspect this discussion is nuanced…….people on DB schemes typically get forecasts of their final pension at normal retirement age based on their current conditions - the numbers in those forecasts will drop if they retire early or earn less…….

[Misc] Retirement

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