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For my last 10 years (43 to 53), I worked (on average) 6 months on/6 months off. I was an IT Contractor so could make 6 months of fees into a reasonable annual salary. Some engagements went on longer than 6 months so I simply extended the following fallow time to compensate.
A* - recommended...
After spending the time off thinking about it and doing our sums, I am going to resign the clinical post tomorrow.
@polarisandy - I probably cannot articulate the profound effect your inertia comment made, thank you so much for taking the time to post. It resonated that is EXACTLY where I am with the clinical role. I am sure I will miss it at some point but COVID significantly impacted the enjoyment I got from clinical work (at one point, all I saw were complaint patients - you can imagine how soul destroying that was).
Re:That video posted earlier
He made a point that the tax free element of a pension does not have used at the start of the pension, or as a lump sum and spreading the use of the tax free element is good tax planning. The example he mentioned was when talking about a DC pension.
Does anyone know whether the same flexibility is available for DB pensions?
I have about 20 years contributions to the old Civil Service pension which will provide me with what I understand to be a "25% tax free lump sum" which I've always assumed I'd get as soon as start claiming though, for other reasons, that's actually very tax inefficient for me (and I don't need to cash at the moment).
So, does anyone know whether I can defer to tax free element and/or spread it out over a number of years??
(I'll double check with the pension administrator but such flexibility would be very useful to me!)
whether the same flexibility is available for DB pensions
I am not familiar with the CS pension, but most public sector schemes are similar. The older schemes had a mandatory tax free lump sum that you had to take when you took the pension - usually around 25%. Newer schemes (and you can be in more than one depending on how long your service lasted - I am in three different schemes) give you the option of how much you want as a lump sum and ow much as pension.
You can usually defer when you take the pension too - so if you dont want to takemit now, you can defer it and yu should get slightly more when you do actually take it.
or other reasons, that’s actually very tax inefficient for me
Trying to undersatnd this - it is tax free? It might affect benefits I suppose?
The email was sent at 9am today with finish date of 1st April. I am off today on leave so we'll see what it's like when I next go in......
My overwhelming emotion this morning was relief, so I am hoping that means it was the correct decision (fingers and toes being crossed as I say that)
Trying to undersatnd this – it is tax free? It might affect benefits I suppose?
I don't live in the UK, so whilst I won't pay UK tax, I'll have to declare it, and pay tax on it where I live now. There's a 50:50 chance I'll return to the UK (or Europe) some time in the next few years and it will be bloody annoying to pay tax now (when I don't need the cash at the moment anyway) if I could defer receiving it until I'm somewhere where it's considered tax-free...
sprootlet
The email was sent at 9am today with finish date of 1st April. I am off today on leave so we’ll see what it’s like when I next go in……My overwhelming emotion this morning was relief, so I am hoping that means it was the correct decision (fingers and toes being crossed as I say that)
There is no right or wrong decision but the decision you make is right for you because you feel emotional relief. This looks like years of accumulated burden, stress and blockage suddenly being cleared.
There is no measurement for relief as I can only describe it as being a light suddenly being relit in yourself by pushing away the darkness that had accumulated for years.
From now on you can focus on things that make you happy and share that happiness with others.
Getting bored is not a bad thing but not learning to do what you want is.
Free! You are Free! Enjoy!
For me there is very complex family problems (all caused by others and a s***bag, lowest of the low, BIL which severely impacted on me) that I need to solve before I can even retire. Worst still his gene pool have almost 100 years lifespan (each of his parent is about that age). Hopefully, all can be sorted this year otherwise I would have wasted this life.
I retired at 57 at the end of August. 27 years in the NHS. Had been unrealisticly thinking about it for a few years, but when covid hit, it was 'all hands on deck'. Annual leave was postponed, had to do extra 12 1/2 hour shifts. Although the working conditions weren't great, the commoradery generally was.
Unfortunately it all seems to have taken it's toll (everyone in my small team is knackered). Doing shifts, and having to deal with inept managers just brought everything to a head.
Mainly to help out the team I was in, I do a few bank shifts. Normally 2 long shifts a week, but also taking a break of 2 to 3 weeks occasionally. This may well end soon though as I still haven't got paid for any of the bank shifts yet (more NHS incompetence - fortunately they paid me for an extra month after I left).
I found the hardest part of retirement is the guilt (?) of seeing the OH having to leave for work in the morning. I'm sure I'll get over this though. I better, she's got a few more years left to go. Filling my time hasn't proved to be a problem so far.
One of the things that is key in my thinking about retirement is whether I’ll need to support / assist my kids. They’ll be teenagers when I’m 50, young adults when I’m 60. It seems really hard to predict whether they’ll still need me, financially, at that point.
This is me. 50 this month, with very late teens/young adults. I feel like there is more that I can do for them and keeping the income flowing is, regrettably necessary for that and to ensure I have enough to retire on.
I'm entertaining part-time at 60, but it just depends on what happens between then and now. In the meantime I'm focussing on my pensions growth and paying down the mortgage.
I’m the same age, 50 this year with 19/15 yo. Best decision we ever made was topping up the child trust funds they were given by govt with a monthly direct debit, so they will at least have a decent start for deposits etc, plus we will pay their maintenance for uni.
Barring disaster we will be fine in retirement from 60. Any inheritance we receive in the future will go straight down to the kids, plus we could downsize to help out if needed. Mortgage will be paid off 3 yrs before retirement so as well as smashing that straight into the pension for 40% tax relief, that gives a bit more spare to help out too.
In reality, we should both pass on sizeable lump sums from our pension pots to the kids down the road too, as we are planning to live on the earnings from the pots rather than drawdown the principal.
The last few years have been a tough watch for my investments, as I’m in funds 100% exposed to equities and biased to growth, which have been the hardest hit. They are coming back though and my US tracker fund just keeps on producing, with only 0.15% fees!
I plan to keep at least half my pot in equity only funds into retirement, as I see drawdown as a long game, rather than the necessity of taking an annuity on “A-Day” so playing safe in the preceding years. How many funds missed their best compounding years with that strategy??
PS - fully aware that I’m lucky to be in a solid financial position, with a good company DC pension on top of a military FS scheme from 60. I feel we brits can be a bit too shy to talk money sometimes, but threads like this are a great sounding board for such a broad spectrum of us, that being able to talk openly on here is really good.
The last few years have been a tough watch for my investments, as I’m in funds 100% exposed to equities and biased to growth, which have been the hardest hit.
Yeah, but generally still providing better returns than more conservative funds over time, if you can live with the volatility.
Indeed. As that chap James Shack on the video says, selling a fund when it’s down is the worst time. One of my funds dropped 60% from its 2020 peak when Ukraine started. Ive still got it and it’s still about 20% down on when I purchased it.
I am contemplating feeding into a vanguard Lifestyle fund though. I have to spend 4 months next year working full time after a promotion, so I will stash the extra into pension and think that might be a good time to start a vanguard 80/20 fund. I want to have 1 fund specifically earmarked for our retirement sailing project and think I might use that. It will be an extra incentive to feed in anything spare as AVCs.
As that chap James Shack on the video says, selling a fund when it’s down is the worst time.
Although if you held on to RBS shares till the end, you might disagree...
Those that are already retired would you have saved harder on done anything differently if you could wind back the clock?
selling a fund when it’s down is the worst time.
Maybe. There is always an opportunity cost to holding onto falling investments. There may be a time to bail, bake in the loss and take an opportunity elsewhere. I did this with one fund after buying it very high just before the pandemic. Made a loss but the reinvestment has almost totally brought that back.
I have held onto most of my funds for many years and simply continued to invest through thick and thin and I was fortunate to invest in Fundsmith from the day it began. It has not been spectacular compared to many but has continued to be the largest fund I own. It aligns with my basic understanding of investment. Start early and pick the companies that have already won, then do nothing. Anyway, anything can happen and you take your chances...
Try not to think too much about the billions being invested in new oil drilling wells to give some folk great pensions while we have energy costs sky high and global warming on the go causing major floods then maybe buying an electric car and voting green
With hindsight? Maybe pay attention to the pension benefits attached to jobs. Similar level job to my wife with similar salary. Mine pays 15% of salary if I put in 6%. Hers is only 5/5. We will have similar DC pots at retirement but I will also have a £13k annual Final Salary.
hammy7272
Free Member
Those that are already retired would you have saved harder on done anything differently if you could wind back the clock?
yes, i would have started a pension at 18 years old, and then retired at 40.
Made better use of tax benefits at the higher rate whilst I could.
Very much this, massive benefit that really boosts your pension pot.
Hindsight (low key retirement flex) - you can actually get taxed on your pension contributions if they are too large: https://www.gov.uk/tax-on-your-private-pension/annual-allowance
(I didn't actually incur this but came far too close for comfort over one three-year period)
Hindsight? As I keep reminding my nephews I hammered AVCs 26 years ago from age 30, so a huge lump coming in addition to my company DB pension in 4 years time. My colleagues laughed at me for not taking extra holidays in Spain, but cycling holidays much cheaper any way. So one of the very few decisions I got right. Both of nephews are early 30's and dont have a handle on it. They yawn when I do the annual talk with them. Dickheads.
Stepped off the corporate hamster wheel at 51. No regrets. You need less than half what you think you do when working.
Early investment is key. Although I didn’t appreciate it at the time my parents made me take out a £15 a month pension when I was 18. I consolidated it into Vanguard 2 years ago at a value of £67k. Do the maths (I was 50) £15 x 12 months x 32 years = about £6k of investment, so it’s grown 10x.
And for Danstw I put it into Lifestrategy 100 (within a SIPP) whereby it’s grown by £4.5k despite the currently volatile markets over 2 years. I’ve at least 10yrs to go, so it looks promising
55 next year. I’ve, through luck rather than management, benefitted from decent pension schemes since starting work at 20 so have a decent pot. I have a meeting with a Financial Planner next week to see what the strategy and chances are for winding down/retirement/part time. We’ve also inherited a small pot of cash and the initial view of the FP was to pay it into a private pension in my name to get the tax benefits. Seemingly, you can roll back three years of pension contributions allowance.
I have watched quite a lot of James Shack videos and he delivers the advice well, IMO.
^^ I'm still unsure what actually constitutes a 'decent pot'..
So much of the online advise suggests £800k to £1M, which is reassuringly at odds with many of the experiences of some who have posted. What does a, say £500k, pot really mean, lifestyle wise if retiring early 60's with no mortgage and kids all grown up and away ?
^^ I’m still unsure what actually constitutes a ‘decent pot’..<br /><br />
The annual amount of money you’d like to have to support your lifestyle between the time you retire/have no other income, until the time you pass away. So £30k per year between 67-87 or 20yrs needs a £750k pot (becuase you’ll pay tax at 25%)
Not always that simple becuase it’s a linear example and you may need less in your later years as your becomes less active. And, you might gamble with less in that leaving the remainder invested year on year achieves an amount of growth - that’s risky though IMO
This may be of help to people
don't forget when you do those sums
1) state pension kicks in at a given age, and pays approx £10k/year. So you can blow through more of your pot before that and less after with the same amount of cash in your pocket
2) whhether you'll have a property you can live in rent-free
3) some risk of "running out o money" may be acceptable if you have #2 sorted as you can use the value in that to cover the last few years. Sure you'll have less to pass on, but there's also a risk you have more to pass on.
4) you can mix an annuity with simple drawdown to give a level of protection and a level of value.
(becuase you’ll pay tax at 25%)
as a pensioner (not paying NI) you'll only pay ~£2k tax on a £30k withdrawl - 25% is tax free anyway (assuming you haven't rinsed the lump sum), leaving £22.5k, of which the first £12.5k is tax free, leaving £10k to be taxed at a rate of 20%. Overall tax rate is thus ~6.5%
All good points, I very much simplified it above so thanks for augmenting.
v useful, thanks
ballpark you may get something like 4% annually from your pension pot - could be more or less depending on age, gender, index-linking, survivor's pension. Maybe 6% or more if the factors work in your favour - especially if you're past 60 when you start. That's the rough picture. So 1 million might give you 40k-60k per year which any normal person would regard as a very ample income indeed assuming no mortgage or children to pay for. Over 100 quid per day, every day, to fritter away on food and hobbies!
i was having a play with this tool over lunch, seems quite good at factoring in variables too :
For those with Vanguard SIPP - or similar - be aware that the transition from equities to bond investing as part of the 'glide path' is not risk free.
Chaos in bond market in mid-2023 was bad news for those whose SIPP maturity co-incided.
Yes, a rare occurrence but the potential should not be ignored.
FWI, I do think the state pension provision kicking in is overlooked to a degree and if you were being robust, you could draw down a decent chuck of the pot while you are fit and able to spend it, then get to 67/68 and suddenly you have circa £20k coming in if you are a couple with full NI contributions. That would certainly take a good deal of heat from the pot supporting you, more so as your spending may have dismissed by then and have no mortgage and dependants. £20k annual income takes a hefty annuity price or pension pot to achieve otherwise.
Also to add that a lot of my retired cycling buddies have downsized and moved to a cheaper area and country - the latter I intend to do.
1 million might give you 40k-60k per year which any normal person would regard as a very ample income indeed assuming no mortgage or children to pay for.
I like to think I am a normal person and I do well enough on the very bottom of that with a kid and a mortgage but then I don't think this thread is really for me
Chaos in bond market in mid-2023 was bad news for those whose SIPP maturity co-incided.
Not sure what you mean by SIPP maturity? You can crystalise and drawdown as much or as little from your pot as you want when you want.
FWI, I do think the state pension provision kicking in is overlooked to a degree
I'm in my early 40s. I strongly suspect that by the time I get there, the state pension will either be means-tested out of meaningful existence, start after average life expectancy runs out, or both.
Personally I wouldn’t be in any fund that had a fixed transition to bonds based upon time only. Not all Vanguard funds do this BTW, just the target retirement date ones.
James Shack suggests you can double the value of a pot in the last 5 years to retirement, so if your pot is smaller, a couple of years extra can make a big difference, also getting you closer to State pension age, so a smaller gap to bridge.
Shinton - many default “Lifestyle” funds with occupational schemes have an automatic transition to bonds /gilts/cash built in. Even getting out of this often has very limited choice.
My provider allows me to transfer out of the main scheme into a SIPP with access to a fund supermarket containing 1000s of funds.