The Retirement Thread
176 watchers
Nov 2020
12:43pm, 24 Nov 2020
1,774 posts
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WtnMel
I'm so glad I stumbled across this thread and hope I'll be able to contribute in future as and when I can. I retired early in 2015. I was due to retire in 2017 and was reasonably happy with my work (IT Support). But I'd never been one who 'lives to work' - with me it had always been that I 'work, to live'. So when the opportunity arose to retire early I grabbed it with both hands. I was lucky - I was made an offer but it wasn't enough so I said I needed twice what the company had offered to survive comfortably .. cue a sharp intake of breath from my boss but she said she'd see what HR had to say. The following day my boss told me the company would pay me twice their original offer. As a postscript to this, my boss was also approached around the same time and ended up retiring the same time as I did. The best advice I was given (years before I actually retired) was on a walking holiday when one of the people there told me - "Don't retire FROM work - retire TO DO something". And also, to take a break after retiring to enjoy having the freedom of not working before taking on any other responsibilities. As far as pensions are concerned, I had several from various company schemes as well as some personal pensions that had been frozen. I did my best to review them and decide what to do. But eventually, on advice from my partner, decided to call in the experts and spoke to an IFA. He was able to advise on which companies had a 'good name' (one was notorious for adding non-guaranteed terminal bonuses to make the pension appear better than it was, then whisking the bonus away just prior to retirement). The upshot was I kept my money in some schemes and moved the remainder into a SIPP (self-invested personal pension). I don't make any investment decisions myself - that's all done using the modelling system my IFA uses. The returns have been better than I expected. So much so, I've been able to drawdown money from the SIPP each month (25% of which is tax-free) and the 'pot' has still grown in value. The drawdown payments are flexible so could be increased if there was a 'special' holiday or similar I wanted to pay for. I'll carry on with the SIPP until such time as I want to convert it to an annuity - but I don't see that happening for a while yet. |
Nov 2020
2:09pm, 24 Nov 2020
37,536 posts
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♪♫ Synge ♪♫
Interesting, Mel. Out of interest, what would make you switch to an annuity later on? I am - hopefully - still a couple of years off needing to start breaking into my pension fund, but I have thought that I would be unlikely to buy an annuity. A big advantage of flexible drawdown seems to be that, as you say, you can vary the amount monthly and leave the rest to keep growing. Also, if you die before the fund is completely depleted, you can pass something on as an inheritance rather than effectively have the annuity provider make money on it. I appreciate that the flip side of that second point is that, if you live longer than the projections assume, the annuity will keep paying out and you will never run out, but I am working on the premise that, as I get into my nineties, I won't need nearly so much to live on anyway. I know a lot of people still plan to buy annuities - I suppose the certainty is part of the attraction? |
Nov 2020
2:11pm, 24 Nov 2020
20,544 posts
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EvilPixie
Given how poor savings rates are is it worth (or indeed can you?) placing a lump sum into your pension?
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Nov 2020
2:15pm, 24 Nov 2020
37,537 posts
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♪♫ Synge ♪♫
EP - if you know you can do without the money until you retire, definitely, as you get tax relief on contributions. (Make sure you don't breach any maximum contribution limits - there are annual and lifetime limits.)
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Nov 2020
2:22pm, 24 Nov 2020
20,547 posts
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EvilPixie
husband seems to be coming up with excuses to spend as there's no point saving which seems silly I may suggest this |
Nov 2020
2:28pm, 24 Nov 2020
1,346 posts
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mushroom
Yes - my point a few pages back. Even £500 saved now means one month closer to retirement in a few years, especially if you follow WtnMel's comment above about 'retiring to' something.
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Nov 2020
2:29pm, 24 Nov 2020
37,538 posts
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♪♫ Synge ♪♫
As a rule (and to be clear I am not giving financial advice anywhere in this thread), if you have spare cash, start by paying off liabilities, loans, mortgages etc, then think seriously about pension contributions. That nice Mr Sunak will contribute 25p to your pension scheme for every £1 that you put in, which is well worth taking advantage of. And if you're a higher-rate taxpayer, he'll contribute even more (for the time being, at least, although word is that this might be something he'll withdraw in order to help pay for you-know-what). Or take a chance and book a Cunard cruise for 2021! 
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Nov 2020
2:31pm, 24 Nov 2020
20,551 posts
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EvilPixie
Synge no debt here even mortgage was cleared 10 years ago hubby used to work in bad debt for TSB so has always been cautious |
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Nov 2020
2:47pm, 24 Nov 2020
1,347 posts
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mushroom
This thread has inspired me to read more about the FIRE movement which started in the US. "Financial Independence Retire Early" playingwithfire.co Interesting to hear about how old age Pensions started in the US: "In 1935, Franklin D. Roosevelt proposed the Social Security Act of 1935, to ease the financial strains of retirement. Starting at age 65, workers could retire and qualify to receive social security benefits. At that time, the average life expectancy was 61, so setting the retirement age at 65 would mean that most people would never live to retirement. This would make it a cheap plan that could be sustained with moderate taxes - the idea of the retirement age was made up by a bunch of economists, actuaries, and politicians." In the UK, the basic state pension, was introduced in January 1909. The qualifying age was 70, and was means tested. Even for someone born in 1980 the UK life expectancy was approx 72 years, so I guess it wasn't expected to be used much in 1909! |
Nov 2020
2:51pm, 24 Nov 2020
49,995 posts
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Velociraptor
Provided the rules don't change dramatically, putting surplus income into a pension fund up to the limit is a "Future You will be glad you did," thing. And it is so easy to do now. Starting a private pension was quite a laborious and fee-laden process until the late 1990s when stakeholder pensions were introduced, and the obligation to buy an annuity was only lifted a few years ago.
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Jigs Useful Links
FE accepts no responsibility for external links. Or anything, really.- Money Helper
- How Much is Enough to Retire On?
- Retirement Living Standards
- How much will you need to retire?
- Free Govt website for pension advice
- SIPP pensions
- ISAs
- Check your National Insurance contributions
- Check your state pension account
- Martin Lewis on pensions
- Support and advice for those widowed under the age of 50
- Power of Attorney information
- Making the most of your retirement
- 20 tips for a happy retirement
- Married Couple's Allowance
- Aviva guide to retirement planning
- U3A
- U3A Local Sites - map
- Make a Power of Attorney
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