I have questions, but don't know where to start.
Discussion
Having finished typing all that, I thought I'd better apologise for the rambling nature of this. Finance just makes my head spin. 
I'm 59, 60 at the turn of the year. At 60 I can take my final salary pension, currently that'll be £24,100 per annum without taking the lump sum.
For each year I defer, that pension increases by 8% compound. At 62, when I plan on retiring I can a lump sum of £124k and a pension of £17,200, or a £28k pension. I'm taking the lump sum. Good decision?
When I hit 67, 5 years later I'll get a full SP. Wifey will get hers 18 months later. She is currently getting a small pension, worth £1,800 per annum and has another worth about the same she isn't yet taking.
I have a DC pension which I am paying into, that pot should be worth around £100-110k at 62.
My retirement plan is as follows:
Retire at 62 and take the lump sum. We'll have £124k plus around £20,000 per annum, plus whatever the DC gets me, £6k per year? So £26k in pensions.
I've simply taken the lump sum and divided it by 5 to give us 26K pension + 25k per annum from the lump sum to enjoy ourselves with for 5 years. We'll have about 20K left on the mortgage when I retire, and around 30k in savings. Use the savings to pay the mortgage off, in one go or keep the monthly payments going?
At 67/68 our pensions will give us an income of £49k, even if we blow the lump sum on 5 years of travel etc. I think the kids will be gone by the time I get to SP age (both have expressed that wish and have good savings) so we will probably downsize and release another £100k from that.
We plan on leaving the house to the kids when we're gone. We started with nothing, and we were left nothing, so they've had a better start then we had and will get a home to split after we've gone.
One of the question I have is how to I protect the lump sum? Where to invest? How safe will that be?
Do I take an annuity with the DC, or drawdown?
Do I need an IFA, a pension expert, or an audience with The Pope?
That's all I have. If you got this far, apologies. If you have any comments, or can point me somewhere, I'd appreciate it.
I'm 59, 60 at the turn of the year. At 60 I can take my final salary pension, currently that'll be £24,100 per annum without taking the lump sum.
For each year I defer, that pension increases by 8% compound. At 62, when I plan on retiring I can a lump sum of £124k and a pension of £17,200, or a £28k pension. I'm taking the lump sum. Good decision?
When I hit 67, 5 years later I'll get a full SP. Wifey will get hers 18 months later. She is currently getting a small pension, worth £1,800 per annum and has another worth about the same she isn't yet taking.
I have a DC pension which I am paying into, that pot should be worth around £100-110k at 62.
My retirement plan is as follows:
Retire at 62 and take the lump sum. We'll have £124k plus around £20,000 per annum, plus whatever the DC gets me, £6k per year? So £26k in pensions.
I've simply taken the lump sum and divided it by 5 to give us 26K pension + 25k per annum from the lump sum to enjoy ourselves with for 5 years. We'll have about 20K left on the mortgage when I retire, and around 30k in savings. Use the savings to pay the mortgage off, in one go or keep the monthly payments going?
At 67/68 our pensions will give us an income of £49k, even if we blow the lump sum on 5 years of travel etc. I think the kids will be gone by the time I get to SP age (both have expressed that wish and have good savings) so we will probably downsize and release another £100k from that.
We plan on leaving the house to the kids when we're gone. We started with nothing, and we were left nothing, so they've had a better start then we had and will get a home to split after we've gone.
One of the question I have is how to I protect the lump sum? Where to invest? How safe will that be?
Do I take an annuity with the DC, or drawdown?
Do I need an IFA, a pension expert, or an audience with The Pope?
That's all I have. If you got this far, apologies. If you have any comments, or can point me somewhere, I'd appreciate it.
You say it makes your head spin but you’ve given a pretty concise breakdown and split of numbers.
The one thing missing as grey goose has already said is the estimated normal living expenses you may need for the next few years to match.
If that is lower than your estimated annual pension income then the enjoyment pot can be just that.
If it’s higher than obviously you need to reduce the enjoyment pot.
Keeping a tally of the enjoyment pot is important given from it you may have a deficit or indeed surplus to carry forward as it were.
The other point is supposing you still want an enjoyment pot in years 6 + ?
Generally taking pension early is quite penal so waiting until until it’s normal due date is perhaps a better option especially if you can make the numbers work until then.
The one thing missing as grey goose has already said is the estimated normal living expenses you may need for the next few years to match.
If that is lower than your estimated annual pension income then the enjoyment pot can be just that.
If it’s higher than obviously you need to reduce the enjoyment pot.
Keeping a tally of the enjoyment pot is important given from it you may have a deficit or indeed surplus to carry forward as it were.
The other point is supposing you still want an enjoyment pot in years 6 + ?
Generally taking pension early is quite penal so waiting until until it’s normal due date is perhaps a better option especially if you can make the numbers work until then.
On the assumption that the income was 100% yours then tax would be circa £7,500 and obviously a little lower depending on how much was your wife’s portion of that income ie you have her £ 12,570 allowance to play with too but either way seemingly easily in excess of your normal annual bills.
Yes there is inflation to consider but trying to have a spreadsheet to cater for that for the next decade is probably a bit painful.
Your questions were as below.
One of the question I have is how to I protect the lump sum? Where to invest? How safe will that be?
Depends on your attitude to risk and how much you are depending on this. If it’s vital to keep safe then only really a cash based account which itself could be spilt into a mixture of fixed rate and instant split 4/5 etc and then repeat for year 2.
Or obviously you could split the sum into various other accounts ( stock market tracker etc ) but again only you know your risk attitude.
Do I take an annuity with the DC, or drawdown?
Crudely this will depend I guess on the amounts available to you when you have to decide but obviously once chosen that’s it.
Drawdown is more flexible ie you can alter the sums each year.
Do I need an IFA, a pension expert, or an audience with The Pope?
I am none of these.
Yes there is inflation to consider but trying to have a spreadsheet to cater for that for the next decade is probably a bit painful.
Your questions were as below.
One of the question I have is how to I protect the lump sum? Where to invest? How safe will that be?
Depends on your attitude to risk and how much you are depending on this. If it’s vital to keep safe then only really a cash based account which itself could be spilt into a mixture of fixed rate and instant split 4/5 etc and then repeat for year 2.
Or obviously you could split the sum into various other accounts ( stock market tracker etc ) but again only you know your risk attitude.
Do I take an annuity with the DC, or drawdown?
Crudely this will depend I guess on the amounts available to you when you have to decide but obviously once chosen that’s it.
Drawdown is more flexible ie you can alter the sums each year.
Do I need an IFA, a pension expert, or an audience with The Pope?
I am none of these.
LHRFlightman said:
For each year I defer, that pension increases by 8% compound. At 62, when I plan on retiring I can a lump sum of £124k and a pension of £17,200, or a £28k pension. I'm taking the lump sum. Good decision?
Sounds a bit short sighted to me...Even with the lump sum being tax free, if you assume 2.5% escalation on the pension income it'd take around 12.5yrs to get £124k after 20% tax. After that it just keeps on paying you more to retain the full annual pension.
greygoose said:
You probably need to do a budget to see what income you currently live off and how the pensions compare. Some costs might go down (like petrol/car costs if you commute a long way to work), others might go up like heating the house in winter if you both are going to be home more.
I have a year of every thing we spent since June last year. Its eye opening.We have paid off the mortgage and only Need about £1500 a month to survive with a few extras.
It's the other extras that add £1500 a month to that.
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