I'm thinking of finishing work on 4 years when I'm 60...where did that go..!!!
Anyways trying to think of the best way to sort this out .
According to my pension advisor it won't pay a lot out so looking at finishing and using that drawdown to take money out yearly until retirement when I can get state pension
From what I understand you can get £12000
Tax free a year ? Or there about probably wouldn't need that though because I would be pottering about doing lessons and stuff..
I don't have any mortgage or loans to pay ...does anybody know off this is the right way to go ...or is there something more beneficial I could do ...like buy a 57 les paul..
Comments
Have a look at the Gov pension site for an estimate of what you’ll get in state pension and when you’re eligible for it, it might not be as much as you think.
Your tax-free allowance is (this year) £12500.
You can take the first 25% of your pension fund pot tax-free.
BUT everything you draw down after that 25% is taxable, because you didn't pay tax on the money you paid into the pension. In theory you could therefore draw down £12500 every year tax-free, until the pot runs out.
All your income over £12500 will be taxable at 20%.
If you stop working, will you keep on paying National Insurance? This will have a bearing on how much your state pension will be when/if you reach the age to claim it.
If I were you I'd take a good look at the government pension website: https://www.gov.uk/browse/working/state-pension
It will let you see what your state pension age is, how many years contributions you need to make, and how much your state pension will be, when you're able to claim it.
Don't forget your remaining pension pot stays invested and will grow (potentially) as well. Check the historical pension growth rates and you should be able to forecast an annual growth of around 7% on average, 2018 was a poor year for mine but growth has been healthy most other years. It's a guess obviously but you need to factor something in.
I have a spreadsheet that shows this growth and also shows a drawdown amount that increases 2% a year to keep up with inflation and takes off 20% tax after the 25% tax free every year. Run this as a model and and you can adjust the amount you withdraw each year as required to see how long it will last, reducing once the state pension kicks in. Currently my drawdown would run out around the age of 86 if I started drawing down at 57, but this doesn't allow for extra pension contributions I hope to make in the last few years.
Things I need to add as the charges for the drawdown scheme I end up with and the national insurance contributions, do they need to keep being paid if you stop work before state pension age? I need to check into that.
One of the reasons I am doing it this way is I have heard of a few people that have paid into a pension all thier lives when they come to pension age don't get as much as say somebody who hasn't made any provision at all...and get payments through different benefits I would presume ...iff I was going to be good pension this dosnt really matter but for smaller pension pots it seems you are just saving up so the goverment dosnt have to ..iff that makes sense ...and after about 40 years so far paying tax winds me up ...
It's all very confusing and the more I look the the more confusing it seems about the best way to go
I’d avoid taking any pension money in advance, if at all possible.
The State pension is a welcome payback from your own contributions over your working life.
But it’s not exactly generous, and it’s onset will be delayed.
Check the website as others have said
I think about mine a lot, although it’s Local Govt Pension Scheme so doesn’t work quite the same way( or I’ve not understood it in the same way). The temptation at the moment is to take it from the minimum age (55) which will give me a very basic fixed income then look for part time/ temporary jobs to top it up - my assumption that pushing trolleys around Asda will be less stressful than social work although maybe that’s a wrong assumption!
They have a helpline for ad hoc questions but you can have a free Pensions Wise call.
I've just finished a contract working for them. I'm a Wealth Manager by trade. It's a great service and gives you around 1 hour of guidance around all the options.
A couple of pointers, money has to last a long time as we are living longer. Invest in low charge funds, 0.3% Annual Management fee, spread monies across different countries in trackers, Vanguard are a great fund manager for this.
Don't allow a financial adviser to take a regular fee, 0.5% to 1% they will want, they are typically NOT fund managers and only tell you the very basics on investment funds.
Red meat and functional mushrooms.
Persistent and inconsistent guitar player.
A lefty, hence a fog of permanent frustration
Not enough guitars, pedals, and cricket bats.
USA Deluxe Strat - Martyn Booth Special - Electromatic
FX Plex - Cornell Romany
The NI thing is odd. Yes, you need 35 years of contributions to qualify for the full state pension but they will then knock a sum off for every year you don’t contribute any NI payments. For instance I gave up work at 58 and will have 8 years of non-contributing years according to the Gov site: so despite 42 years worth of NI payments I still wont get a full pension. I lose even more because my company opted me out of full NI payments. In some respects people who have never worked will benefit more, because they get the full pension no matter what.
Feedback
Following advice from a trusted IFA, I took my 25% tax-free lump sum (this went on some major house improvements, etc.) and the rest has been put into a draw-down fund which has been growing quite nicely.
Between Our Maud and myself, we manage on our state pensions and her Electricity Industry pension for annual income, and only use the draw-down for out-of-the-ordinary expenses, such as our trip to New Zealand for our daughter's wedding.
So far, so good...
As I only have £20k in mine, it meant I could have had some useful money for a project, but now I am forced to have to receive and annuity of only £700 - a YEAR ! Oh and of course pay Tax on it...
There are various options and in pure financial terms carrying on where I am until 67 obviously comes out tops but I want to find a way to be at work less or not at all. MrsTheWeary takes her NHS pension next year and it effectively pays her what she earns ( part time) now so that seems like a no brainer and we'd like to do some stuff.
With joint pensions and lump sums in the bank we should be fine but it's how many repairs on the house, bailing out the kids, getting the car fixed,etc, before we start running out of money. Making the decision to take my pension is fairly final even if I work on top.
Sorry, none of this helps Barney other than acknowledging it's bloody complicated!
Not sure I understand. What did Hammond do?
I think you can still take all your money out in one lump... but obviously, you have to pay tax on anything over 25% of the pension fund value. Also, the compulsion to buy an annuity was removed some time ago.
Feedback
Feedback