Retiring

[Citizen of Legoland]

This is the significant bit from that link

However, the good news is that you may still get a full ‘flat rate’ pension of £175.20 when you retire. This is because all of the years you work from 16/17 onwards are adding to your pension and slowly wiping out the impact of the deduction for contracting out.

Which confirms that you CAN get the full SP so long as your "contracted in" period is a total of 35 years. If you have less than 35 years at state pension age, you lose about £5/week (according to the article), so if you have 32 years contributions, your SP would be £160

At least, I think that's what it means.......

Actually, it's a lot better than that for most of those that did contract out. What happened was in 2016 the pension changed from the 2-part state pension (basic + additional) to the 1-part state pension we have now. The contribution qualifying period increased at the same time from 30 years to 35 years (sounds bad but we all generally contribute 40yrs + anyway so it's not a biggie unless there are long periods without working). In 2016 the government made the COPE calculations for everyone who had ever been contracted out (of the state additional pension).

I'm up to full pension as of this April but was contracted out for about 10 years. My number of years contributions is 36, so 26 contracted in and 10 contracted out. I don't need another 9 years to make 35 yrs "contracted in" though. If I had never contracted out I would have got to full pension around 2015, so only 6 extra years to make up the difference.

 

[give it to gordon]

I am nearly 61. One of my pension pots is 125k but only paying about 3k year !

I want to retire or go part time , do financial advisor cost alot because I havent a clue what to do .

Thanks

 

[flook]

I am nearly 61. One of my pension pots is 125k but only paying about 3k year !

I want to retire or go part time , do financial advisor cost alot because I havent a clue what to do .

Thanks

friend of mine has paid a FA around 4k in the last year or so, but he had a couple of things to sort that were a little out of the ordinary. Get quotes/ideas of costs

 

[hammocity]

I am nearly 61. One of my pension pots is 125k but only paying about 3k year !

I want to retire or go part time , do financial advisor cost alot because I havent a clue what to do .

Thanks

It depends on your type of pension. I've got one that's now dropped from 84k to 73k in a year but it's a defined benefit pension that pays 4K per year which is guaranteed. A lot of Financial Advisers are unable to sign off transferring the pot as their indemnity insurance doesn't allow it. If it's a defined contribution pot it's much easier. Depending on your health I think you should be able to achieve about 4-5k per year if you buy an annuity but at your age if you can transfer and are able to take 25% of the pot tax free (not all DB schemes allow this) you could draw down 12,500 per year tax free until your state pension kicks in then 3,000 per year until you've drawn out, that's all assuming you have no other income. If you have you'll be taxed on 75% of the pot and initially some at 40% which you have to claim back. Get a reputable Financial Adviser, shouldn't cost you more than a grand and it's the law anyway when taking the pot outside of your pension providers normal payout.

 

[hammocity]

friend of mine has paid a FA around 4k in the last year or so, but he had a couple of things to sort that were a little out of the ordinary. Get quotes/ideas of costs

My sister works for a FA and he wouldn't charge anywhere near that but as I stated in another post his indemnity insurance won't allow him to sign off any deal that is not financially practical based in a pension of a healthy person living until 89 years of age. Some of the less scrupulous Advisers will do it but they charge a lot more, my mate had a Civil Service pot and was quoted 16k on a 200k pension, there's some sharks out there.

 

[LGWIO]

Have to say hats off to City fans for this thread...never going onto RAWK I couldnt tell you if there is such a thread on there.....of course you would no doubt tell me that as most dippers are unemployed they dont have to worry about workplace pensions...
That said some interesting posts.
I can only suggest everyone gets the free consultation from Pensionwise.gov.uk or spends some time reading up at Moneyadviceservice.
As with everything, knowledge is power!
It makes sense to have an idea what you have to live on later in life.
I'm just glad I have my civil service pension and took out my added years. QAlthough the whole McCloud judgement is still clouding the issue and is impacting so many across the country

 

[flook]

Have to say hats off to City fans for this thread...never going onto RAWK I couldnt tell you if there is such a thread on there.....of course you would no doubt tell me that as most dippers are unemployed they dont have to worry about workplace pensions...
That said some interesting posts.
I can only suggest everyone gets the free consultation from Pensionwise.gov.uk or spends some time reading up at Moneyadviceservice.
As with everything, knowledge is power!
It makes sense to have an idea what you have to live on later in life.
I'm just glad I have my civil service pension and took out my added years. QAlthough the whole McCloud judgement is still clouding the issue and is impacting so many across the country

Most dippers are unemployed so don't have to worry about workplace pensions.

 

[SilverFox2]

I am nearly 61. One of my pension pots is 125k but only paying about 3k year !

I want to retire or go part time , do financial advisor cost alot because I havent a clue what to do .

Thanks

Not sure of current position but FT on Saturday lists the best funds for using your cash ie they want cash.
I looked round before transferring for best pension many years ago.

 

[SWP's back]

Just a gentle reminder not to purchase an annuity if you have a defined contribution pension. The rates are appalling and you are able to use flexible drawdown now.

 

[hampshireblue]

I am nearly 61. One of my pension pots is 125k but only paying about 3k year !

I want to retire or go part time , do financial advisor cost alot because I havent a clue what to do .

Thanks

I'm sure there's at least one on here who can advise!

 

[Manchester33]

I am nearly 61. One of my pension pots is 125k but only paying about 3k year !

I want to retire or go part time , do financial advisor cost alot because I havent a clue what to do .

Thanks

I appreciate you might not want to give more info on a forum like this, but it would be helpful if you did.

You say 'one of my pension pots', which insinuates you have more than one?

How much money would you require pa in retirement?

Do you qualify for the state pension and if so, what is your projected pension?

£3k pa from £125k is a 2.4% withdrawal rate. That is extremely cautious. If it's invested sensibly you should have no problem upping that slightly.

 

[give it to gordon]

I appreciate you might not want to give more info on a forum like this, but it would be helpful if you did.

You say 'one of my pension pots', which insinuates you have more than one?

How much money would you require pa in retirement?

Do you qualify for the state pension and if so, what is your projected pension?

£3k pa from £125k is a 2.4% withdrawal rate. That is extremely cautious. If it's invested sensibly you should have no problem upping that slightly.

How many money do I need ?!! Well my rent is 900 a month ! So would need around 1600 a month, ( that's cheap for the area ) but cant see that being possible to be honest. I have another 5 yrs before the state pension

 

[Chris in London]

Just a gentle reminder not to purchase an annuity if you have a defined contribution pension. The rates are appalling and you are able to use flexible drawdown now.

Unless you think you will live until you are 127 like that woman in France, who bought an annuity in her early 90s

 

[Gareth Barry Conlon]

How many money do I need ?!! Well my rent is 900 a month ! So would need around 1600 a month, ( that's cheap for the area ) but cant see that being possible to be honest. I have another 5 yrs before the state pension

You already have the right idea around working it out. You start with how much you need to live on. Make sure you are covering all your bills and anything that you might pay for in lump sums - you need to allocate money to accrue to pay for thinks like a new car etc if you need / want one.

Once you know how much you need then you take whatever pension payouts you have and add in a small amount of capital spend (your lump sum divided over say 30 years). If it doesn't add up then you work longer or reduce your costs until it does.

 

[Manchester33]

How many money do I need ?!! Well my rent is 900 a month ! So would need around 1600 a month, ( that's cheap for the area ) but cant see that being possible to be honest. I have another 5 yrs before the state pension

Ok, bear with me here. I'm going to throw a lot of figures at you but I've bolded the key sections: Your annual spending is £19,200, but in five years you will receive the state pension. Let's presume you earn the average state pension (£153.36 per week) you can subtract that figure from your annual spend (£19,200 - £7,974.72) which gives you £11,225.28 per year, that you'll need to withdraw from pensions annually.

The universal rule with withdrawing from pensions is called 'the 4% rule'. There's lots of information about it online. It presumes: your pension will grow by an average of 7% pa and that inflation will rise by an average of 3% pa. Therefore you can withdraw 4% of the total value of your pension per year and it should last as long as you do.

So to find out what you need in your pension to retire (in the simplest form) is to multiply £11,225.28 by 25 which gives you £280,632. (280,632 x 0.04 = £11,225.28). Around £280k is the figure you need invested when you reach state pension age to retire on £19.2k pa.

Now if you want to retire or go part-time prior to state pension age, you should really make up the deficit so you don't risk financial insecurity in later life. If your part-time covered the state pension (around £8k pa) that would suffice. To fully retire you would need 25x your annual spending at state pension age + the equivalent of 5 years worth of state pension (£39,873.60) which is £320,505.60 invested sensibly today.

If your total pension contributions are £125k, when you reach state pension age you can withdraw £5k safely pa and your state pension of roughly £8k means you'll receive around £13k pa or just over £1k per month.

Once you've considered this, then you can really start to consider where you are with work and if going part-time or retiring is the right decision.

 

[give it to gordon]

Its having to pay pvt rent that is killing me ! If I had got the house and not the ex I could retire.
The way pvt rent is going I dont really see me ever being able to retire and that's scary

 

[Manchester33]

Its having to pay pvt rent that is killing me ! If I had got the house and not the ex I could retire.
The way pvt rent is going I dont really see me ever being able to retire and that's scary

Maybe not in a high cost of living area like Kent. But there are plenty of places up North where you can rent at affordable prices.

Outside of Manchester city centre (which is far from the cheapest), the average rent for a 1 bed flat is £541 per month. In Blackpool it's £411 per month.

 

[give it to gordon]

Maybe not in a high cost of living area like Kent. But there are plenty of places up North where you can rent at affordable prices.

Outside of Manchester city centre (which is far from the cheapest), the average rent for a 1 bed flat is £541 per month. In Blackpool it's £411 per month.

That is true but its abit sad I might have to move away from family and friends to be able to retire. It is something we have talked about but my missus is very much against moving away from her family. I am more open to it.

 

[Manchester33]

That is true but its abit sad I might have to move away from family and friends to be able to retire. It is something we have talked about but my missus is very much against moving away from her family. I am more open to it.

I could be pitching it the wrong way there too though. You could rent an apartment on the costa del sol for about 500 Euros per month. Might be a bit nicer than Blackpool! :')

 

[denislawsbackheel]

I could be pitching it the wrong way there too though. You could rent an apartment on the costa del sol for about 500 Euros per month. Might be a bit nicer than Blackpool! :')

So you live there for 90 days And where do you live for the next 90 days that you aren’t allowed in the EU since we left?