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Thread: Early retirement

  1. #201
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    Quote Originally Posted by ralphy View Post
    A wise man once gave me this definition: True financial independence is the point in time that you have enough assets or capital at work for you to ensure your future life-style is affordable, i.e. if you work beyond that point you are doing so because you choose to and not because you need to. (He refused to talk about or even refer to the 'retirement', citing it as a very negative connotation and I now fully understand that).

    That helped me to make some significant changes in my life years ago, ones which I have greatly benefitted from since then.

    R
    Wise words. I actually would like to do un-paid work, especially if I can assist with local woodland projects or renovations (I always wanted to be a lumberjack - cue Monty Python song).

    Update on my little saga - possible redundancy package after a M&A at our firm so hanging on to May to get a decision on that. Meanwhile - living off calculated pension values (rest of money being diverted to a savings account) - to check we can live ok on pension incomes. Wife left work at the end of last year due to worsening health but finds more than enough to do at home. We will not rush into relocating - but have had some agents round to value our house - development potential would maximise our return being in greater London, as the local council is really pushing for more dwellings with the chronic shortfall.

    So plan to sell up / move either to devon / dorset area. Or still interested in Portugal - there are some properties that are energy positive (giving back to the grid) and with their own hat water heating and water supply (water-well) and enough land to grow food.

    Martyn

  2. #202
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    Not sure to be happy or sad. But my position has been made redundant. So that crystallises the higs-boson.

    Last day in office August. So time to settle my affairs and tie up project delivery in good time. End of an era after 23years with the same firm. Might be worth a few beers for the lads.

  3. #203
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    All the best, Iím rather jealous...


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  4. #204
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    I was 45 a couple of weeks ago, and I'm already thinking about retirement, not because I can afford to, but because I'm ready.

    I started a pension the same week I started working, so am probably in a better position than some, plus I don't have any children and a wide with a good job. Our intention is to pay the mortgage off in about 5 years, and in my case, stop doing my proper job, and start doing a more enjoyable, part time job, probably/hopefully a ski instructor.

    I'm all for retiring as soon as you can afford to, working is pretty thankless, as has been said, we're expected to do more, usually for less, and to be grateful that we have a job and haven't been made redundant in the now annual restructure.

    In the OP's situation, what would you achieve, financially, in the next 2 years, and is it worth it in the short and medium term? I'd be surprised if it was worth hanging around for, but good luck with your decision and future.

  5. #205
    Quote Originally Posted by dickdutch View Post
    I was 45 a couple of weeks ago, and I'm already thinking about retirement, not because I can afford to, but because I'm ready.

    I started a pension the same week I started working, so am probably in a better position than some, plus I don't have any children and a wide with a good job. Our intention is to pay the mortgage off in about 5 years, and in my case, stop doing my proper job, and start doing a more enjoyable, part time job, probably/hopefully a ski instructor.

    I'm all for retiring as soon as you can afford to, working is pretty thankless, as has been said, we're expected to do more, usually for less, and to be grateful that we have a job and haven't been made redundant in the now annual restructure.

    In the OP's situation, what would you achieve, financially, in the next 2 years, and is it worth it in the short and medium term? I'd be surprised if it was worth hanging around for, but good luck with your decision and future.
    Freudian slip?

  6. #206
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    Quote Originally Posted by MartynJC (UK) View Post
    Not sure to be happy or sad. But my position has been made redundant. So that crystallises the higs-boson.

    Last day in office August. So time to settle my affairs and tie up project delivery in good time. End of an era after 23years with the same firm. Might be worth a few beers for the lads.

    It depends upon personal circumstances, however I put my hand up for redundancy a couple of years ago (after 10 years at the same company) and have never looked back. Plenty of DIY (the house is coming along nice) plenty of gardening (looking good), golf handicap reduced to 12, a few hours doing good deeds for a local charity and of course time to do the cooking/ironing, etc. In fact it's rather busy, but I am safe in knowing I am doing what I want to do, rather because I have to. The other benefit has been the opportunity to learn new skills including stuff like plumbing.

    Do I miss work? Well I do miss some of the people, but not the corporate politics, bureaucracy, the endless email chains, the constant drive for efficiencies, spreadsheets, etc, etc. Plus I don't miss the stress or that feeling of dread every Sunday night.

    Honestly once you get over the shock of not having to get up at sparrow's fart, actually planning YOUR day/week to include stuff you want to do and having the satisfaction of actually completing tasks in your timescales with no other dependencies, then happy days. The only other thing you have to get used to is not getting a payslip each month, but its amazing how frugal you become.

    Embrace it, enjoy it and consider yourself fortunate to have reached the milestone. You are now officially on easy street and free!
    Last edited by Andyg; 17th April 2019 at 18:25.

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  7. #207
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    Quote Originally Posted by MartynJC (UK) View Post
    Not sure to be happy or sad. But my position has been made redundant. So that crystallises the higs-boson.

    Last day in office August. So time to settle my affairs and tie up project delivery in good time. End of an era after 23years with the same firm. Might be worth a few beers for the lads.
    Youíll probably feel happy and sad at different times in the next few weeks, which would be natural for anyone, but Iím sure youíll embrace it as a positive and look forward to the next chapter of your life.

    The saying Iíve heard a thousand times over the years (Iím sure most people have) is Ďtoday is the first day of the rest of your lifeí. You have adventures ahead, enjoy every moment. Keep us informed, oh and Devon would be a great shout. Iím biased of course :-)

  8. #208
    Grand Master Carlton-Browne's Avatar
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    August gives you plenty of time to strip the stationery cupboard bare. Or are they threatening to put you on gardening leave?
    Die Zeit verwandelt uns nicht, sie entfaltet uns nur.

  9. #209
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    Quote Originally Posted by Kingstepper View Post
    Freudian slip?
    Haha, no children, there's your clue.

  10. #210
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    Well done on 23 years with the same company - donít think Iíve managed more than 5 so far (in a 30 year ďcareerĒ). I was made redundant from my first company and would love to be made redundant from my last just to add a bit of symmetry :-)

    Itís a year since you started this thread, so I guess the timing is working out pretty well. Do keep us updated on progress and how you find the adjustment to the next stage.

  11. #211
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    For what it's worth, for me once my pension (monthly income) reached a certain amount I was off. This happened a few months ago and I retired 3 weeks ago. Your comment ref remaining time, chimes with me, the thought of spending two more years at work and missing two summers, all for a few extra quid.... nah.

    Wish you the all the best and good luck with the re-location.

  12. #212
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    I was 44 the first time, lasted 3 months before boredom set, went to work for a guy I knew 3days a week, didn't last long, up to 6/7 days within months as forecourt manger, left jobs a few times since but kept going back, well f/forward to Jan this year and I stopped again supposedly for the last time, I have been approached to do some part time holiday cover already by an ex employer, maybe I will get out off her hair, who knows.
    I left the first job with industrial pension that is now pays twice my last salary so I wasn't working for the money just needed to keep busy.
    You'll never know till you try it.

  13. #213
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    After the official notice I will will be leaving in August, just after my 58th birthday, I view this not so much as retirement, but more: 'moving onto the next phase of life'. I am so looking forward to getting off the treadmill of "eat work sleep repeat". I have plans and will approach the next phase like any project I tackle - planning is key. It is very exciting.

    I still remember my Dad - who had plans with my Mum - they bought a flat to downsize after his retirement. He was dead from throat cancer before the completion date. So sad. It is alarming he was not much older than I am now. Focuses the mind.

    I am fortunate I can live for at least a year off the redundancy package without touching savings at current spend levels. But we are looking to release some of the equity in our current house by a sale of some sort. We have got some quotes from developers on the house and sale estimates and have some ideas what to do with the property - higher returns come with higher risk but you only get one chance at life right? My wife and I are spending time looking around the south coastal areas for a place we would like to settle, mostly during weekends / holidays. Haven't quite found what we are looking for - but we now have a more refined short list of what we are looking for. Down to the Brighton area (just a outside) on bank holiday this Saturday. Isle-of-White is on the list, already looked at Dorset and Devon. Want to get away from the London light pollution and smog we can see from (and on) our windows.

    This is turning into a bit of an epic!

    Cheers

    Martyn
    Last edited by MartynJC (UK); 18th April 2019 at 21:21.

  14. #214
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    Quote Originally Posted by MartynJC (UK) View Post
    After the official notice I will will be leaving in August, just after my 58th birthday, I view this not so much as retirement, but more: 'moving onto the next phase of life'. I am so looking forward to getting off the treadmill of "eat work sleep repeat". I have plans and will approach the next phase like any project I tackle - planning is key. It is very exciting.

    I still remember my Dad - who had plans with my Mum - they bought a flat to downsize after his retirement. He was dead from throat cancer before the completion date. So sad. It is alarming he was not much older than I am now. Focuses the mind.

    I am fortunate I can live for at least a year off the redundancy package without touching savings at current spend levels. But we are looking to release some of the equity in our current house by a sale of some sort. We have got some quotes from developers on the house and sale estimates and have some ideas what to do with the property - higher returns come with higher risk but you only get one chance at life right? My wife and I are spending time looking around the south coastal areas for a place we would like to settle, mostly during weekends / holidays. Haven't quite found what we are looking for - but we now have a more refined short list of what we are looking for. Down to the Brighton area (just a outside) on bank holiday this Saturday. Isle-of-White is on the list, already looked at Dorset and Devon. Want to get away from the London light pollution and smog we can see from (and on) our windows.

    This is turning into a bit of an epic!

    Cheers

    Martyn
    Sorry if I missed it. What happened to the idea of moving to Portugal? Is this still a long term plan?


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  15. #215
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    Personally I wouldn't sell a London/Surrey property to move to Dorset. The property you are in now will appreciate higher than the Dorset one so why not rent in Dorset and rent your current place out? Then you get to move to a newer home every few years or so.

    Good luck with it all - these things tend to be a blessing in the end

  16. #216
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    Quote Originally Posted by ryanb741 View Post
    Personally I wouldn't sell a London/Surrey property to move to Dorset. The property you are in now will appreciate higher than the Dorset one so why not rent in Dorset and rent your current place out? Then you get to move to a newer home every few years or so.

    Good luck with it all - these things tend to be a blessing in the end

    Not a lot of point in keeping a property in London unless you intend to return to it in the future. If you rent it out and then rent in Dorset he will also have an additional tax burden.

    Selling the house in London will release capital (Tax Free) and will enable the OP to buy a nice place in Dorset - which will not come cheap.

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
    Friedrich Nietzsche


  17. #217
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    Quote Originally Posted by Andyg View Post
    Not a lot of point in keeping a property in London unless you intend to return to it in the future. If you rent it out and then rent in Dorset he will also have an additional tax burden.

    Selling the house in London will release capital (Tax Free) and will enable the OP to buy a nice place in Dorset - which will not come cheap.
    We have been looking at lots of options with our current property, Now that I have redundancy money the heat is off as regards an income stream for at least 12-14months before hitting any pension pots for income. Looking to piss the neighbours off (not really the only reason) by maximising profit - by a considerable amount compared to a private property sale - and selling for development. Start looking for a solicitor to look over the options contract over the next few days. A local developer / builder firm with good reputation has been short listed, after narrowing down to 2 / 3 including some big-boy firms. If all goes to plan - in 12 months we should exchange on the deal and time to complete and find a property this time next year. Going for the long-game.

    The next home will hopefully be the last one we move to - it's stressful moving home. Doing it this way gives us 12 months to get rid of a load of clutter from our current house accumulated over many years.

    To buy near Brighton for the type of property we are looking for is not cheap either..

    Will update in 12 months!!

    Martyn
    Last edited by MartynJC (UK); 25th April 2019 at 22:56.

  18. #218
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    Quote Originally Posted by Carlton-Browne View Post
    August gives you plenty of time to strip the stationery cupboard bare. Or are they threatening to put you on gardening leave?
    I`d never bought a paper clip in my life till I retired!

  19. #219
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    Quote Originally Posted by MartynJC (UK) View Post
    Not sure to be happy or sad. But my position has been made redundant. So that crystallises the higs-boson.

    Last day in office August. So time to settle my affairs and tie up project delivery in good time. End of an era after 23years with the same firm. Might be worth a few beers for the lads.
    Trust me, you'll be happy when you finish!

    I finished 9 years ago aged 52 and I've never once missed it. Once you get used to not working you'll look at retirement as the best career move you ever made. Forget the 'self-esteem and need to feel needed' etc etc, just enjoy another hour in bed and a second pot of tea to drink at leisure with your breakfast!

    I spent my last 20 months knowing I`d be finishing, that was a bit strange but the time seemed to fly by. Ironically I got moved into a position I enjoyed far more, I spent the last few weeks working my nuts off but enjoying the job more than I had for the previous 10 years, but I still wasn`t sorry to go.

    Have a good think about how you'll spend your time when work finishes, it helps to have something to keep yourself (reasonably) busy, but it's no crime to spend time doing very little if that's what you enjoy. Finding the right balance is key.

  20. #220
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    As a seasoned 'pensionado' I can only tell you that it is important to have something to do what you like to do, not what you have to do. If you like to pick up something, then it's not stressful anymore. I've written before that I'm currently teaching 12 -15 y/o refugees the Dutch language (I do this two mornings/week). Totally hassle-free educational enjoyment, so to speak. I have fun, they have fun (very motivated, very eager to learn kids as well!). It keeps me off the street, young people keep you young and in this case, with refugee-kids from the Yazidi (the people who got wiped out by ISIS) pretty humble when it comes to earthly possessions and I can learn (and have learned...) something about resilience, humour and the importance of having a family. I dare to say that I would never had learned that without early retirement!

    Menno

  21. #221
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    Early retirement

    So this seems to be the appropriate thread to ask about my situation.

    Simple question to those a few years ahead of me - how much money do you need to retire?

    Ok, Iíll expand a little.


    Iím 52 and intend to resign from my job in September, leaving after 3 months notice, so at the end of the year.

    Iíve done quite a bit of financial planning - I *believe* that I have enough to live off. Thereís buy to let income from a 1-bed flat in London which will account for around 35% of our living costs. I have a reasonably healthy SIPP and some money in an ISA. My wife intends working for another 3 years so her income should mean we wonít need to withdraw anything from the ISA during that time. At 55 I intend to take the 25% tax free pension lump sum and move it over time into the ISAs (using both mine and my wifeís allowances). Income should then be shared between SIPP drawdown, ISA and rental and be mostly tax free. Iím making the assumption that there will be a state pension in 15 years so the bulk of our drawdown will happen up to that point, but I donít expect to be on the breadline even if state pension is greatly reduced.

    I wanted to reduce sequence risk so this month decided to use some of the ISA (and sold the sports car - sob) to pay off 90% of the remaining mortgage on both our main property and the flat. I didnít pay them off fully because Iíve heard it might be good to retain some debt in this world of credit ratings.

    My main question to current retirees is: was there any big expense that you hit in retirement that you werenít expecting? Did you end up spending more or less than you thought? I can imagine heating bills being high in the winter in my old draughty house for example.

    Interested in your thoughts and advice on any of the above.

    Itís a strange feeling switching from having plenty of disposable income to saving every penny for retirement. All of my luxury watch buying plans have gone out of the window. I can now only stare longingly at RyanBís incoming sbga387 on SC - could anyone lend me 6k? I appear to have left my wallet in the Jag....

  22. #222
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    Re the above post.

    Why take your 25% tax free cash and put it in ISAís? Youíd be better off leaving it in pensions really if you donít need it - out of the estate for IHT (if applicable) and if it continues to grow the 25% would eventually be larger. People nearly always took money out of pensions first, under the new rules generally pensions are the last thing thatís touched - cash, isaís, shares etc first, pensions last. If you do eventually need drawdown Iíd probably crystallise it every month along with your drawing as opposed to in one go.

    As regards to leaving a mortgage going for credit etc, shouldnít be necessary especially if you have a credit card or mobile contract etc. Depending on the interest rate Iíd probably just clear it.

    Although the last paragraph was probably tongue in cheek I would ask why retire early if youíre going to have to count the pennies and not buy watches? Would another year or twoís income and pension contributions not give you that bit extra for the rest of your lives that you can still buy watches :-)

  23. #223
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    Quote Originally Posted by PhilT View Post
    decided to use some of the ISA (and sold the sports car - sob) to pay off 90% of the remaining mortgage on ... the flat.
    Have you actually carried that out? Obviously much depends on the exact facts but you do still get tax relief on BTL mortgage interest (albeit they are tapering relief down to 20% only).

  24. #224
    Quote Originally Posted by Devonian View Post
    Re the above post.

    Why take your 25% tax free cash and put it in ISAís? Youíd be better off leaving it in pensions really if you donít need it - out of the estate for IHT (if applicable) and if it continues to grow the 25% would eventually be larger. People nearly always took money out of pensions first, under the new rules generally pensions are the last thing thatís touched - cash, isaís, shares etc first, pensions last. If you do eventually need drawdown Iíd probably crystallise it every month along with your drawing as opposed to in one go.

    As regards to leaving a mortgage going for credit etc, shouldnít be necessary especially if you have a credit card or mobile contract etc. Depending on the interest rate Iíd probably just clear it.

    Although the last paragraph was probably tongue in cheek I would ask why retire early if youíre going to have to count the pennies and not buy watches? Would another year or twoís income and pension contributions not give you that bit extra for the rest of your lives that you can still buy watches :-)
    As I see it (as a layman):-
    If tax free cash left in pension could well be taxed on drawdown (especially if also receiving state pension.
    If put in ISA could grow equally well and will be tax free when withdrawn.

  25. #225
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    Quote Originally Posted by Kingstepper View Post
    As I see it (as a layman):-
    If tax free cash left in pension could well be taxed on drawdown (especially if also receiving state pension.
    If put in ISA could grow equally well and will be tax free when withdrawn.
    The tax free cash element is always tax free cash when drawn up until age 75.

    What quite a few people do at 55 or over is crystallise their tax free cash element with the drawdown payments - so assuming no other income stream they can draw approximately £16,666 per annum out of their pension tax free annually. 25% of that is their tax free cash and the balance is their annual taxable income allowance of £12,500. They are then only using a small amount of the TFC.

  26. #226
    ^^^ Thanks!

  27. #227
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    Quote Originally Posted by David_D View Post
    Have you actually carried that out? Obviously much depends on the exact facts but you do still get tax relief on BTL mortgage interest (albeit they are tapering relief down to 20% only).
    I don't think you do as an individual but you still can if its run through a ltd co.

  28. #228
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    Quote Originally Posted by DavidL View Post
    I don't think you do as an individual but you still can if its run through a ltd co.
    Individuals still get tax relief, itís set against the rental profit. Itís being tiered from 100% to 50% over 4 years for higher rate tax payers. However I suspect that paying it off probably makes sense as the interest on a buy to let will be a lot higher than the interest on deposit even with the tax relief.

  29. #229
    Grand Master Andyg's Avatar
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    I answer the the following "My main question to current retirees is: was there any big expense that you hit in retirement that you werenít expecting? Did you end up spending more or less than you thought? I can imagine heating bills being high in the winter in my old draughty house for example."

    1) i blew quite a bit on golf clubs and club membership.

    2) DIY bits a bobs to help keep the good lady sweet.

    3) Holidays - lots of them

    4) A Tesla Powerwall which has reduced to electricity bill to 0.8p in the last 2 weeks.

    I still have not touched my pension pot yet, but honestly you don't need much providing you can pay your bills and put food on the table.

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
    Friedrich Nietzsche


  30. #230
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    Thanks for all your comments and suggestions.

    To answer some of those points:

    - paying off some of the buy to let mortgage. This is really just a risk reduction exercise, so effectively reducing the amount of capital that weíve borrowed in order to buy funds in an ISA. I appreciate that tax relief is still available, so for the next 3 years or so until my wife stops working it might have made more sense to keep the mortgage, but only if the rate of return was better than the tax adjusted mortgage interest. Thatís the logic I used, but it may well be flawed!

    - taking 25% tax free pension lump sum up front, instead of in chunks with 25% of each chunk tax free. This is an interesting one. My logic was to try to partially balance up the pension and ISA pots in such a way that if I wanted to withdraw, for example £25000 a year, then I could take £12500 from the pension and £12500 from the ISA and pay no tax, and there would be enough in the ISA to maintain this for n years.
    Taking £16666 from the pension and £8334 from the ISA might work out the same in the end, in terms of fund balancing. The strange thing is (another glimpse into how my brain works...) I have more confidence in the ISA fund remaining tax free than I have in the rules around a 25% pension allowance lasting for the duration of my retirement. Correct me if Iím wrong, but I assume that if I start to withdraw in chunks then I canít later change my mind and take 25% of the remainder tax free and move the rest into drawdown (without paying tax on it up front)?

    - Working for a year or 2 more to have extra for a more luxurious lifestyle. This definitely makes financial sense, but the current job is taking itís toll and Iíd rather kill it before it kills me. When your wife is telling you to stop you need to take stock. I have a number of other things Iíd like to try my hand at so it might not be the end of my earning days, but future income is likely to be pocket money in comparison (which is fine).

    - Having enough to pay the bills and put food on the table - good point, the essentials should be covered by some margin. Tesla PowerWall? - not a clue, Iíll have to google that one but it sounds like I might be letting Dr Evil into the house ;-)

  31. #231
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    Quote Originally Posted by PhilT View Post
    Thanks for all your comments and suggestions.


    - taking 25% tax free pension lump sum up front, instead of in chunks with 25% of each chunk tax free. This is an interesting one. My logic was to try to partially balance up the pension and ISA pots in such a way that if I wanted to withdraw, for example £25000 a year, then I could take £12500 from the pension and £12500 from the ISA and pay no tax, and there would be enough in the ISA to maintain this for n years.
    Taking £16666 from the pension and £8334 from the ISA might work out the same in the end, in terms of fund balancing. The strange thing is (another glimpse into how my brain works...) I have more confidence in the ISA fund remaining tax free than I have in the rules around a 25% pension allowance lasting for the duration of my retirement. Correct me if I’m wrong, but I assume that if I start to withdraw in chunks then I can’t later change my mind and take 25% of the remainder tax free and move the rest into drawdown (without paying tax on it up front)?
    I’ll correct you- you can change your mind and take the balance out tax free. I agree that there is no point taking the tax free cash out to put it in an ISA. Also if you don’t take all the commencement 25% as a lump sum, if your fund grows you are entitled to 25% of the growth too so, potential your 25% is worth more (of course assuming your fund grows!)
    Last edited by craig1912; 3rd August 2019 at 17:51.

  32. #232
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    Quote Originally Posted by ichaice View Post
    Am I right in thinking anything over £85k in an ISA would not be covered by the FSCS compensation scheme in the event the firm goes under?
    If you retired overseas would you be able to take money out of your SIPP and pay whatever rate the local tax is instead of being taxed in the UK?

  33. #233
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    Quote Originally Posted by ichaice View Post
    Am I right in thinking anything over £85k in an ISA would not be covered by the FSCS compensation scheme in the event the firm goes under?
    Basically yes. You need to spread it around if it's a concern. If the ISA is invested in funds (unit trusts (if they still exist), shares, etc.) then, as far as I am aware, your exposure is to the underlying investments not the investment manager.

    FSCS is usually mentioned in relation to bank and building society deposits although I am sure it does extend further.

    - - - Updated - - -

    Quote Originally Posted by ryanb741 View Post
    If you retired overseas would you be able to take money out of your SIPP and pay whatever rate the local tax is instead of being taxed in the UK?
    If you can shake off UK tax residence, I guess so.

  34. #234
    Quote Originally Posted by Devonian View Post
    The tax free cash element is always tax free cash when drawn up until age 75.

    What quite a few people do at 55 or over is crystallise their tax free cash element with the drawdown payments - so assuming no other income stream they can draw approximately £16,666 per annum out of their pension tax free annually. 25% of that is their tax free cash and the balance is their annual taxable income allowance of £12,500. They are then only using a small amount of the TFC.
    Iíll chip in with a question if you donít mind, since you know youíre stuff.

    I only have a final salary pension scheme, and Iím 50 now and can take an unreduced pension at 60, or reduced (-15%) at 55 with Company agreement.

    If I was to take it at 55 and not take a 25% lump sum, would the first 25% pension income be tax free year after year, in addition to my personal allowance?

    Ta in advance.


    Sent from my iPad using Tapatalk

  35. #235
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    Quote Originally Posted by noTAGlove View Post
    If I was to take it at 55 and not take a 25% lump sum, would the first 25% pension income be tax free year after year, in addition to my personal allowance?
    Nope! Yours is a Defined Benefit/salary related pension. The thread has been more about Defined Contribution/Money Purchase arrangements.
    Last edited by David_D; 3rd August 2019 at 19:02.

  36. #236
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    Quote Originally Posted by PhilT View Post
    Taking £16666 from the pension and £8334 from the ISA might work out the same in the end, in terms of fund balancing. The strange thing is (another glimpse into how my brain works...) I have more confidence in the ISA fund remaining tax free than I have in the rules around a 25% pension allowance lasting for the duration of my retirement. Correct me if I’m wrong, but I assume that if I start to withdraw in chunks then I can’t later change my mind and take 25% of the remainder tax free and move the rest into drawdown (without paying tax on it up front)?
    Drawdown is flexible so you can change your mind and take more tax free cash later if you want. You are essentially just crystallising more if you do.

    As for the the tax free cash going, whilst no one can ever guarantee anything, it would be just about the biggest vote loss for any party to do this. It’s been debated numerous times before each budget and the ‘analysts’ always put it at 1% maximum of happening. It would kill off people being prepared to contribute which is what any government is desperate for them to do.

    Also just remember the £16,666 figure I quoted is based on no income for it to be totally tax free - you mentioned rental income so bare that in mind.

    Quote Originally Posted by ichaice View Post
    Am I right in thinking anything over £85k in an ISA would not be covered by the FSCS compensation scheme in the event the firm goes under?
    In stocks and shares ISA’s the money is now more protected, however as mentioned above it’s based on the performance of the individual shares in the holdings. Bank or building society would be the 85k.

    Worth considering now that cash ISA’s aren’t very good for a lot of people. Basic rate tax payers can earn £1,000 in interest (higher £500) before paying tax so at 1% they would need £100,000 saved. Lots of accounts pay more interest than cash ISA’s so if you only have 20k or 50k for example you may be losing out.

    Quote Originally Posted by ryanb741 View Post
    If you retired overseas would you be able to take money out of your SIPP and pay whatever rate the local tax is instead of being taxed in the UK?
    As long as you can get away from the U.K. tax regime, which I’d imagine is more complex than it sounds. Interestingly Portugal are letting Brits who move over draw their pensions tax free. They’ve been really advertising it to attract pensioners over to live and spend their money I guess. Apparently the EU (which they are in!) aren’t happy with it and saying they can’t do it.

    Quote Originally Posted by noTAGlove View Post
    I’ll chip in with a question if you don’t mind, since you know you’re stuff.

    I only have a final salary pension scheme, and I’m 50 now and can take an unreduced pension at 60, or reduced (-15%) at 55 with Company agreement.

    If I was to take it at 55 and not take a 25% lump sum, would the first 25% pension income be tax free year after year, in addition to my personal allowance?

    Ta in advance.
    Sent from my iPad using Tapatalk
    Final salary works totally differently so you can’t do that I’m afraid. However they will offer you take free cash and it may be possible to ‘commute’ some of your pension so you get extra, or take less (or none at all depending on the scheme) and get a higher pension. People generally always take tax free cash but it’s sometimes worth looking at the numbers just to check. It’s worth taking advice on this if you have a good number of years.

    15% reduction at 55 is pretty good if you can get it. Many will knock 4 or 5% off per year.

  37. #237
    Might an advantage of transferring cash to an ISA be the flexibility of choosing a different provider?

  38. #238
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    Quote Originally Posted by Kingstepper View Post
    Might an advantage of transferring cash to an ISA be the flexibility of choosing a different provider?
    If you have a Defined Contribution pension, you can transfer that between pension providers.

  39. #239
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    You should go and see an adviser and take proper advice. This is the kind of area where getting something wrong can be extremely costly. Itís worth paying to make sure you donít inadvertently pay more tax than you have to or lose out on valuable iht planning properties of a pension.


    Sent from my iPhone using TZ-UK mobile app

  40. #240
    Grand Master hogthrob's Avatar
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    Once you retire, are you still able to take our loans, credit agreements or mortgages? I assume the answer is no. Does any major expenditure like car, moving house etc. have to come from your savings?

  41. #241
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    Quote Originally Posted by hogthrob View Post
    Once you retire, are you still able to take our loans, credit agreements or mortgages? I assume the answer is no. Does any major expenditure like car, moving house etc. have to come from your savings?
    Of course you can, providing you have an income.

  42. #242
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    Quote Originally Posted by craig1912 View Post
    Of course you can, providing you have an income.
    To be frank, if you cannot afford to buy a car for cash, you should not even be thinking of retiring. Carry on working is the best advice I would give to anyone in that position.

  43. #243
    Grand Master magirus's Avatar
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    Quote Originally Posted by Chris_in_the_UK View Post
    Scheme specific - I bailed at 50 1/2 to a full pension.
    Quote Originally Posted by Chris_in_the_UK View Post
    Well i really did retire in January 2013 - I am not imagining this.

    As you know Chris I also left the job at 50, right on my 50th birthday in fact. June 24th 2007. (with a full pension)

  44. #244
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    Quote Originally Posted by magirus View Post
    As you know Chris I also left the job at 50, right on my 50th birthday in fact. June 24th 2007. (with a full pension)
    It would have been foolhardy to do otherwise Bob - even if I wanted to stay it made no financial sense.
    When you look long into an abyss, the abyss looks long into you.........

  45. #245
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    I was supposed to retire at 55 on a final salary pension. Then legislation meant I could work til 65. I did some sums and thought 57 sounded a good age to retire but that came and went. I love my job so much, it's hard to give it up (they say if you love your job, you never have to work again).

    I'm 61 now and was still loving the job until 5 weeks ago when I went to my GP complaining about a spot of blood on the loo paper. I have since been fast tracked through surgery for removal of a stage 3 bowel cancer and start chemo in 2 weeks. It has been a real shock to the system and until recently thought I'd live forever and didn't want to retire. Believe it or not, I still want to get back to work to retire on my terms, not for medical reasons! That's giving me the drive to fight this.

    The best advice I was given for pension calculations is to draw up a budget spreadsheet and put everything you currently spend in the first column. Add three more columns for retirement. The first column is essentials (gas/elec/council tax/food/fuel etc), second column is nice to have (eating out, holidays etc), third column is luxury stuff (new car every year, boat, plane etc). That was the totals show you what kind of budget you need to move out of subsistence into luxury and help you plan what you need to live in retirement. If you're fortunate to have saved well, another factor might be to drawdown or have a pension that sits just on the high rate tax bracket so you're not paying too much tax out of your pension.

    A good financial advisor is vital, I'm fortunate to find one and he offers really good advice, particularly adjusting from the accumulation mindset that was with me most of my working years to a disposal phase where it's time to spend it rather than be the richest man in the graveyard. My recent medical scare has highlighted this more than anything.

  46. #246
    Grand Master Glamdring's Avatar
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    Wow. Very best of luck with your treatment, Broxie.

  47. #247
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    Quote Originally Posted by Glamdring View Post
    Wow. Very best of luck with your treatment, Broxie.
    Thank you. I plan to start a relevant post as bowel cancer is the second highest death rate amongst them. The symptoms are minimal and I passed the NHS poo stick test last year that they send out on your 60th birthday. My consultant said the cancer was several years old, so the NHS screen was useless. I highly recommend a colonoscopy at age 55 which is what many countries do and several NHS areas.

  48. #248
    Grand Master magirus's Avatar
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    Quote Originally Posted by broxie View Post
    Thank you. I plan to start a relevant post as bowel cancer is the second highest death rate amongst them. The symptoms are minimal and I passed the NHS poo stick test last year that they send out on your 60th birthday. My consultant said the cancer was several years old, so the NHS screen was useless. I highly recommend a colonoscopy at age 55 which is what many countries do and several NHS areas.

    I sincerely hope you get through this OK. I just sent off my second stick test last week (62 now) and may be paying my GP a visit shortly in light of your failure.

  49. #249
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    Another retirement tip for those planning to downsize their property on retirement and spend some of the cash (as opposed to live off it) is to take out an interest only mortgage on part of the value of the downsizing equity release and enjoy the money now since interest rates are low.

    I have done this and released about 1/3rd of the planned equity from downsizing. Iím paying 1.09% interest only (ticked the box that said capital paid back from sale of property). To put this in context, I am paying £90 a month for each £100,000 of equity Iíve released 3 years ahead of retirement/sale of property (so total cost of ďloanĒ £3,270 per £100,000 taken early). Itís cheap money and enables me to enjoy my money now, and also rides out the property market slump at the moment.

    My current LTV is so low (20%) and my planned downsize to a place of half the value, that there is little downside to this method of equity release.

  50. #250
    I quit working at the end of June after a 34 year career, about a month ahead of my 57th birthday. I love not having to get up and commute.

    Otherwise, I'm feeling a little lost so far. My wife's still working, and could be for the next ten years, so I'll have to find something to do during the day.

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