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I'm 52 this year and over the last year have made sure my wife's & my pensions are all located, consolidated (my wife had 4 pensions from various jobs over the years - these are all now transferred into 1), in order and valuations updated and benefits understood. I have a spreadsheet that plots out a forecast of annual cash drawdowns, allowing for income tax, with a retirement date from age 55 up to 67. Obviously, the amount of drawdown gets higher and the money last longer the later I retire but there's the dilemma.
It's non stop rock 'n' roll here in my life!
I was working with a old friend from a local transport company on a large project over winter, we started in September and finished at the end of January, except he didn't make it to the end of the job. Richard was last in my office on 13th November and on 27th December at 07:30am I got an email from his wife to tell me that he passed away at 10pm Boxing Day. It's a long story but he appeared fit as a fiddle in November but apparently had lymph node cancer and died from respiratory complications within 6 weeks of feeling ill. He was 66.
This shocked me and has really made me think about when the best time to retire is. At 66 I won't have even started drawing my state pension.
Do you work and work and work putting more and more money into your pension?, do you take the cash lump sum tax free to renovate your house, buy a new car, take a world cruise? Do you jump out of the rate race at 55 and maximise the time you have free before the grim reaper calls for you? I am getting weary of the daily trudge and commute but have no desire to leave and go and work elsewhere, my general desire to work for faceless greedy corporations is diminishing each year.
By the time I get to 55 I will be debt free, mortgage free, have a fair amount of savings and have 13 years of preserved index linked defined benefit pension alongside a current defined contribution pension but the drop from current pay would be significant and the money would run out in my mid 80s after which I would be reliant on state pension only. But if I work up to 60 or beyond, that's another 5 years when I could pour large amounts of earnings into my pension, along with my employer, and have even more of a savings pot.
If only we knew what the planned date of our death was...I never worried about any of this shit when I was 21, just enjoyed playing in a band, chasing girls and going to the pub.
I know you can get pension advice but I'm not sure a Financial advisor will help me wrestle with this. It's the age old dilemma, lots of time with a lot less money or a lot less time with a lot more money...
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My wife's ex is a crazily fit 61 year old with an excellent pension from holding good managerial positions his entire working life, but he won't see it, he has inoperable cancer and is not expected to see this year out.
Having lived very happily on an income well under the lowest tax threshold for the last nine years I know I won't need much to retire on, in fact the current state pension is significantly more than my current wage.
Wouldn't it be funny if being a feckless yob musician who never showed the slightest interest in planning for his future turned out to be the best plan after all?
Take that, parents.
So yeah, time isn't money, time is time.
“made sure my wife's & my pensions are all located, consolidated (my wife had 4 pensions from various jobs over the years - these are all now transferred into 1), in order and valuations updated and benefits understood. I have a spreadsheet that plots out a forecast of annual cash drawdowns, allowing for income tax, with a retirement date “
How do you go about doing precisely all that? Am in exactly same position, and wouldn’t know where or how to start?
I know I’ve said this before on here but my father retired at 55 which was when I was 18 so my adult role model was of someone who did some part time work, did some gardening, did a part time degree, got the garden in shape, did some travelling with my sister and me. By contrast my father in law had just retired at 65 by the time I met him he had gone straight to daytime TV and seeing how far his free bus pass could take him ( to Coventry bus station and back in off peak from their house in Brum as it happens). My eldest brother died in his early sixties and the other one is now having a forced retirement at 66, he has spent decades trying to keep up with the Joneses and his health is now shot to shit from years of stress.
I really do feel old a lot of the time now but I can shed 20 years in 48 hours on holiday and I’d like to be nearer to that most of the time.
There are a couple of blokes at work who have retired but now do part time through an agency. Their hourly rate is higher than mine and although they don’t get paid sick leave or pension contributions they couldn’t give a shit, it’s just all disposable income to them. Assuming my kids fuck off at some point that seems a reasonable place to be.
* there is; in practice something part time that draws upon your qualifications/ experience/ skills is going to be easier to get and probably more financially rewarding. Or turn those skills to help run a charity or something so it’s at least personally rewarding.
For every pound I spend, I need to save a pound....
However, it won't stop me doing things that I love, such as travelling and photography, I turn up for work on time but I also leave on time.
At the time we were debt free and have no kids, so our necessary outgoings were, and are, small. We both have private pensions that will pay out something when we are too old to work, and have a fair bit of capital tied up in the house, which we will sell and downsize at some point.
Now I work about 15 hours a week as a gardener/handyman etc. It's hard work sometimes, and I am starting to feel a bit creaky, but I work in the village, and most of my clients I walk to.
The downside/s is that sometimes the work in inconsistent, bad weather can play havoc with your income. All my clients are elderly, so I know that sooner or later, they will die and I'll have to replace them. I do miss the regular income, that's for sure, but by and large I'm much happier than I was 12 years ago.
It's not for everyone, if you like good living and all that, then possibly not the life for you.
I'm not locked in here with you, you are locked in here with me.
I'm going through similar thoughts for the future. My concern is not just having enough while I'm around. I want to make sure my other half won't have to struggle when I'm gone. That makes it even harder to work out what to do. :-(
One note of caution... the IFAs I've encountered have been less than impressive when it comes to anything beyond fairly basic knowledge and advice. If you can, it's probably a good idea to try to get your head around general options and investments etc. Two reasons...
1. Nobody is going to care about your cash like you're going to.
2. Building on your existing knowledge of investment options etc. is going to put you in a better position to evaluate the 'skills' a specific IFA can offer... if you do decide to use one.
Well, I dug out all the old paperwork I could find and luckily had something from all every pension we've had. We called them and asked for up to date statements of transfer value. Once we had those my wife's current pension provider just needed the details of all 3 other of her preserved pensions and facilitated the transfer. It took a while, couple of months I think but once it was complete she has an online portal through her pension provider that shows the new pension pot value.
Mine is the same, I can login to Standard Life portal and see the pot value and also a future prediction of pot value based on an estimated investment return and planned employer & personal contributions, so I can see what the pot should be at any point in the future. My 13 years of final salary is not viewable online so I ask for an up date statement of benefit and a transfer valuation periodically and use that.
I plot these values on a spreadsheet and divide the amount up across as many years as I want to drawdown cash, add a line deduct 20% tax on the amount over the current tax free threshold and add the state pension and get a forest annual total pension for us both to live on.
My new hobby is now maximise my savings.