Thoughts on life, death and when to retire...

RandallFlagg

jdgm said:

...but I will still have the DB pension coming in - and so should you, surely?

Best wishes.

Yes you're right, the DB pension will keep paying as long as I'm breathing and increase inline with inflation.

RandallFlagg

RandallFlagg said:

sev112 said:

@RandallFlagg ;;

“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?

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.

Also, we have Gov Gateway portal logins so we can check our NI contributions history to see if there are any gaps and confirm the amount of state pension we expect to receive, I'm already maxed out on 35 years, my wife has 3 years to add as there were some gaps when she stopped work to have the kids.

Roland

A few years ago I was facing a similar decision. The advice I was given at the time was:

1. You don’t need as much money per year as you think to live on. No business suits and shoes, expensive coffees and sandwiches, travel-to-work costs, and you’ve got time to evaluate spending decisions rather than plump for the what you can find in the time available.

2. The old death bed quotation about “I wish I’d spent more time in the office”.

On the other hand, I didn’t canvas people in their 90s because none of them are on defined benefit pensions.

As it was I stopped working at around 60, not because I wanted to, but because I had other things which I needed to focus on. Not least of these was that I’d spent decades working 10+ hour days, and it caught up with me. 

What I would say is:

1. Getting your finances in order is a good thing. You never know what might suddenly put an end to your employment: family circumstances, health, redundancy, etc. Even if one of these does not force you to stop at least you will have the option.

2. Once you’ve got things in order then consider whether you want to reduce your work. That might be going down to four days, or changing job to something less demanding. There’s an attitude amongst some working people that cutting down is a sign of failure. Whereas many who do it take pride in the fact that they’ve already made themselves financially secure, and now want to move on to other challenges.

3. Retiring takes getting used to. Some people don’t handle the transition. You need to continue to do something. I have a friend who took early retirement at 55. He immediately went into contract work, but refuses to do more than a three day week. I have a neighbour who had a major heart attack in his 50. He left his high flying accountancy job, and himself set up doing accounts for small businesses. Besides money it provided interest. Now in his late 70s he’s been reducing the number of clients in recent years, and will finally retire this year.

Koa

RandallFlagg said:

sev112 said:

@RandallFlagg ;;

“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?

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.

Fascinating stuff, thanks for posting. I’m in a similar situation with various pots and have so far not sought advice from an IFA.
Besides saving on fees what are the benefits of pension pot consolidation?
I’m hoping guitars form part of a balanced portfolio in the eyes of an IFA but there seem to be an increasing number of people  selling up or cashing in.

HAL9000

I'm 64. I was working a shift pattern that meant I only got three weekends out of eight. So a while back I arranged with work (who, fortunately, were very good about it) to only work Wednesdays, Thursdays, and Fridays. So a bit of a drop in income but the way I see it the time is more precious than the money. I now get to spend every weekend with the lovely Mrs9000, and have freed up Mondays and Tuesdays for doing other stuff. Definitely a good move. I know of too many people who have either died or become very unwell around retirement age, and though I don't feel ready to give up work yet I certainly am ready to cut down and spend more time with the people I love, and doing the things I want to do.

Nitefly

Strat_a_tat_tat said:

RandallFlagg said:

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.

I think the state pension is taxable... so you're likely to have to pay a bit more tax than your current model suggests.

Correct - state pension is income.  Mine is just a smidge above the tax-free threshold (because of SERPS), so any other income is taxable.

RandallFlagg

Nitefly said:

Strat_a_tat_tat said:

RandallFlagg said:

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.

I think the state pension is taxable... so you're likely to have to pay a bit more tax than your current model suggests.

Correct - state pension is income.  Mine is just a smidge above the tax-free threshold (because of SERPS), so any other income is taxable.

Noted, I need to revisit the calc anyway as it's a bit crude and needs refinement. It also doesn't;t include any additional pension contributions I may make in the coming years, which I do plan to do.

It's an easy decision isn't it? £3.5K into your pension pot or a Custom Shop Strat?

Strat_a_tat_tat

RandallFlagg said:

It also doesn't;t include any additional pension contributions I may make in the coming years, which I do plan to do.

In that case... you're rich... rich I tells ya.

thomasross20

I look forward to reading this entire thread.....  
Sheena was super fit and only early 50s. It can hit anybody at any time. 
Work is an insurance policy against old age. I agree - if only we KNEW when our time was to be up...

After a bloody amazing gig last night, coming in to sit in front of a PC screen is such a downer. I would absolutely LOVE to be up there playing guitar like Slash  

I could probably afford to do a 4-day week but it's not a possibility with the job I've got. Not many would offer that. Imagine a whole extra day... if you actually put it to use to practice properly (like you said to me @Roland... so many people spend years getting better at their job but is that what they SHOULD be spending their time getting good at?). Or even better.... a career change to do what you actually love, if it could sustain your lifestyle (and IF you had enough money to fall back on). What I love doing is playing guitar. Damn it!

MtB

In the same boat here. I'm 57 and will be retiring at the latest when I'm 60. Some good advice here. I'll add that if you do have a financial adviser bear in mind that they are trained to make sure that you have enough money to last you to 100 years of age, and/or pay for your own old age care.

@RandallFlagg if you haven't already, consider whether you'll need the size of house that you're currently living in when you are 80-odd years of age. Downsizing to a flat or suchlike will give you a helpful release of equity. 

tone1

My usual response to financial threads is.....I have just consulted my financial adviser, and after much thought and deliberation he announced that I have enough money to last me for the rest of my life.........on the strict understanding that I die a week on Tuesday 

sev112

How on earth does one find a IFA that you can actually trust ?

Iamnobody

I’m 40 now so fuck knows what the state pension age will be (if I live long enough).

Just checked - it’s 68 although the wife will be able to collect her state pension when I’m 64. That could be a tough arrangement if she stopped work...

My plan is to get debt free, start overpaying more (current large mortgage)and review things nearer the time.

When to retire? That’s easy to answer - as soon as it’s financially viable I’ll look to stop working, well at least full-time work.

In my case, if things don’t change drastically with the house market that could mean moving to a cheaper area (with a healthy sum left to live on) or downsizing leaving a reasonable lump sum.

At the end of the day you can’t take money with you and when it comes down to it and your laid in a bed dribbling and shitting yourself - if the guy in the next bed has nothing, maybe he pissed every penny he earnt (or the Gov. gave him) up the wall, and you’ve worked/saved and have got a million pound house and £250k in savings. You’ll get the same level of care except you’ll probably be paying for it and he won’t.

RandallFlagg

MtB said:

In the same boat here. I'm 57 and will be retiring at the latest when I'm 60. Some good advice here. I'll add that if you do have a financial adviser bear in mind that they are trained to make sure that you have enough money to last you to 100 years of age, and/or pay for your own old age care.

@RandallFlagg if you haven't already, consider whether you'll need the size of house that you're currently living in when you are 80-odd years of age. Downsizing to a flat or suchlike will give you a helpful release of equity. 

Now I'm depressed, having to consider old age care costs in my retirement plan in my squitty little bungalow surrounded by old people riding around on mobility scooters?

Oh man...

boogieman

Don’t forget that you may be hit for a reduced company pension pay out if you retire before 60. My company knocked off 5% per year.

Also don’t bank on getting a full state pension as it depends if your pension scheme ever opted you out of paying full NI contributions. If you retire early and therefore have no NI contributions for certain years you’ll lose even more state pension. I have 42 years of contributions but still stand to lose about a third of the full pension payment because my employer opted out and I’ll have 8 non-contributing years by the time I qualify for the pension. You can go on the gov.uk site to get an estimate. 

Btw I retired at 58 and haven’t regretted it a bit. I’d rather be young enough to enjoy my pension. 

Musicwolf

I'm 55 and, hopefully, in the next couple of months I will be given the choice to either stay where I am or to take a package to leave at the end of the year.  It has been easy enough to crunch the numbers but it has been quite daunting making a decision.  It was something that I wanted but, when it started to materialise, it caused me the odd sleepless night.

Following the news from Honda today my wife just remarked that it might be the right thing to do to go (I'm connected with the Automotive industry).  That was good to hear since I'd already decided that I'll be taking the offer if / when it comes.  Maybe I'd forgotten to tell her.

RandallFlagg

boogieman said:

Don’t forget that you may be hit for a reduced company pension pay out if you retire before 60. My company knocked off 5% per year.

Also don’t bank on getting a full state pension as it depends if your pension scheme ever opted you out of paying full NI contributions. If you retire early and therefore have no NI contributions for certain years you’ll lose even more state pension. I have 42 years of contributions but still stand to lose about a third of the full pension payment because my employer opted out and I’ll have 8 non-contributing years by the time I qualify for the pension. You can go on the gov.uk site to get an estimate. 

Btw I retired at 58 and haven’t regretted it a bit. I’d rather be young enough to enjoy my pension. 

I've checked my state pension contributions, no missed years full entitlement

prowla

I've no plans to retire; I find my work interesting and the pay's OK, so why would I want to give it up?

Fretwired

I've worked for myself for years and am down to 3 days a week. Not much stress. If I feel like it I can post on here or have a noodle with my guitar. I'm early 60s with no debt, savings good pension pot and the kids have gone.

I'm happy just ticking over working a few days a week to pay the bills and buy gear without touching my savings.

EricTheWeary

MtB said:

In the same boat here. I'm 57 and will be retiring at the latest when I'm 60. Some good advice here. I'll add that if you do have a financial adviser bear in mind that they are trained to make sure that you have enough money to last you to 100 years of age, and/or pay for your own old age care.

@RandallFlagg if you haven't already, consider whether you'll need the size of house that you're currently living in when you are 80-odd years of age. Downsizing to a flat or suchlike will give you a helpful release of equity. 

My mother still lives in the house I grew up in, which isn’t huge but is a 4 bedroom detached house. It was apparent by my parent’s 70s that they couldn’t really cope with it any more but at 91 the stress of moving and just the thought of leaving a house full of memories is unbearable for my mother so she plods on. In retrospect if as a couple they had moved into somewhere more suitable where they could have made new links and maybe buy in care as necessary as time went by that would have all been so much better. If you don’t release the equity it is likely to go in care home fees one day anyway. 
Probably not much of an issue for the OP at the moment but if Randall is doing some very long term planning...