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I have 2 pensions a preserved Defined Benefit and a current Defined Contribution that I pay into along with my employer's 11% contributions.
I am looking to take the lump sum and start drawing the preserved DB pension at 55 and use the lump sum to do some house renovations, but continue working in my current job as long as I can hack it and load up the DC pension with extra contributions.
Once I've had enough I will either retire completely and start drawing down on the DC pension or get a lower paid/more enjoyable job and take less drawdown or keep it preserved.
I have just under 3 years until I'm 55 so will be getting as much advice I can and eventually reluctantly pay for some professional advice in a year or so.
I was thinking that if I took my LGPS pension from next year it would be worth about £12k per annum. But there would be no tax, NI or pension to pay out of that so I would get all the money. Unless I'm missing something? So although gross it's a big drop in income net it isn't actually as bad. I feel there's a catch I'm missing?
Have you thought of just working the night shift?
You may well turn out to be correct, I like to err on the side of caution. If I can make the numbers work for me at the pessimistic end of the scale then I'm pretty confident that I'll come up with a way of disposing of any money that is left over. Failing that, my wife will.
Nowadays, I think most advisers would say 6-7% is too high. Although it depends on health, life expectancy, age, whether the investor wants to leave money to loved ones etc.
Many advisers are suggesting 3.5% drawdown at age 65 (or I think 3% if starting at age 55)
Although one of the things I was thinking of doing was trying to get some relief care work which would probably end up being mostly nights. I could say I currently work with adults with learning disabilities and autism but actually I mostly work at a computer and occasionally see adults with learning disabilities and autism in order to generate more work on the computer. So actually seeing more of real people seems quite appealling.
Edit: even if they are mostly sleeping real people.
Growth in the last year was tiny on my pot, but you're making me wonder whether I should switch. Currently I'm on an annuity plan - perhaps I should switch to drawdown.
So, for example, if your pension is £12K/year and you earn £5K/year from your care work, you'd pay 20% tax on £4.5K/year = £900/year.
Put simply, aside from the ability to remove a tax-free lump sum, pension income (whether from an annuity or through draw-down) is treated as normal income for the purposes of tax.
You may be thinking of the pension illustrations you get every year, which will say "You can expect a lump sum of £X plus an income of £X", normally for three different growth assumptions. These illustrations *are* based on an buying an annuity at retirement, but that doesn't mean you're on an "Annuity plan".
I understand that you need circa £200k pot to get around £10k per year...what you think?
Im a little shy of that myself ;-)
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In reality we’d also have MrsTheWeary having a similar ( actually slightly better) pot plus lump sums in the building society for rainy days. I guess one of the unknown is how many rainy days. However, having seen my in laws and now my mother lose almost everything they have to pay for care there doesn’t seem any point in trying to hang onto it for too long.
As an aside, some people ignore the likely fact that you'll need far more income in your early years of retirement (when you're still active) to the later ones.
When the state pension kicks in for you and your wife if you have one, the amount you need from private pensions can reduce if you are on a drawdown.
Build a spreadsheet and plot out the costs and the income and tweak it to see how far it can stretch. If you're no good at spreadsheets then consider professional advice. Google and research this question, there is plenty of pension planning tools out there, they are a little crude but will give you a basic idea.
https://www.fidelity.co.uk/retirement/calculators/pension-drawdown-tool
If so wouldn't it make more sense to draw down based on a mount that gradually whittled down your portfolio?
When I talk about retirement, it's retiring from this job, there is nothing to stop me taking a part time job to top up the pension once I do drop out.
I plan to draw down the fund growth amount plus some of the original equity so the pot will diminish over time. The kids will get the house and what's left of any savings, the pension is for me and the wife.