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Should everyone on Final Salary scheme claim before 60?

Discussion in 'Retirement' started by diddydave, Nov 9, 2019.

  1. diddydave

    diddydave Established commenter

    We pretty much did the same thing on the money and timing side (not the travel which sounds hectic!) but we put our savings into a private pension (5 x £16k) which has then been 'drawndown' each year to cover the 55-60 was the route we took as it has the bonus of going in without tax and then coming out without tax. (Well technically we lived off the savings whilst our earnings went into the pension). In effect that meant that, at our 20% tax rate, we put in £13k - the tax man put in the £3k they would have received in tax. When you draw it out of the pension you get 25% tax-free and the remaining £12k is our tax-free personal allowance. :)
     
  2. Yoda-

    Yoda- Lead commenter

    There seems to be no real downside to taking it slightly earlier apart from a minimal deduction. I believe there are other advantages in taking it earlier and the amount you can earn when you have retired.
     
  3. harpplayer

    harpplayer Occasional commenter

    Yes diddydave, I think that's what my friend said he was doing, drawing down on a SIPP each year by whatever was the personal allowance that year. Pretty sound financial sense if you ask me. He reckons his TP at 60 is about £15k pa, with a state pension of another £7k seven years later. And a few other savings. He did say his challenge was to try to spend more each year, as he worked out he should have £25k a year until he is 80 (savings plus pensions), then whatever is left of his savings plus £22k a year pensions. He said he stayed in a five star resort in Thailand this year for the first time ever - but that was still only £50 a night end of Oct beginning Nov!! (It's over £200 a night in December.) He says it's actually quite hard to spend more than £13k a year. Got to laugh!!
     
  4. diddydave

    diddydave Established commenter

    Those are pretty much spot on the same figures we got, the pension fund we have has increased by 5% each year so it's beating inflation and so long as we reach our tax allowances for the year we are actually leaving it alone because it's better than any of our other savings. It's also a good 'rainy day' pot to have because you can always turn it into an annuity or a proper drawdown and take 25% of the entire pot in one go. One aspect that may be crucial for some is that once you take cash out like this you are severely limited in how much you can put into a pension thereafter - down to only £4k.

    The only downside I've found so far is that I should have reviewed my plans in my early 40s rather than my late ones as it's quite possible that we could have given up work a few years earlier. Once we went through a year living on half our salary whilst still working we were stunned to realise just how little we actually needed.
     
  5. harpplayer

    harpplayer Occasional commenter

    My mate has been my inspiration. Here in Dubai, I'm accumulating cash at a rate I just never thought possible as a crummy UK teacher in a tough academy just six years ago. My fabulous job is a standard well paid teaching post leading a department in a good school but the cherry is the dozen hours a week of private teaching to mega rich families. It more than doubles my annual income. I'm actually planning to go all out next year and teach privately in the holidays as well, up my rate further and get the houses paid off in two years. I want to be in a position to retire at 45. I realise it really is possibly by planning ahead but also knowing you don't need as much as you think. The one fly I have which my friend doesn't is not having a guaranteed teachers teacher's pension. But two properties and loads of cash is a substitute :).
     
  6. Jamvic

    Jamvic Star commenter

    Don’t be so hard on yourself, I’m sure you weren’t as crummy as you think.
     
  7. meister

    meister New commenter

    Am I correct in thinking that if you claim your FS pension early (even aged 59 years and 11 months), you have to take your CA benefits at the same time, losing 5 years of potential growth in the CA benefits?
     
  8. diddydave

    diddydave Established commenter

    Yes.

    However the growth in CA benefits is with inflation unless you are still working. Your CA (and FS) pension will grow with inflation.

    You also 'gain' from having extra years of pension paid to you. I did a comparison sheet, see the 2nd sheet for an NPA67 comparison...you can make a copy and should be able to figure out the relevance to an NPA65 is that is what you are: https://docs.google.com/spreadsheets/d/1MmQ1h1AwCoC5IggRdVai4L0aBu5j0subZHCkVe3JNOw/edit?usp=sharing
     
  9. meister

    meister New commenter

    Thanks DD!
     

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