In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone
The approach of selling pensions with the promise that a tax-free lump sum would pay off mortgages and provide a lifelong pension was common in the 1990s. However, many factors can affect the outcome, including changes in the housing market and interest rates. It's crucial for investors to seek personalized advice and consider diversified financial strategies to ensure long-term financial stability
it's vital for investors to seek personalized advice and adopt diversified financial strategies. Working with a knowledgeable financial adviser is crucial for achieving long-term financial stability and freedom.
I'm intrigued by this. I've searched for financial advisers online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
I've experimented with a few over the past years, but I've stuck with ‘’Angela Lynn Schilling” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
if the idea is to build an income stream to use as complement for retirement, or at any given point if needed, then building a dividend growth portfolio always buying adding to it could be a good and peaceful path. On the long run consistency and perseverance could guaranty the desired income stream goal with little worries
the idea is to Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions.
Well said, with the help of the an investment advi-sor, I diversified my 62K portfolio across many markets and in a matter of months, I was able to produce over 356K in net profit from high dividend yield equities, bonds, and exchange-traded funds (ETFs).
wow massive gains! my partner recently hinted on going same direction.. what did you invest in, and who is your investment advisr please, if you dont mind me asking? in dire need of asset allocation
SONYA LEE MITCHELL is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
As soon as I get the chance, I’ll be taking out the 25% and putting it to work in a different area. Maybe even drop it into physical Gold and sit on it until it’s needed
*Do not just seat and do nothing when an investment opportunity comes. Most millionaire investors you see and admire today, didn’t make it by wasting time or waiting on others before investing*
You are right, these days peer group influence, family and the rest influences the decisions of others. It’s funny how a *50 years old* doesn’t own a portfolio while someone just *18 years old* owns a portfolio and is enjoying what life could offer through the profits he makes.
@Bianca Williams Nothing is easy to achieve but with determination, self perseverance and hard work, nothing is impossible. I got help and also invested in crypto currency through a RIA ; *Rodney Hamilton Steve* it’s been 5 years already working with him but everyday feels like the first day as he always brings in new ideas , very accurate and honest . I doubt there is his kind out there.
Rodney Hamilton Steve again!!! This guy is just too good. His name is around the globe , I’m from 🇧🇪 Belgium , I got connected with Rodney Hamilton Steve through a TH-cam commentary. It’s been just six months with him and I’ve made *$200k* already working with him. I would add that , the experience with him so far has been the best and I’m looking forward to many more years with him.
Rodney Hamilton Steve did not just make me rich , but he changed the way I think and improved my finances. Investing with him, gave me a chance towards early retirement. I made so much money investing with him than working for others. I realized that salary alone couldn’t give me that dream of a millionaire lifestyle Sincerely , Rodney Hamilton Steve deserves a medal , lots of accolades, good reviews and recommendation as well to promote his good works and name.
Ahhhhh I take it that when your financial advisor asked you your risk evaluation questions and he asked the question "do you regret losses more or less than missed opportunities?" you went for the latter! Yup, thought so!
I think one thing we've all learnt from the pandemic is to live much more in the moment. We might not be around to enjoy our old age, and these investments might not perform in future in the way we hope anyway. So, if there is an opportunity to take some retirement money earlier to buy or do something we'd really benefit from or just take a break from working to study or have fun or to help a family member or friend, then may as well do it.
I'm 57 and a half...I'm looking forward to taking my final salary next month. The early retirement reduction was minimal for me. If you're around 57 now I'd take it now.
I will be taking my 25% at 55 which will serve as a double bonus; 1. I will use the money to pay off my mortgage, thus leaving me much better off monthly until I retire. 2. It will reduce my pot and I won't pay 55% tax on future withdrawals because I would exceed the life time allowance.
Woah there! Taking your 25% PCLS (Pension Commencement Lump Sum) generates a BCE (Benefit Crystallisation Event), at which point your fund will be tested against the Lifetime Allowance (LTA). The percentage of the LTA that your fund is worth at that point is 'memorised' - so if your fund were worth £1.07M in total at the point of you removing your 25% - you will have used up 100% of the LTA at that point. If your fund continues to grow, you will still have exceeded the LTA (the 25% PCLS is included in the calculation) and you may, depending on what you put into payment, still be liable for the 55% rate of tax. I'd get professional advice before doing what you're planning - I'm not a professional advisor - just someone who has been through/is going through this, as I took my 25% out last year and used up all of my LTA in doing so. Best of luck!
@@phil_nicholls Many thanks for your good advice. My pot won’t be at the LTA level when I take the 25% so I think I will be ok. Also I have an excellent financial planner who will not let me make a mistake like that. 👍🏻
@@phil_nicholls I'm a mere strip of a lad at 51 now, but currently weighing up the pros and cons of this. Nice to see advice from someone who has seen this at first hand. Thanks.
@@RB-pf6dz Don't want to sound morbid but you don't know how long you are going to live. My wife drew her 25%, very sadly died only 5 years later, aged 67. Live it while you can.
I will get a spongy job ,already have one ,and probably work till 67 tbh ,once I get to 60 it really is not that long ,a spongy job something that involves sitting and giving people tickets or something,or a job where you can just tell people to fuck off
Take your money as early as you think possible and enjoy it .You need to have less than £16000 at 66,67 years you will get most thing payed for example your care fees ,rent allowance etc.having plenty of money at the end not a good idea the government is very good at clawing your money back to them.Come in with nothing and go out with nothing.
State pesion retirement age is going to be 68 yrs for lot of people in future in UK & the only option is your workplace pension. I'd say anywhere between 56-58 yrs is good, so you get to enjoy a bit when your a bit healthier & can do something with the 25% tax free cash & leave the remainder invested or take all of it (get taxed on remainder 75% as well but you can invest elsewhere not using all in one go). No point leaving longer invested & seeing yourself grow old with it :)
It is always assumed that people take the 25% and spend it rather than invest it in similar assets. It would have helped to go into more detail around the crystallisation rules and tax implications.
Why take it out and reinvest it? You are just closing off the avenue of tax-free growth. If you take it at 55 with 100k in the pot you get 25k tax free. At 65 when it has grown to 200k, you get 50k tax free. If you only crystallise what you need the tax free portion grows at the same rate as your investment.
One approach I can see is to take some cash out and invest it into an ISA so you retain the tax free element and also more importantly the flexibility of having that all important cash buffer that all advisors are suggesting you need to dip into when your drawdown pot is falling due to stock market volatility (IE let it recover as opposed to selling stocks at a reduced price). So I can see some justification for drawing your tax free element out and drip feeding it into ISA investments to then use as your buffer fund. Any thoughts anyone?
start investing as soon as you can in an index fund with vanguard, then at 55 take the 25% of your pension and do the same and you will be financially free and you can retire or work part time if you want to!
Don’t listen to these experts .. of course they don’t want you to take cash .. that’s how they make money. Do you want to be the richest man in the graveyard? Enjoy your life
Why would you leave money in when you could put £20k of it into ISA (possibly £40k with partner) and invest the rest in std investments and get £12k CGTA (possibly £24k with partner). Surely you must take it out, just don’t spend it. Am I wrong?
Fees on pension usually less than ISA, and you can withdraw the 25% tax free (aka opportunity cost) over next 30 yrs....so say £12570 t f allowance plus say 2 or 3 % of the hitherto 25%... so say £20-30k p.a. draw down ALL tax free is doable if you have biggish pot (AND YOUR NON-TAKEN 25% HAS INCREASED IN VALUE in intervening years)!
Can I buy an annuity at 57 (after 2028) and get paid index linked pension til i die? That seems like an attractive option. Potentially 50 years of cash!
Hmmm seems way better to just pull it out and put it into a better investment, people should be investing for their whole life to pass money down to there family. With a pension there is nothing to pass down to the family. No to mention to get an investment to grow the money faster
You couldn't be more wrong. The pension is not subject to inheritance tax. Your other investments are. This is provided you don't buy an annuity, but instead, go into drawdown. I'm sure annuities have there place, but your money is kept by the insurance company when you die.
He would say leave it invested.. that's how the city makes its money. Take it out get buy to let and income plus something to pass on to your children.
What puts me off getting a pension is, the government keep changing the ‘rules’. It’s now 57 from 2028 before you can access any of it and this is just going to keep on going up. They’ll probably do away with the tax relief next the mess we’re in!
I think it's very unlikely that they'll do away with the tax relief on pensions as they need to continue to make it attractive for us to make our own pension provision as the govt can't afford to pay the entire pensions bill themselves. Higher rate taxpayers will probably find their relief pegged back though.
@@VoiceOfThe I don't think they'll do away with the state pension either. However, the triple lock will go, as it costs too much to uprate pensions by 2.5% when inflation is much lower and also the link to earnings will probably change. But I do think the state pension will stay, at least in some form. Although a major success as far as people not opting out, the biggest problem with auto-enrollment it is that most people are simply not paying enough in to their pensions. I know it's gradually improving, but come on, you must admit at the start of auto-enrollment, something like a 3% contribution from your company and not much better employee contributions are woefully inadequate. Most people miss the bus by not thinking about pensions until it's too late. My relatively new grandson is 2yrs old in a couple of weeks time, but even now I'm thinking about a pension for him and long term savings. He has been left £5k in my mother's will and I intend to start a junior pension with the £2880 maximum ~ the tax relief will bring it up to £3600. The rest will go in to a stocks and shares ISA. He will thank me when he's older. Unfortunately though I won't be around for him to do so, as he is 61yrs younger than me.
Can someone explain to me these: How can you be 'taxed' on the money you earn so it goes into your pension sum, then 'taxed' again if you take out a lump pension sum over 25%? Why are pension sums taxed at all? Is that tax going back into your afterlife pension? That '%pension tax' sounds like a built-in depreciation mechanism, that might make your long-term investments seem less intelligent. Please help.
Your pension contributions aren't taxed as part of your earnings. Your pension pot is tax free, then taxed once as income when you eventually withdraw it as an income.
Is the way not just to use a self select S&SISA, as a retirement pot, then draw off as much as you want tax free? without faffing around with 25% tax free lump sums, with rest of capital taxed to fcuk etc. like with normal pension funds.
Joseph White No. Because you get income tax back on initial contributions to a pension. So £100 in is actually £120 in for a basic rate taxpayer. £120 with compounded growth will be worth a heck of a lot more over the same time period than £100 with the same percentage compounded growth.
To echo the sentiment of the first answer... Any savings put into any ISA is from nett pay. Basic rate taxpayer => £1 gross pay became 68p of ISA savings Higher rate payer => £1 gross ends up 58p in ISA Higher rate taxpayer between 100-125k => £1 gross ends up just 38p in ISA (due to progressive loss of personal allowance) Top rate taxpayer => £1 gross pay ends up as 53p in ISA. Therefore, your ISA would have up grow between 47% to 163% (depending on your marginal tax rate) to compete with the pension contribution from your gross pay. Now, throw in other aspects such as 1) matched contributions from your employer 2) the fact you can take 25% tax free (so that money isn’t taxed on the way in or the way out) 3) you are unlikely to have the same marginal tax rate in retirement that you have in your working life And it leads to as efficient an investment as you are going to find. With that said, ISAs offer more flexibility. No one can stop you withdrawing, whereas you are limited by age restrictions. On the upside though, money you can’t access also can’t be withdrawn to cover an “emergency”. It’s locked away for the purpose intended - to keep you going in old age.
Argument doesn’t work because of tax advantages gained by pension salary sacrifice. Also doesn’t work for those who want to invest in excess of the £20k annual Ida allowance.
But what about if your pension policies are stuck in the uk but you left years ago and the pension company won’t let you have the funds to invest in retirement funds in the country you now live in
Loved this one, especially the bit about staying invested in stocks for longer. I’m 40, and it I followed the supposed advice, I’d be 40% in bonds! Doesn’t seem like a good growth strategy. I’ll stay in stocks for a while longer!
You don't seem to grasp it's a risk reward trade off. You are able to get higher returns with stocks, but if there's another crisis like COVID or war, your portfolio will drop much more than if you've got a diversified portfolio with lower risk assets
@@u3vs62cja You mention covid (and could equally have mentioned the wall street crash) in all scenarios the market recovered within a few years or less. If you put it in a historical context, frankly, i wouldn't worry. You only lose if you bottle it and sell up - specifically in reference to the original posters 40 (oh i wish i were that age again!) years. if someone were 65 I might not be quite so forward with the advice (disclaimer: i'm 51 and put nothing into bonds any more - 100% index funds all the way - "diversified over the entire market spread (albeit unevenly) over the whole world)
@@u3vs62cja at 40 years old, why would that matter to him? The market recovers and averages 11% return. You just need to have other income or investment that won't be hit at the same time.
Those idiots who take the tax free amount to buy Jags and Mercs make me think that the government should get rid of the tax free lump sum completely and instead make every withdrawal 25% tax free, with a yearly withdrawal limit from drawdown set at no more than 10% of the pot.
I need to die when I am 82 ,I am just taking it straight to account,so no annuity etc ,and my money will have run out by age 82 so I will need to die lol
Same here. Plans evolve running out of money st 82. Don't forget equity release is also an option. De risk yourself as much as practically possible for care home fees lol
Yep take it all and they'll add what you take minus ( any tax free allowance) and add it to your earnings in the year you take all your pension. If the total comes to £50k or more in any one tax year then you'll pay 40% on anything over £50k. Don't think I'll be doing that as HMRC will charge me thousands..,...... might work though if you have a very very small pension pot...... another important thing to be mindful of is if you take you're entire pot, when you take it. The closer to the start of the tax year, the better, or a whole years salary will be added to your pension withdrawal to determine your tax liability.
The cemeteries are full of people who had plenty of money during their lives and held on to it like they were going to live forever . When they died they had not lived at all . The majority of the people who inherited it blew it quickly on lavish holidays , paying off holidays and drugs . I find that quite amusing . Ha
Why have we worst pensions in Europe, BBC are paying there work force in millions ,the new north to south railway Costing billions,now defence costing billions,mps bumper rise , my state pension is £137.56 yes you can’t believe that I will repeat £137.56 better to be payed in peanuts
Take that 25% (tax free) an you’ll end up getting taxed 55% on it, it terrible at explaining things but look it up yourself first if your thinking of taking your 25% early
If you worked for 30 years and had created a pension worth £200k then you need to understand some basics. If you take a pension early (between 55 - 66 dependent on your type of scheme) you may be making a huge mistake. You normarlly loose circa 5% per year for every year you take your pension early. So if your scheme states you can retire at 60 but you decided to leave early and decide to take your drawdown at 55, you will loose circa 25% of your pot in penalties instantly. But if you then also decided to take 25% of you pot as a lump sum at 55 you would have then taken 50% of the value of your pension already reducing your pot to a mere £100,000. That's alot to loose at just 55. You may think hey i will live of the lump sum (£50k) i will live off it till 67? thats just £4116 to live off a year OUCH! You may have savings also lets say £50k thats another £4116k giving you £8,232 to live off (a £1000 less than state pension). So you have left 55 and you have £100,000 to live off until 67 state pension. But and its a big but. Your savings (£100k) only giving you 1% interest a year in an ISA which at best it will give you £1000 interest a year. YOU CANNOT LIVE OF THE INTEREST Or you put your saving in Bonds and an ISA and lets say £2000 in interest. YOU CAN NOT LIVE OFF THE INTEREST Or you may decide to invest in shares and make 3% -10% per year (£1500 - £5k if its a good year) but what if theres a stock crash? you could loose 50% of you pot? You still need to live and every year up until 67. YOU CANNOT LIVE OFF the INTEREST. SO YOU NEED SOME SERIOUS MONEY IF YOU WISH TO LEAVE AT 55! REMEMBER YOU NEED THIS MONEY TO TOP UP YOUR STATE PENSION. Living off £9,200 state pension a year will not be fun at 67 never mind trying to go at 55 without some serious assets. You still need to get to 67 to get state pension. SO FROM 55 to 67 thats 12 years you need to have enough money to live comfortably. YOU realistically will want about 20,000 -£25,000 a year to live a comfortable life in retirement. SO the reality is you need at 55 saved funds of between £250,000 - £300,000 that you can invest, or put in savings accounts, buy premium bonds or place in an ISAs at 55 and also 200,000 pension pot at 67. If you worked on the priniciple of retiring at 55 and an investment interest rate of 4% a year without ever loosing any of your saving (investment) you would get 12k a year on 300,000 savings. which if you then topped up with the lump sum of 50k (spending 4116k each year) you would have a retirement pension of £16k ish a year before the age of 67 and state pension. RULES TO A COMFORTABLE LIFE GET A PENSION EARLY as soon as you start your working life at 18. ITS A MUST. SAVE, SAVE SAVE as much as you can afford put what you can in an ISA each year AND OR SAVINGS ACCOUNTS AND OR BONDS (put in £1k-2k each year as soon as you get a job and never touch it just keep adding to it until you are at least 55! KEEP ADDING EACH YEAR (COMPOUND INTEREST WILL EVENTUALLY MAKE THE MONEY WORK FOR IT SELF without you needing to pay into it) If you buy a house PAY YOUR MORTGAGE OFF AS SOON AS POSSIBLE or when its down to the last 10k buy another house for rental income IF YOU HAVE SAVINGS INVEST IN ANOTHER PROPERTY OR LAND (look for a 6%+ return in rent) When you want to retire (55) use the income from the property to prop up your pension pot at 60 or 67 cash it all in and you will be minted. (millionaire) So when you drawdown each year you will likely only want to take a small percentage of your pension out e.g 4% and hope that the financial team that you sell your pension to will invest wisely and gain you between 3 % and 10% per year. If you have a good year take a small sum out extra but never try and take 25% out per year unless you really need it. If you have ill health and think you could utilise the money better for your care or hand it too your family before you pop your clogs. Make sure the TAX man does not take your hard earned money you worked for all your life! SO REMEBER If you want to leave early do not draw down on your pot for as long as possible do not draw down until there are no penalties (60 or 67). Only draw a lump sum when you reach the zero penalty stage of pension (or maybe 5% or 10% penalties 1 or 2 years early) YOU CAN LEAVE EARLY JUST DO NOT DRAW ON YOUR PENSION. (if you have savings and a PLAN) A 95 scheme (defined benefits aka final salary) will let you draw down at 55 - 60 but you will get penalised for every year you take your salary earlier than 60. If you take a lump sum as well at 55 lets say you have lost 50% of the value of your pension already. BE VERY CAREFULL So do not think hey i have 200,000 pension i will take 25% at 55 and buy a car go on holiday and think you will be fine. You loose 100,000 of the value of your pension asap. Yes you would have 50k to buy a new car and have a nice holiday. But then for maybe 30 odd years you are drawing down on only whats left of 100,000. While a 2015 defined benefits scheme would mean you would need to wait till 67 before you can draw down on it without penalities. The rates are different but you really need to get some pension advise before taking your pension pot early. Not everyone was advised to take pensions out in the 80s and alot of people will be lucky to have 30 years in a scheme never mind 40 years. So start saving or even get a 2nd pension, Try and put stuff away in Bonds, shares and ISAs spread it around. BUT FOR GOD SAKE GET A PENSION! I see so many kids now making the mistake of living for today rather than saving for tommorrow! Its scary how fast retirement comes up and i see so many people who have not got a private pension and are now in their 50s. They think state pension at 67 is all they need. Scary. YOU WILL LIVE A VERY MISERABLE LIFE in retirement.
Thank u for taking the time to share such good advice. I work as a nurse and am in all 3 pension pots 1995/2008/2015. It’s so damn confusing and if I look for advice to see if I should take my measly 10k out at 60, all independent advisors don’t want to bother!!?? So thank u for talking some sense
Brilliant advice, thank u for this great info. I work as a nurse and have bits of pension in 1995/2008/2015. Should I take or leave my measly 10k out at age 60yrs. I will not be stopping working till 63-65yrs!!??
@@carolturner7419 Hi Carol, Can i just point out that the 95 scheme will be an annuity not a drawdown scheme. Meaning you get a fixed income for your entire life. I think you can take the 2008 scheme out and drawdown on it. I may be wrong check with your pension manager. Work on the basis that 95 scheme is 1/80 * salary * years Then * all years acrued from your pension start date in the 95 scheme up to 2022 (as that is the new date at which you can claim years back in the 95 scheme now) So lets say you started in 2002 and have 20 years in the 95 scheme to (2022) Your pension is worth 1/80 (0.0125 * salary Band 7 (guess)= £44,503 * 20 years = £11,125 for the rest of your life at 60. Now do the same for 2008 scheme (1/60 =0.0166666666666667 ) and 2015 scheme = (1/54 *0.0185185185185185) Remember that 2008 and 2015 is an average of your entire working life salaries. Simply add your original salary and expected final salary /2 to get a rough idea This will give you a realistic idea of your pension worth at 60; and 66ish. I will only have 6 years in the 2015 scheme so may just decide to leave it till 67 and retire at 58 or 60 or i may even take the penalty on the 2015 scheme and draw it straight away a 60 taking a 30% deduction. Hope this helps!!! Also note that you will get £33,375 lump sum as a golden hand shake on the 95 scheme :) 3 * your final 95 pension worth. (working on my 20 year calc) You could reduce this or not even take it for a larger pension i think. I will take the lump sum and invest it! DO NOT FORGET IF YOU HAVE BOUGHT YEARS BACK IN THE 95 SCHEME add them to the years!!!. "Staff who retire from the 1995 Section and return to work are unable to re-join the NHS Pension Scheme, but employers must provide an alternative pension arrangement in line with auto-enrolment legislation. Staff in the 2008 Section or 2015 NHS Pension Scheme can re-join the scheme while in receipt of their benefits and build further pension. Such eligible staff will be auto-enrolled into the NHS Pension Scheme on their return to work but can opt out if they wish. " I feel like many you were hoodwinked into moving to the 2008 scheme rather than staying in the 95 scheme until forced over to the 2015 scheme. This was a mistake. BUT you may be able to decide to move the 2008 pension back into the 95 scheme. (this would be a better option) check next year when the new pension review comes into play. Hope this helps
@@carolturner7419 Hi Carol, This is a really good number to remember THE 15 -8 -4 rule To undertstand how much saving you need to retire do these simple calculations for your savings and pension requirements: You want to have savingsand or pension worth 15* your salary gross = 15* £44,503= £667,545 You want to be saving each month between 8-10% of your net monthly salary in savings and your pension contributions. For any investment plan you have (eg Investment ISA that you can put £20k in each year without tax implication) you will want to only drawdown each year just 4%. So your investment pot never looses money. Investment (stocks and shares normally make between 3-8% each year) HENCE 15-8-4 rule!!!! So when you get your lump sum at 60 put £20,000 first year in an investment ISA before 6 May or April (not sure) You will be able to draw £800 next year out to top up your pension. Add the rest the year after £13,000 = increased 4% drawdown of £1,320 year after. Thats just given you a top up to £12,500 a year pension. It may seem like a temptation to go on a world cruise by a car and shop crazy but resist. Maybe invest 85% have some fun! Depends on your financial status. If you decided to then take 2008 and 2015 early you will get about 3,000 (after deductions) extra to your pension i'm guessing which would then become £15,500 maybe more. REMEMBER 5% penalty each year to take off as a rough idea for the 2015 and 2008 scheme you take before 66. SO leave at 60 take off 30% from the 2015 and 2008 totals calculations. Then add to your 95 pension to get an idea. If you have been saving from now to your retirement into an investment isa starting now to the time you retire (max 20,000 each year for lets say 5 years before you retire) that would give you £100,000 savings. This would give you a potential drawdown each year of £4,000 extra boost to your pension. This would hopefully keep increasing each year as well as investment profit will have hopefully topped up the loss of the drawdown that year. Each year you would need to be investing £1,667 a month into your Investment ISA (alot to invest but if your mortgage is paid off then why not?) If you can afford it. Set the amount to what you can afford. Its that simple. 20k each year for 5 years or longer is possible in later years of your working life this would get you a total yearly pension at 60 of about 19K-20K Add £9,100 state pension at 66ish = £29k You will be sorted ;) YOUR AIM IS TO HAVE A PENSION WORTH BETWEEN 50% and 70% of final salary On these calcs you would have 66% of your final salary (worked on top of band 7) I hope this helps you consider your pension position and retirement options. Maybe try a financial adviser. Depending on your circumstances. I have a 3rd pension with Aegon retireready that i will have paid in £40k ish to top up over a 6 year period (Till i reach 58 or 60). I transfered in 8000 upfront as i had an old pension outside NHS when i was in 20s, i pay £200 in a month to this. Its defined contribution so i think i could simply take 25% each year or just take an another annuity. If you want to invest in an ISA (investment isa) you can manage it yourself using a site like trading 212 (zero commission) or do a click and forget investment ISA managed by an investment house like Blackrock (done in house with AEGON. Simply choose a risk level and how much you want to invest each month. use this to work out investment compound interesting: www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php Thats it you know about as much as i do now about my NHS pension:) Good luck and have a nice retirement! I wish the NHS pension officers provided far more information than what they do currently. When i first joined the NHS they never explained i could pay in my old pension into the scheme until after the the date was up. They failed to arrange some buy added extra years on my pension on my birthday costing me 3 years of missing pension in the past. So many people will leave without realising what they need in retirement till its too late. This is why i want to pass on what i know now and give you my experience of mistakes made and how to rectify them in later life before retirement. Fail to prepare! Prepare to fail.
@@carolturner7419 If you are adventurous and fancy a dabble at managing stocks and Shares investing than i would have a look at trading 212 (ZERO Charges is good). Start an investment account. Do not use the Investment ISA section if you have an investment ISA else where (e.g AEGON ISA etc) if you have already invested into it this year. Else the TAX man will come after his cut. Do not be confused BTW between a cash isa and an Investment ISA. You can have one each each year if you wished with 20k max. Protected up to a value of 85,000 normally. With trading 212 you can have a go any time without using real money. They give you an imaginary 50k to invest and tell you pick some stock and shares and see what happens Trading 212 has 3 types of investments account options CFDs, Invest and ISA CFDs are for the big boys and you can loose your shirt on this DO NOT MESS UNLESS YOU REALLY KNOW HOW TO TRADE. THIS IS NOT INVESTING THIS IS TRADING. HUGE DIFFERENCE!!!!! When you watched trading places and they all start crying this is WHY!!!!! ITS a GAMBLE which can loose all your money in a 30 seconds and then owe some more. DO NOT TOUCH!!!! Invest account section. This section allows you to pay into an account to purchase factional shares, Full Shares or ETFs For a low risk investor like myelf i would choose some ETFs (low risk as it allows diversity) I would choose between 10-15 shares only as its easy to manage Lets say i bought 5 fractional ETF shares (groups of fractional shares) Let say 5 well established shares (e.g google, tesla, coca cola, microsoft, Nvidia etc... (fractional or full depending of your budget) Lets say 5 shares that are speculative and a bit of a gamble (maybe a company is having a bad year (oil, air, Rental) but you feel in a year it will bounce back (easy jet) after doing some research (do some you tube searches soak up knowledge before making your investments) Learn how to read candlestick, screeners, PE etc.... Theres alot of info. BUT its fun! ETFs are like a hole range of similar stocks and shares grouped together in a INDEX (s500, FTSE) they are low risk because its a predefined group rather than a single stock in a specific sector e.g Technology, Health, Finance, Gold, Oil etc shares You always have risk nothing is risk free and stocks and shares go up and down constantly. As a long term investor you need to think of your investment over 5-10 years not think every day or week my shares are down i must sell and buy something else. You need to look at the average gained over a year. You want to be seeing 3% -8% over a year for your entire investment to be doing ok this may not happen each year but some years will be BAD but other years you could see 25% increase in your pot (it happens) ISA account its the same as the invest account but you can get 20k invested TAX free so if you maxed out before May 5th and made 25% investment profit you would have 25K tax free in the account free from the tax man that year :) If you did this in the investment account you would pay tax i think on the £5k profit. I'm new to this so use anything i'm saying to you as a starting point rather than FACT. Always research and verify anything you read on youtube. If you do decide to do your own investments good luck and enjoy and have fun. If you are more laid back or worried then go with a financial investment house like Aegon or some other investment ISA company, pay a commision to have it handle for you. You will not get the returns as high but the investor will be knowldgeable and likely have some excellent stock options. You just need to choose a risk level rather than all the stocks and share option. They do the work for a charge ) All the best enjoy!
That's incorrect, you are allowed 25% of the fund value tax free, BUT once you have taken money out the fund is crystallised so cannot take money later tax fee e.g 5 years later. Also you more than likely will not be able to combine it with another pension scheme that is not crystallised due to causing conflict when you take funds from that
My plan is to not take an annuity / and just spend my pot over say 20 yrs then I will take a gun probably at the age of 83 and finish it all when my pot is empty
@@gumusluk05 had a whole bottle ,whisky last year ,8 hrs washing dishes next day ,,felt sooooo bad ,like really bad ,,,one of those I’ll just try a wee taster , 3 hrs later wrecked ,,,,just about sober this year though ,feel great way more productive/ happier ,cheers
In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone
The approach of selling pensions with the promise that a tax-free lump sum would pay off mortgages and provide a lifelong pension was common in the 1990s. However, many factors can affect the outcome, including changes in the housing market and interest rates. It's crucial for investors to seek personalized advice and consider diversified financial strategies to ensure long-term financial stability
it's vital for investors to seek personalized advice and adopt diversified financial strategies. Working with a knowledgeable financial adviser is crucial for achieving long-term financial stability and freedom.
I'm intrigued by this. I've searched for financial advisers online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
I've experimented with a few over the past years, but I've stuck with ‘’Angela Lynn Schilling” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
Wow, her track record looks really good from what I found online. I'll take a chance and see how it goes. Thanks for the info
if the idea is to build an income stream to use as complement for retirement, or at any given point if needed, then building a dividend growth portfolio always buying adding to it could be a good and peaceful path. On the long run consistency and perseverance could guaranty the desired income stream goal with little worries
the idea is to Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions.
Well said, with the help of the an investment advi-sor, I diversified my 62K portfolio across many markets and in a matter of months, I was able to produce over 356K in net profit from high dividend yield equities, bonds, and exchange-traded funds (ETFs).
wow massive gains! my partner recently hinted on going same direction.. what did you invest in, and who is your investment advisr please, if you dont mind me asking? in dire need of asset allocation
SONYA LEE MITCHELL is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
As soon as I get the chance, I’ll be taking out the 25% and putting it to work in a different area. Maybe even drop it into physical Gold and sit on it until it’s needed
*Do not just seat and do nothing when an investment opportunity comes. Most millionaire investors you see and admire today, didn’t make it by wasting time or waiting on others before investing*
You are right, these days peer group influence, family and the rest influences the decisions of others. It’s funny how a *50 years old* doesn’t own a portfolio while someone just *18 years old* owns a portfolio and is enjoying what life could offer through the profits he makes.
@Bianca Williams Nothing is easy to achieve but with determination, self perseverance and hard work, nothing is impossible. I got help and also invested in crypto currency through a RIA ; *Rodney Hamilton Steve* it’s been 5 years already working with him but everyday feels like the first day as he always brings in new ideas , very accurate and honest . I doubt there is his kind out there.
Rodney Hamilton Steve again!!! This guy is just too good. His name is around the globe , I’m from 🇧🇪 Belgium , I got connected with Rodney Hamilton Steve through a TH-cam commentary. It’s been just six months with him and I’ve made *$200k* already working with him. I would add that , the experience with him so far has been the best and I’m looking forward to many more years with him.
Rodney Hamilton Steve did not just make me rich , but he changed the way I think and improved my finances. Investing with him, gave me a chance towards early retirement. I made so much money investing with him than working for others. I realized that salary alone couldn’t give me that dream of a millionaire lifestyle Sincerely , Rodney Hamilton Steve deserves a medal , lots of accolades, good reviews and recommendation as well to promote his good works and name.
Ahhhhh I take it that when your financial advisor asked you your risk evaluation questions and he asked the question "do you regret losses more or less than missed opportunities?" you went for the latter! Yup, thought so!
I think one thing we've all learnt from the pandemic is to live much more in the moment. We might not be around to enjoy our old age, and these investments might not perform in future in the way we hope anyway. So, if there is an opportunity to take some retirement money earlier to buy or do something we'd really benefit from or just take a break from working to study or have fun or to help a family member or friend, then may as well do it.
Their good worthwhile aims ,,,getting something tangible that will reap,rewards in future is good idea a new car is not ,imm
Exactly I want land
I'm 57 and a half...I'm looking forward to taking my final salary next month. The early retirement reduction was minimal for me. If you're around 57 now I'd take it now.
I will be taking my 25% at 55 which will serve as a double bonus; 1. I will use the money to pay off my mortgage, thus leaving me much better off monthly until I retire. 2. It will reduce my pot and I won't pay 55% tax on future withdrawals because I would exceed the life time allowance.
Sounds like a good move for someone who is not on an average salary but i may be wrong.
Woah there!
Taking your 25% PCLS (Pension Commencement Lump Sum) generates a BCE (Benefit Crystallisation Event), at which point your fund will be tested against the Lifetime Allowance (LTA). The percentage of the LTA that your fund is worth at that point is 'memorised' - so if your fund were worth £1.07M in total at the point of you removing your 25% - you will have used up 100% of the LTA at that point. If your fund continues to grow, you will still have exceeded the LTA (the 25% PCLS is included in the calculation) and you may, depending on what you put into payment, still be liable for the 55% rate of tax.
I'd get professional advice before doing what you're planning - I'm not a professional advisor - just someone who has been through/is going through this, as I took my 25% out last year and used up all of my LTA in doing so.
Best of luck!
@@phil_nicholls Many thanks for your good advice. My pot won’t be at the LTA level when I take the 25% so I think I will be ok. Also I have an excellent financial planner who will not let me make a mistake like that. 👍🏻
@@phil_nicholls I'm a mere strip of a lad at 51 now, but currently weighing up the pros and cons of this. Nice to see advice from someone who has seen this at first hand. Thanks.
Utter bollox they want you to leave it in and die before you take it . Take the lot as much as you can as early as you can
👍yes I did.
@@RB-pf6dz that's what I'm thinking of doing too but I worked out I'll have to pay approx £40k in tax which is a huge amount to lose
@@RB-pf6dz Don't want to sound morbid but you don't know how long you are going to live. My wife drew her 25%, very sadly died only 5 years later, aged 67. Live it while you can.
@@philattlee1 I nearly died at 35, my father died at 59. I’m 55 in 3 years. Wonder 💭 what I’ll be doing? 25% thank you very much
@@MrModelflyerdid u take the 25%?
My 25% will be spent on my accommodation when I retire.
I will get a spongy job ,already have one ,and probably work till 67 tbh ,once I get to 60 it really is not that long ,a spongy job something that involves sitting and giving people tickets or something,or a job where you can just tell people to fuck off
My kinda guy 🤣
😁😂
Get a job in customer service 😄
PML
Take your money as early as you think possible and enjoy it .You need to have less than £16000 at 66,67 years you will get most thing payed for example your care fees ,rent allowance etc.having plenty of money at the end not a good idea the government is very good at clawing your money back to them.Come in with nothing and go out with nothing.
Fidelity need you to keep your money with them otherwise they need to make some fund managers redundant
Peter Jackson Absolutely spot on,”Don’t take your 25% out of Fidelity, the service on my Aston Martin is due any minute “
Simon Morse If you’ve bought an Aston Martin you have no idea about money!
Retrie early and enjoy life
Better to not work at all
@@thomaspridmore106 hows that working out for you?
That's what I'm planning to do later this year and I'm hoping to move to either Malaysia or Thailand
Tomorrow is not guaranteed , good advice
taking no risk ...you may not leave to enjoy your pension...
State pesion retirement age is going to be 68 yrs for lot of people in future in UK & the only option is your workplace pension. I'd say anywhere between 56-58 yrs is good, so you get to enjoy a bit when your a bit healthier & can do something with the 25% tax free cash & leave the remainder invested or take all of it (get taxed on remainder 75% as well but you can invest elsewhere not using all in one go). No point leaving longer invested & seeing yourself grow old with it :)
Sometimes it’s a need must!
His voice sounds a bit like Alan Partridge :)
ah ha............
B edwards so that’s damn funny
Hahahahah it’s just like him 😂😂😂
back of the net
It is always assumed that people take the 25% and spend it rather than invest it in similar assets. It would have helped to go into more detail around the crystallisation rules and tax implications.
Michael Nunn that’s what I’m thinking. I’d roll it to an Ira and have a monthly withdrawal to live on. Is that a bad idea?
Why take it out and reinvest it?
You are just closing off the avenue of tax-free growth.
If you take it at 55 with 100k in the pot you get 25k tax free.
At 65 when it has grown to 200k, you get 50k tax free.
If you only crystallise what you need the tax free portion grows at the same rate as your investment.
One approach I can see is to take some cash out and invest it into an ISA so you retain the tax free element and also more importantly the flexibility of having that all important cash buffer that all advisors are suggesting you need to dip into when your drawdown pot is falling due to stock market volatility (IE let it recover as opposed to selling stocks at a reduced price). So I can see some justification for drawing your tax free element out and drip feeding it into ISA investments to then use as your buffer fund. Any thoughts anyone?
That makes no sense.
@@slayerrocks2couldn’t agree more
start investing as soon as you can in an index fund with vanguard, then at 55 take the 25% of your pension and do the same and you will be financially free and you can retire or work part time if you want to!
I'm 35. Which vanguard index fund would you invest in and why? Thank you.
Tyson Spiller I like something very diverse like the global all cap or lifestyle funds
Dreadful advice
I was thinking of taking money at 55, after listening to this, think I will take pension 57-58 now, thanks.
Tomorrow is not guaranteed
Don’t listen to these experts .. of course they don’t want you to take cash .. that’s how they make money. Do you want to be the richest man in the graveyard? Enjoy your life
Lol. Fidelity fees are tiny and if you do what he says you will end up wealthier.
Why would you leave money in when you could put £20k of it into ISA (possibly £40k with partner) and invest the rest in std investments and get £12k CGTA (possibly £24k with partner). Surely you must take it out, just don’t spend it. Am I wrong?
Fees on pension usually less than ISA, and you can withdraw the 25% tax free (aka opportunity cost) over next 30 yrs....so say £12570 t f allowance plus say 2 or 3 % of the hitherto 25%... so say £20-30k p.a. draw down ALL tax free is doable if you have biggish pot (AND YOUR NON-TAKEN 25% HAS INCREASED IN VALUE in intervening years)!
A 10 year (financial) horizon aged 30 is massively different to 10 year horizon at 60 !
This guy is not a qualified adviser, he works for a company that has an interest in retaining your funds!
Spot on
Is it worth putting some money in Bonds?
Can I buy an annuity at 57 (after 2028) and get paid index linked pension til i die? That seems like an attractive option. Potentially 50 years of cash!
A very interesting video, thanks for sharing. Gary.
I can’t get access. At 57 I was told my type of pension doesn’t allow it
Hmmm seems way better to just pull it out and put it into a better investment, people should be investing for their whole life to pass money down to there family. With a pension there is nothing to pass down to the family.
No to mention to get an investment to grow the money faster
You couldn't be more wrong.
The pension is not subject to inheritance tax. Your other investments are.
This is provided you don't buy an annuity, but instead, go into drawdown.
I'm sure annuities have there place, but your money is kept by the insurance company when you die.
He would say leave it invested.. that's how the city makes its money. Take it out get buy to let and income plus something to pass on to your children.
What puts me off getting a pension is, the government keep changing the ‘rules’. It’s now 57 from 2028 before you can access any of it and this is just going to keep on going up. They’ll probably do away with the tax relief next the mess we’re in!
state is 68 from 2028!
I think it's very unlikely that they'll do away with the tax relief on pensions as they need to continue to make it attractive for us to make our own pension provision as the govt can't afford to pay the entire pensions bill themselves. Higher rate taxpayers will probably find their relief pegged back though.
@@garyrichardson8934
The auto-enrolment work pension looks like replacing the state pension in time.
@@VoiceOfThe I don't think they'll do away with the state pension either. However, the triple lock will go, as it costs too much to uprate pensions by 2.5% when inflation is much lower and also the link to earnings will probably change. But I do think the state pension will stay, at least in some form.
Although a major success as far as people not opting out, the biggest problem with auto-enrollment it is that most people are simply not paying enough in to their pensions. I know it's gradually improving, but come on, you must admit at the start of auto-enrollment, something like a 3% contribution from your company and not much better employee contributions are woefully inadequate. Most people miss the bus by not thinking about pensions until it's too late. My relatively new grandson is 2yrs old in a couple of weeks time, but even now I'm thinking about a pension for him and long term savings. He has been left £5k in my mother's will and I intend to start a junior pension with the £2880 maximum ~ the tax relief will bring it up to £3600. The rest will go in to a stocks and shares ISA. He will thank me when he's older. Unfortunately though I won't be around for him to do so, as he is 61yrs younger than me.
@@garyrichardson8934
Yeah, I’m beginning to wonder why my parents didn’t set things up for me. It’s common sense really.
He didn’t really tell you anything other than don’t draw it out and put in a bank account.
If25%exceeds the LTA Is it still tax-free?
Can someone explain to me these:
How can you be 'taxed' on the money you earn so it goes into your pension sum, then 'taxed' again if you take out a lump pension sum over 25%?
Why are pension sums taxed at all?
Is that tax going back into your afterlife pension?
That '%pension tax' sounds like a built-in depreciation mechanism, that might make your long-term investments seem less intelligent.
Please help.
Your pension contributions aren't taxed as part of your earnings. Your pension pot is tax free, then taxed once as income when you eventually withdraw it as an income.
@@david1731048 spot on mate o)
@@david1731048
Thx
@@david1731048 and because your pension contributions come out pre tax, you pay less tax on the rest of the money you do earn
wow a guy who gives impartial advice and has not got his nose in the trough. Rare breed.
Is the way not just to use a self select S&SISA, as a retirement pot, then draw off as much as you want tax free?
without faffing around with 25% tax free lump sums, with rest of capital taxed to fcuk etc. like with normal pension funds.
Joseph White No. Because you get income tax back on initial contributions to a pension. So £100 in is actually £120 in for a basic rate taxpayer. £120 with compounded growth will be worth a heck of a lot more over the same time period than £100 with the same percentage compounded growth.
To echo the sentiment of the first answer...
Any savings put into any ISA is from nett pay.
Basic rate taxpayer => £1 gross pay became 68p of ISA savings
Higher rate payer => £1 gross ends up 58p in ISA
Higher rate taxpayer between 100-125k => £1 gross ends up just 38p in ISA (due to progressive loss of personal allowance)
Top rate taxpayer => £1 gross pay ends up as 53p in ISA.
Therefore, your ISA would have up grow between 47% to 163% (depending on your marginal tax rate) to compete with the pension contribution from your gross pay.
Now, throw in other aspects such as
1) matched contributions from your employer
2) the fact you can take 25% tax free (so that money isn’t taxed on the way in or the way out)
3) you are unlikely to have the same marginal tax rate in retirement that you have in your working life
And it leads to as efficient an investment as you are going to find.
With that said, ISAs offer more flexibility. No one can stop you withdrawing, whereas you are limited by age restrictions. On the upside though, money you can’t access also can’t be withdrawn to cover an “emergency”. It’s locked away for the purpose intended - to keep you going in old age.
@@Askoorb actually £100 becomes £125 tax free, as the £100 is the net of tax amount e.g. 80% if you pay 20% tax.
Argument doesn’t work because of tax advantages gained by pension salary sacrifice. Also doesn’t work for those who want to invest in excess of the £20k annual Ida allowance.
IS ANYONE astute enough to explain the steps to take to get your pension?
Covid will make sure people like me born in 61 will retire at 70 !
Tomorrow is not guaranteed, take it as early as possible
This was a brilliant piece thankyou very much .
Lots of hands
But what about if your pension policies are stuck in the uk but you left years ago and the pension company won’t let you have the funds to invest in retirement funds in the country you now live in
I'm in that very boat Mark I've just found out. NOT HAPPY.
Loved this one, especially the bit about staying invested in stocks for longer. I’m 40, and it I followed the supposed advice, I’d be 40% in bonds! Doesn’t seem like a good growth strategy. I’ll stay in stocks for a while longer!
You don't seem to grasp it's a risk reward trade off. You are able to get higher returns with stocks, but if there's another crisis like COVID or war, your portfolio will drop much more than if you've got a diversified portfolio with lower risk assets
@@u3vs62cja You mention covid (and could equally have mentioned the wall street crash) in all scenarios the market recovered within a few years or less.
If you put it in a historical context, frankly, i wouldn't worry. You only lose if you bottle it and sell up - specifically in reference to the original posters 40 (oh i wish i were that age again!) years. if someone were 65 I might not be quite so forward with the advice (disclaimer: i'm 51 and put nothing into bonds any more - 100% index funds all the way - "diversified over the entire market spread (albeit unevenly) over the whole world)
@@u3vs62cja at 40 years old, why would that matter to him?
The market recovers and averages 11% return.
You just need to have other income or investment that won't be hit at the same time.
How do you know if you are eligible? 🤔". #jamaicababyvevo
Taking financial advice from main stream media
Those idiots who take the tax free amount to buy Jags and Mercs make me think that the government should get rid of the tax free lump sum completely and instead make every withdrawal 25% tax free, with a yearly withdrawal limit from drawdown set at no more than 10% of the pot.
Agree!
Is this video relevant today
Is there a no risk pension ,53 and happyish with what I have do I have any options
Win the lottery
@@vespapx5334 completely unrelated to what I’m asking ?
Great thing about approaching retirement is you can tell your boss to “fxxxx off”
I need to die when I am 82 ,I am just taking it straight to account,so no annuity etc ,and my money will have run out by age 82 so I will need to die lol
You could always book a trip to Dignitas for when you are 82.
Average life expectancy is 80 don't worry
Same here. Plans evolve running out of money st 82. Don't forget equity release is also an option. De risk yourself as much as practically possible for care home fees lol
Most men dying before 65 so take it all .
Grab the lot or they will
Yep take it all and they'll add what you take minus ( any tax free allowance) and add it to your earnings in the year you take all your pension. If the total comes to £50k or more in any one tax year then you'll pay 40% on anything over £50k.
Don't think I'll be doing that as HMRC will charge me thousands..,...... might work though if you have a very very small pension pot...... another important thing to be mindful of is if you take you're entire pot, when you take it. The closer to the start of the tax year, the better, or a whole years salary will be added to your pension withdrawal to determine your tax liability.
Median life expectancy in the UK is around 80 years at birth (according to the ONS), did you make that number up ?
2:51 before Pandemic
Money is the root of all evil ! You can't take your money to the grave , spend it now and be happy !
The love of money is the root of all evil. A big difference.
Dr A Hole would be more accurate.
The cemeteries are full of people who had plenty of money during their lives and held on to it like they were going to live forever . When they died they had not lived at all . The majority of the people who inherited it blew it quickly on lavish holidays , paying off holidays and drugs . I find that quite amusing . Ha
Paying off holidays ha ha ha .. true but I meant debts ha
...interest from their bank
No rob it
Yeah I wonder why Fidelity want people to not take lump sum.....
All he said was don’t take it out before you need it.
Fuck yeah
Don't understand him. Didn't say clearly ( round and around ).don't want invest just want to collect it 25%tax free.
Why have we worst pensions in Europe, BBC are paying there work force in millions ,the new north to south railway Costing billions,now defence costing billions,mps bumper rise , my state pension is £137.56 yes you can’t believe that I will repeat £137.56 better to be payed in peanuts
Should have probably got a job and paid into one yourself then. Telling people not to work but moaning your pension is rubbish
If my pension divebombs ,can I come back to this account and sue
Take that 25% (tax free) an you’ll end up getting taxed 55% on it, it terrible at explaining things but look it up yourself first if your thinking of taking your 25% early
If you worked for 30 years and had created a pension worth £200k then you need to understand some basics.
If you take a pension early (between 55 - 66 dependent on your type of scheme) you may be making a huge mistake. You normarlly loose circa 5% per year for every year you take your pension early.
So if your scheme states you can retire at 60 but you decided to leave early and decide to take your drawdown at 55, you will loose circa 25% of your pot in penalties instantly. But if you then also decided to take 25% of you pot as a lump sum at 55 you would have then taken 50% of the value of your pension already reducing your pot to a mere £100,000. That's alot to loose at just 55.
You may think hey i will live of the lump sum (£50k) i will live off it till 67? thats just £4116 to live off a year OUCH! You may have savings also lets say £50k thats another £4116k giving you £8,232 to live off (a £1000 less than state pension). So you have left 55 and you have £100,000 to live off until 67 state pension.
But and its a big but. Your savings (£100k) only giving you 1% interest a year in an ISA which at best it will give you £1000 interest a year. YOU CANNOT LIVE OF THE INTEREST
Or you put your saving in Bonds and an ISA and lets say £2000 in interest. YOU CAN NOT LIVE OFF THE INTEREST
Or you may decide to invest in shares and make 3% -10% per year (£1500 - £5k if its a good year) but what if theres a stock crash? you could loose 50% of you pot? You still need to live and every year up until 67. YOU CANNOT LIVE OFF the INTEREST.
SO YOU NEED SOME SERIOUS MONEY IF YOU WISH TO LEAVE AT 55!
REMEMBER YOU NEED THIS MONEY TO TOP UP YOUR STATE PENSION. Living off £9,200 state pension a year will not be fun at 67 never mind trying to go at 55 without some serious assets. You still need to get to 67 to get state pension.
SO FROM 55 to 67 thats 12 years you need to have enough money to live comfortably. YOU realistically will want about 20,000 -£25,000 a year to live a comfortable life in retirement. SO the reality is you need at 55 saved funds of between £250,000 - £300,000 that you can invest, or put in savings accounts, buy premium bonds or place in an ISAs at 55 and also 200,000 pension pot at 67.
If you worked on the priniciple of retiring at 55 and an investment interest rate of 4% a year without ever loosing any of your saving (investment) you would get 12k a year on 300,000 savings.
which if you then topped up with the lump sum of 50k (spending 4116k each year) you would have a retirement pension of £16k ish a year before the age of 67 and state pension.
RULES TO A COMFORTABLE LIFE
GET A PENSION EARLY as soon as you start your working life at 18. ITS A MUST.
SAVE, SAVE SAVE as much as you can afford put what you can in an ISA each year AND OR SAVINGS ACCOUNTS AND OR BONDS
(put in £1k-2k each year as soon as you get a job and never touch it just keep adding to it until you are at least 55! KEEP ADDING EACH YEAR (COMPOUND INTEREST WILL EVENTUALLY MAKE THE MONEY WORK FOR IT SELF without you needing to pay into it)
If you buy a house PAY YOUR MORTGAGE OFF AS SOON AS POSSIBLE or when its down to the last 10k buy another house for rental income
IF YOU HAVE SAVINGS INVEST IN ANOTHER PROPERTY OR LAND (look for a 6%+ return in rent)
When you want to retire (55) use the income from the property to prop up your pension pot at 60 or 67 cash it all in and you will be minted. (millionaire)
So when you drawdown each year you will likely only want to take a small percentage of your pension out e.g 4% and hope that the financial team that you sell your pension to will invest wisely and gain you between 3 % and 10% per year. If you have a good year take a small sum out extra but never try and take 25% out per year unless you really need it. If you have ill health and think you could utilise the money better for your care or hand it too your family before you pop your clogs. Make sure the TAX man does not take your hard earned money you worked for all your life!
SO REMEBER If you want to leave early do not draw down on your pot for as long as possible do not draw down until there are no penalties (60 or 67). Only draw a lump sum when you reach the zero penalty stage of pension (or maybe 5% or 10% penalties 1 or 2 years early) YOU CAN LEAVE EARLY JUST DO NOT DRAW ON YOUR PENSION. (if you have savings and a PLAN)
A 95 scheme (defined benefits aka final salary) will let you draw down at 55 - 60 but you will get penalised for every year you take your salary earlier than 60. If you take a lump sum as well at 55 lets say you have lost 50% of the value of your pension already. BE VERY CAREFULL So do not think hey i have 200,000 pension i will take 25% at 55 and buy a car go on holiday and think you will be fine. You loose 100,000 of the value of your pension asap. Yes you would have 50k to buy a new car and have a nice holiday. But then for maybe 30 odd years you are drawing down on only whats left of 100,000.
While a 2015 defined benefits scheme would mean you would need to wait till 67 before you can draw down on it without penalities. The rates are different but you really need to get some pension advise before taking your pension pot early. Not everyone was advised to take pensions out in the 80s and alot of people will be lucky to have 30 years in a scheme never mind 40 years. So start saving or even get a 2nd pension, Try and put stuff away in Bonds, shares and ISAs spread it around.
BUT FOR GOD SAKE GET A PENSION! I see so many kids now making the mistake of living for today rather than saving for tommorrow! Its scary how fast retirement comes up and i see so many people who have not got a private pension and are now in their 50s. They think state pension at 67 is all they need. Scary. YOU WILL LIVE A VERY MISERABLE LIFE in retirement.
Thank u for taking the time to share such good advice. I work as a nurse and am in all 3 pension pots 1995/2008/2015. It’s so damn confusing and if I look for advice to see if I should take my measly 10k out at 60, all independent advisors don’t want to bother!!?? So thank u for talking some sense
Brilliant advice, thank u for this great info. I work as a nurse and have bits of pension in 1995/2008/2015. Should I take or leave my measly 10k out at age 60yrs. I will not be stopping working till 63-65yrs!!??
@@carolturner7419 Hi Carol,
Can i just point out that the 95 scheme will be an annuity not a drawdown scheme. Meaning you get a fixed income for your entire life. I think you can take the 2008 scheme out and drawdown on it. I may be wrong check with your pension manager.
Work on the basis that 95 scheme is 1/80 * salary * years
Then * all years acrued from your pension start date in the 95 scheme up to 2022 (as that is the new date at which you can claim years back in the 95 scheme now)
So lets say you started in 2002 and have 20 years in the 95 scheme to (2022)
Your pension is worth 1/80 (0.0125 * salary Band 7 (guess)= £44,503 * 20 years = £11,125 for the rest of your life at 60.
Now do the same for 2008 scheme (1/60 =0.0166666666666667 ) and 2015 scheme = (1/54 *0.0185185185185185)
Remember that 2008 and 2015 is an average of your entire working life salaries. Simply add your original salary and expected final salary /2 to get a rough idea
This will give you a realistic idea of your pension worth at 60; and 66ish. I will only have 6 years in the 2015 scheme so may just decide to leave it till 67 and retire at 58 or 60 or i may even take the penalty on the 2015 scheme and draw it straight away a 60 taking a 30% deduction.
Hope this helps!!!
Also note that you will get £33,375 lump sum as a golden hand shake on the 95 scheme :) 3 * your final 95 pension worth. (working on my 20 year calc) You could reduce this or not even take it for a larger pension i think. I will take the lump sum and invest it!
DO NOT FORGET IF YOU HAVE BOUGHT YEARS BACK IN THE 95 SCHEME add them to the years!!!.
"Staff who retire from the 1995 Section and return to work are unable to re-join the NHS Pension Scheme, but employers must provide an alternative pension arrangement in line with auto-enrolment legislation. Staff in the 2008 Section or 2015 NHS Pension Scheme can re-join the scheme while in receipt of their benefits and build further pension. Such eligible staff will be auto-enrolled into the NHS Pension Scheme on their return to work but can opt out if they wish. "
I feel like many you were hoodwinked into moving to the 2008 scheme rather than staying in the 95 scheme until forced over to the 2015 scheme. This was a mistake. BUT you may be able to decide to move the 2008 pension back into the 95 scheme. (this would be a better option) check next year when the new pension review comes into play.
Hope this helps
@@carolturner7419 Hi Carol,
This is a really good number to remember THE 15 -8 -4 rule
To undertstand how much saving you need to retire do these simple calculations for your savings and pension requirements:
You want to have savingsand or pension worth 15* your salary gross = 15* £44,503= £667,545
You want to be saving each month between 8-10% of your net monthly salary in savings and your pension contributions.
For any investment plan you have (eg Investment ISA that you can put £20k in each year without tax implication) you will want to only drawdown each year just 4%. So your investment pot never looses money. Investment (stocks and shares normally make between 3-8% each year)
HENCE 15-8-4 rule!!!!
So when you get your lump sum at 60 put £20,000 first year in an investment ISA before 6 May or April (not sure) You will be able to draw £800 next year out to top up your pension.
Add the rest the year after £13,000 = increased 4% drawdown of £1,320 year after. Thats just given you a top up to £12,500 a year pension.
It may seem like a temptation to go on a world cruise by a car and shop crazy but resist. Maybe invest 85% have some fun! Depends on your financial status.
If you decided to then take 2008 and 2015 early you will get about 3,000 (after deductions) extra to your pension i'm guessing which would then become £15,500 maybe more. REMEMBER 5% penalty each year to take off as a rough idea for the 2015 and 2008 scheme you take before 66. SO leave at 60 take off 30% from the 2015 and 2008 totals calculations. Then add to your 95 pension to get an idea.
If you have been saving from now to your retirement into an investment isa starting now to the time you retire (max 20,000 each year for lets say 5 years before you retire) that would give you £100,000 savings. This would give you a potential drawdown each year of £4,000 extra boost to your pension. This would hopefully keep increasing each year as well as investment profit will have hopefully topped up the loss of the drawdown that year.
Each year you would need to be investing £1,667 a month into your Investment ISA (alot to invest but if your mortgage is paid off then why not?) If you can afford it. Set the amount to what you can afford. Its that simple.
20k each year for 5 years or longer is possible in later years of your working life this would get you a total yearly pension at 60 of about 19K-20K
Add £9,100 state pension at 66ish = £29k You will be sorted ;)
YOUR AIM IS TO HAVE A PENSION WORTH BETWEEN 50% and 70% of final salary On these calcs you would have 66% of your final salary (worked on top of band 7)
I hope this helps you consider your pension position and retirement options. Maybe try a financial adviser. Depending on your circumstances.
I have a 3rd pension with Aegon retireready that i will have paid in £40k ish to top up over a 6 year period (Till i reach 58 or 60). I transfered in 8000 upfront as i had an old pension outside NHS when i was in 20s, i pay £200 in a month to this. Its defined contribution so i think i could simply take 25% each year or just take an another annuity.
If you want to invest in an ISA (investment isa) you can manage it yourself using a site like trading 212 (zero commission) or do a click and forget investment ISA managed by an investment house like Blackrock (done in house with AEGON. Simply choose a risk level and how much you want to invest each month.
use this to work out investment compound interesting:
www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php
Thats it you know about as much as i do now about my NHS pension:)
Good luck and have a nice retirement!
I wish the NHS pension officers provided far more information than what they do currently. When i first joined the NHS they never explained i could pay in my old pension into the scheme until after the the date was up. They failed to arrange some buy added extra years on my pension on my birthday costing me 3 years of missing pension in the past.
So many people will leave without realising what they need in retirement till its too late. This is why i want to pass on what i know now and give you my experience of mistakes made and how to rectify them in later life before retirement. Fail to prepare! Prepare to fail.
@@carolturner7419 If you are adventurous and fancy a dabble at managing stocks and Shares investing than i would have a look at trading 212 (ZERO Charges is good). Start an investment account. Do not use the Investment ISA section if you have an investment ISA else where (e.g AEGON ISA etc) if you have already invested into it this year. Else the TAX man will come after his cut.
Do not be confused BTW between a cash isa and an Investment ISA. You can have one each each year if you wished with 20k max. Protected up to a value of 85,000 normally.
With trading 212 you can have a go any time without using real money. They give you an imaginary 50k to invest and tell you pick some stock and shares and see what happens
Trading 212 has 3 types of investments account options CFDs, Invest and ISA
CFDs are for the big boys and you can loose your shirt on this DO NOT MESS UNLESS YOU REALLY KNOW HOW TO TRADE. THIS IS NOT INVESTING THIS IS TRADING. HUGE DIFFERENCE!!!!! When you watched trading places and they all start crying this is WHY!!!!! ITS a GAMBLE which can loose all your money in a 30 seconds and then owe some more. DO NOT TOUCH!!!!
Invest account section. This section allows you to pay into an account to purchase factional shares, Full Shares or ETFs
For a low risk investor like myelf i would choose some ETFs (low risk as it allows diversity)
I would choose between 10-15 shares only as its easy to manage
Lets say i bought 5 fractional ETF shares (groups of fractional shares)
Let say 5 well established shares (e.g google, tesla, coca cola, microsoft, Nvidia etc... (fractional or full depending of your budget)
Lets say 5 shares that are speculative and a bit of a gamble (maybe a company is having a bad year (oil, air, Rental) but you feel in a year it will bounce back (easy jet) after doing some research (do some you tube searches soak up knowledge before making your investments) Learn how to read candlestick, screeners, PE etc.... Theres alot of info. BUT its fun!
ETFs are like a hole range of similar stocks and shares grouped together in a INDEX (s500, FTSE) they are low risk because its a predefined group rather than a single stock in a specific sector e.g Technology, Health, Finance, Gold, Oil etc shares
You always have risk nothing is risk free and stocks and shares go up and down constantly. As a long term investor you need to think of your investment over 5-10 years not think every day or week my shares are down i must sell and buy something else. You need to look at the average gained over a year. You want to be seeing 3% -8% over a year for your entire investment to be doing ok this may not happen each year but some years will be BAD but other years you could see 25% increase in your pot (it happens)
ISA account its the same as the invest account but you can get 20k invested TAX free so if you maxed out before May 5th and made 25% investment profit you would have 25K tax free in the account free from the tax man that year :) If you did this in the investment account you would pay tax i think on the £5k profit.
I'm new to this so use anything i'm saying to you as a starting point rather than FACT. Always research and verify anything you read on youtube.
If you do decide to do your own investments good luck and enjoy and have fun. If you are more laid back or worried then go with a financial investment house like Aegon or some other investment ISA company, pay a commision to have it handle for you. You will not get the returns as high but the investor will be knowldgeable and likely have some excellent stock options. You just need to choose a risk level rather than all the stocks and share option. They do the work for a charge )
All the best enjoy!
This is wrong.You can only get 25% of what you take out tax free. So if you take out 10k you will have 2.5k tax free.
That's incorrect, you are allowed 25% of the fund value tax free, BUT once you have taken money out the fund is crystallised so cannot take money later tax fee e.g 5 years later.
Also you more than likely will not be able to combine it with another pension scheme that is not crystallised due to causing conflict when you take funds from that
Private pension early retirement due to ill health and if not for housing benefit I would be below the poverty line. So explain this rubbish
Government couldn’t run a kids party, they’re in their positions for their benefit, not ours.
Wakey wakey
My plan is to not take an annuity / and just spend my pot over say 20 yrs then I will take a gun probably at the age of 83 and finish it all when my pot is empty
Lol that's my plan as well
I'll get 2 bottles of the finest malt whisky a few pills and bugger off in style around 82 🎄🎄🎄
@@gumusluk05 lol make sure you do a good job ,,the hangover will be liveable,but unliveable
@@BobBob-uv9fq Imagine the hangover 😬😵💫
@@gumusluk05 had a whole bottle ,whisky last year ,8 hrs washing dishes next day ,,felt sooooo bad ,like really bad ,,,one of those I’ll just try a wee taster , 3 hrs later wrecked ,,,,just about sober this year though ,feel great way more productive/ happier ,cheers
People are living longer?😂😂😂 that’s a joke” the police are killing people these days 😳
You really believe that you have more chance of being shot by the police than you will of living in to old age and retirement 🤣