Scared for retirement after seeing an IFA

[Rainbowgoldover]

Morning

I had a free call with an advisor from St James Place and I'm now more confused and worried than before about my retirement planning.

I am 52, health issues mean probably only another 3 years max in current role which pays quite well.

Single, small mortgage of 40k on a London flat worth between 500 and 600k

Savings of 100k cash ISA fixed, and private pension pot of 300k

Full NI contributions since 18

I have 3 years to plan better for retirement, advisor recommend savings go into pension pot but I worry alot about having no money to fall back on if I get sick, employer offers very limited full pay for illness. 2 weeks a year I think.

I could get a lodger , don't run a car, and currently putting as much of my salary into pension pot that I can afford

However pretty disorganised and don't know what to do for the best, need to plan that at 55 I may not be able to work full time any more

Thanks in advance for any suggestions

I think they were encouraging me to move my private pension pot to them, and my cash isa to them also, and telling me not to worry about paying off mortgage

They have offered me another free call to go through options but I think I will decline

These recommendations are for their benefit, not yours.

If you go ahead and give them your money, they'll get thousands in commission but you'll be no better off.

Please talk to ad least two more financial advisors. Are you in a union? Do they have contacts with finance people. I think you need a different view from St James, by the sound of it.

No need to panic OP, and I certainly wouldn't be transferring your pension etc to SJP - that's for the salesman's benefit, not yours!

Have you thought about The Number, and what you will actually want/ need to live on in retirement? It's a fascinating subject. I would strongly recommend you go over to the forums on Moneysaving expert. There are people on there who really know their stuff re pensions and will give you good advice. ( I am no slouch financially, but have found their advice invaluable on certain points over time).

I think you would find this invaluable, and you will know they are not trying to sell you something, which could be an extremely expensive mistake for you!

Good luck. 😊

Sorry you are looking at declining health. Do apply for pip and remember that even if you don’t qualify now you should at the point of ill health meaning that you can’t work.

I think your position is good too - sorting the mortgage and a Monday to Friday lodger sound great but also think about what you want to do for you. Your costs will reduce if your capacity does and you should also invest in things you can enjoy while you are comparatively well.

Are there any places you could move to that would allow you to commute to your hospital (obviously dependent on frequency and your health and support) but also free up a chunk of equity?

Hope you stay well and your sensible planning isn’t needed until later.

Another one here thinking you are in a great position, especially if prepared to downsize somewhere a lot cheaper. You could easily live off the equity from the flat sale for 10+ years until you can take your state retirement pension and private pension.

You’ve already had good advice here. If your health condition gets to a point where you can’t work, or even can only work part time, then you should be eligible for PIP which can be quite substantial. If your non-pension savings fall below £16k you might also get Universal Credit with no obligation to look for work.

How expensive is your mortgage? If or when the fixed rate expires it might end up costing more in interest than you’re earning on your ISA, at which point you should think about paying it off.

If you’re in London there should be lots of demand from professional people for a room during the working week. Sometimes people only want Tue-Thu, to let them work three days in the office if they live further away. This income is also tax free up to £7,500 a year (Google “rent a room scheme”).That could make a big difference. There are websites which help you find lodgers like this.

At least you will own your own place - it would be good to have any disability benefits sorted now.
Can you draw your private pension before your state pension? It’s the gap that is difficult if you’re unable to work.
Lodgers sound good but in practice it can be really hard to share your home.
I too would be wary of financial advisors wanting to move your pension - they’re sure to profit from it not you.

Financial advisor sounds highly biased, would have thought that paying off mortgage would be the first priority.

It depends what mortgage rate you have.

lodger can be awkward but having the option is good.

Do not move your ISA money in to your pension. It becomes taxable as soon as you move it in to your pension, it’s in a tax free wrapper currently.

I would get a lodger, maybe go for a midweek one only. Then you get the house to yourself two days a week. You can earn its 7k a year tax free doing this plus they have no real rights as in your own home.

Your best bet would be to move when you stop working to another part of the country or just further out of London. Where I live you could buy a nice albeit small semi detached house with a garden for 250k.

I am not an IFA but DH and I have set ourselves up very well for retirement. I do not trust them as far as I can chuck them.

OP. Have a look at moneyhelper.org.uk it's an impartial website from an arms length government body. (The Money and Pensions Service). There is loads of useful information on finances, pensions ill heath etc.

I know it ses counterintuitive, but paying off a mortgage isn't helpful other than for peace of mind. The interest on your mortgage will be a smaller rate than a good no risk savings account, if you put £500 away a month for the next 3 years you'll have another nearly £19k if you can get 5% interest, which will be enough to defer taking your pension for a year which will help you. He's right about not worrying about the mortgage and trying to beef up your pension pot.
do you have any critical illness coverage or income protection? I guess not with previous ill health. If you are disabled on a day to day basis it would be worth looking at PIP but you do need to be pretty disabled to qualify, not just struggling a bit at times.

@PensionMention pension money is only taxable when you draw on it and depending on your annual allowance and tax position you will probably get tax relief added to pension contributions. Some people then draw some of the money when they are non tax payers (no other income) so can draw £12K pa tax free. I am not saying this is the best thing for the op but it's not always the worst move for everybody. OP, Ring a few advisors, tell them the sort of advice you are looking for and ask what they would charge you.

This. I wouldn't move the while £100k of ISA savings to your pension but if you're not maxing out pension contributions then it could be worth looking to move some into a SIPP. You'd get tax relief added and could draw down from 57 and if you're not earning then would be potentially under threshold. £100k in cash ISA sounds a lot to me so do make sure you are getting a decent rate on that.

Choosing a financial advisor is a very big decision…I talked to 4 or 5 before I settled on someone. Saw someone from St James Partnership who I didn’t trust at all.

You’re best off with a truly independent financial advisor (IFA) and I don’t think St James are independent.

You actually sound in a strong position financially, and it may be possible to do equity release from your flat when you’re older as well. Do you expect to give up work entirely because of your health? You can get a state pension forecast from DWP. Talk to several advisors, I don’t think you need to rush into this.

Please reconsider OP- this company have been investigated for mounting customer complaints, and have recently had to pay out large amounts of compensation (articles freely available in the financial media)

There is some good advice here, plus I'd look at somewhere like money saving expert MSE (I don't always like Martin Lewis but he is an expert in this field) as a starting point

If you think you need more advice, get some personal recommendations or MSE to direct you to a reputable person

Good luck and please don't panic unduly- you are right to look in to this. See it as you being diligent and putting together a plan- better than burying your head in the sand and ending up in a mess

The red flag to me is that THEY contacted YOU. They're also suggesting you transfer your full pension pot to them. Don't do it, could be a scam!!

It's not a scam but it's definitely not independent advice and they are just in it for the commission. I made the mistake of seeing a SJP advisor and he tried to pressure sell me their investment products. Luckily I did research and didn't invest a penny with them.

If you need to retire early, the obvious strategy would be to sell your flat, buy a flat or house in a less overpriced part of the country and take the train to London for occasional hospital visits.

You are in a great position. I clicked on this thinking you might be someone with an actual problem.

Definitely look at applying for PIP. As pp have said, it’s not means tested and it’s absolutely possible to be eligible whilst still working.

There is lots of advice out there about filling in the form. The mistake people make is listing all their diagnoses, rather than how their life is affected.

@Floofydawg SJP may well be legit. However the person who contacted the OP may not. If you look at the FCA's pension scams leaflet it lists some red flags that are included in the OP, such as someone contacts you, free pension reviews, transfer to them. All I am.saying is check everything out properly before going ahead. Red flags are present

I'm not trying to be unsympathetic but I don't quite understand why you feel you are in such a bad financial position. You more or less own a property worth 500 - 600k, you've got £100,000 in an ISA and a pension pot of £300,000. You will quite likely get PIP which will give you around £700 per month which is not means tested and you can continue to work whilst claiming it. You will get your State Pension when you're 67 which currently is worth around £800 per month.

Am I missing something?

OP, I echo the above comments. It would be best for you to find an independent financial advisor. This is exactly what I did, and my situation isn't massively dissimilar to yours. See here for a couple of recommended search websites: https://www.moneysavingexpert.com/savings/best-financial-advisers/