If you want to retire before 67...

[RoseThornside]

And your work pension only kicks in at 67, how do you find the years before 67? I am thinking I'd like to retire at 64 or 65, but I'm already in my late 50s. I have a small work pension that I can take at 67, and obviously the government pension will start then too.

How do I fund the 2 or 3 years before that? From savings? Or is there a better way?

I've just had an email from Nest saying I now have to decide what to do with my pension pot. Don't know why as I'm 57? Apparently I need to take it out or put the money in a different ( more appropriate) pot. I have no idea what any of it means or to do. I'm so economically illiterate

Have a look at the Meaningful Money podcast - and it’s also on you tube. There’s loads of back catalogue and you really need to learn this stuff for yourself. It can make a real difference for the same pot of money, what you do with it. Listen to them while you are tidying, walking, travelling and you will be surprised how much you learn in a short space of time. I knew nothing when I started a year ago but now can tell a bit about investing and what to do with pension pots.
you won’t regret investing the time.

What does the email actually say @LuckyStarz ? It’s sounds unlikely that you have to move it, but without the actual email wording it’s impossible to say.

57 is state pension age minus 10 years. There is a view that for the last 10 years before planned retirement you might choose to change your investments. Put very simply, 20 years from retirement you might have higher risk investments because if that doesn’t pay off, you have time to recover - but with only 10 years to go, you might want something safer. So it’s just a guess but perhaps it’s just an email saying you might want to think about that. You don’t have to though.

Hi @Testina .. it says it's in a short term fund that's not designed to hold savings for long periods of time. Your response makes a lot of sense, thank you.
@Spck thanks for the tip. I love podcasts and that one has just shot to the top of the list!
I really need to get a handle on all of this. I'm very capable regarding most things but not money unfortunately. It's about time I was!

I’m hoping to retire before 68 as well!
I can’t put any more into pensions as I keep going over AA and get tax bills so trying to pay as much as I can into S&S ISAs

Very hard when I’ve got two youngish DC and school fees etc.

I wouldn’t go with the cash savings idea personally

Yes, you can set up a SIPP, chuck in the £20,000 and take it out when you’re 65 and 66.

The reason that’s better than just putting it into a savings account is that you only need to put in £16,000 and it will be topped up to £20,000. You have to pay tax when you take it out again, but you’ll get the same personal allowance as if you were still working, and £10,000 a year is below that so you won’t have to pay any tax. That means you’ll get an extra £4,000 which you wouldn’t have had if it had been in a savings account.

There are rules about how much you can pay into your pensions in any year, as @nannynick says. If you drip feed money in over a few years you’re less likely to run into problems.

The problem with putting into a sipp or my pension is I cant access it until the state pension age.

I want to retire early.
So I need to invest in something that let's me take the money earlier. I know I lose the tax advantage, but it doesnt help me retire earlier if I cant access the money til after I'm 65.

If your children are secondary school age now could you look at taking on a more full time role (still public sector) for a bit? You could then both save up and benefit from higher contributions to your pension?

Otherwise I think it's inevitable that if you are working very PT then your pension won't stretch far.
Essentially it's a trade of between retiring earlier or working very part time now for longer.

If you have a separate SIPP you can take the money out whenever you want, up to 10 years before state pension age. That’s why it’s perfect for bridging the gap.

@rowthe are you in the U.K.?
No-one here who hasn’t already has a state retirement age of 65 - it’s currently 66.

And as @Hazelnut5 has pointed out, you can access your SIPP much earlier.

I recommend you get to grip with the pension basics before you make planning decisions on incorrect beliefs!

I think a pp has it right when they said the trick is to reduce your outgoings. When I retired, I did so at 59 with an actuarilly reduced pension.

with my lump sum, I took care of the house infrastructure. New roof, rewire, new central heating new windows etc. I also ensured I had no debts, only utilities.

what money you have going out is as important as that coming in. It's something that is quite often forgotten.

Thank you @Hazelnut5, that is interesting!

And thank you to you all also - really helpful. Yes, I know I can take my local government pension early if I want, but it's so small anyway that I can't really afford to take that hit. And I am starting to look at jobs which are not term-time only - I have just wanted to put my all into being a mother - it's my blessing and my joy - didn't have a great childhood and I find it really healing weirdly.

I have never understood pensions and really thankful for everyone's help. Going to do some research on SIPPs now!

I'm in the UK.
My current age of retirement will be 67. But may increase depends on the whims of the govt. I can take my pension up to 10 years early but it will be reduced.

Same with Sipp arent they going to increase the age at which you can access it?

For myself I wouldn't trust the government not to keep increasing the age at which you can access it.. Its something to consider and keep in mind.

Another one suggesting that a SIPP sounds like a good shout for you.

if you can afford £150/month, you’ll get tax relief bumping that effectively up to £180/month; assuming you have 8 years left to pay in and an average rate of return of 5%, you could be looking at £20,000 in there by the time you’re 65.

if you take out £10K/year you won’t be taxed (assuming you have no other income at that point).

The more you can afford to put in, the comfier you’ll be.

@Rowthe “Same with Sipp arent they going to increase the age at which you can access it?”

The government announced a long time ago, when 55 was introduced as the earliest age for general pension access, that they intended to peg it to SRA minus 10 years. Hence 55, as SRA was 65 at the time. And why it will move to 57 in 2028.

I believe that the actual legislation to enact that hasn’t actually been passed yet - but that’s just admin really, and even pension provider websites present 57 from 2028 as fact.

So yes, it will increase, but I see no reason it won’t stay as they’ve indicated all along: SRA minus 10.

Why did you say you couldn’t take it until SRA?

@dyrne I agree, but on this: “if you can afford £150/month, you’ll get tax relief bumping that effectively up to £180/month”

Even better than that actually! £150 in is bumped to £187.50! You need to add 25%, because it’s actually the gross figure less 20%.

I'm 51 and my DC pension is accessible from 57. Plan is to live off/deplete ISA savings first before drawing down from my pension pot (currently volatile and down!) My pension pot is worth approx £200K so nowhere near enough to retire. Mortgage paid off and youngest DC is now 15 so pumping more into pension and ISAs.

Mid 50's. We're set up for retirement by downsizing and paying off the remaining mortgage, saving into premium bonds and personal pensions and we also have work pensions. We also have rental property which we will sell when the above runs out. We'll probably sell one when we retire this year anyway because we don't want the hassle and would like the money to enjoy the early years of retirement with lots of holidays before the health issues kick in.
We've cut back on vehicles in preparation, we'll see how we adjust with that.

Downsize and hopefully use freed up equity to tide you over until 67? Or think of a small side hustle?

I'm planning on retiring at 62. We have a BTL so will use rental income until DH reaches state pension age when I'll be 65.

DH has recently started a side hustle (hobby to a business) which he loves so he might carry on with that until he turns 67.

@Chewbecca why do you say 35 years NI does not equal full state pension?

I get some pension at 60 ( about £10 000 pa) and I'm paying extra into AVCs with the plan of taking these at 60 until state pension age where I'll get my state pension plus the rest of my work pension. Hope this will be enough but I might need to work part time too. __

35 years NI only applies to people who started paying from April 2016. If you were working before then, you have a personalised calculation that you need to log on to gov.uk to see the result of. Many people (me included) need over 40 years for a full SP.

@Chewbecca I've just checked mine and if I contribute for another 3 years I'll get the full state pension in 2037. That works out to 35 years of contributions.

It's such a long way off. 14 years. Could even be 15 years if they raise pension age to 68 which is very likely.

You can take your pension from 55
It will be reduced, but depending on your scheme and how long you've been in it you may be pleasantly surprised if you only want to take it a few years early.

But yes, I plan to live off savings (and maybe part time earnings) until my official retirement age so that I don't have to take a reduced pension.

That’s good Amboseli.

I’m conscious a lot of people underestimate how much they need, don’t check it or don’t accurately understand what it says when they do check it (it’s not as clear as it could be).

@Chewbecca I agree the gov forecast statement is not very clear.

I will probably have contributed for 41 years by the time I retire.

I can definitely see pension age rising to 70 for those under 40.