Very tempted to take my pensions now . Any tips ?

[InkySplott]

Hi I'm 62 and I have about 5 years before my state pension kicks in . I have two small pensions worth 70k I'm very tempetedc to take my cash lump sums and take draws downs until it's all gone by 67. My parter is the same age and he will get a government final salary pension and that comes with a small pension for me also , which combined with the state pension takes me over the tax threshold. I just think if I keep my existing pensions I will pay loads of tax anyway at 67 . What do you think I should do ?

Plus I'm not working at the moment because I got made redundant. Thanks .

Worst case scenario.
What happens if you draw down now and then your partner passes on before/during retirement, could you manage?

Are you sure you will get a pension from your husbands employer? Would that not only be if he passes away before you, as a survivors pension?

If you are not a taxpayer now but expect to be a taxpayer when you get your state pension then you might want to take taxable income from your pensions now and preserve as much of the 25% tax free cash as you can.

of course, there are other factors to consider, mainly do you need the money and inheritance tax.

No if he passes away I will get his pension as a lump sum or an income . He has filled in forms nominating me as his beneficiary. I know I'm in a lucky position but I've heard about a lot of people dying or being very ill recently before they had the chance to benefit from their pension . I don't know if I will be able to get a job now at my age .

No-one here can tell you.
You need to work out what your outgoings are, have a contingency fund and and decide whether that's enough to live on and allow for some quality-of-life spending.

And,as pointed out up thread, what happens if your DH dies?
If you own your house, it's surprising how much you need to spend on maintaining it in retirement too - costs have all rocketed.

This is an article from last year - at a minimum a couple need about £20k a year and that's a very basic standard of living:
https://www.theguardian.com/money/2023/apr/15/uk-pensions-how-much-retire-cost-of-living-inflation-income

Thanks . This is what I'm in a dilemma about . If I leave my pensions invested and don't access them I will pay 20 % text anyway . If I take an annuity I will get 2k a year for life . In 20 years time 2k won't buy a lot

Are you married to him?

If not, if you break up before he died, or if he decided to change his beneficiary without telling you, you’d be screwed.

You need to see a financial adviser or someone at your bank or your accountant and get professional and EXPERT advice on this. You could find yourself reaching 70 with no money at all.

I"d be surprised if you get all your DH's pension if the worst happened - check how much it is. And the state pension dies with him I believe?
Don't think you're unemployable either - we have a lot of labour shortages in the country at the moment, although you might need to learn new skills.

It would be worth modelling the tax efficiency of drawing down your pension in the next five years and transferring the funds into an ISA, which is then tax free at the point of withdrawal.

You only pay tax on amounts over the allowance - currently £12570 is tax-free.

That's a good idea 👍 thank you

Thanks . Yeah I've tried for entry admin level jobs but told I've not enough experience but they asked when I took exams and when did I take them so worked out how old I was . I will keep trying.

Yes his state pension dies with him but my pensions are small so will only generate a very small income . I wish I had a crystal ball . I can see shares are going up and my pension is related to that .

If you are in the market for a new job: Talk to your local careers office (see if there's any retraining funding available), take a look on the Rest Less website and also set yourself up on LinkedIn (where you need to post regularly, add connections and comment on other people's posts) and sign up for job adverts.

Don't be afraid to ask people you know through your previous jobs if they know of vacancies.

firstly if your DH ( assuming you are married) is a public sector employee you will get a widows pension of 50% once he dies you will get nothing before then so if his pension is 15k a year that's what he will get per year plus his state pension total roughly 25K ( tax payable on portion over 12750) if he dies you will then get 7.5K for the rest of your life.
assuming you both have enough contributions for full state pensions that is approx 10K each plus your husbands pension
if you have a pot of 70K, you will have a tax free lump sum of 25% of that which is 17,500, ( and doesn't count towards your tax allowance) the rest depending how you use it will be taxed if you are over the threshold
if you use the 17.5 k to live on for year 1 and part of year 2 you will have 13,125 for the next 4 years but then you'll have 0 unless you have other savings,
you could take your lump sum and use 3500 a year and try and find a small job even if minimum wage and leave the rest invested
ultimately you need advice Pension wise give you one free appointment if you haven't used it already
also can you actually live on your husband's income just now and what does he think, obviously you probably can't claim unemployment on basis of low income as he earns too much but you can probably get 6 months based on your NI contributions. Also presumably you have your redundancy money

Another recommendation for Pension Wise https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

You really need to work out your outgoings to know the answer to this. How much do you need each year and how can you fund that? Do a spreadsheet going forward indefinitely.
I wouldn't worry too much about the tax implications, your primary task is to work out if you have enough (pension + SP) to live on.

You can draw it down and out it into a SIPP which will then give you a monthly income, probably about £350 per month, which you can then either reinvest in savings or use for spends. Or keep it in there with no monthly income.

My pension pot was about 3 times the size of yours and I retired at 53 and dew it down at 55 and put it into a scheme which gives me a monthly income.

Mine covers the income needed for my French inactive visa as we moved here when I was 54.

@InkySplott You say "your partner" unless you re married, the trustees may not have to follow his expression of wishes, my FS pension dies with me as i'm no longer married and don't have dependent children, my partner or DD gets nothing.

Which is why i have taken it early, as i have all my defined contribution pensions.

At 62, you probably don't have many years of active life left, sure there are 80 yo's who go back packing around Peru but most don't and neither do most people in their 70s either.

My mum delayed taking her pension, she died shortly after she eventually did.

This is what is praying on my mind . I don't blame you for taking your pension now.

@Alexandra2001

It seems unfair that your DD gets nothing considering you have paid in to your pension . When my FIL died apparently his pension died with him . He worked for British Rail all his working life from about 1950 until his retirement .

Thank you . I can't get UC because it's based on the last 3 years and in one of those years I didn't pay enough NI . It's a shame because I would have qualified for free training .

Tou "may" get his pensions but its not a given , its up to the trustees. If you are not married, you should be.