Advice for retirement planning at 58-60

[LilWoosmum82]

Hi I am a single parent, 43yrs old, 22 yrs NHS Service, I have always paid into the pension pot, but can't retire until 68yrs old under the scheme.
I have recently suffered a bout of ill health - MH Burnout, now diagnosed with PTSD. I have returned to work and am now beginning to look to future planning. I don't think realistically i can work until i am 68, i would like to go/ retire at 60. I am looking for advice on how to go about building a private pension pot, to be dawn on from 60. I should be able to have my mortgage paid off by then and would be happy to work in a part time role outside the nhs, if feasible. Its been quite a hard time for me and although there is the possibility i may have inheritance from my parents at that point. I do not feel ethically or morally anyone should base their future on 'potentially their parents dying' (i also lost my brother in the pandemic and realistically we are goinf to need their savings, house possibly to pay for any care they may need- they will be 80/ 82 when i am 60)

Join the nhs pensions facebook group. They are really helpful. You’ll probably find you can go earlier than 68 with minimal reduction.

Do you have any pension in the '95 scheme? You must take this at 60 as it doesn't go up if you don't and you will "lose" that money if you don't take it then. This could help you reduce your hours.

Have a look at Rebel Finance School…free on FB and YT.

I agree with the FB group
My colleague is 58 and went to a seminar about this recently and is planning on taking his early probably at 60 - the figures worked out for him. I was always told you can’t take 2015 early but it’s not actually true - you just get less (but for longer) and you need someone to help you get the actual figures so you know if it’s viable.

I put £400/month into a private pension and I started when I was older than you are now. I’m hoping to take that at 60 and reduce my hours (and should have lower expenses by then). It won’t be loads but with a part time wage and no kids at home it will be fine. didn’t start in the nhs until 2018 so I don’t have anything in the 95 but everyone who does takes it at 60.

You can go earlier but with reductions due to the pension being paid for longer. Pension is reduced for each year you take it before state pension age by approx 5% a year, and remember you won’t be contributing anymore for the final years which tend to be the highest earning years.

Retire and return or partial retirement might be an option? Reduce your hours and use your pension to top up your wages until state pension kicks in at 67 or 68.

You could look at contributing to the early retirement buyout (ERBO) scheme which is offered by the NHS pension scheme. You pay more in to buy back extra years of pension, potentially reducing your retirement age by a couple of years but keeping full pension entitlement. NHS 2015 pension is paid at state retirement age, if that goes up then the date your NHS pension is paid will also go up (including and ERBO years purchased) ERBO depends on many factors and can be expensive. You might be better putting the money into tax efficient savings instead. You need to run the figures and see what suits you best.

The other option is taking out an AVC (additional voluntary contributions plan ) via the nhs pensions. Money is taken out of your salary before tax and you can take it as a lump sum on retirement.
Make an appointment with your trust pensions officer to talk through your options.

if you have any years in the 1995 scheme you should definitely take that and the tax free lump sum at 60. It’s a closed scheme and you won’t get any more by leaving it unclaimed. People have lost thousands by not being aware of how the scheme works. Your total reward statement will tell you which schemes you are in.

As PP say there are options for taking some or all of the NHS pension before 68, and you should definitely take the 1995 part at 60. There may also be the option of ill health retirement - early with no reduction.

You need to do one of the pension/preparing for retirement seminars to understand your starting position before you begin adding things on. All trusts should offer one. There may also be the option of a free follow up individual session with a financial adviser. If so, take it but don't sign up with them. The 'talking through plans' part is very useful, but (if it's the same fiance company my trust used - I think they do the whole NHS) the actual financial advice is rubbish - and their fees are very expensive.

If you're looking to cut back on work before retirement, cut hours - do not drop grades. The latter does much more damage to your pension.

A very simple approach, if the NHS pension isn't going to work for you, would be to start saving into a S&S ISA each month. If you saved £500pm, you would have over £100k plus potentially significant growth. Would that be enough to live on (with no mortgage) for 8 years? Could you manage £500pm saving?

If you save it to a pension instead of an ISA, you get a 20% top up.

I've done it by saving/investing, mostly in ISAs, to supplement my occuational pension.

I "retired" from my big job at 55 and am living off savings , plus income from working a few hours a month, until I can take my occupational pension (which is 60 for me).

If you have long service with the NHS you might find your pension is better than you expect, even if you take it a few years early.

You do, but then you pay tax on what you take out. For me, a mixture made more sense.

Unless you are a lower rate taxpayer when paying into an pension and a higher rate one when drawing it, the tax you pay is less than the rebate.