The 3 Big Pension Mistakes Retirees Make (Real world examples)

Financial Planning

Taking pension benefits when you reach 55 may be the worst financial mistake of your life.

Over the last few months, lots of you have been getting in touch asking for help with your financial planning. Most of you have been making simple mistakes that are easy to fix, but there are some mistakes that I cannot help you with. These are the 3 Big Pension Mistakes that I’ve seen people make, I want you to know about them so you don't fall into the same traps.

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0:00 Intro
1:38 Pensions Recap
3:24 Mistake Number 1
6:36 Mistake Number 2
08:18 Mistake Number 3

[JamesShack]

Pensions are one of the most misunderstood products. What do you think of them, good? Bad? Is there something you think is better?

[suekay]

So glad I watched this ! You just probably saved my Family a huge chunk of money. Thank You
I am 54, so you timed it perfectly !
Bless You

[jamesyoung]

I hear what you’re saying however I’d much prefer to take my 25% and enjoy the money while I can.. life is far too short to be holding out for a later date and not being able to enjoy your money properly when your 60/65 when u could be a lot more frail and house bound does not seem appealing to me.

[doriangray]

Nice if you updated this so it reflects 2023 pension changes

[ChrisShawUK]

excellent summary again James. I have stopped working and reach 55 next year, so am carefully weighing up the right options

[tancreddehauteville]

You cannot pay much into a pension after your start drawing down, HOWEVER you can still put money into a maxi-Isa - this is the best approach.

[brentpowell]

Well I have other forms of income, but I will be taking my pension in February at 55, I am already retired and intend enjoying my retirement to the full, my pension will be worth a lot when I am 75, but definitely not, waiting, going to enjoy my money why I am in good health, helping supporting my children 👍

[valgarrett]

I've found you just at the right time! or possibly too late you might I'm 58 and husband is soon to be 60 with pensions not available until we are 65 (penalty to take early)

[gcrichards]

I'm 55 next month so timely advice, thanks

[clairedriscoll]

Quote of the century, "HMRC are neither generous or stupid" - Brilliant !!!

[muckrakingmouse]

Thanks For making the confusing world of pensions much clearer.

[peterguildford]

Hi, could you do an advice video for expats with a uk pension? There are hundreds of thousands of us who get bombarded with advice or sales pictches about transferring our pensions over.

[tonyc]

You are always better using a financial advisor. I’ve just retired and the advice and money I saved more than covered his fees.

[gp]

Example person turning 55 this month has 5 pensions in different amounts. The first one is the large one with a County Council around 28 years or there about. This one pension it seems has a step layer affect in terms of change to the pension with the County Council from Pension changes in 2008 and so on. The lump sum is guaranteed up till 2008 and after that the 25% kicks in from then with the portion taken from earnings from 2008 period. The 4 other pensions it seems are from different providers while changing jobs it seems. Now the advice I gave was along these lines keep the main pension as the large sum before 2008 figure and after that just take it annually. He got the pension 12 years before he would retire when 67 and the amount taken when 67 equals to 81 years of age before the it even out before from the age of 55 years. So in reality he would have the pension 12 years early even with a deduction.

The other pension I suggested to take a 25% lump sum from the second largest leaving the rest. With this and combining the 3 other small pensions he created another pension pot but with benefits and up to 4, 000 yearly as a top up. By the time he reached 67 years of age he would have a second pension as well as state pension. Whilst having an early access to county council pension. Reality with state pension and the one taken at 55 years and the second pension created and draw down when 67 would led to a very comfortable retirement.

Some Advice explain the Pension changes from 1997 onwards would help. Upcoming change for people 2027 you have to be 57 before you can access your pension early if you wanted. Each pension pot you can take 25% tax free. The amount for investment if a pension is taken out is 4, 000 per year if you wanted to start another pension after and so on.

[dougjordan]

A very valid comment was made about retiring when knowingly (or not) you have contributed enough to fund you alternative income from salary to pension. As Jame's implies this is a difficult decision to make as you switch from a salary to pension.

[TheJonny]

First like 👍 Nice to see you are using the timeline bar again.

[JLangley]

Absolutely brilliant video, James! I'm passing this onto my soon-to-be approaching retirement aged parents now. Thank you!

[robertramsey]

Thank you James a very clear concise video. have you done or please can you do a video to show any potential pit falls of the NHS pensions?

[steve]

Hi I have 6 pensions nothing major I’m 50 years of age and I really feel I probably won’t live until I’m 65 should I cash all in at 55 and enjoy the money

[kickdoc]

Question not covered. Assuming you were to retire at 55 with a £300k pot. If you had no other income between 55 and 65 (till other pensions start) wouldn't it make sense to at least withdraw my personal tax allowance of £12500 per year, and not draw anything tax free from the pension (of course that would reduce the tax free allowance i could get as the total left would only be £175k which woild then be left untouched unless needed). This assumes I don't actually need that 12500 for living during the 55-65 but we would re-invest it. Hope that makes sense