Forum menu
You have to factor in some capital consumption – Unless your pot is 7 figures then maybe just live of the returns but the majority of us will be tapping into an ever reducing pot.
Well i'm not taking it with me at the end, so i may as well spend it ?
If your pot is 7 figures you'll end up having to spend money on shite to avoid the LTA , or the taxman will hump you stupid.
Nice problem to have mind.
How on earth did they get those figures?
I guess that the £40k per annum is £27k from pension and £13k from state pension.
Then 6% yield from £465k gives £27k.
Still seems a bit optimistic unless that 6% includes capital erosion.
State pension is 9k a year...
Everyone's outgoings are different, but you need to know what your life currently costs. Exclude what your putting into your pension/savings/mortgage as those will likely stop, but do factor in significant irregular costs ie new car every ? years.
Take what your life costs are that you've just worked out, then multiply by 25 (based on 4% safe withdrawal rate). This gives an approximate number you need invested to live off returns and leave the capital intact. Whether you choose to be Conservative and go for 3.5%swr or 5% is up to you.
Where your money is invested (sipp/pension or S&S Isa) affects how much extra you'll need to cover your tax liabilities.
I would have to get a crazy offer to surrender my final salary pensions. In fact I don't think an ifa would sign off the form to allow me to do it.
Think they increased 3% last year when the ftse was c 15% off.
Someone's going to have to pay for the pandemic and there are some soft targets that won't lose many votes.
State pension is 9k a year…
good point, I think my figure is what it will be when I retire assuming the current triple lock..
Do you really think that you'll need £40k pa (each) in retirement?
I don't think I spend that much now - even with paying a mortgage.
I would have to get a crazy offer to surrender my final salary pensions. In fact I don’t think an ifa would sign off the form to allow me to do it.
Yeh you would. Might have to look harder than this time last year mind.
Some CETV's are quite amazing. My choice was 20k per annum pension or a CETV of £750k
That, plus 100k in a SIPP has turned into 1M this year.
Crazy enough offer ?? lol Probably worth a look as you have much more flexibility, plus the option to leave it to your kids instead of the company keeping whats left when you die.
It's outside the inheritance tax as well.
A friend recommended Tim Hayle's "Smarter investing" as a good guide to how to arrange your SIPP and ISAs and I'd now second the recommendation.
£400k now can be battered by inflation, by share price drops, by interest rate changes, companies going bust (affects shares & bonds), commodity price changes.
How much did you have when the stock market plummeted this spring?
And although it's true you may not be skiing aged 86, you may want to shell out for carers, cleaners, taxis etc to stay in your own home, or to pay for a care home that doesn't smell of wee (rare I know). Or to go private for something that the local waiting list is enormous for. That can really add up.
I have just retired, mid 50s, but for a couple of years beforehand I was shovelling so much stuff into my pension that take home was around what I'd roughly calculated I'd want for retirement. Simultaneously I kept an eye on how much income & growth was produced by the investments.
Anyway if you have a DC company pension where they match contributions up to a point, you may well be able to do partial transfers out of it to your own SIPP with cheaper charges and a wider range of investments. That's what I did - every so often moved a chunk from company DC pension into SIPP. The default investment in the company pension was a very low volatility one...
Crazy enough offer ?? lol Probably worth a look as you have much more flexibility, plus the option to leave it to your kids instead of the company keeping whats left when you die.
It’s outside the inheritance tax as well.
Does it retain widows/widower benefits?
I've a few Final Pensions and they're all at a minimum of 50% widows/widowers, with one at 2/3. And these are also outside of (inheritance) tax too.
I've stayed within my company scheme, but transferred it to a SIPP wrapper to get access to a LOT more funds, and still low charges (0.15% platform charge).
My current thinking at retirement is to transfer to Interactive Investor for drawdown, as they have a flat fee which suits larger pots. Their interface is much better than the basic Aviva rubbish we get on the company scheme.
Their interface is much better than the basic Aviva rubbish we get on the company scheme.
Aviva is terrible - we had a company scheme with them - just awful.
Does it retain widows/widower benefits?
That's what really nailed it for me to transfer my pension. My wife would get 60% of my company pension, but 100% of it now, if I go under a bus tomorrow
Ive got all my Aviva funds logged in Trustnet so I can track them properly. Weeks like last week though, I wish I couldn't see what was happening - carnage!
Sadly our old CEO is now with Aviva.The Old Boys network trump,ps everything else.
Very very interesting thread as i'm getting to 50 this year, plus clearly in 5 years i'll be hitting the magic 55 where i can remove a chunk from my fund potentially.
I'm honestly not thinking of "i must have XYZ left" , my boy will get a ridiculous chunk of money when i'm out of here from the sale of the house (ok, ridiculous isn't right, but lets just say it's a reasonable chunk) so he'll be fine and dandy.
So all i really need my money for is bills and day to day living, i don't care if there's £4.00 left on the day i croak it, i'd actually like that more than there being £500k in there that then ends up with my lad along with the house LOL. I'm kinda hoping by the time i go, he's got his own house and job etc... Otherwise i've gone WAY early.
I've been fairly lucky with pension contributions from employer over the years, so i think i'll do OK. But i do need to research into my options a LOT more in the coming years as when you guys talk about things like annuities, draw-down, SIPP, i have absolutely no idea what you're on about and lets face it, i really ought to in the coming years.
I'll likely in the next few years speak to an IFA about it all, currently it's all in the works pension and ticking away nicely, so no rush.. but i'd like to be more informed.
Weeks like last week though, I wish I couldn’t see what was happening – carnage!
Strangely enough, my SIPP and ISAs barely moved at all, up and down maybe 1 or 2%.
Overall I was ok, but I'm in some quite volatile holdings as well as some of the big funds. The Gamestop saga apparently led to some of the big hedge funds needing liquidity, so there were a lot of sellers, hence price drops. My portfolio is still above where it started the year so not all bad.
I'm targeting growth over stability right now, so some bad weeks are inevitable. the performance of some of the funds over the last 12 months is eye watering though (over 100% - thanks Tesla!) so its all worth it.
if you do run out of cash from drawdown, remember (assuming you have one) - you can always take out a "lifetime mortgage". obviously the kids get less, but they get the pleasure of your company for longer..
Does it retain widows/widower benefits?
Your family get the lot 100%, not 50% If you both cack it your kids get the lot free of inheritance tax.
My SIPP has barely moved 2% this week. Diversity is key, and also remember your investing not trading so leave it well alone.
Just another word on DB schemes (final salary) Someone mentioned their wife gets 50% and it;s outside inheritance tax etc, in fact she won't inherit anything, she'll get paid half pension but after she is gone so is the pension. You have NO MONEY in a final salary scheme, only benefits.
Has anyone had an experience of the equity release industry? My wife and I have no kids so at something we need to come up with away of releasing the cash in our house to enjoy whilst still keeping a roof over our heads!!!
Interesting thread. I am 55 and since November last year receive a 22k per annum index linked pension (no mortgage no kids). The last 3 months have been good but I have been keen to work again. Today I started a new job - full time COVID related. Time will tell what happens next!
Good luck Pastyboy - enjoy the freedom when Covid allows!
Anyone buying an annuity needs there heed looked at 🙂
Flexi drawdown from well invested funds is far far better. I transferred my “gold plated final salary pension ” into a self managed SIPP and am very happy with my choice. It will allow me to spend more younger and less as I get older.
I like your thinking - but I can also look at my parents in their early 70s and be pretty sure that by their late 70s they'll will probably still be perfectly compos mentos to manage their routine expenditure but actively managing investments with constantly changing regulations, tax rules etc... I'm not sure that's what they want to be doing; and once they end up a dribbling mess, I sure don't want to be doing it for them!
Has anyone had an experience of the equity release industry? My wife and I have no kids so at something we need to come up with away of releasing the cash in our house to enjoy whilst still keeping a roof over our heads!!!
Kind of - It was a few years back where I know of an old guy who got into debt issues (his business failed and he was personally liable for the debt). He took out an equity release product to sort it but it was not the best deal. It's interest roll up and it compounds so you have a debt ticking up though until your house is sold - whenever that may be. I would treat it as a last resort. You are much better off downsizing. That said it was a few years back and maybe its a bit more competitive now.
I’ve got 10k in savings 90k mortgage and a young son. I’m 46 11/12’s. Can I retire at 50 please?
That will be just about the time that the gov realise they could save a fortune by just getting the equivalent of Jo Wicks to present a youtube channel for each of the subjects and get rid of schools altogether. So teachers will be offered an early retirement/redundancy package. Wealthier parents will be able to pay for tutors, or send them to private school so there will still be opportunities for you to come back and earn high rates alongside the pension. You'll be raking it in, with none of the hassles of having to teach poor kids, unless they are really smart anyway and qualify for some sort of scholarship (you'll be raking it in so much you might even want to set up a scholarship scheme to reduce your tax bill). The extra win is once there are no schools they can finally stop paying for school lunches, especially if Marcus Rashford gets snapped up by a foreign club so isn't so annoyingly vocal here.
My parents did equity release as did my aunt. Worked for my parents - who didn’t do more than a 1/2 value of their house. It was about 8% APR if I remember correctly. They had a great time, lots of overseas holidays in their twilight years and after care homes they had blown everything apart from a few thousand for the grandchildren. Perfect. It worked well for them. Not so for my aunt who took out more, ran out of cash and had miserable last few years in debt. Expect equity release to burn up your house value very quickly so don’t do it too young. Better off selling up / downsizing out the money in the bank and rent
Yeh you would. Might have to look harder than this time last year mind.
You will also need to stump up the full costs of the assessment, around 1%, in advance, at risk.
Door is closing fast for those in DB schemes
Door is closing fast for those in DB schemes
I thought the general thinking was that it was best to stay in a DB scheme if you had one?
I’ve got one from an old employer that will give me a pension of around £14k/year from age 67 (16 years to go).
They gave me a transfer value of £500k+ last year, would it make sense to go for this?
I know nothing about Sipps etc but a 25% lump sum in 4 years from that figure would clear my mortgage.
I will have other income from property so it wouldn’t just be making that 75% of the remainder last.
Its all guesswork all you can do is manage the risks. If you have DB pension then you need to be honest about the risks (health, death etc) as pointed out above DBs can disappear very quickly if you die.
If you hate your job then find something that interests you for less hours. The UK is a grim place in the winter to retire- you have to spend money (shopping, pubs, cafes) just to stop yourself going mad. A part time job on 10 quid an hour for 20 hours keeps you entertained and puts entertainment money in the bank.
Hanging onto property and not downsizing too soon makes sense as property is still good growth.
If you are going to retire at 55 as a couple and travel, do sports and socialise then you are going to need a million quid in pensions/cash thats well invested and a 500k house thats paid for... that assumes 18k state pension for a couple and a 50% downsize at state pension age.
You cant say i can live on 12k - Well you can but its an existence, even a modest lifestyle is around 24k per annum after tax - 36k before tax is adequate as you will need capital items like a car and replace lots of household stuff.
So 30 years of retirement x 36k = a million quid (less tax), the downsize to free up 250k and the state pension will absorb inflation care at home and some additional years. The 250k left in your house will be stolen by the government.
Trying to plan 30 years out economically is not possible, if you can do it you need to tell Rishi Sunak how. Being realistic 10 years is a guess, 5 years is a forecast and if you had forecast 5 years ahead in 2015 how close would you have been?
I am fortunate by the time i have sold up cashed in i can make the above numbers but i plan to have a business that takes a couple of days a week of effort to create some disposal income.
1979 2008 2016 2020 - every 10 years there is a big one so a typical retirement will see at least 2 big **** ups.
’m honestly not thinking of “i must have XYZ left” , my boy will get a ridiculous chunk of money when i’m out of here from the sale of the house (ok, ridiculous isn’t right, but lets just say it’s a reasonable chunk) so he’ll be fine and dandy.
Not if you last few years are in care he won't (and that is fairly likely unless he is going to give up his job to look after you for 2 years?)
I actually enjoy my job. It mentally challenges me, pays very well and has many positive benefits that I would lose if not working at all and at 53 I have no desire to retire yet but I would like to do the same job part job in a few years time.
Don't see this happening/being offered as much as it should though as be better to do half the time in well paid job rather than scratchy around for work at B&Q for a pittance. Probably because I would still be counted in the headcount figures but not doing the work of a full headcount.
You have NO MONEY in a final salary scheme, only benefits.
Yep, but YOUR pension when you've moved it out will run out, whereas a DB scheme doesn't.
When my Dad died a few years ago his annual pension was more than his entire history of contributions, and Mum now is getting 50% of that too. It paid out 20 years to my Dad and now has paid out 5 years to Mum, and she's a fit as a fiddle +80 y/o.
There's a reason that the various companies offer vast sums to buy them out - I'm not taken them up on their offers.
It's going back a page or two, but I've just had a look at that Which 'how much do I need' article, and I'm amazed that no one has yet pointed out that you need to add £5k - £10k to their numbers to cover your bicycle-related spending. Also their alcohol number is low because it clearly isn't based on the price of craft beer, and their groceries number is pitifully inadequate to cover the cost of artisan cheese, coffee, and sourdough.
Not if you last few years are in care he won’t (and that is fairly likely unless he is going to give up his job to look after you for 2 years?)
Well no, but i may never end up in a care home, or i may end up in one for 15 years, who knows, you can't allocate your life completely on 'what if'
If this thread shows anything it is that there is know right answer and one size does not fit all.
So as I'm approaching my late forties and want to get some professional help but how do you choose a IFA?
Obviously I can look online and historically I would have gone for someone local who we could actually go and see but no chance of that these days and perhaps it doesn't matter. I'm at the point of wanting advice, know I need a IFA, no idea how to pick one?
I’m at the point of wanting advice, know I need a IFA, no idea how to pick one?
Absolute minefield.
Personal recommendation?
There's a free government advice thing, I'd start there.
https://www.pensionwise.gov.uk/en
If you IFA recomends a set of investments, I'd get it double checked first - a quick read of the Sunday Times Money section will remind you there are plenty of fully qualified crooks out there.
Door is closing fast for those in DB schemes
Can you please back this comment up with evidence, or is it just a guess? Because it genuinely has me worried.
IANAFA but... I have managed my own money and pensions and never used one. I am 56 and still need a bit more before I would be happy retiring so will likely stop work at 60 if nothing happens in the meantime. I approached an IFA recently as I wanted to make sure I made the correct decisions in the final few years of work. I didnt want investment advice (more around tax) and he told me there was little he could add. I think if you research thoroughly there is a lot you can do yourself. Of course there is always risk but I dont think you need to pay someone to tell you how to manage your pension/sipp/ISA etc I think it can be done largely independent of experts.
Door is closing fast for those in DB schemes
Can you please back this comment up with evidence, or is it just a guess? Because it genuinely has me worried.
The FCA is clamping down on people cashing out of DB pensions as there has been a lot of people very badly advised (generating massive commissions for IFA crooks) e.g. British Steel etc.
If you follow the finance pages, lots of articles about it. As for will they ban it out right - unlikely, but who knows.
https://www.ftadviser.com/pensions/2020/09/09/half-of-pension-transfers-trigger-scam-warnings/
It's more and more difficult to find an IFA now. They are out there and some good ones, but they aren't easy to find or deal with.
Yep, but YOUR pension when you’ve moved it out will run out, whereas a DB scheme doesn’t.
When my Dad died a few years ago his annual pension was more than his entire history of contributions, and Mum now is getting 50% of that too. It paid out 20 years to my Dad and now has paid out 5 years to Mum, and she’s a fit as a fiddle +80 y/o.
My transfer figure was more than 40yrs worth of payments. And it's grown and grown, it's now worth 50 yrs of my annual pension figure. 25yrs worth doesn't sound all that good to me, and you won't see any of it.
I'm not being critical, but it isn't the same for everyone and it's at least worth a check to see if it's for you.
If there is anything when we both die, my children get it.
I have a team in my pension company that do all my financial planning for me for free and I never have to think hard about what I'm doing with my SIPP.
I'm aware this thread is drifting but going by PM's etc it seems to be of interest to a lot of folk.
I think oldmanmtb has hit the nail on the realistic head. Also makes a fair point that the UK is pretty grim in winter, and if you want to go abroad you're going to need fairly substantial minimal income + health insurance etc (thanks Brexit!).
1979 2008 2016 2020 – every 10 years there is a big one so a typical retirement will see at least 2 big **** ups.
Although the last one recovered incredibly quickly (under a year) compared to the 2008 one. OK UK stocks not so much, but the Dow Jones is above 2020.
I think oldmanmtb has hit the nail on the realistic head. Also makes a fair point that the UK is pretty grim in winter, and if you want to go abroad you’re going to need fairly substantial minimal income + health insurance etc (thanks Brexit!).
I think he has come up with his figures, which of course are different for everyone.
I have now gone through my expenditure over the past 3 years and its approx 20k a year(no mortgage), but with 8k of that being new bikes each year. So a figure of 12k per year with less new bikes is very achievable for myself, as a single person, to continue living pretty much as I do now.
I have now gone through my expenditure over the past 3 years and its approx 20k a year(no mortgage), but with 8k of that being new bikes each year. So a figure of 12k per year with less new bikes is very achievable for myself, as a single person, to continue living pretty much as I do now.
I am surprised by both figures!
£8k a year on bikes seems really high and £12k seems quite low!
I spent £5k on a new roadbike last year, but I don't expect to replace it for a long time eg 5 years minimum.