Absolutely – plus my State pension (possibly!) kicks in at 68. That is why drawdown is so much better than an Annuity. It’s flexible, just subject ton tax as income, obviously.

The thing with a drawdown is you probably don’t want to take it out in a linear fashion. How much you need at 55 will be different at 65 and almost certainly at 75.

This is a fair point, but isn’t the recommended amount you can draw down based on not touching the principle? My experience of older people is that there is good chance you won’t slow down until 75-80 – not always, but a good enough chance i’d want to plan for it rather than planning to do nothing at age 75.

Ewan
What you on about. Your drawdown figures leave you with the lump sum intact at the end of it. That’s crazy. Surely you should be doing the sums so you spend a good chunk/ most of the capital too?
( Kids notwithstanding)

Surely you should be doing the sums so you spend a good chunk/ most of the capital too?

In theory yes, however unless you know how long you are going to live then the sums are impossible. You can guess, fair chance most of us will live to about 85 I’d have thought, totally off the top of my head, but what if you don’t.

The counter-argument to that would be how much are you wanting to save to spend on a care home. Or do you assume that by the time you’re 90 you’ll be a dribbling, gibbering wreck who doesn’t know Tuesday from beetroot. In which case we’re back to coke and hookers at 55.

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.

Even on a moderate return it was providing bigger income as well. The old adage about 4% still works, although most are performing much higher than that.
I use Intelligent Money so do not use an IFA

Best calculator I’ve seen is this one.

https://www.tidewaywealth.co.uk/p/151/drawdown-calculator

I’ve got 10k in savings 90k mortgage and a young son. I’m 46 11/12’s. Can I retire at 50 please?

Surely you should be doing the sums so you spend a good chunk/ most of the capital too?

As Kenny says, you don’t know how long you’ll live for so a dangerous game. Plus by not touching the capital you can cope with the stock market having a bad year or five.

Or do you assume that by the time you’re 90 you’ll be a dribbling, gibbering wreck who doesn’t know Tuesday from beetroot. In which case we’re back to coke and hookers at 55.

😄
Somewhere in between I’d reckon. Can’t recall which of the two threads we’re currently in 😄 but if he’s 50 now then taking £24k pa would see him broke after 30 years, or £21k breaks him at 87 years old. I’d probably go for that..

Well invested , that 400k will provide 20k a year till 67 then drop to 10k (plus state pensions) and will last pretty much till the end.

Most 80 odd yr olds get by on state pension just fine.

It’s a fine balance but doable. 5% return will provide 20k forever without touching the capital.

Lots of funds could manage that. Allowing for shit years and better yrs to make it back up again.

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.

Psychologically that is something prior generations have not had to deal with. For most of history you worked until you dropped. Then post war pensions have been pretty good for the average person in the UK.

Not sure how well i will do at managing my finances in my 80’s.

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.