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  • FIRST POST
    • AndyAdams
    • By AndyAdams 7th Dec 17, 5:35 PM
    • 28Posts
    • 29Thanks
    AndyAdams
    Done IT- is the pot big enough
    • #1
    • 7th Dec 17, 5:35 PM
    Done IT- is the pot big enough 7th Dec 17 at 5:35 PM
    Well that's it, confirmed I am finishing work at the end of month.

    Nearly 53 got a pot of around £800,000, mixture of ISAs and Pensions (approx 50:50 split) Got 37 years contibutions but only 34 years for the new pension, so currently 1 year short. My wife still works, brings in around £800/mth and she also has defined benefit pension of £7200/yr linked to CPI (starts at 60, 10 years time for her), will have another smaller projected DB pension of around £2k/yr once she retires from current employer

    Do you think I have got enough or will I need a part time job? No mortgage and reckon I need about £2500 a month.

    My spreadsheet says I have but maybe I'm wrong, also concerned about the, in my opinion, current asset bubble!

    Any thoughts?
    Last edited by AndyAdams; 07-12-2017 at 5:37 PM.
Page 1
    • atush
    • By atush 7th Dec 17, 5:47 PM
    • 16,375 Posts
    • 10,134 Thanks
    atush
    • #2
    • 7th Dec 17, 5:47 PM
    • #2
    • 7th Dec 17, 5:47 PM
    It all depends on your outgoings, but looks doable.

    How much in cash? Will you keep your investments as they are, but switch some to income rather than accumlation units? will the natural yield of your isas give you the income you desire, or will you run them down?
    • AndyAdams
    • By AndyAdams 7th Dec 17, 5:55 PM
    • 28 Posts
    • 29 Thanks
    AndyAdams
    • #3
    • 7th Dec 17, 5:55 PM
    • #3
    • 7th Dec 17, 5:55 PM
    As mentioned I think i need £2500 per month when factoring everyting in plus a bit of a safety buffer.

    I have cash of around £200k, rest is in mixture of acc and income funds (income is reinvested). I am planning on running the pot down.
    • ex-pat scot
    • By ex-pat scot 7th Dec 17, 5:57 PM
    • 224 Posts
    • 255 Thanks
    ex-pat scot
    • #4
    • 7th Dec 17, 5:57 PM
    • #4
    • 7th Dec 17, 5:57 PM
    Initial impression: certainly looks rosy.


    A few thoughts:
    1. don't look at the ISA and pension money together. They are very different, both in terms of access (you can't get the pension for another 2 years) as well as tax treatment.


    2. investment strategy. You can have a similar investment strategy for the ISA as for the SIPP. Or you could view the SIPP as your protected fund, with the ISA more cautious.


    3. Depletion strategy. Simplistically, you should be doing the following:
    a) depleting the ISA first until you hit 55 and can access the SIPP.
    You will no doubt have used up your personal allowance 2017/18 by this point in the tax year, so you might as well draw from the ISA up to 5/4/18 and enjoy a tax rebate cheque.
    For tax year 2018/19 I suspect it might be quite advantageous to do a bit of part time work perhaps, to get you to the personal allowance / NIC threshold, and then make up the monthly difference to your £2500 living cost through wife salary and partial ISA depletion.
    Once you hit 55, then the smart thing would be perhaps to take £12,000 (or whatever the Personal Allowance is by then) from the SIPP, then the excess from your ISA (ie leave your SIPP invested for IHT and tax reasons).


    You really ought to create a nice spreadsheet, modelling the timing and amount of all future income cash flows, then work out the shortfall, then calculate where (ISA or SIPP) this should come from and what is the better tax approach for both you and your wife.


    Frankly though, you could set a pretty low Safe Withdrawal rate on the sums noted, and still hit way in excess of your £2500 "number".
    • Thrugelmir
    • By Thrugelmir 7th Dec 17, 6:17 PM
    • 56,213 Posts
    • 49,592 Thanks
    Thrugelmir
    • #5
    • 7th Dec 17, 6:17 PM
    • #5
    • 7th Dec 17, 6:17 PM
    Legal and General Investment Managers today suggested bracing for a market correction of 30% next year. Uncertainty as to how Central Banks are going to unwind years of support (cheap money) will make for interesting times.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • AndyAdams
    • By AndyAdams 7th Dec 17, 6:18 PM
    • 28 Posts
    • 29 Thanks
    AndyAdams
    • #6
    • 7th Dec 17, 6:18 PM
    • #6
    • 7th Dec 17, 6:18 PM
    Thanks ex-Pat Scot some good thoughts. I have considered getting a part time job, doing something I want to do rather than something I have to do.

    Yes I think I need spreadsheet No2 to model my withdrawal plans.

    Interesting about the correction, I think 30% may be optimistic I can see a 40 to 50% correction, once the market gets momentum (in either direction) it is often difficult to stop.
    Last edited by AndyAdams; 07-12-2017 at 6:20 PM.
    • sandsy
    • By sandsy 7th Dec 17, 6:42 PM
    • 1,224 Posts
    • 721 Thanks
    sandsy
    • #7
    • 7th Dec 17, 6:42 PM
    • #7
    • 7th Dec 17, 6:42 PM
    Once you hit 55, then the smart thing would be perhaps to take £12,000 (or whatever the Personal Allowance is by then) from the SIPP, then the excess from your ISA (ie leave your SIPP invested for IHT and tax reasons).
    Originally posted by ex-pat scot
    If you don't plan to take tax free cash, you could use UFPLS to take £15k out of the pension of which £3k would be taxfree, and the remaining £12k would be your personal allowance (or whatever the correct numbers are by then).
    • jim8888
    • By jim8888 7th Dec 17, 6:52 PM
    • 39 Posts
    • 35 Thanks
    jim8888
    • #8
    • 7th Dec 17, 6:52 PM
    • #8
    • 7th Dec 17, 6:52 PM
    If you're worrying about this, and a 50% market "correction", I'm not sure you're mentally ready for retirement yet. Going from a steady income to no income but still with substantial outgoings is a shock to the system in a lot of ways. It's clear you've been a saver, so the transition to being a total spender will be hard. You're still relatively young at 53 and could easily work for another 12 years. I don't think you "need" to work, but you might find after a while that you want to. Good luck either way.
    • coastline
    • By coastline 7th Dec 17, 7:06 PM
    • 921 Posts
    • 1,061 Thanks
    coastline
    • #9
    • 7th Dec 17, 7:06 PM
    • #9
    • 7th Dec 17, 7:06 PM
    Thanks ex-Pat Scot some good thoughts. I have considered getting a part time job, doing something I want to do rather than something I have to do.

    Yes I think I need spreadsheet No2 to model my withdrawal plans.

    Interesting about the correction, I think 30% may be optimistic I can see a 40 to 50% correction, once the market gets momentum (in either direction) it is often difficult to stop.
    Originally posted by AndyAdams
    Most people would jump at the chance of leaving work with those kind of funds and future pensions. A nice little part time job as you say doing something you like. Savers often end up with more money due to being generally cautious to start with. I left work early with a lot less and have never looked back since.
    £800,000 with an income of 3-4% is within reach even in equities. The FTSE 100 has averaged over 3.5% and is forecast 4% next year. Why worry about market crashes when the dividends are rolling in. Good luck.

    http://www.iii.co.uk/sites/default/files/Dividend%20yield.png
    • westv
    • By westv 7th Dec 17, 7:14 PM
    • 4,372 Posts
    • 1,993 Thanks
    westv
    Legal and General Investment Managers today suggested bracing for a market correction of 30% next year. Uncertainty as to how Central Banks are going to unwind years of support (cheap money) will make for interesting times.
    Originally posted by Thrugelmir
    So maybe down 17% with a fully diversified portfolio if that prediction was correct?? The crash predictors will, of course, be correct at some point.
    • Thrugelmir
    • By Thrugelmir 7th Dec 17, 7:28 PM
    • 56,213 Posts
    • 49,592 Thanks
    Thrugelmir
    So maybe down 17% with a fully diversified portfolio if that prediction was correct?? The crash predictors will, of course, be correct at some point.
    Originally posted by westv
    A certain quote springs to mind.

    "You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • westv
    • By westv 7th Dec 17, 7:34 PM
    • 4,372 Posts
    • 1,993 Thanks
    westv
    A certain quote springs to mind.

    "You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch
    Originally posted by Thrugelmir
    Well nobody has said that won't happen at some point.
    • westv
    • By westv 7th Dec 17, 8:42 PM
    • 4,372 Posts
    • 1,993 Thanks
    westv
    As mentioned I think i need £2500 per month when factoring everyting in plus a bit of a safety buffer.

    I have cash of around £200k, rest is in mixture of acc and income funds (income is reinvested). I am planning on running the pot down.
    Originally posted by AndyAdams
    Mortgage free or still some left?
    • ischofie1
    • By ischofie1 7th Dec 17, 10:16 PM
    • 189 Posts
    • 152 Thanks
    ischofie1
    Legal and General Investment Managers today suggested bracing for a market correction of 30% next year. Uncertainty as to how Central Banks are going to unwind years of support (cheap money) will make for interesting times.
    Originally posted by Thrugelmir
    Christ let's all panic because L&G think the floor's going to collapse.
    I'm sure if we trawled the net we'd find some other expert advice saying it's going up 30%.
    • cloud_dog
    • By cloud_dog 7th Dec 17, 10:52 PM
    • 3,308 Posts
    • 1,864 Thanks
    cloud_dog
    I don't think a 30% correction is unreasonable, and is probably highly likely.

    You need to remember that the mighty UK has benefited from a turbo boosted rise in the market over the last 18 months due to the weaker GBP. If we get weakness and the GBP strengthens then we will get a bit of a double whamy (though why anyone would think the GBP will be a strong currency is beyond me).
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • IanSt
    • By IanSt 8th Dec 17, 10:11 AM
    • 149 Posts
    • 104 Thanks
    IanSt
    Got 37 years contibutions but only 34 years for the new pension, so currently 1 year short.
    Originally posted by AndyAdams
    Just a quick question on this - do the 34 years include this tax year?

    If it doesn't then you might get a pleasant surprise depending on what national insurance you've paid this year.

    If it does then you can always purchase a year's extra contributions, but I'd probably wait a while until you've found whether you're definitely out of the working-game!
    • Anonymous101
    • By Anonymous101 8th Dec 17, 10:20 AM
    • 1,022 Posts
    • 384 Thanks
    Anonymous101
    Very well done.
    I'd give up work now at 36 if I had those funds. I think I need around £2,500 a month too.
    • p00hsticks
    • By p00hsticks 8th Dec 17, 10:21 AM
    • 5,784 Posts
    • 5,565 Thanks
    p00hsticks
    W Got 37 years contibutions but only 34 years for the new pension, so currently 1 year short.
    Originally posted by AndyAdams
    Get a personal State Pension forecast if you haven't done so already.
    The '35 years = full new State Pension' only works for those starting their working lives now. Depending on whether you've been contracted in or out in the past you may find you can get more pension with more than 35 years (in which case it's usually good value to buy those years even if not working) or that you have already reached the maximum.

    https://www.gov.uk/check-state-pension
    • Thrugelmir
    • By Thrugelmir 8th Dec 17, 12:46 PM
    • 56,213 Posts
    • 49,592 Thanks
    Thrugelmir
    Christ let's all panic because L&G think the floor's going to collapse.
    I'm sure if we trawled the net we'd find some other expert advice saying it's going up 30%.
    Originally posted by ischofie1
    Little point in going OTT. Sensible to factor all view points in account when making a decision. Over confidence has been the down fall of many.

    PS. Just happened to read that particular article yesterday.
    Last edited by Thrugelmir; 08-12-2017 at 12:49 PM.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • bostonerimus
    • By bostonerimus 8th Dec 17, 1:23 PM
    • 1,215 Posts
    • 668 Thanks
    bostonerimus
    At 4% withdrawal your pot should produce your income needs.....add in your SP and your wife's earnings and pensions and you are in fine shape. The only danger might be a crash soon after you retire; so make sure you have a diversified portfolio and access to a good buffer of cash and/or short term bonds. A plan to cut spending would be useful too.
    Misanthrope in search of similar for mutual loathing
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