Pensions Planning: The NUMBER

SMcGill

I’m sorry to hear about your situation, and for what it’s worth my basics are less than £1250 but you might well find it frugal for life in the south east.

You say you’re a planner so plan. Replace your worries with options. You won’t like all of them but that’s not the point is it? The point is it puts you back in control, and right now you must feel that’s been ripped away from you.

I wish you and your hubby all the good luck and mercy that life can bestow.

SouthCoastBoy

From my perspective there is also the complication that all my money is either dc or isas. My wife has no interest in finance so although she would inherit a sizeable pot the question is whether she has the skills to manage it

NedS

SouthCoastBoy said:

From my perspective there is also the complication that all my money is either dc or isas. My wife has no interest in finance so although she would inherit a sizeable pot the question is whether she has the skills to manage it

At which point she can consider using the services of an IFA or purchasing an annuity, which I suspect will be the reality for the vast majority of people (and no different in our household either)

merlin321

SouthCoastBoy said:

From my perspective there is also the complication that all my money is either dc or isas. My wife has no interest in finance so although she would inherit a sizeable pot the question is whether she has the skills to manage it

This is my concern also.  When my wife joins me in retirement next year, I intend to increase our cash buffer and simplify our Sipps/Isas as much as possible.
So hopefully if I go first, she wont need an IFA or buy an annuity, and if any funds remain our family will benefit, instead of a finance company.

enthusiasticsaver

merlin321 said:

SouthCoastBoy said:

From my perspective there is also the complication that all my money is either dc or isas. My wife has no interest in finance so although she would inherit a sizeable pot the question is whether she has the skills to manage it

This is my concern also.  When my wife joins me in retirement next year, I intend to increase our cash buffer and simplify our Sipps/Isas as much as possible.
So hopefully if I go first, she wont need an IFA or buy an annuity, and if any funds remain our family will benefit, instead of a finance company.

That is one reason we have gone with an IFA as my husband has no desire or knowledge to  manage investments so if anything happened to me he would need to engage one anyway.  Our family will still benefit should both of us go and the pot still be there as our investment pot has grown more than 18% over the last 2 years anyway even after IFA costs. I prefer to think of the investments as being there to protect us in our old age though rather than being an inheritance to pass on to our children.  They will get whatever is left but we have helped them with education and house deposits anyway so anything else is a bonus.  Same goes for my mum and her estate.   

Earl_Tucker

Hello all,
Thanks for all the free information on this thread! Really helpful as my wife and I start to consider returning to UK from abroad and hopefully retiring. We have a daughter (early teens) so there is an added level of complication, but I think things might be lining up to make the move in less than 2 years.

One slight difficulty is that we have been in a very high cost of living environment for 22 years, and we have lost track of what 'normal' life costs in the UK. Our (reasonably frugal, especially since COVID) life at the minute costs us approximately 75000-80000 GBP a year. Remove accommodation costs and that goes to 40000 - 45000. I reckon - based on little more than a wild guess and reading this thread - that those living costs might reduce further to about 36000 after a move to UK (probably somewhere close to Chester.) That would be without housing costs (we are currently gathering cash to buy a house) and with no car (we've never had one, especially since we currently live in a large city with good transport. Maybe this is going to be a problem in thre UK though.) 3000 pcm for a family of three feels more than fine to me, particularly since we live a very 'normal' life - is that in line with what other people aim for? 

I think I can generate 26000 from a 3.3% SWR from an investment account; there is a further 10000 or so coming from BTL. We will get about 10000 in pension when we turn 60 (currently 49) and another 10000 or so as it stands in state pension at 67. (I will probably continue to pay additional years though.) So those pensions might act as a bit of a hedge against inflation. Still need to save a bit more to account for tax and to gather up a bigger emergency fund (about 40000 at the moment, but I want that to be higher; we rely too much on stocks and everything feels a bit crashy at the minute, but it has felt like that for the last several years.) 

Things looming; Uni costs for daughter, health care (no idea about current state of NHS, don't know whether we need private insurance for a few long-term but not life threatening ailments), housing costs (everything based on zillow and similar estimates at the minute, which are probably not accurate.) Obviously there will be unexpected costs also (I think we just escaped involvement in the cladding crisis nonsense, for example, but that's not 100% certain either. I am sure there are similar nightmares looming)

I also don't understand the pension landscape in the UK. I suspect my best bet, once back in UK, would be to start moving money out of our investment account into a pension, but I don't know how much I am allowed to move or the actual mechanics of setting up a pension. Any advice in that direction very welcome! And, of course, any general comments on the millions of things I have not considered when preparing to move from one country back to UK!

Madrick

MrsFingersCrossed said:

Hello. Me again, but this time with not such an optimistic outlook I'm sorry to say.

We had planned for our retirement quite well I thought, but my husband has recently been diagnosed with a terminal illness so I now have to look ahead as if it's just me, and unfortunately it's not looking very good financially.  I am a planner and am finding it hard with the future so sad and the timeline so uncertain. 

I have worked out that I should have an annual income of around £15,000 a year after tax. So approximately £1,250 per month. I haven't yet worked out our (sorry, my) exact monthly outgoings like council tax etc (too distressing), but I have a feeling £1,250 per month is not going to be enough. I expect I could just about get by with that, but living in the south east where we do it is an expensive area and I would have to live a very frugal life. 

I am thinking ahead to the possibility of equity release but I know it's not recommended and I am definitely too young (mid 60s) for it to be a good idea. I think there is a plan where you can release in dribs and drabs to supplement your income, rather than a large lump sum (which wouldn't interest me). But I fear the compound interest on any equity release, and wouldn't have the income to pay the interest (which I know is allowed on some plans).

We downsized 6 years ago so we could retire after my H was made redundant and I could downsize again but it would cost around £20k to move and I can't imagine how I would manage the move or settle somewhere else on my own. I know people do manage but it seems impossible to imagine just now. If I did move it would probably have to be to a terraced house with no parking outside which would make it difficult for friends to visit.

I suppose I'm just hoping for your views on whether I could manage on that income, or if it's too unrealistic. I don't spend much on clothes / hair etc, hardly anything, but do spend on the garden and house, and going out for coffee and meals with friends, which will be very important to continue when I'm on my own.

Sorry for the sad update. I think only a few posts ago someone brought up about how would I manage on my own and I agreed things would be tight in my old old age (when I would live a smaller, simple life), never for a moment imagining it would be while I'm still quite young. 

Hi. 

So sorry for your sad news that both of you have received 

It is important not to panic or make any rash decisions or plans. 

In your mid 60's, are you drawing your state pension as yet? 

What about your husband? 

Is your mortgage fully paid up? 

I too live in the South east
Age 60 and now on my own for over 3 years.   No mortgage and 23year old son still living at home. 
He has just started full time employment after uni and is contributing some money each month towards his keep etc. 

Since April I have been monitoring all expenditure, and my Average  Expenditure is exactly that.... £1250
We shop in Sainsburys for convenience, but know if I were to swap to a Lidl or Aldi to save money. 

Some months a little higher others slightly lower

However much time that you have together.... 
It is very important to try to do as much together as you can, while you have time and do not waste a second

Be that going for a trip to a beachside cafe, watching a sunset,snuggling up on the sofa and watching a film
Just do not waste a moment

Having a practical outlook is good, but it's important to also live for the now 

Just keep talking to your friends and family
I think you'll be fine

dean350

Earl_Tucker said:

Hello all,
Thanks for all the free information on this thread! Really helpful as my wife and I start to consider returning to UK from abroad and hopefully retiring. We have a daughter (early teens) so there is an added level of complication, but I think things might be lining up to make the move in less than 2 years.

One slight difficulty is that we have been in a very high cost of living environment for 22 years, and we have lost track of what 'normal' life costs in the UK. Our (reasonably frugal, especially since COVID) life at the minute costs us approximately 75000-80000 GBP a year. Remove accommodation costs and that goes to 40000 - 45000. I reckon - based on little more than a wild guess and reading this thread - that those living costs might reduce further to about 36000 after a move to UK (probably somewhere close to Chester.) That would be without housing costs (we are currently gathering cash to buy a house) and with no car (we've never had one, especially since we currently live in a large city with good transport. Maybe this is going to be a problem in thre UK though.) 3000 pcm for a family of three feels more than fine to me, particularly since we live a very 'normal' life - is that in line with what other people aim for? 

I think I can generate 26000 from a 3.3% SWR from an investment account; there is a further 10000 or so coming from BTL. We will get about 10000 in pension when we turn 60 (currently 49) and another 10000 or so as it stands in state pension at 67. (I will probably continue to pay additional years though.) So those pensions might act as a bit of a hedge against inflation. Still need to save a bit more to account for tax and to gather up a bigger emergency fund (about 40000 at the moment, but I want that to be higher; we rely too much on stocks and everything feels a bit crashy at the minute, but it has felt like that for the last several years.) 

Things looming; Uni costs for daughter, health care (no idea about current state of NHS, don't know whether we need private insurance for a few long-term but not life threatening ailments), housing costs (everything based on zillow and similar estimates at the minute, which are probably not accurate.) Obviously there will be unexpected costs also (I think we just escaped involvement in the cladding crisis nonsense, for example, but that's not 100% certain either. I am sure there are similar nightmares looming)

I also don't understand the pension landscape in the UK. I suspect my best bet, once back in UK, would be to start moving money out of our investment account into a pension, but I don't know how much I am allowed to move or the actual mechanics of setting up a pension. Any advice in that direction very welcome! And, of course, any general comments on the millions of things I have not considered when preparing to move from one country back to UK!

I am in a very similar situation to yourself and I can share with you what I have discovered so far.

Unless you are going to be working in the UK you will only be able to pay in 2880GBP into a pension (SIPP) which HMRC then gross up to 3600. You can do that for yourself and your wife so you are effectively receiving  1440GBP each year courtesy of HMRC. If you get a job you can look at things like salary sacrifice which would allow you to pay in more.

If you have share based investments held in regular brokerage accounts then you are best to sell them before you leave and rebuy them when you get back. That's to avoid excessive UK CGT being applied on any share sales in the future. I suspect you may live in a jurisdiction where CGT is not levied and if so, you can do this without incurring a local tax charge. If your investments are held within a QROPS scheme then things are different and you need to take specialist advice. Everything below assumes you are outside of a QROPS.

You and your wife will be able to take advantage of ISA's when you return and put into each ISA in each year 20,000 GBP. Any gains and any dividends within that ISA can then be taken free of tax. Therefore many will put any high dividend shares they own into an ISA first. The rest of your pot would have to go into a regular stockbroking account which for tax reasons you should split between you and your wife. Any gains on share sales will be subject to CGT and any dividends from those will then be subject to dividend tax.

However, you and your wife would each get a 12,570GBP tax free allowance and the first 2,000GBP of dividends on top of that are tax free. If you have 20,000GBP of shares each in an ISA and take say a 4% dividend out then that is a further 800GBP  a year. Therefore you and your wife can take 30,740GBP free of tax each year which will increase as you fill up your ISA's. Any dividends earnt on top of that are taxed at 8.5%. (more if you get up into a higher tax band)

On university you will be charged international fees if you have been resident in the UK for less than 3 years. Some universities may exempt you from this requirement but its very unlikely for popular and oversubscribed courses. The same rule applies for taking maintenance loans - you need to clock up 3 years residency first and I am told there are no exemptions to this.

Getting into a good UK state school is very difficult if you are applying from overseas so that is something else to think about. You may have to budget for private schooling for a couple of years. If your daughter has been used to international schools that may be the best option.

I would build up more cash before you go back as a stock market crash could dent your plans. Best to have a couple of years living expenses in cash. You also need to ensure a crash would not affect your plan to buy a house. Putting 50K in Premium Bonds is quite popular at the moment and is open to non residents. You might win something and you can get your cash back within a couple of days.

3K a month sounds OK for three. The basics are about 1100 a month. Best to do a spreadsheet. Unless you are in London you will need a car.

Familiarize yourself with UK inheritance tax and make wills when you return.

justme111

Private health insurance will be of no help with your previously existent chronic illnesses- they don't cover them in the UK - they don't cover emergencies either !
Don't ask me what they cover ...🙄
Although would have been rich of me to complain- I am being treated for cancer under private health scheme ...

dean350

justme111 said:

Private health insurance will be of no help with your previously existent chronic illnesses- they don't cover them in the UK - they don't cover emergencies either !
Don't ask me what they cover ...🙄
Although would have been rich of me to complain- I am being treated for cancer under private health scheme ...

Only hope for the OP is if he already has a BUPA International policy or if they accept a transfer in from his current provider. Correct that existing conditions will be excluded from a new policy taken out in the UK. Premiums will be high if the OP is older in any case.