investment for retirement

shiredeon

i will be retireing to france where i own a house in the next couple of years, i do have an executive pention that will have about 150k in it, but the retirement age is 65, in the meantime my only source of income will be from the sale of my uk house which should make 500k, any ideas on how to invest the money to gain an income, as i will be abroad and i'm not as young and astute as i used to be i don't want to be continually trying to juggle the money, if it helps my partner could share the tax burden, thanks.

EdInvestor

This thread takes you step by step through investing a lump sum for income.

It will probably be best to run most of the investments from here, so make sure you open all your discount broker and high interest bank accounts *before* departure and get a Nationwide credit card so you can access money from ATMs without paying a fee. (IIRC Liverpool Victoria also does one of these).

When you say "the retirement age is 65", what do you mean exactly? You can take benefits from pensions at age 50.If the date on the contract is 65, you might have to pay a penalty if the money is in the insurer's With profits fund by going early, and you might also lose a valuable Guaranteed Annuity Rate if one exists (check.)

But otherwise there should be no need to wait if you don't want to.

Also don't forget to keep paying voluntary NI conts for your state pension ( very cheap once abroad), your partner should do this also.

shiredeon

your quite right, i could take the pention now and pay penalties, i wondered if it would be best left to a later date and in the meantime try and live off the 500k ish from the house sale, even if i couldn't live off the interest alone the capital should not reduce too drastically, i'm 52 now and it's fairly economic to live in our rural area of france provided we're not too extravagant, cheers.

shiredeon

phew, read through the post, all a bit complicated for me, my problem is that when i go i will have no income whatsoever so i need a vehicle that will give me an income, am i right in thinking there are funds that generate a regular income and could i create a portfolio of these funds,

EdInvestor

your quite right, i could take the pention now and pay penalties, i wondered if it would be best left to a later date and in the meantime try and live off the 500k

Who is the pension with and what is it invested in? Under the new rules you can vest the pension, take out the 25% tax free cash, but leave the rest of the fund invested (in an income drawdown Sipp) without actually taking an income until you need it.


Would the penalties kick in because of leaving WP? or is there a GAR? It might be worth staying in for the latter,if large, but it's unlikely to be a good idea to stay in a WP fund for another 13 years otherwise - they are very poor performers these days.

Some people also think it's a good idea to take any tax free cash, just in case it gets abolished.....

On the other hand, vesting the pension now would mean you partner would get less if you died. ( She would get the other 75% of the fund minus a 35% tax charge).

Either way what you need to work out is how to invest your cash - whether there's one lump sum or two. Can you manage on 25k a year? Properly invested you should be able to take 5% from your 500k without incurrring too much risk, the trick is to make sure that's not taxed.

cheerfulcat

shiredeon, I would suggest that you consider carefully what you are planning to do in the future before deciding on an investment strategy. If you intend to remain in France it really makes no sense to invest in sterling based funds; you would be better off in something which pays out in Euros. You also need to consider the tax situation in France; there are almost certainly funds based in France which would be more favourable to you where tax is concerned.

EdInvestor

shiredeon wrote:

am i right in thinking there are funds that generate a regular income and could i create a portfolio of these funds,

Yes. When invested in shares,these funds are called "equity income funds". These funds invest in blue chip shares which pay higher dividends. There is no tax to pay on these dividends for basic rate taxpayers like you, which helps.

Other funds invest in bonds and in commercial property and also pay out income. Look for the "yield" - you want 4-6%.

https://www.citywire.co.uk/Funds/Home.aspx

Look at some of the funds here in the "equity income" category for a start.Don;t bother with anything below the top 10.

You'll need to open an account at a low cost discount broker to invest in funds/shares, one that will rebate the charges. One that takes expats is https://www.selftrade.co.uk

EdInvestor

cheerfulcat wrote:

you would be better off in something which pays out in Euros. You also need to consider the tax situation in France; there are almost certainly funds based in France which would be more favourable to you where tax is concerned.

CC

This might be so: but I have yet to run across any expats who have really managed to operate successfully as investors in Europe using their local system: they all seem to fall into the clutches of the frightul offshore IFA brigade - and if you think our onshore lot are bad, you ain't seen nothing till you've looked at them.To be avoided at all costs.

There is one offshore discount broker chap who I've heard quite good things about: might be worth contacting him.

https://www.offshorerebates.com

shiredeon

the pension was with allied dunbar now zurich, it's invested in a range of funds i can't remember what they are, it's up to about 150k, i also have my opted out of serps pention which is about 50k,(i've now opted back in) , whilst i appreciate there may be suitable funds in france i find the situation here confusing enough without the language barrier, i was thinking that i could create an income producing portfolio before i left and maybe get the money transfered to my french account, i could cash in both my pensions or wait if it's more beneficial. by the way 25k a year would be great.

cheerfulcat

The problem with generating your income in sterling is that you are horribly exposed to currency fluctuations. I understand that you find this complicated but you have an fair amount of capital to deal with and it is important to get this right since you could have many years to provide for. You really need to think about this, as getting it wrong could cost you an awful lot of money.

Why not have a look at the Expat Investors board on TMF? You are bound to get some more informed advice there, from people experienced in living and investing abroad.

shiredeon

i find the trouble is having to become an expert in every aspect,i am already somewhat burnt out by having run a business for 25 years and to be quite honest i can't raise my game anymore, i know i'll save money by investing myself
but i'd sooner bow to someone elses greater knowledge, what i want is an expert to say," if it was my money i'd do this" (for a fee of course) and then leave thinking well i've given it my best shot.