Early-retirement wannabe

ex-pat_scot

ukdw wrote: »

Agreed. At present assuming no protection the above LTA amount is about £400k - so the minimum tax liability at 25% would if I have understood how LTA tax works be about £100k which is about 7% of the pot.

If the OP makes real terms growth of say 3.5% for the next 20 years then the £1.4m could have grown to £2.4m in real terms.

If we assume that the LTA penalty tax rate stays at 25%, and the LTA level increases only in line with inflation, the above LTA amount in 20 years time could be as much as £1.8m with a minimum penalty tax liability of £450k - which would be then be about 16% of the pot.

I'm pretty darn certain that the LTA will not be recognisable when you get to access your pot.


The rational approach would be for it to be removed, as the AA is sufficient.
The political approach is to either increase (not in this political climate it won't!) or decrease again. There may be Fixed Protection on offer.


Basically - I think it's too uncertain to plan for. Therefore I am continuing and will then adjust plans if and when the rules shift.

Marine_life

Some thoughts on the channel 4 program - How to retire at 40 in the blog:

http://earlyretirefree.com/so-can-you-retire-at-40-the-not-so-simple-math-of-early-retirement/

chiefie

Marine_life wrote: »

Some thoughts on the channel 4 program - How to retire at 40 in the blog:

http://earlyretirefree.com/so-can-you-retire-at-40-the-not-so-simple-math-of-early-retirement/

Great blog thanks for sharing.

One of the elements I am worried about is factoring in state pension to my income when I retire. I plan to take some pension early and then stop as the state pension kicks in and the sipp runs out. If this starts to get means tested or NI taken from I then it b@ggers up the result.

And of course my spa at the mo is 67 and it could well go up again twice before I take it ! So am starting to think there is a need to save even more or get better returns or spend less or take in some paid employment. 😙😙

Monie

Hi all, just reading from the start in 2017 on page 6 at the moment. I'm currently 25 and have been paying into a pension since I started working (not necessarily huge amounts) but everything has currently stopped due to OH not working. We are on the property ladder and I enjoy the mortgage free wannabe threads too.

I'm not a dummy when it comes to pensions and investments however I am a bit bamboozled about a comprehensive way to track and plan for retirement. I'm sorry if this question has been asked but can anyone recommend a good but simple website or spreadsheet to start properly tracking for retirement?

Thanks everyone

bigadaj

Monie wrote: »

Hi all, just reading from the start in 2017 on page 6 at the moment. I'm currently 25 and have been paying into a pension since I started working (not necessarily huge amounts) but everything has currently stopped due to OH not working. We are on the property ladder and I enjoy the mortgage free wannabe threads too.

I'm not a dummy when it comes to pensions and investments however I am a bit bamboozled about a comprehensive way to track and plan for retirement. I'm sorry if this question has been asked but can anyone recommend a good but simple website or spreadsheet to start properly tracking for retirement?

Thanks everyone

Well from your footer first advice is probably to stop overpaying your mortgage and divert that into investments.

Marine_life

chiefie wrote: »

One of the elements I am worried about is factoring in state pension to my income when I retire.

It is a dilemma.

However, I suspect that anything as fundamental as a significant change to pensions (e.g. means testing) would have to have a relatively long lead time so the closer you get to retirement the more comfort you would have.

Its also a fact that the UK is below the OECD average in terms of the generosity of pension payments so a further reduction would be politically difficult.

Nevertheless I still think its one of the factors to consider when thinking about the buffer you might need.

Marine_life

Monie wrote: »

I'm not a dummy when it comes to pensions and investments however I am a bit bamboozled about a comprehensive way to track and plan for retirement. I'm sorry if this question has been asked but can anyone recommend a good but simple website or spreadsheet to start properly tracking for retirement?

Thanks everyone

I am not an expert on UK pensions but you could do worse than start here:

https://www.gov.uk/plan-retirement-income

Once you understand the basics it would make sense to get some impartial advice to get you started.

AlanP_2

Monie wrote: »

Hi all, just reading from the start in 2017 on page 6 at the moment. I'm currently 25 and have been paying into a pension since I started working (not necessarily huge amounts) but everything has currently stopped due to OH not working. We are on the property ladder and I enjoy the mortgage free wannabe threads too.

I'm not a dummy when it comes to pensions and investments however I am a bit bamboozled about a comprehensive way to track and plan for retirement. I'm sorry if this question has been asked but can anyone recommend a good but simple website or spreadsheet to start properly tracking for retirement?

Thanks everyone

Take a look at retireeasy.com as that might help you to track & plan although you will have to make a lot of estimates as you are looking a long way out.

michaels

bigadaj wrote: »

Well from your footer first advice is probably to stop overpaying your mortgage and divert that into investments.

Except that is too simplistic because improving the loan to value brings access to lower rates....

jamesd

Getting to 75% LTV is good because it allows getting a lower ongoing mortgage rate on the remaining amount borrowed. The gain from that normally beats the improvement from investment returns on the extra twenty percent or so of equity needed. Be sure to factor in property price changes that can help you to get there.

But overpaying isn't the best way to get there. I expect more than ten percent a year of P2P lending interest after allowing for bad debt. That'll be way more than your mortgage interest rate so you can get to the target faster by investing instead of overpaying. Then use the invested money to get to the LTV when remortgaging.

Looking longer term than that, mortgage overpaying is very harmful to both long term wealth accumulation and early retirement planning. The loss of long term investment growth on the difference between investment returns and mortgage interest rates is very costly.

For early retirement you want either interest only or the longest term you can get, so you pay as little capital as possible and can invest the difference.

For bigger payments a pension is a good tool because you get tax relief on the way in but can take out a quarter tax free from age 55. Effectively getting tax relief on your mortgage capital payment.