Retirement income planning for a couple?

jamesd

OldBeanz wrote: »

Opinion on here suggests drawdown appears only to be viable for a pension pot of £100k.

That's news to me. On here it's more about pointing out that a minimum of £100k isn't required and doesn't make sense. If paying an IFA to manage it, that is the sort of value it takes to make it economic. DIY it's dirt cheap, with a fee of £75 once every three years from one provider for the GAD calculation.

There are income variability concerns but with the state pensions and a final salary pension making up most of the likely income in this case that's very well taken care of eventually.

nicknameless wrote: »

Silly Q but risk of? ... Guesstimations would be my SIPP pot at approx £100k and her pot at around £50k at 55 if we divert some S&S funds to her SIPP.

No increased investment risk. In either plan for some years the intention is to live of the invested money.

The risk in drawdown tends to be the variability in the value of investments and most of that is the same whether the money is in a pension pot or an ISA. The pension pot has the additional risk of the GAD limit calculation that may force the income being taken lower if a revaluation happens during a market downturn or a government does what this one did for a while and lowers the limit.

The pension is more tax-efficient while she's not a tax payer, but does come with that extra risk from the GAD limit. And it just might not allow drawing the income as fast as desired to keep the income level smooth between retiring and having all of the guaranteed pensions in payment.

Firecalc can be used to look at the investment risks and it's applicable to both pension and non-pension cases.

Freecall

jamesd wrote: »

it's dirt cheap, with a fee of £75 once every three years from one provider for the GAD calculation.

It's good to see someone else say this.

I have never been able to see where this mythical 'only worth it for more than £100k' comes from.

Obviously if you are going to spend a chunk of it on advisor's fees then it will only be worth it for larger sums but for most people simply managing their affairs in a straightforward manner, £25 a year is really neither here or there.

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yorkshireman2

nicknameless wrote: »

Many thanks.
I know there are many debates about pensions vs investments (for those who have some pension provision already). In general would the above tend to make the most of our spare investment cash? My only worries are the lack of flexibility with pension pots and how much value is achieved via annuities.

As you can see I'm not well versed in the options and pros and cons.

Perhaps some IFA help might be called for?

I'd definitely be seeking out a good IFA as you're moving into a life phase that requires good long term planning. Too many people make the mistake of just dabbling in the hope that things will work out.

It sounds like you're already having the right thoughts and I'm sure a good IFA will be able to crystalise those thoughts into something actionable.

jamesd

The value of £100,000 was used in some guidance from the FSA to IFAs. So it implicitly assumes IFA charge levels and the charges for IFA platforms and such that were around at the time. DIY just doesn't have that level of charging.

nicknameless

yorkshireman2 wrote: »

I'd definitely be seeking out a good IFA as you're moving into a life phase that requires good long term planning. Too many people make the mistake of just dabbling in the hope that things will work out.

It sounds like you're already having the right thoughts and I'm sure a good IFA will be able to crystalise those thoughts into something actionable.

TBH I wanted to DIY as much as possible. Maybe that's unwise?

Most of the plan is already in place based on my own spreadsheet forecasts that run from 55 to 100. Occupational pensions, predominantly passively invested buy and hold S & S ISA portfolios that are also reflected in my SIPP.

I was trying to weigh up the pros and cons of additional provision for my partner / wife to take advantage of her tax free allowance versus the flexibility that S & S ISAs would give us after all my HR pay is in pensions.

Maybe you don't know what you don't know and I should seek advice? Am I missing obvious options? BTW I do not want investment advice for either our ISAs or SIPP.

OldBeanz

I am in a similar position where my wife will be only earning £5k for 7 years. I cannot figure out a means of exploiting this either. The govt are threatening to bring in swappable tax relief so that may be of some help.

gadgetmind

My current plan is that all 25% tax free sums are invested in my wife's name at retirement. She can then move them into S&S ISAs ASAP, but this will take a few years, so she'll have interest and PID income using a fair bit of her allowance pre-SP but not all of unless I go right off dividend income assets.