Still tinkering with the plan

elantan

Hi all,

have asked questions before and got great helpful answers so been away and hatching plans, i think i know what i want to do now but may not be bang on with the full plan ... can you let me know what you think of the so far plan ... Im trying to keep it simple so that as i learn more i can adjust the plan accordingly

thanks in advance

ok so far the plan is ( taking into account todays values as i know goalposts change, but as they change i will change with them hopefully)

taking the state pension and having a personal pension that will bring it up to the tax code ( currently 944 for pensioners i think) so that i am taking advantage of the tax relief,

having enough saved into an I.S.A to give me an income to add to the pensions, i am thinking minimum £100,000 so that i get approx £3,000 a year pay out and it doesnt affect the lump sum,

I dont earn much,( on average £13,000 or so a year...varies though) so i dont need to have £20k a year income when i retire ( although i would like it)

now when i looked at drawdown figures ( as opposed to annuity which i need to look more into but so far dont think they are for me) when i put in a date of birth 65 years ago today i got 6% ( approx) as a drawdown amount so was thinking i need a pot of atleast £50k ... This will probably take me into the paying a little tax (but that could depend on if i take the 25% tax free lump sum), but that is ok, i am not opposed to paying tax i just want to try and make the little that i have stretch as far as i can, hence the I.S.A idea to add to my income whilst still maintaining the lump sum

Currently my pension savings look like this

i only get 1% paid into my pension from my current employer, when i change employers i will be taking advantage of any pension arrangements available, but with this in mind i am ignoring my current employment pension and will treat it as an added bonus

i have an old frozen pension also which is predicted at todays rates to pay out £440 a year, so will be adding this in to my figures, there is approx £9,000 in this pot, i have another pot with £18,680 ( phoned up today for todays figure) and another SIPP with £5,987 in it ( checked today as well so that makes it roughly £33,000 i need atleast another £17,000 by my calculations which i fully intend on getting

i know that the £50k pot will need to go up to more as the goalposts change and i will work on that ...

but does my plan sound ok ?

am i missing anything ? or more like what am i missing lol

elantan

Any one got any opinion ?

AlwaysLearnin

Although you may be able to take 6% drawdown at the moment, this is based on gilt rates (and govt policy...) so could change, and at that rate you could risk the pension fund dwindling. Don't forget, the amount will need to increase with inflation to maintain the equiv income value, including when you're drawing down.

Have you looked in to what costs are involved with drawdown too?

Essentially you're talking about topping up the state pension by a small amount really. I presume you'll qualify for full state pension? It's anyone's guess what changes will be made on it in future though.

elantan

AlwaysLearnin wrote: »

Although you may be able to take 6% drawdown at the moment, this is based on gilt rates (and govt policy...) so could change, and at that rate you could risk the pension fund dwindling. Don't forget, the amount will need to increase with inflation to maintain the equiv income value, including when you're drawing down.

Have you looked in to what costs are involved with drawdown too?

Essentially you're talking about topping up the state pension by a small amount really. I presume you'll qualify for full state pension? It's anyone's guess what changes will be made on it in future though.

thanks very much for replying Always learning, yes you have it right essentially i am intending on topping up my state pension to reach the tax relief threshold ... obviously i went a long way round explaining that ( not great with words and explanations) ,

we do have other plans as well as this pension, for example we should have a property bringing in a net rental income of roughly £400 a month at today's rates, husband also has a company pension etc, in this instance i am just really looking at my pension as part of a whole picture, i am making contributions into my pension just now and will be upping them and paying more in as often as i can, i just dont want to solely concentrate on paying into a pension as i think it is ( for me anyway) more of a whole retirement plan subject.

i havn't looked at costs etc of drawdown or anything yet and i know i will have to look at that, i will qualify for full state pension when the time comes, i currently have 25 out of the 30 years worth of contributions, obviously when that goes up to 35 years it will add a further 5 years of ni contributions to pay but i will have plenty of time to pay them, i also have additional contributions which i think if i worked it out wont be taken into account, every year when i get my pension statement through it gives me an estimated pension of much more than the £140 the government are currently working on, so i will be working on the £140 a week as i highly doubt i will get more than that,

i know the goal posts change regarding pensions and retirement often and i know that it is hard to pin things down exactly right, which i think is the reason i want to have an I.S.A there as back up, when i first started working i shouldve been retiring at 60 then it went to 65 and currently it is 67 so there are three changes already, i also had the serps thing to deal with and like a bit of a numpty chose to not opt out, therefore the pension i was told i was getting is no longer there,

so whilst i want to get a pension sorted and will continue to pay into my pension, i dont want to solely rely on it

thanks again ... will go and learn a bit about charges etc now

i would go and see an IFA and i probably should, i just dont feel that i have a big enough pot or enough money etc to plow into a pension to make it worth my while, so feel i kinda need to so a DIY job of it, therefore i am trying to learn and alter the plans accordingly

AlwaysLearnin

Okay, so it's part of a wider plan with you and your husband. That adds some further context.

Makes sense that you're looking to use your tax allowance. Something else to consider is what would happen if either of you wasn't around - would the other have enough on their own. Hopefully won't be an issue for a long while, but worth considering.

I'd also be inclined to agree that the size of pot means you're better off not paying for an IFA.

I think you're on the right lines at least. Good luck with it

elantan

AlwaysLearnin wrote: »

Okay, so it's part of a wider plan with you and your husband. That adds some further context.

Makes sense that you're looking to use your tax allowance. Something else to consider is what would happen if either of you wasn't around - would the other have enough on their own. Hopefully won't be an issue for a long while, but worth considering. It is something we do think about especially with the way my health has been, and one of the reasons why i keep visiting the subject of pensions, i learn a wee bit then tweak it accordingly then slowly learn more and continue tweaking... i find the subject of retirement and pensions both a minefield and fascinating in equal parts, i fully understand that every one's need is different and alot of people would find my approach wrong for them, but i dont earn alot so i dont need a huge pension if that makes sense

I'd also be inclined to agree that the size of pot means you're better off not paying for an IFA. Yeah, i know IFA's can be fantastic, i just dont think my pot would be worth it, i also think i would loose too much in charges, i have just stopped paying for the last advice i received 5 years ago

I think you're on the right lines at least. Good luck with it

Thanks, it is going to be a lot of learning for me, but i think i like the idea of learning and feeling confident ( for the most part) in what we are doing financially