Anything wrong with this plan

SandLake

I have recently been made redundant at the age of 54 (I will be 55 at the end of April) and with my wife have come up with a plan for the future. 3 things to consider :-

1, Friends Life AVC worth 37K that was always designed to be taken on my 55th birthday

2, Most recent work pension (Aviva defined contribution) worth approx 50K

3, BTL in which we have no equity and a £130K mortgage (locked in until May 2016) which is covered by the £600/month rent we receive

Plan is in the next 2 financial years for me to draw down all the 2 pensions and that along with some other savings to clear the BTL mortgage and turn the £600 rent into an income. Pick up some part time work until my main work pension (final salary) kicks in at 62 when we can re-evaluate the plan. I know the drawdowns and p/t work will need managed to stay below the 40% tax threshold.

I think this sounds good but I am not an expert. Am I making any glaring errors? Should I speak to an IFA about this?

Loughton_Monkey

It's very difficult to comment without full information. We know nothing about benefits you may or may not qualify for, any income from your wife, or what your standard monthly commitments/spending are.

As an initial observation, I was struck by the concept of 'cashing in' equity investments [capable of ~ 7% tax free annual return - although admittedly volatile and uncertain] to pay for a low-interest mortgage. This is something I would personally seek to avoid.

Given that the BTL is currently self financing, maybe there's a way of eking out a spendable income some other way - perhaps from savings. If pensions must be involved, then maybe they could be put into some form of drawdown. You could take (and use) the 25% tax free element. Then the rest could be taken at such a rate as to 'use up' your annual income tax allowance, but otherwise 'recycled' into S&S Isas so they remain equally well invested. That way, subsequent drawdowns are totally flexible and tax free.

SandLake

Thank you. I am quite the novice at this and you have quickly suggested an alternative so maybe it is something I should take to an IFA. The mortgage cleardown seems quite straightforward, something I would be happy to arrange without further advice.
I am not expecting full personalised advice on a forum just that I am on the right lines - or not.