3,4 or 5 year journey to financial freedom

frugal90

Using the SIPPS to front run the DB schemes.

I will draw £26000 this year, £6.5k tax free so with personal allowance £12.5K plus wife 's allowance as she has no income of £1250, means I only pay tax on £19500-£13750=£4750 at 20% =£950.
If I take my db pension I 'll pay tax of 20% on it all of the sipp except the tfls.

Happy taking higher db pension and with our strategy so far. Good luck with yours. We don't need to leave an inheritance.☺

bluenose1

Johnnyboy11 wrote: »

I'd be tempted to start both DB pensions at age 55 and take the actuarial hit. Lots of reasons why...
The actuarial reduction is not supposed to be punitive.
You'll probably get a much higher return on your investments than the CPI uplift of your DB pensions.
You'll still have your investments to leave to someone in your will, and there are tax advantages too.
You'll still have your investments, which you can access if you ever want to.
You might pay less Income Tax overall, particularly when State Pensions kick in.
You could reduce the back-end loading of your retirement income when SP kicks in, and you might not need so much income as you get older.
Our circumstances are not dissimilar, and we're leaning towards starting the DB pensions at 55, then possibly heading off to Portugal or Cyprus for the tax breaks

I was going to take mine at 55 for same reason but when I have put it all on a spreadsheet comparing the two options have decided to use my DC pot tax free between 55-60. As after taking tax / inflation into account meant not quite as advantageous as I originally thought.

Johnnyboy11

bluenose1 wrote: »

I was going to take mine at 55 for same reason but when I have put it all on a spreadsheet comparing the two options have decided to use my DC pot tax free between 55-60. As after taking tax / inflation into account meant not quite as advantageous as I originally thought.

Can your spreadsheet predict the long-term risk of holding all your assets in GBP - property, DB pensions, savings? We've seen the GBP/USD crash from 2.0 in 2008 to 1.28 today, where next? What impact would a Marxist Government have, would you need a wheelbarrow to collect your Teacher's/ State (unfunded) pensions? And all whilst CPI is less than 2% (whilst average earnings at 3.9%), if you believe the Government's figures. Tinfoil hat stuff, I know, but I'd rather diversify...

cfw1994

Johnnyboy11 wrote: »

Can your spreadsheet predict the long-term risk of holding all your assets in GBP - property, DB pensions, savings? We've seen the GBP/USD crash from 2.0 in 2008 to 1.28 today, where next? What impact would a Marxist Government have, would you need a wheelbarrow to collect your Teacher's/ State (unfunded) pensions? And all whilst CPI is less than 2% (whilst average earnings at 3.9%), if you believe the Government's figures. Tinfoil hat stuff, I know, but I'd rather diversify...

Can’t beat a good selective stat!
Sorry, but 2008 £:$ was indeed 2.0....but in 2000 it was 1.4, as it was in ‘95!
I’ll keep my tinfoil hat ready for the Christmas turkey!

Volatile....that’s what it’s been :rotfl:

[Deleted User]

Johnnyboy11 wrote: »

Can your spreadsheet predict the long-term risk of holding all your assets in GBP - property, DB pensions, savings? We've seen the GBP/USD crash from 2.0 in 2008 to 1.28 today, where next? What impact would a Marxist Government have, would you need a wheelbarrow to collect your Teacher's/ State (unfunded) pensions? And all whilst CPI is less than 2% (whilst average earnings at 3.9%), if you believe the Government's figures. Tinfoil hat stuff, I know, but I'd rather diversify...

Nobody can predict anything long term, but the guy seems to be well diversified with 600k in investment (presumably worldwide assets) and a decent DB pension. Sure, there is currency risk if he moves to Cyprus but hard to be more diversified than having a good government pension as well as an investment portfolio.

And DB pension while not 100% safe, provides the best protection against longevity risks and making money management mistakes as one gets older so Frugal’s strategy seems sound.

frugal90

Frugal isn't moving to Cyprus. Might go on holiday there.
Quite happy with Bonnie Scotland, in fact love it!

I like the certainty of the higher monthly db payment.
In fact when my sp kicks in my monthly income will be about £100 less than when I finished teaching, but I can also draw on the dividends from the ISA's. Some of my lump sum will go into dividend yielding IT's as well.


ISA investments are fundsmith, LT Global Equity fund, CTY, HFEL, MRC, MCH ,Blackrock conscencus 100 and Smithson.

Bravepants

Congratulations on your retirement Frugal!



I'm hoping to go in about three years or so and was just wondering about the reasons for your choice of income funds in your ISA rather than selling units, which seems to be the oft touted preferred option. I need to make the decision whether to switch to income funds or not at some point, and would like to assess the pros and cons.



You are obviously happy with income funds?

frugal90

We actually have a bit of both.

I like the idea of taking a dividend if I need it or let it re-invest if I don't.

So far we haven't touched our Isa's but it feels good to have them there!

When I get to 60 we plan to loosen the purse strings a bit.
I read an article on Monevator about this American guy who died with 8 million dollars in the bank. He never earned big but was extremely frugal. Now I maybe frugal, but there is a limit and life is for living!



Good luck in your own journey.

FRugal

JoeEngland

frugal90 wrote: »

Frugal isn't moving to Cyprus. Might go on holiday there.
Quite happy with Bonnie Scotland, in fact love it!

To quote a Runrig song: "The colours of Scotland leave you young inside" ☺