Setting up Retiree Portfolio

robber2

KT19 wrote: »

Hi Robber2: My mum is 60 and she has 35 qualifying years

Ok, so 6 years to go for state pension. If you do a google search you will find a .gov site that will confirm your mums NI contributions and pension entitlement.

Have to dash otherwise I'd find the link for you.

Rob

xylophone

Have to dash otherwise I'd find the link for you.

See post 5 above.

AlanP_2

jamesd wrote: »

Yes. Public sector almost all CPI, private mostly CPI but quite a lot RPI.

Rather than an absolute YES i would say it's 99% certain for private schemes.

I have one that does not increase the amount in payment as rises " are at the company's discretion" according to its legal arrangements and they have consistently said NO.

Check the scheme rules is the best bet.

KT19

Thanks for the thoughts. I have been reading through the JohnRo Monthly Income thread (i cant post links as a newbie) to get a better understanding of how investment trusts work.

Do most IFAs help with efficient tax planning or do you need an accountant for that?

jamesd

Tax planning is a core part of the work of IFAs and an essential aspect in any income planning that they do.

Traditionally it was considered not cost-effective to use an IFA for amounts below about £100,000 but sometimes lower or higher amounts might be appropriate because IFA charges vary, often much cheaper outside London and the SE, say. The amounts involved here are easily within the range where IFA charges based on fixed or hourly fee - not percentage - make sense.

KT19

Would a reasonable starting point for portfolio construction be something like £100k in say Basket of Seven ITs (Motley Fool) to achieve maybe a 4% per annum return which would nail down her income floor (11k db pension + 4k ITs). Then have maybe a 5 year cash buffer and the rest in longer term equities which would be pretty much left alone for as long as possible? Or are these numbers too conservative if you consider you could use a SWR 3.5 -4%?

Do people consider things like care home costs in their assumptions? Or would you assume that if that ever happened you would use house sale funds to pay for it?

Appreciate any IFA hired will have their own thoughts, but just wanted to establish an idea of what could be expected as a starting point and not go in completely blind. Again thanks for the opinions been v. helpful.

aldershot

KT19 wrote: »

My dad was only 60 when he died.

Sorry for you and your mum to lose your dad so young.

Lesson for us all, don't work longer than you have to.

chiram2015

Hi KT

Firstly heartfelt condolences. It's hard enough losing your Dad without doing all of this.

Just to let you know though that I use Retireeasy and although it is a brilliant planning tool I do think you should make an appointment with a few IFAs and try to get a recommended IFA from a trusted colleague or another family member. If you cannot get a recommendation you could try unbiased.co.uk

We use the retireeasy lifeplan with our IFA and if you and your Mum build her lifeplan you will then have all your mum's finances in one place and this will be a helpful start when you first start your talks with the IFAs.

Good luck

atush

jamesd wrote: »

Equities aren't at a value price even after the initial brexit changes. The cyclically adjusted price/earnings ratio remains high and it's still too soon to know whether there will be more drops to a typical "big drop" 40% or so fall. We're a fair bit overdue for one of those and the bull market that started in 2009 has been running for a long time now.

All of those are reasons why at the moment it's better to be gradual. Add in her lack of comfort with risk/volatility and a big move now could put her off for the rest of her life. Not getting her scared of investments is probably the biggest challenge here.

I do agree with you that some investing now is a good move, though.

I was talking about investing 45K out of over 600K I call that pretty gradual dont you?

Although it could be drip fed in at 3K a month or something.

Sitting on a huge pile of cash, at little to no interest sjould only be very short term.

atush

KT19 wrote: »

Hi all, Thank you for taking the time to respond with helpful advice.

Would it make sense to divide the money into an income generation pot (ITs, anything else?), Cash reserve in current accounts (maybe a bond ladder?) & a longer term growth pot that could be left untouched for longer and thus be more aggressive?
What kind of % mix would the above look like? (100k, 50k, 420k)
Is part of the idea with ITs to use some of the income to buy more holdings of ITs?
Does anyone have any idea how long it would take for an IFA to construct a recommendation report and how long it would take to implement? or is that how long is piece of string type questions?
Should the IFA be chartered?

The IFA should be qualified and independant. And yes I would use one for this but yes, the idea would be to spread her cash around into cash, bonds equities etc.

And yes, the initial ITs in the Isa could be set to reinvest any dividends. This sort of compounding will give a very good return over many years. She could move money into the S&S isa each year with her allowance to increase that 45K and to keep the money in a tax free environment. She can also invest 2880 er year into a personal pension even if she is no longer working. Which will become 3600 with tax relief. If she doesnt need this money (before age 75) she can keep it there to be passed onto you tax free. But the rules change at 75 so she might want to take it then.

ITs bought elsewhere, she could live on the natural income perhaps. That way short term ups and downs of the market would not affect her.

She needs to understand (and you can explain ) that there are other risks apart from investment risk. She needs to esp understand inflation risk and shortfall risk sitting on all that cash.