Ready for retirement

MallyGirl

You can add the £2880 until she turns 75

Same allowance as you - currently £11,500

crv1963

stephen0002002 wrote: »

And when it comes to taking her sipp pension (drawdown?) can I ask what personal allowance would she have ? Would she have her own allowance like mine (£11,500).

If you both wanted you could transfer part of her personal allowance to you to reduce your tax bill when you take the pensions.

jamesd

stephen0002002 wrote: »

The 9K pa is what my F.Salary pensions would pay me "now" at 62.
Spouse gets 50% of F.Sal pension - ( but with a TV fund its 100% ).
Yes FS is index linked.

TxValue (of £250k) in theory would last a long time.
I'm 62 so if it lasted 20+ years I'd be 82 then.

£250k in exchange for £9k of income looks like a good deal, since the income is only 3.6% of the capital.

There's a cheap and easy way to "buy" more inflation-linked income: deferring claiming your state pension. It's increased 5.8% for each year of deferral. Assuming yours starts at £8,000 a year that's an increase of £464 for each year you spend £8,000 from the pot to substitute for the state pension. You can't practically get to £9k this way because that takes 19 years but you could get a lot of the way there if you both deferred.

Since there are two final salary pensions you should look at them individually because:

1. the transfer value paid vs the income and benefits given up can vary a lot between different pensions
2. it might pay to transfer just the one with the best transfer value and keep the other one to provide a top up guaranteed income above the state pension and deferring.

If you were to take a £250,000 transfer value and use the Guyojn-Klinger drawdown rules you could expect to start on at least £12,500 instead of £9,000. That would decrease if you happen to live through unusually bad investing times =ir increase in good times, this willingness to be flexible about at least some part of your income is at the core of the transfer approach. You can limit the variation potential in many ways, including state pension deferring, spending money on annuities from time to time or just picking a lower starting income.

Using trackers is often an excellent choice, particularly for those not already very familiar with investing.

jamesd

stephen0002002 wrote: »

I'm unsure if its an idea to use the PP int-free part as our income on its own for the first year ?

You have an income tax personal allowance. Use it or lose it, so use it. You don't have to actually spend the money but be sure you take enough taxable to fully use the allowance.

stephen0002002 wrote: »

The int free credit cards still have 12-months to run with int-free time so I may keep them for now.

Good move, making money while you're paying nothing to have use of it.

stephen0002002 wrote: »

I feel our retirement budget is high tbh (32K ?).
But we like to travel (breaks) and it is the first year of retirement.
So we don't want to get dreary :-)

It appears to be well below what is sustainable so I don't think calling it high in the context of the assets you've accumulated is right. Assuming you use the Guyton-Klinger drawdown rules a couple of state pensions of £8,000 each plus 5% or more of £500,000 takes you to £41,000 a year and you can pick a lower success rate and start higher if you're willing to take bigger drops if you happen to live through worse than average investing times in retirement. Starting at £50,000 and planning to decrease over time wouldn't be unreasonable even ignoring anything other than the state pension that your other half might add.

It's also worth knowing that spending tends to decline in retirement, more for those like you with lots of money. Not due to lack of money, it just doesn't get spent and ends up in savings instead. Nothing wrong with planning to do this from the start.

Well worth looking over Drawdown: safe withdrawal rates and experimenting with cfiresim and your guaranteed and variable potential incomes.

stephen0002002

TY for those thoughts.

My plan was to transfer both FS pensions before I started this thread.
I had run lots of excel growth scenarios for the next 20-30 years and things seemed pretty good, given a fair wind.

My thoughts were, with reasonable luck and growth (nothing greedy and even though there's no crystal ball). Growth "could" be better than the index linked or 1% to 3% (capped) in my 2 x FS funds.

Then after the earlier replies suggesting caution, I started to think again.

So it is good to get another perspective, TY, that falls more inline with my earlier thoughts, and good food for thought.

My only concern then was that I don't have experience of funds like index trackers, as yet. Which is why I was asking for some pointers.

Thank you for the thoughts on Guyojn-Klinger drawdown rules.
That's very useful reading.

So I'd like to ask, if you were me would you go for the transfer values on both FS's. Or maybe defer as I said for at least 12 months until I get a better idea how the market works. The responsibility is mine of course.

My IFA cuts in in a few days and I would like to make some decisions asap. Your thoughts and any other pointers are really helpful and appreciated. TY.

jamesd

stephen0002002 wrote: »

So I'd like to ask, if you were me would you go for the transfer values on both FS's.

I'd want to know the benefits and transfer values for each because my answer could be different for each. Then I'd want to know how much you value certainty - transferring just one could be good - and how far the state pensions will go compared to your minimum needs.

You seem to place a high value on the flexibility to spend more in early years and that combined with typical current transfer values suggests that ttransferring is likely to be a good match.

pip895

I would talk to an IFA who can advise you regarding a DB transfer but keep an open mind - you may well be better off keeping both.

The transfer values don't seem that great. I have a DB pension that if I took it now would yield just over 9k/annum but the transfer value is over 500k. I am younger at 56 and female which would both tend to support the value, but even so its a big difference.

ffacoffipawb

pip895 wrote: »

I would talk to an IFA who can advise you regarding a DB transfer but keep an open mind - you may well be better off keeping both.

The transfer values don't seem that great. I have a DB pension that if I took it now would yield just over 9k/annum but the transfer value is over 500k. I am younger at 56 and female which would both tend to support the value, but even so its a big difference.

Being female should make no difference, transfer values may be gender neutral nowadays?

happyandcontented

Does anyone (who is not an IFA) wonder if the reason IFA's won't come out and say go ahead and transfer from a FS scheme is actually more to do with their possible liabilities down the line than the best interests of the customer?

We have seen 3 correctly qualified advisors and of the three I was a categoric no without even looking at the details of the scheme, 1 was a yes, but we weren't sure of him on a personal level. The third said he would look at the detail and discovered that spousal benefit only exists if the pension is in payment which was a blow to us. We sensed a reluctance to transfer although he was not categoric, and he has almost advised against paying the fees to have an in-depth analysis to facilitate a transfer.

We swing from transferring to not......

Once you have paid for the required advice is it necessary to follow it or have you done what is needed to transfer?

jamesd

You have to get advice and a document of some sort saying that you have taken advice but you don't have to follow that advice. The scheme you're transferring from will ask to see proof of advice. Some places won't agree to receive a transfer without advice, others will.