Opening a SIPP and investing in Vanguard LifeStrategy 80

swindiff

Cheers Alex
Wife is 48 same age as me. Both aiming to retire at 60. She has an existing small NHS pension worth about £1500 per year. She is currently in the LGPS and has been for about 18 months but is going back into the NHS within the next couple of months so this will have to be transferred into the NHS pension.
At 60 we estimate her pension will be about £5k per year so currently £7k short of her tax free allowance. We are therefore looking to save into a pension to provide up to that £7k totally tax free until her state pension kicks in. She will be entitled to full state pension at 67ish

Alexland

Might be worth targeting a SIPP value above 7k pa to take the 25% tax free income too? Also depends if you would intend to use marriage allowance if it still exists in future. Still hard to be too precise with so many uncertainties and being reliant on investment performance.

swindiff

Have thought about that, we could at today's values have about £65k in a SIPP which she could take out totally tax free. 25% lump sum, then £7k a year for 7 years.

However, assuming 5% growth/year she would need to put away £260/month, £325 with tax relief.

That might be a bit of a stretch for us at the moment, but we could maybe increase contributions in the future.

Cheers for all the advise

Alexland

Remember it's growth above inflation and fees that count assuming that the tax thresholds get inflation adjusted. For example 5% market growth, 0.5% fees, 2% inflation would only give 2.5% real growth.

With marriage allowance she could transfer circa 10% of her tax free income allowance for you to use.

Alex.

swindiff

I did not realise you could do that. So are you saving than my tax tree allowance could go from £12000 to £13200? Assuming it still exists in 12 years.

Alexland

https://www.gov.uk/marriage-allowance