IFA or Psychologist?

Pat_Fleming

atush wrote: »

Basically it has to come out somehow. So you'd want it to come out w/o tax (ie does your OH have any PA left? She could draw that each year w/o tax) or to pay as little as possible. Money drawn from the pension doesnt need to sit in cash, or be spent. You can put it in a S&Sisa and even in the same funds if you like. Meaning then income/capital can be tekn whenever you like w/o further tax.

So you mean I should start to draw the SIPP (whether I need it or not) paying the necessary basic rate tax on withdrawals and reinvest it in an ISA. Basically removing just tax liability on any future growth?

atush

Possibly. It could be better than paying HRTax later should you need a large chunk. Esp for your wife if she is earning under her PA she should take some and not pay any tax on it.

But one reason not to take money out, is that it would form part of your estate (whereas in the pension it is outside of your estate). But if you have no one to leave it to, then that is less of a concern as you wont be worried how much of your excess gets tax paid on it?.

Linton

Pat_Fleming wrote: »

So you mean I should start to draw the SIPP (whether I need it or not) paying the necessary basic rate tax on withdrawals and reinvest it in an ISA. Basically removing just tax liability on any future growth?

The issue isnt really the tax on the extra growth as in the end it doesnt matter - assuming you stay in the same tax band you end up with the same after tax amount whether you pay the tax before or after the growth (80% X ROI = ROI X 80%).



The problem is staying in the same tax band. For example after you start taking your State Pension your opportunity to drawdown money tax free is severely restricted. Or for the more wealthy if you leave drawing down until too late you may not have enough time to access all of a pension pot without paying higher rate tax. So all other things being equal and depending on your current and projected income it could be most beneficial to drawdown as much as you can as soon as you can up to the limit of your current tax band.

fred246

I have retired much earlier than yourself. I too have a DB pension but not as good because I finished early. That is the fantastic part that many people don't have. I still have children at university. Most people wouldn't retire early in my situation. The only reason I have is spreadsheet planning. In the early years my expenditure is much greater than my income. Scary. Other pensions then kick in and my losses reduce. My income is greater than expenditure when state pension kicks in. Mentally you have to be flexible. Any part time work would tip the balance. Minimum wage jobs are easy to find and the work can be interesting. Do you need two cars in retirement?

OldMusicGuy

Linton wrote: »

Changing from pension accumulation to decumulation is a serious step that can be difficult to cope with. The risk is that you die without having done all the things you would have wanted to do despite leaving a fortune. Or, worse, you run out of money too early. For me the answer is in planning.

This is your answer. You need to step back and plan what you want to do with your lives for the next 30 years or so. That means sitting down together and deciding together how you want to spend your remaining years on this planet. Once you have done that, you then need to make a financial plan for how you will use your funds over the next 30 or so years, and plan for possible scenarios, like one or both of you needing later life care, one of you pre-deceasing the other etc.

My situation was similar to yours, although you are in a far better situation than me. I retired 6 months ago at 60 with no DB pension. I have a large SIPP but I can tell you that the mindset shift in going from a high paid job to having no income but relying on a large pension pot to provide a reasonable lifestyle for two people for an unknown number of years was pretty big.

In my case, the shift was made easier because I wanted to take early retirement due to pressure of work. Like many people, I just kept working with no definite end date in mind because I hadn't thought seriously about retiring (the "one more year syndrome"). But as work became more and more stressful, I realised I had to think about retiring earlier than planned for the sake of my health and my family. However, I retired two years after I made the decision to go early, so I had plenty of time to think about it. My wife wanted me to retire because she could see how work was damaging me.

Your situation is similar but different in two ways. First, the decision was forced on you so you haven't done the preliminary planning and been thinking about it for a couple of years like I did. So it's likely to be a big shock to the system. Second, you have a good DB pension. That, plus your SPs, gives you a guaranteed income floor on its own that ought to be able to support a pretty comfortable lifestyle with no risk. Imagine your uncertainty if, like me, your lifestyle depended very heavily on making your SIPP investments last for 30 to 40 years. It's taken me about 5 years of reading and researching about investing to become comfortable with how I should do that (which I now am btw).

So like Linton said, you need to plan. You might find this thread of interest https://forums.moneysavingexpert.com/discussion/2840632/early-retirement-wannabe, although recently it's gone off track a bit. It talks a lot about how people make the decision to retire early, and why they do. You might also find this thread of interest: https://forums.moneysavingexpert.com/discussion/2146737/pensions-planning-the-number&highlight=number because it talks about the level of income people need to support their desired lifestyle in retirement.

EDIT: I just read what Triumph13 posted, "You don't NEED to get the best or most efficient solution financially." That is so true. All you need to do is to protect what you have rather than make it grow significantly. I have adopted a low-cost, low-risk investment strategy in decumulation because all I need to to do is to get my investments to match inflation. We are spending it now, not saving it.

westv

And this thread would be usefuil too.


https://forums.moneysavingexpert.com/discussion/5466114/drawdown-safe-withdrawal-rates&highlight=drawdown

Pat_Fleming

fred246 wrote: »

Any part time work would tip the balance. Minimum wage jobs are easy to find and the work can be interesting. Do you need two cars in retirement?

I am doing a bit of unpaid voluntary work, mainly for friends rather than organisations but that may change in the future.


WRT to 2 car bit. We live in a very rural area in a village with no shops, pubs or other amenities. The only public transport is the school bus & a once weekly service to the local town on market day! Two cars are a necessity unless we are going to be bound together.

Ganga

Pat_Fleming wrote: »

I am doing a bit of unpaid voluntary work, mainly for friends rather than organisations but that may change in the future.


WRT to 2 car bit. We live in a very rural area in a village with no shops, pubs or other amenities. The only public transport is the school bus & a once weekly service to the local town on market day! Two cars are a necessity unless we are going to be bound together.

Could your wife not travel with the gardener?:rotfl::rotfl::rotfl:

With the finance you have/will have i do not think running two cars will drive you to the poor house.:)

Pat_Fleming

Ganga wrote: »

Could your wife not travel with the gardener?:rotfl::rotfl::rotfl:

He's currently digging a large hole in the back yard. Poor fool thinks it's for a pond. :eek:

Slinky

Pat_Fleming wrote: »

I am doing a bit of unpaid voluntary work, mainly for friends rather than organisations but that may change in the future.


WRT to 2 car bit. We live in a very rural area in a village with no shops, pubs or other amenities. The only public transport is the school bus & a once weekly service to the local town on market day! Two cars are a necessity unless we are going to be bound together.

Do you have any plans to move to somewhere where you are less reliant on driving? Seeing that you have little in the way of backup in public transport this may be worth considering. My neighbour who is in her early 70s slipped over on the ice last December and has been unable to drive since, she's only just about walking now after an operation. Her husband still drives but isn't in the best of health himself.


We're moving to an area with good transport links that is walkable to the facilities we need/want in retirement. We're a long way off their age but we hope this move will be the last one unless one downsizes into a retirement flat, of which there are several close by where we are moving to.