63 in a few months

Thrugelmir

redmalc wrote: »

It’s a very difficult decision whilst I sit in Tenerife listening to all of the retired couples telling me they are here for two months

Do you want to spend 2 months of the year on Tenerife? Far more interesting places to visit and things you could do in my personal opinion.

drumtochty

Do you want to spend 2 months of the year on Tenerife? Far more interesting places to visit and things you could do in my personal opinion.

The poster was not asking for holiday destination advice.

drumtochty

Spreadsheetman wrote: »

Retirement isn't un-doable provided you have engineered your life to live on 2 x SP and whatever can be safely drawn from the £600k-ish investments. That's £27k-ish assuming full new SP @ £8k5 and 3% drawdown. (I'm more pessimistic re future equity returns).

You'd also need to fill in the shortfall until SP can be drawn (3 years for you, 4 years for your wife) so that's maybe another £60k to find.

There's a reasonable amount of cash at £140k to cover lumpy expenses and stock market crashes.

So the question is - can you live happily under £30k pa? What are your current essential expenses?

With a 3% return on capital and assuming your 2 x £8.5k state pensions as you surmised and the fact that 25% of the pension and the S&S ISA are both protected from income tax. Also the unprotected shares should be moved into an S&S ISA but even if not, there will be little tax if any to pay.



That suggests a joint retirement income of nearer £34k a year unless you are putting in an other safety factor for possible reduced returns on funds. No allowance has been made for any possible interest on their cash.

Spreadsheetman

drumtochty wrote: »

With a 3% return on capital and assuming your 2 x £8.5k state pensions as you surmised and the fact that 25% of the pension and the S&S ISA are both protected from income tax. Also the unprotected shares should be moved into an S&S ISA but even if not, there will be little tax if any to pay.

That suggests a joint retirement income of nearer £34k a year unless you are putting in an other safety factor for possible reduced returns on funds. No allowance has been made for any possible interest on their cash.

Duh - yes, you are right. I don't know where that £27k came from. It's getting on for £34k less anything that has to be taken from the overall sum to bridge to SP ages and a small amount of tax.

atush

Immediately open a pension for the wife, 2880 PA- becones 3600 after TR.

Are you using your full annual allowance? Do you have any spare fromt eh prev 3 years?

Triumph13

A generous interpretation might be that the OP has only very recently acquired their high salary, after a lifetime of much lower paid work, and that they've been saving 75% of it to build up their retirement funds. In that case they'll probably be fine.
If, on the other hand, they've had that kind of high salary for years and only saved a tiny percentage of it, then they are in for a very nasty shock.
I'm going to hope it's the former.

Thrugelmir

drumtochty wrote: »

The poster was not asking for holiday destination advice.

Precisely. Retirement is a personal choice. There's no right or wrong answer to the question. My observation was rhetorical.

enthusiasticsaver

You have £746k of cash/investment assets but if you have no DB pension then this may have to last you 30 years. Do you both qualify for full state pension? Have you obtained quotes?

The first question to ask is how much do you need to live off each year/month? £130k is a large salary to replace but if you have been saving a lot of that you may be able to live on a lot less. We worked out that our required income is £2500 net each month and many people come up with that if they are mortgage free. Some can live on less, some need a lot more. It depends on your lifestyle and aspirations for retirement.

Will you be downsizing your house or moving to another area and if so how much capital would you relinquish?


The general drawdown figure is 3 to 4% but this will only get you £22380 so you will need to draw down on the capital each year if you need more than that to live off. To make your income more tax efficient you may like to look at investing some in a SIPP in your wifes name but it depends on whether she is still working. If not, there is a maximum amount of £2880 (£3600 with tax refund) she can invest annually until 70. Otherwise the most you can draw from your personal pension without incurring tax will be the PA limit which I think is around £12k per annum from April. Of course you could take any further funds you need from the cash or the ISA. Really you should be looking to maximise both personal allowances which means getting your wifes income to around £12k too from a pension. If she is no longer working though it may be difficult to get too much into her name now.

kidmugsy

Thrugelmir wrote: »

Do you want to spend 2 months of the year on Tenerife?

Certainly not the hot months. A week or two in Jan and Feb might be OK

drumtochty

She can put £2,880 PA into a pension up to the day before her 75th birthday not up until 70.


I think a good amount of the shares not tax wrapper protected should be and also move a good portion to his wifes name.


I think as has been hinted at by your comments that a trick has been missed in the recent times in not putting money in the wifes name in a pension. All things being equal but we do not know all the details.



My calculations show that the taxable part of the SIPP will only pay tax of £700 pa on £7,500 pa income assuming a 3% investment return. At £2,880 a year contribution for the wife going back say 10 years that would have with some growth amounted to say a £50k pot with the tax relief of £720 a year which would give an income of £1,500 a year and a tax reduction to the husband of £300 a year in income tax.


That is better than a poke in the eye with a stick but the overal tax bill would go down from £700 pa to £400 pa, not a great deal at the end of the day.



On the other hand he would have saved money by not paying 40% tax on that money when it went in to his pension.


He has not done too bad at the end of the day.