Swerve ball ....just need to check our exit plan!

Rodders2409

Hello All,

We're looking for a little more info following my original post "Life Swerve Ball....."...it ended up being a long thread (thanks for the help) but in the interest of not wasting your time I thought I'd summarise a little and add the new question.
Unfortunately, we need to manage and plan for a different life due to my better half's developing medical condition. Basically, we need to make the best of our time, meaning me being able to stop working at 55 or earlier if possible.
Following a great deal of info from this MSE Forum we’ve already started the process, but with only 2.5yrs to go, I’d like to get a heads up on the next bit.
I work full time (and like it!), my better half doesn’t. I have full SP contributions and she almost has but no longer works.
Main ‘live’ Pension – SUN Aegon GrowthTkrFlexTgt2021Pn ARC = £252K
2 x AVIVA with profits = £80K
AVIVA Managed fund = £11K
HL SIPP = £35K

Contributions
AEGON = £4100 per month (£3800 me / £300 company)

Property rental income = £7K net in her name.

Plan
Reduce work to 3 days to get some balance and time, maintain £2000 monthly contributions to Aegon and £2880 annual HP SIPP payment for my other half.

At 55 take 25% TFLS, use that to bridge for 12yrs until SP starts, supplemented by the £7K rental income, and a 4% drawdown of the 75% balance. Hopefully this gives us about £28K p/a.

I could also continue to work part-time if really required.

Questions – should I be considering transferring to another Pension fund with lower risk so close to needing to draw on it? This AEGON product seems to hold 75% Equities and seems to have provided a 9% gain in the last 6months…is there a better fund ?.....

I’ve seen Vanguard LS60 as a possible mainstream option….worth looking at in my situation?

Albermarle

This AEGON product seems to hold 75% Equities

It is largely down to your personal attitude to risk . At 53 you still have quite a long way to go ( hopefully) so a high equity/risk/potential growth fund makes some sense IF you can emotionally cope if it dropped 25% overnight and sit it out until the next upturn.
The usual advice on here is to have enough cash to fund yourself for a couple of years if the above happens , to give time for your fund to recover . You do not mention if you have any cash savings ?
If the above seems a bit scary then you need to change to a fund with less % equities. Or a more balanced mix of funds

Rodders2409

Thanks Albermarle,

We are using a chunk of savings to remodel the home to accommodate, my better half's developing medical condition, but should have approx £40K left in a combination of Cash ISA's and savings accounts.

Understood the need to assess risk and in general I've typically been OK with a slightly higher than average risk, and don't know enough to determine if 75% in Equities is a good thing.

Rodders2409

Also, I have increased my Sal Sac to the extent it drops me to below the HRT threshold to provide better efficiency, but I think I had been advised that there's another step you could take dropping down to a level which is even more beneficial tax wise...is this correct or have I miss understood?

Thanks.

Albermarle

Well if you drop below the HRT level you will still get 20% tax relief ( obviously not as good as 40% but still a benefit) and with salsac some NI benefit . I am not aware of anything else but could be wrong.

Regarding risk and investment , if you go onto most pension providers websites they usually have some kind of information about risk and investments and will do a simple risk profile for you.

Rodders2409

Thanks again,

I scanned through previous threads and found that if you drop to minimum wage then there is another tax benefit to be gained. Tha's on the basis that I'd use cash top up from savings to live day to day.