Retirement drawdown

earlybirdsunshine

Hi, I am 56 with a retirement fund of ~£550,000. I am struggling to see where it is possible to convert to a pension as the annuity rates a shocking at the moment. This leaves me with the option of leaving the pot of monies invested and drawing down a monthly "income" from the investment.


Any ideas of good products with low charges ?
Or other ideas (tax efficient ideas) that might leave me sitting pretty in retirement ?!

Linton

earlybirdsunshine wrote: »

Hi, I am 56 with a retirement fund of ~£550,000. I am struggling to see where it is possible to convert to a pension as the annuity rates a shocking at the moment. This leaves me with the option of leaving the pot of monies invested and drawing down a monthly "income" from the investment.

Any ideas of good products with low charges ?
Or other ideas (tax efficient ideas) that might leave me sitting pretty in retirement ?!

I assume your money is currently held in a pension....


Drawdown is at the moment diy rather than a product as such. You invest the money within a SIPP or personal pension and sell investments, or take dividends/interest, to generate sufficient cash to drawdown the income you require. It is up to you to manage the process.

The key issues are what you should invest in and how much you should drawdown. You would probably want to increase your income with inflation and make sure you dont use up all your money before you die.

If you have no experience of managing your own investments, for a pot as large as £550K I suggest you consult a local IFA.

AnotherJoe

earlybirdsunshine wrote: »

Hi, I am 56 with a retirement fund of ~£550,000. I am struggling to see where it is possible to convert to a pension as the annuity rates a shocking at the moment. This leaves me with the option of leaving the pot of monies invested and drawing down a monthly "income" from the investment.

Any ideas of good products with low charges ?
Or other ideas (tax efficient ideas) that might leave me sitting pretty in retirement ?!

That's what many of those in your age range do. That's what I'm doing.
As per Linton, if you have no experience managing sums of this order, see an IFA to advise you.

Thrugelmir

At a relatively young age. Annuity rates aren't going to be that high. After all you may live another 40 years yet. At the moment 30 year gilt yields are just over 1.5%. Below the rate of inflation. There's unlikely to be any easy answers to your conundrum for the foreseeable future. With QE giving assets prices a large (possibly temporary boost) over recent years.

xylophone

I am 56 with a retirement fund of ~£550,000.

Do you mean that this the current value of the investments within your pension fund?

Are you now seeking to stop work altogether?

Have you obtained a new state pension forecast?

https://www.gov.uk/check-state-pension

Does your current provider facilitate drawdown?

Had you considered consulting an Independent Financial Adviser?

https://adviserbook.co.uk/ You would tick "confirmed independent" and then other specialisms required.

ratechaser

I had the same question to myself yesterday, as I will definitely be looking at drawdown as an option for my own pot, currently around 600k so similar to you (although I'm a fair few years younger ). None of my existing pension schemes offer drawdown right now so I took an idle look at what is out there.

So although I wouldn't presume to advise you, yada yada... MSE suggests that Interactive Investor is a good lower cost option for larger pots, with a flat £120 annual platform fee.

And on the subject of 'other tax efficiencies', I believe there are countries within Europe you can emigrate to and potentially expatriate your entire pension fund tax free. Portugal for example. I've not looked closely at this as I'm at least 12 years from early retirement and a lot can change in that time, but I'm well aware this is a complicated and highly technical area that absolutely would need professional advice and planning.

Huge appeal to me in principle though - if I was able to move my pension there, while my wife kept hers in the UK... and live the expat lifestyle.

Again, not advice, obviously...

xylophone

Huge appeal to me in principle though - if I was able to move my pension there, while my wife kept hers in the UK... and live the expat lifestyle.

Is that you living the expat lifestyle while Mrs R languishes in the UK?

Perhaps she'd turn it the other way about....:).

earlybirdsunshine

Thanks for all of your advice. Its about where I am in my thinking.


I am keen to steer clear of IFA as I think investment in simple tracker funds over time will probably yield as much fund growth as a professional. I agree about annuities/QE, thats years away returning to a reasonable level. One thought I had is to live off the fund growth + some capital drawdown until I reach State Pension Age, then opt for buying an annuity with some of the fund providing rates are in my favour. The advantage I see in this is that it takes the worry out of fund management as the ravishes of age kick in !

earlybirdsunshine

Should have said tracker + bond funds (not just trackers)

bostonerimus

You can't really develop a drawdown plan until you know how much income you need. So the starting point is to do a budget.

xylophone

as the ravishes of age kick in !

You should be so lucky!:)

Ravages now....not so lucky!:eek: