It's time to start digging up those Squirrelled Nuts!!!!

pensionpawn

Stubod said:

..I (we) still find it difficult to "spend spend spend", even though our long term xcel budget planning sheet suggests we can probably spend twice as much as we are now, (and we don't have anybody to leave it to).

Like Seashell, we still look for "value for money", but a lifetime of saving is a hard habit to break. When we switched from saving to spending mode I changed the emphasis on our planning spreadsheet from an annual "savings target", to highlight the difference between what we originally budgeted to spend (based on some fairly pessimistic projections), and what we actually spend,

I find this helps focus the mind a little as each year for the last 4 years we have been retired is showing a significant surplus! (even the pre covid), so I am not sure even that strategy is working how I intended, but I am sure we will get there!. 

Do you withdraw your personal allowance each year? If that is sustainable for you anything that you don't spend could A} be ploughed back in up to £2880 a year, B} consolidate your cash reserves C} put into a SAS ISA with the same funds as your pension.

quirkydeptless

Sea_Shell said:

It's like a "Magic Porridge Pot" strategy!!

The Story of Sea Shell and the Three Bear Markets

Once upon a time, there was a little girl named Sea Shell. She went for a walk in the magic money tree forest. Pretty soon, she came upon a portfolio.

At the table in the kitchen, there was a Laptop showing three bowls of investments. Sea Shell was hungry.
She tasted the equity from the first bowl.
"This equity is too hot!" she exclaimed.
So, she tasted the cash from the second bowl.
"This cash is too cold," she said.
So, she tasted the last bowl of bonds.
"Ahhh, these bonds are OK, but there's something wrong with taste.
However over the coming decades of retirment, she said happily ate it all up

Sea_Shell

quirkydeptless said:

Sea_Shell said:

It's like a "Magic Porridge Pot" strategy!!

The Story of Sea Shell and the Three Bear Markets

Once upon a time, there was a little girl named Sea Shell. She went for a walk in the magic money tree forest. Pretty soon, she came upon a portfolio.

At the table in the kitchen, there was a Laptop showing three bowls of investments. Sea Shell was hungry.
She tasted the equity from the first bowl.
"This equity is too hot!" she exclaimed.
So, she tasted the cash from the second bowl.
"This cash is too cold," she said.
So, she tasted the last bowl of bonds.
"Ahhh, these bonds are OK, but there's something wrong with taste.
However over the coming decades of retirment, she said happily ate it all up

Brilliant, thank you!!!
❤️

Stubod

pensionpawn said:

Do you withdraw your personal allowance each year? If that is sustainable for you anything that you don't spend could A} be ploughed back in up to £2880 a year, B} consolidate your cash reserves C} put into a SAS ISA with the same funds as your pension.

...At present we are living off a combination of Mrs Stubods pension, which is taxed as it's just over the £12.5k limit, (I have kindly donated some of my tax allowance). + from me some (very) casual work which pays maybe a couple of grand a year.

The rest then comes from our S&S Isa's which are tax free, plus whatever "interest" we get  from Premium bonds.

We probably have 50% in SS ISA's, 30% in NSI index linked bonds and PB's, and the balance in the best cash accounts we can find. We currently drawdown about 4.5% from our S&S's ISAs, (mainly to support our accounts that need a "minimum" income per month), then at the end of the month we return any "surplus" to our best interest paying cash accounts.

In another 2-3 years we will then get 2 state pensions + my own (non index linked) DB pension at which point our drawdown from S&S ISAS and SIPPS, may well go down to nothing?

Our IFA thinks we have too much in "cash", but I feel happy with our current split and don't really want to commit anymore to investing, although I have considered putting in the max we can (£2,880) for a SIPP each year?...(Although I am not sure about the logic of taking money out of an ISA, and putting it back into a SIPP and paying another fee for the privilege?)

pensionpawn

Stubod said:

pensionpawn said:

Do you withdraw your personal allowance each year? If that is sustainable for you anything that you don't spend could A} be ploughed back in up to £2880 a year, B} consolidate your cash reserves C} put into a SAS ISA with the same funds as your pension.

...At present we are living off a combination of Mrs Stubods pension, which is taxed as it's just over the £12.5k limit, (I have kindly donated some of my tax allowance). + from me some (very) casual work which pays maybe a couple of grand a year.

The rest then comes from our S&S Isa's which are tax free, plus whatever "interest" we get  from Premium bonds.

We probably have 50% in SS ISA's, 30% in NSI index linked bonds and PB's, and the balance in the best cash accounts we can find. We currently drawdown about 4.5% from our S&S's ISAs, (mainly to support our accounts that need a "minimum" income per month), then at the end of the month we return any "surplus" to our best interest paying cash accounts.

In another 2-3 years we will then get 2 state pensions + my own (non index linked) DB pension at which point our drawdown from S&S ISAS and SIPPS, may well go down to nothing?

Our IFA thinks we have too much in "cash", but I feel happy with our current split and don't really want to commit anymore to investing, although I have considered putting in the max we can (£2,880) for a SIPP each year?...(Although I am not sure about the logic of taking money out of an ISA, and putting it back into a SIPP and paying another fee for the privilege?)

It's good to keep a healthy amount of cash to ride out future dips in performance and / or to give you the option to invest in funds that are performing well. Returning money to your SIPP will attract tax relief to the tune of £720 pa max, which across a couple is £1440 pa. The cost of a nice holiday for some! This reinvestment could keep a pot sufficiently topped up to sustain a preferred drawdown rate until you're beamed up however if you've reached your personal allowance any extra is of course taxable on the way out. You mention that your DB pension is approx 30 months away. If that isn't above your personal allowance paying into a SIPP now could help increase your own future drawdown income. It's horses for courses!

Stubod

Hi Pensionpawn and thanks for the feedback. I am aware that any "sipp" money gets tax relief added, but then, (assuming you are a tax payer), you get taxed when you take it out. I did suggest to our IFA that perhaps I should start taking my SIPPS out now as I will not be paying any tax for the next couple of years, but they thought it was better to leave them alone a drawdown our ISA's?...not quite sure of the logic there, but will go with the flow...(don't have that much in Sipps anyway, mainly ISA's accrued from the days they were Peps!)

Sea_Shell

Stubod said:

Hi Pensionpawn and thanks for the feedback. I am aware that any "sipp" money gets tax relief added, but then, (assuming you are a tax payer), you get taxed when you take it out. I did suggest to our IFA that perhaps I should start taking my SIPPS out now as I will not be paying any tax for the next couple of years, but they thought it was better to leave them alone a drawdown our ISA's?...not quite sure of the logic there, but will go with the flow...(don't have that much in Sipps anyway, mainly ISA's accrued from the days they were Peps!)

Surely it's a no brainer to pull your PA plus 25% tax free (if not yet taken) out of your sipp for those years you don't use your PA.

Use it or lose it!!

Leave the ISA alone.

Stubod

Sea_Shell said:

Surely it's a no brainer to pull your PA plus 25% tax free (if not yet taken) out of your sipp for those years you don't use your PA.
Use it or lose it!!
Leave the ISA alone.

..yes I thought that??

cfw1994

Sea_Shell said:

What percentage of equities would you all have in our position.   
Our pot is now pushing £600k and we're currently sitting at about 60% equities across the whole portfolio (including cash).
As we move into the initial drawdown stage, for the next 10 years, would you reduce this %, keep it pretty much the same, or  maybe even increase it?
Hubby is erring towards reducing it to nearer 50%.
Thoughts?

I'm guessing the number went up because 2020 weirdly worked well?  (as it did for us, at least)
We're sort of struggling with the same question....& I don't think there is a clear and obvious answer.   
My head tells me markets remain "frothy", and last year's correction wasn't deep enough.....but then that same head says "we can see light at the end of the COVID tunnel, things *will* open up more, and. ergo, markets will continue to rise for maybe another year or two.

Given how things have worked for you, my vote is on you having the casting vote, and I suspect likely leaving it as things are
I also suspect either decision will work okay.  Rock, paper, scissors to decide?

pensionpawn

Sea_Shell said:

Stubod said:

Hi Pensionpawn and thanks for the feedback. I am aware that any "sipp" money gets tax relief added, but then, (assuming you are a tax payer), you get taxed when you take it out. I did suggest to our IFA that perhaps I should start taking my SIPPS out now as I will not be paying any tax for the next couple of years, but they thought it was better to leave them alone a drawdown our ISA's?...not quite sure of the logic there, but will go with the flow...(don't have that much in Sipps anyway, mainly ISA's accrued from the days they were Peps!)

Surely it's a no brainer to pull your PA plus 25% tax free (if not yet taken) out of your sipp for those years you don't use your PA.

Use it or lose it!!

Leave the ISA alone.

Indeed, max your personal allowance (x 2 for a couple) every year. If you don't need (spend) the full £12k5 drop £3k6 back in yours or your other half's pension, or top up a SAS ISA in the same funds that were performing well for your pension (although diversification of risk should also be considered...). Lastly, into cash for poor performance periods. However always max your personal allowance if your pot can take it.
Personally everything we have is going into my wife's SIPP to make her last three years contributions 100% of salary. Why, so that we can max her personal allowance and take a min pension of £25k tax free each year. Actually she's going the UFPLS route taking us up to £29,330 tax free pa.