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

LV_426

cfw1994 said:

LV_426 said:

Dead_keen said:

I can't see that I'd ever want to have access on a regular basis (I have my spreadsheets that do the same thing - including goal seek and monte carlo for investment returns).  But I could see it being very useful for people wondering if they could retire and how much they could spend if they did.

Exactly how I used it - to answer my questions about when I could realistically retire. And it did that extremely well. 

I’m a bit nervous to dive into that….it might tell me I went 2 years too soon 🤣

That's a possibility
I thought the asset burndown graphs were really interesting, and revealing.

Sea_Shell

Well folks, it'll soon be time for the final update of the year, along with a new shiny spreadsheet for 2022.

With all of our Christmas shopping now done, and just 2 more "normal" food shops to do, we look to be on for an annual spend of £17,500.   I'll give a full breakdown over NY weekend.

Sea_Shell

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

It's not his biggest one, but it's the one we want to start DD on in April.

It's currently worth about £60k, but in an "old style" policy.

AWUI, he'd have to open a new "modern" sipp with Aviva, and then transfer in, before he can start to DD.

Once transferred, the plan is to crystallise the whole thing, and take the 25% TFLS (£15k to ISA), and then set up DD to start in the new tax year.  Funds for the 25/75% to be decided.   Monthly DD amount yet to be decided, too!   Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

This pot should last about 3 years, before he'd then transfer in his Aegon pension (currently at zero fee), worth £115k.


He's also still awaiting his HMRC tax rebate in respect of a smaller Aviva pot taken in September - £4200!   


*He wants to stay with Aviva, as he had great customer service for his small pension, and likes their platform/website.



I'm off for a run now, through the mist....yes, i've got my hi-viz, and i'll be sticking to the paths!!

Audaxer

Sea_Shell said:

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

It's not his biggest one, but it's the one we want to start DD on in April.

It's currently worth about £60k, but in an "old style" policy.

AWUI, he'd have to open a new "modern" sipp with Aviva, and then transfer in, before he can start to DD.

Once transferred, the plan is to crystallise the whole thing, and take the 25% TFLS (£15k to ISA), and then set up DD to start in the new tax year.  Funds for the 25/75% to be decided.   Monthly DD amount yet to be decided, too!   Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

This pot should last about 3 years, before he'd then transfer in his Aegon pension (currently at zero fee), worth £115k.

If taking out £1152 per month tax free, I think it would probably take just over 3 years to take drawdown the remaining £45k without paying any tax, so I'm not sure why that would result in paying more tax later?

Sea_Shell

Audaxer said:

Sea_Shell said:

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

It's not his biggest one, but it's the one we want to start DD on in April.

It's currently worth about £60k, but in an "old style" policy.

AWUI, he'd have to open a new "modern" sipp with Aviva, and then transfer in, before he can start to DD.

Once transferred, the plan is to crystallise the whole thing, and take the 25% TFLS (£15k to ISA), and then set up DD to start in the new tax year.  Funds for the 25/75% to be decided.   Monthly DD amount yet to be decided, too!   Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

This pot should last about 3 years, before he'd then transfer in his Aegon pension (currently at zero fee), worth £115k.

If taking out £1152 per month tax free, I think it would probably take just over 3 years to take drawdown the remaining £45k without paying any tax, so I'm not sure why that would result in paying more tax later?

Doesn't that depend on growth of the fund(s)?    If it grows, we'd be left with a balance that would eventually be taxable. 

At the end of the day DH has 10 years x personal allowance to get out as much as possible, for the least amount of tax, before his DB pensions kick in (and pretty much use up his PA).

So any DC balances left by then, WILL be subject to Income Tax, if drawn.

Time4T_Accounts

Sea_Shell said:

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

  Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

I tend to take the view that delaying payment of tax gives the ‘tax’ a bit more time to grow - it may not amount to a lot of money, but then this is MSE!

Sea_Shell

Steve_PL_too said:

Sea_Shell said:

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

  Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

I tend to take the view that delaying payment of tax gives the ‘tax’ a bit more time to grow - it may not amount to a lot of money, but then this is MSE!

Yes, that has crossed our minds.   But, any "extra" tax would be on growth.

Worse problems to have! 

zagfles

Steve_PL_too said:

Sea_Shell said:

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

  Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

I tend to take the view that delaying payment of tax gives the ‘tax’ a bit more time to grow - it may not amount to a lot of money, but then this is MSE!

If the tax rates are the same it makes no difference! The pre-tax amount is growing. So you pay more tax if leaving it in the pension but you aren't worse off.

£100 * growth factor * 0.8 = £100 * 0.8 * growth factor

Assuming growth is not taxed, ie in an ISA or using dividend/CGT allowances outside the pension.

Main thing is to make sure PA is all used, and higher rate tax is avoided.

Obviously any change in the basic rate of tax will change things.

michaels

zagfles said:

Steve_PL_too said:

Sea_Shell said:

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

  Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

I tend to take the view that delaying payment of tax gives the ‘tax’ a bit more time to grow - it may not amount to a lot of money, but then this is MSE!

If the tax rates are the same it makes no difference! The pre-tax amount is growing. So you pay more tax if leaving it in the pension but you aren't worse off.

£100 * growth factor * 0.8 = £100 * 0.8 * growth factor

Assuming growth is not taxed, ie in an ISA or using dividend/CGT allowances outside the pension.

Main thing is to make sure PA is all used, and higher rate tax is avoided.

Obviously any change in the basic rate of tax will change things.

The frozen personal tax allowance and high inflation may mean that it is not tax neutral - it may be worth paying all the basic rate tax now and filling isas.  Also tax, isn't the new social care tax going to be payable on pensions too, hence another incentive to draw out money now before the extra tax comes in.

zagfles

michaels said:

zagfles said:

Steve_PL_too said:

Sea_Shell said:

The other job on our list over the coming weeks, is to sort out DH's Aviva* pension.

  Either pay no tax now (£1152 inc MA), more later.  Or pay some tax now, on say £1300pm.

I tend to take the view that delaying payment of tax gives the ‘tax’ a bit more time to grow - it may not amount to a lot of money, but then this is MSE!

If the tax rates are the same it makes no difference! The pre-tax amount is growing. So you pay more tax if leaving it in the pension but you aren't worse off.

£100 * growth factor * 0.8 = £100 * 0.8 * growth factor

Assuming growth is not taxed, ie in an ISA or using dividend/CGT allowances outside the pension.

Main thing is to make sure PA is all used, and higher rate tax is avoided.

Obviously any change in the basic rate of tax will change things.

The frozen personal tax allowance and high inflation may mean that it is not tax neutral - it may be worth paying all the basic rate tax now and filling isas.  Also tax, isn't the new social care tax going to be payable on pensions too, hence another incentive to draw out money now before the extra tax comes in.

No, the new levy is not payable on pensions. It is payable by people with earned income above state pension age, ie people who don't pay NI now, but not on pension income. It's also paid on (unwrapped) dividends (the dividend tax rate has increased).

As long as the tax rates are the same, ie PA all used up and no HRT, pension or ISA is neutral. There are differences for stuff like inheritance, benefits etc of course.

Of course you could speculate that the govt will extend the levy to pension income. But I personally doubt it.