Life Time Allowance - Big Questions!

lisyloo

Early retirement?

Personally I would retire early rather than go over LTA, given that health, longevity is uncertain I think most people would.

ex-pat_scot

lisyloo wrote: »

Early retirement?

Personally I would retire early rather than go over LTA, given that health, longevity is uncertain I think most people would.

i see the LTA as a great threshold / target.
Once you hit it, then that should be the trigger to stop, if you are able.

It's certainly my broad strategy. I'm 2/3 of the way there with 4 years to go. (or it could be 5, or 6 years, depending on the whims of the investment gods).
If I got to LTA and was able to draw, then I see no reason why I wouldn't.

mark55man

if you are concerned about leaving the rump for inheritance purposes there are some specific rules about if you die crystallised vs uncrystallised and some loopholes about passing on within 2 years or after. I suggest that is a different set of investigations for you

Thrugelmir

ex-pat_scot wrote: »

i see the LTA as a great threshold / target.
Once you hit it, then that should be the trigger to stop, if you are able.

How secure are the underlying investments. As quickly as they have grown they potentially may fall back.

cfw1994

ex-pat_scot wrote: »

i see the LTA as a great threshold / target.
Once you hit it, then that should be the trigger to stop, if you are able.

It's certainly my broad strategy. I'm 2/3 of the way there with 4 years to go. (or it could be 5, or 6 years, depending on the whims of the investment gods).
If I got to LTA and was able to draw, then I see no reason why I wouldn't.

I absolutely agree with this!
A combination of more detailed understanding of the LTA and attending too many funerals over the past 18 months are my key driving forces.....

Good luck with your investments!

Thrugelmir wrote: »

How secure are the underlying investments. As quickly as they have grown they potentially may fall back.

This is, of course, true.....my spreadsheet lets me try to drop in example “corrections”.....the “sequence of returns risk” is pretty high on my radar, and is always a reason to work one more year.....but that itself is a risk (to enjoyment of life!!)

mark88man wrote: »

if you are concerned about leaving the rump for inheritance purposes there are some specific rules about if you die crystallised vs uncrystallised and some loopholes about passing on within 2 years or after. I suggest that is a different set of investigations for you

Any good links on this please?

ex-pat_scot

Thrugelmir wrote: »

How secure are the underlying investments. As quickly as they have grown they potentially may fall back.

There's a sensible argument to de-risk at that point: remaining in high risk investments when at or above LTA means that the upside is heavily taxed, and you are exposed to the higher volatility and downside risk that an equity-heavy approach brings.

Frankly that's a strategy for 4 or 5 years' time, and needs to be considered alongside other assets, including SP x 2, wife's modest pension etc.

One approach is that of the "ladder" - arranging pots to de-risk in phases. Traditionally this would be staggered maturity fixed term bonds, or incremental purchases of annuities as you age.

Frankly I'm hoping that my pot will need to last me 35 years +, and a few years longer still for Mrs XPS. Accordingly, with such a long term horizon, I will want the majority of my assets to be fully invested for the long term (which suggests an equity approach), with a smaller proportion in lower risk to match my anticipated near term cash requirement.

There's no right answer.
2 x SP is about £17,500 which covers the basic running costs of a couple (assuming mortgage free house). That's a nice guaranteed base, and can be commuted with a generous uplift to provide a strong later-life base.

mark55man

cfw1994 wrote: »

Any good links on this please?

No -I remember reading something a year or so ago but oculdn't refind it - I was rather hoping one of the experts have one

zagfles

mark88man wrote: »

No -I remember reading something a year or so ago but oculdn't refind it - I was rather hoping one of the experts have one

This is quite a good summary of death benefits and case studies. The last one is the most interesting. As usual it's "for advisers only", so be warned! https://www.investcentre.co.uk/sites/default/files/AJBIC_Death_Benefit_Rules.pdf

lisyloo

ex-pat_scot wrote: »

i see the LTA as a great threshold / target.
Once you hit it, then that should be the trigger to stop, if you are able.

It's certainly my broad strategy. I'm 2/3 of the way there with 4 years to go. (or it could be 5, or 6 years, depending on the whims of the investment gods).
If I got to LTA and was able to draw, then I see no reason why I wouldn't.

But if you had enough, even by your extravagant budget why would you need to. I understand some level of caution given the unknowns e.g, inflation, but why aim for an arbitrary number rather than your own needs.

The only reason I can think of to work longer is having a passion or enjoying your job - this doesn't apply to many people.

lisyloo

Thrugelmir wrote: »

How secure are the underlying investments. As quickly as they have grown they potentially may fall back.

Would you not make the short term monies a bit safer? And expect growth from the longer term investments.

I don’t have a detailed approach but I’d certainly be expecting to make some changes to the portfolio.
Broadly speaking making the short term stuff safer.