What to do??

SteveC3

She plans to work until 60, at which point my SP kicks in. To retain lifestyle I will need to increase the £1150 to around £1600 for 7 years until she gets her SP but my SP will cover that. When she is 67 and I'm 73 we have 2 SPs, her index linked DBs and the remainder of my pot, hopefully 300k plus, so assuming I'm still walking the planet, I'm not too concerned from that point on. The 7 years up to that may be expensive as we plan to travel a fair bit.
I'm not planning to downsize, but it is a possibility in a few years. There is also the possibility of up to 400k inheritance on my wife's side, but of course we don't want to factor that in, or even think about it.

crv1963

SteveC3 said:

She plans to work until 60, at which point my SP kicks in. To retain lifestyle I will need to increase the £1150 to around £1600 for 7 years until she gets her SP but my SP will cover that. When she is 67 and I'm 73 we have 2 SPs, her index linked DBs and the remainder of my pot, hopefully 300k plus, so assuming I'm still walking the planet, I'm not too concerned from that point on. The 7 years up to that may be expensive as we plan to travel a fair bit.
I'm not planning to downsize, but it is a possibility in a few years. There is also the possibility of up to 400k inheritance on my wife's side, but of course we don't want to factor that in, or even think about it.

Plans do change though. Mrs CRV was not going to retire when I do, now events have changed and she can't wait to hit 55 and retire, even mooting recently that she may go next year at 54, use savings for a year before pension drawdown can begin for her. Meanwhile I'm still enjoying work!

Albermarle

Couple of points . Ideally you should have been contributing enough to your pension to get maximum 40% tax relief, as its a very generous free money gift from the government . Presume you get some of this but maybe not all, but maybe too late now.
Perhaps more relevant seems to be the lack of available cash savings . Three advantages to having cash savings 
1) The investment advice offered is sound enough ( if not a bit UK centric) but in case future investment scenarios do not pan out as expected , cash is a nice safe haven.
2) To cover unexpected expenses 
3) When you are drawing down your pension , it is advised to halt/reduce withdrawals following any big drops in value, due to poor market conditions. Then live off cash until it recovers . This is especially important during the first years of drawdown.
Many contributors to this forum keep enough cash to fund two to five years living expenses . Obviously once FS and state pensions kick in this is less of an issue.

SteveC3

Thanks. Yes, I have put all salary and bonuses that take me into 40% bracket into salary sacrifice. BTW, this year I may go over the 40k annual limit. Do I need to inform tax office or do they automatically look at unused allowances?
And, yes, I need more cash. Not sure where to get it? Take the  remaining from ISA, tax free from pension, or simply re allocate say 30 k into SW cash fund?

Brynsam

SteveC3 said:

"I am a huge procrastinator and I seem to keep pushing out my retirement date!"
If only it were that easy!

It is. You're the one finding excuses not to make a decision. That's not procrastination, it's being indecisive.

enthusiasticsaver

Presumably you would take the tax free amount from the Scottish Widows pension when you retire?  That would keep you going for the 4 years until your SP kicks in.  Or can you partially take it? 

I would be worried by your lack of cash as if there is a market downturn due to a global recession (perfectly possible in current circumstances) you are forced to drawdown from falling investments. We have DB pensions and have not withdrawn from investments this year although that was our original plan to use my tax allowance to the maximum I was going to take money out before 5.4.20 but would not draw down on investments which had fallen by about 15% in March.  Our investments have now recovered so I would be looking to address that lack of cash now if you are in the same situation. 

It looks like with a fund of almost £500k with only four years until SP kicks in you should be fine so I would not delay any further especially if you hate your job.  

Albermarle

I may go over the 40k annual limit. Do I need to inform tax office or do they automatically look at unused allowances?

They should automatically take into account unused allowances. However it is recommended that you keep a record of your calculations , in case they ask at some point.

DairyQueen

4% was considered a safe withdrawal rate in the US in recent years but I have seem several recent reports that US SWR has reduced to 3.5%. The UK's SWR is historically lower at around 3%. We are now planning for 2.5% and with sufficient cash buffer to suspend drawdown for at least 5 years.

Do you have emergency cash? What about replacing big ticket items (car, TV, washing machine) and major house repairs? Or helping out the kids? Fine if an allowance for this is included in your projected annual income. One of the issues around drawdown is tax optimisation. An unplanned large withdrawal from your DC/SIPP could be very costly tax-wise and a double-whammy if it catalysed an asset sale during a market downturn.

Just waving a few extra flags for the cautious to consider (and I am very cautious).

SteveC3

Slightly off on a tangent...
What are the views on holding fixed interest as well as cash?
Such as this, which is available in my SW pension acc.
https://documents.feprecisionplus.com/factsheet/swpoc/fs/BV56_SLG.pdf

Albermarle

SteveC3 said:

Slightly off on a tangent...
What are the views on holding fixed interest as well as cash?
Such as this, which is available in my SW pension acc.
https://documents.feprecisionplus.com/factsheet/swpoc/fs/BV56_SLG.pdf

Bonds/fixed interest is not the same as cash. Although the interest is fixed the face value of the bond is not .
You can say that UK gilts and bonds from similar countries like Germany, US etc are safe but the return is rubbish .
If you go to bonds with potentially higher returns then the risk goes up . Bonds can play a useful role in a portfolio but it is not the same as cash