Finances in retirement

ShakespeareGirl

I'd welcome advice on how to manage my finances in retirement. I'm single, one son, no mortgage. I've just retired at 69. I have a TPS pension of £31, 500 a year and a lump sum of £94,000 which I've put straight into NS&I. Together with existing savings I currently have £120,000 there with interest going into their savings account.  I haven't started my state pension yet, which I've deferred for 8 and a half years. I'm planning to take the extra pension, so should have a monthly pension income of £3,000. Later this month I'll receive a VS payment of approximately £45,000, £30, 000 of which is tax free. I already have 3 cash ISAs totalling £87,00, £40, 000 in two Santander accounts (which I want to move), and I'm drip feeding £10,000 from Tesco savings into Halifax and Coventry Regular Saver Accounts.  I also have about £36,000 just sitting in a Barclays current account. I intend to add an extension next year to my two bed cottage, which is in a very desirable area, and this  will take a chunk of the cash I currently hold.  I've been wondering about starting a SIPP, opening a S and S ISA, or moving £50,000 into Premium bonds. Which would be best? And am I missing anything?

Joey_Soap

And am I missing anything?

Yes, put your feet up a bit, you've earned it.

AlanP_2

A SIPP is an option but you will be limited to £3600 a year gross contribution (you put £2880 in and tax man adds £720) as you will have no relevant income in future years. You can do this until age 75.

If you have worked this tax year you can contribute 100% of your salary (less pension contributions) probabaly and get tax relief which could get you the tax paid on the VS £15k back.

A S&S ISA sounds like a sensible option for money you can put away for 10+ years.

Albermarle

The most obvious point is that you are extremely cash rich . Have you never considered before putting any of this cash to work or have you only started thinking about it now ?
At this very moment in time , with inflation so low , it is not such a bad time 'in cash' but in the longer term you should diversify into investments , even if it is only adding £20K pa to a Stocks and shares ISA.

Audaxer

ShakespeareGirl said:

I've been wondering about starting a SIPP, opening a S and S ISA, or moving £50,000 into Premium bonds. Which would be best? And am I missing anything?

You could invest some of the cash in an S&S ISA and up to £2,880 each year in a SIPP if you wish. However, assuming your £3,000 a month pension income is enough to give you a comfortable retirement anyway, you will not really need the cash invested to give you extra pension income. So it is really your choice as to whether to keep it in cash for extra spending on luxuries, or invest it to grow the pot larger over the longer term if for example you want to leave a larger inheritance.

ShakespeareGirl

AlanP_2 said:

A SIPP is an option but you will be limited to £3600 a year gross contribution (you put £2880 in and tax man adds £720) as you will have no relevant income in future years. You can do this until age 75.

If you have worked this tax year you can contribute 100% of your salary (less pension contributions) probabaly and get tax relief which could get you the tax paid on the VS £15k back.

A S&S ISA sounds like a sensible option for money you can put away for 10+ years.

Thanks for this. Yes, I finished work end of July so could contribute this year.  Are there any recyclng issues I'd need to be aware of?  I'm a complete newbie when it comes to SIPPS. 

Albermarle

AS you are now retired you will have time to read this very long thread about contributing to a SIPP when you have no earnings .
https://forums.moneysavingexpert.com/discussion/5580163/paying-2880-into-pension-when-retired/p1

ShakespeareGirl

Albermarle said:

The most obvious point is that you are extremely cash rich . Have you never considered before putting any of this cash to work or have you only started thinking about it now ?
At this very moment in time , with inflation so low , it is not such a bad time 'in cash' but in the longer term you should diversify into investments , even if it is only adding £20K pa to a Stocks and shares ISA.

Only thinking about investments now!  I will definitely open an S & S ISA as I haven't used my allowance this year. Thanks!

AlanP_2

ShakespeareGirl said:

AlanP_2 said:

A SIPP is an option but you will be limited to £3600 a year gross contribution (you put £2880 in and tax man adds £720) as you will have no relevant income in future years. You can do this until age 75.

If you have worked this tax year you can contribute 100% of your salary (less pension contributions) probabaly and get tax relief which could get you the tax paid on the VS £15k back.

A S&S ISA sounds like a sensible option for money you can put away for 10+ years.

Thanks for this. Yes, I finished work end of July so could contribute this year.  Are there any recyclng issues I'd need to be aware of?  I'm a complete newbie when it comes to SIPPS. 

Probably not as I understand the recycling rules, no.

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/recycling-of-tax-free-cash/

Keeping the gross SIPP contribution to less than 30% of your lump sum would guarantee a NO.
 
By all means put numbers on here for checking of maths / logic if you are comfortable but I think you can contribute your taxable salary (gross salary - TPS contributions) effectively before next April and get tax relief.

So if your taxable salary was £30k including the taxable party of your VS then you could contribute 80% of that (£24k) into a SIPP and provider would claim £6k tax relief from HMRC and add it to your pot.

ShakespeareGirl

Many thanks for this. I'll definitely inform myself about SIPPS in order to do this before the end of the tax year, and likely check my options here.  

xylophone

I'm single, one son, no mortgage. I've just retired at 69. 

Had you considered gifting (PET) or regular gifts from surplus income?