Finances in retirement

Stubod

Before going into the stock market think about your risk profile. The stock market is generally a long term option, and even without it you seem to be financially more than comfortable anyway. Yes interest rates are at an all time low, but inflation is also low at the moment, (and inflation will erode your savings over time while this trend continues). However if you do go into the stock market how would you feel if your investments suddenly dropped by 40% and took 10 years to recover?

SIPPS are OK as you get "free money" added, but then you will be paying tax when you (eventually) take it out (and if you are not earning you are limited to about £3,600/yr anyway).

I only mention this as we are in a similar dilemma. We were relatively late to the stock market and seemed to have missed out on the "boom" years, and overall we have only made a percentage or two over inflation but with the ongoing concern about another crash / long downturn. Technically if we pulled all our investments out and put them into ordinary savings accounts we would still have more than enough to meet our needs, (nb we do not have any dependents to worry about).

OK we may well be worse off in the long run, but if you long term plan still shows you have sufficient income regardless, then you may decide whether you prefer managing the inflation risk or investment risk?

I mention this as it looks like you have not ventured into S&S so far and wondered if there was  a reason why you hadn't?  

(I expect to get some heavy flak for this suggestion, but each to their own).

ShakespeareGirl

xylophone said:

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

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

Yes, that's something I'll need to build in (as my parents did). My house is currently worth under £500,000 but might go over that once the extension is done. As my house will go to my son (would probably be rented out if care funding needed and required topping up) I need to keep an eye on the value of the rest of my estate. My son is very unwilling to take money from me and fortunately his company is doing well at the moment. I have a very small family otherwise, just one brother, so charity giving will have to increase!

ShakespeareGirl

Stubod said:

I mention this as it looks like you have not ventured into S&S so far and wondered if there was  a reason why you hadn't?  

(I expect to get some heavy flak for this suggestion, but each to their own).

Good points.  I had cancer 4 years ago, so at that stage looking 10 years ahead seemed uncertain (well, it still does!). Before that I was focused on paying off my mortgage and making most of my savings tax free as I was a higher tax payer. I suppose I am fairly risk averse and investing in my house seems a good use of some of the cash, as at least I'll get some benefit from it!.  I'll be a basic rate tax payer whatever I do so the SIPP still looks an option.  

Albermarle

Stubod said:

Before going into the stock market think about your risk profile. The stock market is generally a long term option, and even without it you seem to be financially more than comfortable anyway. Yes interest rates are at an all time low, but inflation is also low at the moment, (and inflation will erode your savings over time while this trend continues). However if you do go into the stock market how would you feel if your investments suddenly dropped by 40% and took 10 years to recover?

SIPPS are OK as you get "free money" added, but then you will be paying tax when you (eventually) take it out (and if you are not earning you are limited to about £3,600/yr anyway).

I only mention this as we are in a similar dilemma. We were relatively late to the stock market and seemed to have missed out on the "boom" years, and overall we have only made a percentage or two over inflation but with the ongoing concern about another crash / long downturn. Technically if we pulled all our investments out and put them into ordinary savings accounts we would still have more than enough to meet our needs, (nb we do not have any dependents to worry about).

OK we may well be worse off in the long run, but if you long term plan still shows you have sufficient income regardless, then you may decide whether you prefer managing the inflation risk or investment risk?

I mention this as it looks like you have not ventured into S&S so far and wondered if there was  a reason why you hadn't?  

(I expect to get some heavy flak for this suggestion, but each to their own).

I think you make a fair point so no heavy flak  
There is a kind of knee jerk advice on the forum . If you have a lot of cash that you do not need for 10 years then INVEST !
It is the right advice for most people but for you and the OP's position you can do whatever you feel most comfortable with , although other people in the same position would still invest due to fear of missing out on potential gains. 
Before that I was focused on paying off my mortgage and making most of my savings tax free as I was a higher tax payer. 
Of course if you had come onto the forum before and said this , we would have said increase pension contributions, which is usually a no brainer for a higher rate taxpayer . Too late now , although looks like you should have a pretty comortable retirement anyway.

Stubod

..thanks for the reply, our FA keeps saying that we still have "too much cash", but after what happened in March I am glad that we did! I would certainly not want to put any more of our savings into S&S's. There is a "fear of missing out" but I think I have a greater fear of losing out as well. We have gone without and saved hard for our retirement and I am not sure that I would want to wait another 10 years for an improvement if our shares tanked!

RetSol

Albermarle said:

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

In this thread, Hargreaves Landsdown seems to be regarded as the "go to" SIPP provider for these purposes but it looks as though Fidelity is another provider which does not charge for holding cash in a SIPP - https://www.fidelity.co.uk/statutory-and-regulatory-disclosures/how-we-manage-your-cash/. 

Albermarle

Stubod said:

..thanks for the reply, our FA keeps saying that we still have "too much cash", but after what happened in March I am glad that we did! I would certainly not want to put any more of our savings into S&S's. There is a "fear of missing out" but I think I have a greater fear of losing out as well. We have gone without and saved hard for our retirement and I am not sure that I would want to wait another 10 years for an improvement if our shares tanked!

What happened in March has actually not had such a great effect on investments as first feared. The US market in particular has recovered strongly ( so far ) Those 100% is equities are still suffering a bit , especially if there is a high UK content .
However most medium risk portfolios are back where they started on Jan 1st .
Always nice to have a good cash back up though.

Thrugelmir

Albermarle said:

Stubod said:

..thanks for the reply, our FA keeps saying that we still have "too much cash", but after what happened in March I am glad that we did! I would certainly not want to put any more of our savings into S&S's. There is a "fear of missing out" but I think I have a greater fear of losing out as well. We have gone without and saved hard for our retirement and I am not sure that I would want to wait another 10 years for an improvement if our shares tanked!

What happened in March has actually not had such a great effect on investments as first feared. The US market in particular has recovered strongly ( so far ) Those 100% is equities are still suffering a bit , especially if there is a high UK content .
However most medium risk portfolios are back where they started on Jan 1st .
Always nice to have a good cash back up though.

Strip out some star performers and the remainder have done little in terms of recovery. 

[Deleted User]

You won the game. At this point in the game, I would count my money and then draft a budget on the best way to spend it. 

I would not try to learn about investments. Its too late and you don’t even need it. Keep it simple and stick with what you know. You’ve done ok so far, so why change? 

Your main risk is that you will have too much left in the pot when the lights go out. 

Albermarle

Strip out some star performers and the remainder have done little in terms of recovery. 

On the equity side yes, but also bonds did well which helped as well with multi asset funds .