Retiring April 2021 - Second opinion on our plan please

Thrugelmir

ianthy said:

The growth is targeted as moderate @ 4%.

Before or after fees and inflation? 

enthusiasticsaver

As your income on the BTL alone is over your projected spend I do not think you will have anything to worry about beyond how to spend  all the surplus income.  Did you want to carry on working until 57 as it looks like you could have retired much earlier. Have you done wills? 

ianthy

Thrugelmir said:

ianthy said:

The growth is targeted as moderate @ 4%.

Before or after fees and inflation? 

Thanks for the question - moderate growth of 4% is after fees and inflation. Our investments are trackers and a small number of active funds. The last few year performance have been great but of course there is no guarantee that this performance will continue. We don't have ongoing IFA fees, only platform fees and fund fees in total less than 1%. 

ianthy

enthusiasticsaver said:

As your income on the BTL alone is over your projected spend I do not think you will have anything to worry about beyond how to spend  all the surplus income.  Did you want to carry on working until 57 as it looks like you could have retired much earlier. Have you done wills? 

Thanks for your comments. Yes - despite our previous Wills being lost by the probate service during C-19, we have just completed our new Wills. It is likely that we could have retired earlier but my OH was keen to continue working until March 2021. Also we both took a career break 2013-2016  (abit of trial run for retirement), so it felt comfortable to work for a few more years after the career breark before stopping work completely. Plus we really wanted to downsize out of a larger house before finally stopping work. 

ianthy

jimi_man said:

Just adding up the rough figures, not including the investment properties, you seem to have around £1.2 million in savings between the two of you.

Before SPA in terms of pension you've got just over £50k in pension (plus the £60k BTL), with another £18k after SPA, giving you £110k then around £128k after SPA.

I'm not too worried about you, I actually think you'll be ok. 

You have no-one to leave the money to I assume, so your biggest problem will be spending it. 
In terms of the Civil service pension, she can take it earlier - with a suitable drop for however many years earlier she takes it. I'm guessing it's the Classic scheme?

Thanks for the question - OH is in the Premium Scheme but protected by the McCloud ruling , so allowed to remain in the scheme until retirement at 60. The upside is that OH has maxed in added years, which helped to boost the final pension sum. 

ianthy

Thanks for the answers/advice and sorry I have been offline since posting. Yes - we need to revisit the IFA option, with lockdown it's taken 4 months just to update our Wills. So its on the list for later this year.  Our previous IFA handled mainly insurance renewals and re-mortgaging plus some investments. He handled my DB transfer but then joined True Potential, so became an FA. We then parted company as we preferred to manage our own investments with an annual review.  
Platform fees - yes there are a few options for lower fees especially with II, but we like AJ Bell and understand their ways of working. We are considering Vanguard for OH SIPP, only once they offer a drawdown facility.

Thrugelmir

ianthy said:

Thrugelmir said:

ianthy said:

The growth is targeted as moderate @ 4%.

Before or after fees and inflation? 

Thanks for the question - moderate growth of 4% is after fees and inflation. 

That's more or less at long term historic averages. Hardly moderate. In the current climate potentially demanding. 

ukdw

ianthy said:

...

Me Age 58

Ex DB pension transferred to SIPP in 2017, current value £950k self managed with AJ Bell with moderate growth of 4%. It has achieved abit more with 17% in 3 years. I plan to start drawdown in April 2021 at £25,000 gross per annum. I have already taken 25% TFLS and LTA limit was set at £1,250m in March 2017.

...

Joint

We share 4 investment properties including a holiday home in Europe producing £60k net income after tax.

We jointly share £750k (mainly in fixed interest accounts and equities) from downsizing from our family home plus a misc account with £35k.

...

Questions

-  Am I drawing enough from my SIPP to avoid breaching  LTA ? The growth is targeted as moderate @ 4%.

...

Thanks for reading and your comments. 

Re your £950k current SIPP value. Was this about £811k when you crystallised it in 2017.  Did this therefore use about £1.082k of your £1,250k LTA - leaving you about £167k unused?

If so then your £139k growth so far looks like it has used up most of your available spare LTA if my understanding of how growth is treated is correct.

If you achieve 4% growth on your £950k this would be about £38k - leaving £13k after your planned £25k drawdown. 

Within a couple of years you would probably be above LTA, and liable for an extra 25% LTA penalty at age 75 on the non drawn down growth.

 If the above assumptions are correct I would therefore consider a larger drawdown than £25k, potentially even more than the £38k projected growth in order to keep below LTA especially if you continue to exceed your 4% projection. 

This would leave scope for reducing the drawdowns back a little after SPA if the combination of drawdown, SP, BTL and Non ISA investment income at that stage pushes you into an unattractive tax band - like the effective 60% £100k one. 

Also I suspect 45% or 50% tax is likely to be payable below £100k within the next few years.

billy2shots

Your finances are fine OP and let's be honest, you know they are. 

However if it were me I would be making some other life decisions. 
I would be retiring ASAP. Just as importantly I would be downsizing any life stresses and responsibilities in the shape of selling all BTL properties. I wouldn't care if that's not financially optimal, you don't need optimal from your position. Hell, many are predicting a property price correction anyway so it might also be financially prudent. 

Either way you are minimising risk which will lead to a happier more relaxed retirement.