lifetime pensions allowance

beeza650

Waiting another four years till 62 before drawdown (and living of the 25% tax free lump sum - or not I guess if I do a bit of part time/consultancy work) seem to make a HUUUUGE difference. Doing that I've got income up to 40% band until I'm 91 and there's no way I'm going to live that long.

Croeso69

beeza650 said:

Waiting another four years till 62 before drawdown (and living of the 25% tax free lump sum - or not I guess if I do a bit of part time/consultancy work) seem to make a HUUUUGE difference. Doing that I've got income up to 40% band until I'm 91 and there's no way I'm going to live that long.

Try sticking a couple of -20% returns (instead of +4%) at, say ages 57 and 67, followed by four +5% yesrs in there to stress test this to see if it still adds up 

beeza650

Good point well made. I'll have enough in reserve not to dip in at real deep troughs as long as they're not too prolonged but I totally get what you're saying and it's a good reminder that if I don't keep that (non CGT exempt!) buffer then fund performance could throw a spanner in the works quite easily. I guess there's a flip side too in that 4% growth is maybe a bit conservative?

beeza650

@Croeso69 ....here's the result, not a pretty sight!
Happy to share the .xls sheet with anyone who wants it (not expecting a flood of takers somehow )

Croeso69

beeza650 said:îo

@Croeso69 ....here's the result, not a pretty sight!
Happy to share the .xls sheet with anyone who wants it (not expecting a flood of takers somehow )

Shows you may not have enough for this retirement if things go badly.

beeza650

Yup - though let's take the scenario above. If there was a 20% drop when I was 57 then I wouldn't take the lump sum then and I'd probably work another 2 years and in the second big dip at 67 I'd cash in some 'rainy day' money. That looks a fair bit better @Croeso69 ...is 4% average growth so optimistic?

Croeso69

beeza650 said:

Yup - though let's take the scenario above. If there was a 20% drop when I was 57 then I wouldn't take the lump sum then and I'd probably work another 2 years and in the second big dip at 67 I'd cash in some 'rainy day' money. That looks a fair bit better @Croeso69 ...is 4% average growth so optimistic?

Is 4% too optimistic? It is for me I think. Markets are quite high so I would probably go for 2%. May be OK to use 4% if you have a couple of -20% in there to simulate a crash.

I would aim to run out at 95 not 86 though.

I have crystallised 100% LTA which includes 2 DB pensions totalling £11k per annum taken early to avoid LTA hit. Have also about 20% LTA uncrystallised (so 120% LTA in total) and I still don't feel secure enough to retire at my current age of 57. This is despite my drawdown at 4% being able to match my salary post pension salary sacrifice (yes still paying in despite exceeding LTA).

EDIT: The PCLS has cleared the mortgage and is being drip fed into share ISAs.

beeza650

But wait - I've added another two columns in purple on the right - the purchasing power of the pension given 2.5% inflation and taking into account 15% income tax. Ouuuuuuuch that's really sobering - and that's after modifying state pension inflation so it  matches purchasing power inflation.

Croeso69

beeza650 said:

But wait - I've added another two columns in purple on the right - the purchasing power of the pension given 2.5% inflation and taking into account 15% income tax. Ouuuuuuuch that's really sobering - and that's after modifying state pension inflation so it  matches purchasing power inflation.

Why don't you ignore inflation and work in today's money terms? Makes the spreadsheet a lot simpler I think.

And this is why I don't think 120% LTA is enough to comfortably retire at 57.

beeza650

I forgot to add state pension to the alarming purple columns. With that included income after tax stands at 30K at 65 dropping steadily to 20K aged 90. Somewhere along the way I can imagine a smaller house figuring in the equation - that might generate £150 - £200K. It's the kids that mess up the sums a bit - they're only 2 and 5 - perhaps I'll receive an inheritance that can set them up.