Fast approaching retirement & worried.

SomeMadeUpName

Dex58 said:

 I’d also like to leave an inheritance for my children if possible and ensure my wife is provided for assuming I pre decease her.

There are some voices on here who question the desire to leave something for the kids, but it's always formed part of my thinking (since I had some anyway [kids, not thoughts]).

The epiphany that I had recently was the realisation that by planning retirement incomes (generated by assets, DC pension pots or other) that will provide for us until we reach the ripe old age of 110, then actually what we are doing is estate planning, because honestly we won't make 110 so by default we will leave some of those assets for the next generation.

Dex58

LHW99 said:

As you are both 63, you could potentially buy the remaining years to SPA if you retire from work early - and your wife could do that.

How far short of the maximum are you both? COPE was only relevant for your starting pension amount in April 2016.

Someone here could tell you how much extra you could get with the time you have available (and if your wife has already retired from work, she may be able to buy quite a few post-16 years).

Thanks, we both have 47 years of NI contributions to SP. I thought we had exceeded the requirements?

AlanP_2

As an alternative to the annuity idea for an income floor you could defer your SPs for a few years at rate of 5.8% pa to increase the amount of guaranteed income from say age 70.

Would mean using more of your DC pots along the way but hedges against longevity risk.

fineclaret

FWIW, you don't sound a million miles from my situation, and I effectively retired 2 years ago! Now 63, worked in IT, but got used to c2,000pm due to part-time working, which is my approximate target going forward. Mortgage paid, kids all post-uni and independent, all the bills come from my income. Wife still works, has a couple of modest DB funds to come, but those and state entitlement both limited by child-rearing years.

My total pot is a mix of a drawdown SIPP, the uncrystallised remainder, and a decent amount in ISAs, coming to a similar overall figure to your own. I've spreadsheeted it, splitting my funds between taxable and untaxable and taking 12570 out of taxable (less SP from 66), and the remainder out of untaxable annually till the latter runs out, from which point a sufficient gross figure comes out of taxable. Bearing in mind that, although I worked in IT, for all you know I'm rubbish at it, the figures look OK. Assuming modest growth of 3% and 3.5% RPI, the tax free pot runs out in my 84th year and the remainder at 95. I probably won't actually manage it entirely that way, draining my ISAs completely; it's just illustrative.

Of course, for all we know we're on the precipice of an almighty crash, which substantially changes the starting values and hence the ends, but the 3% figure kind of assumes that will recover if (let's say when) it happens. I'm probably a bit less risk averse, though, so YMMV.

Notepad_Phil

Dex58 said:

LHW99 said:

As you are both 63, you could potentially buy the remaining years to SPA if you retire from work early - and your wife could do that.

How far short of the maximum are you both? COPE was only relevant for your starting pension amount in April 2016.

Someone here could tell you how much extra you could get with the time you have available (and if your wife has already retired from work, she may be able to buy quite a few post-16 years).

Thanks, we both have 47 years of NI contributions to SP. I thought we had exceeded the requirements?

A specific number of years will only be relevant to people who have paid all of their national insurance under the new rules. You have paid into the old and the new systems and so you really should get specific pension forecasts rather than just assume that your 47 years will be enough.

sammyjammy

Would your wife be entitled to claim Contribution base Employment and Support allowance (called New Style ESA), she would need a fit note from her GP but if entitled would boost income by a minimum of £300 every four weeks.

fineclaret

"I think UFPLS would be preferable to drawdown as most of the 25% tax free entitlement would remain invested."

Not sure about this bit. An UFPLS is equivalent to taking a tax free lump sum, moving the rest to drawdown, but then taking it all out of drawdown again on the same day. The net effect is the same, but for the far greater flexibility of true drawdown. If you want to remain invested, stick the TFLS in an ISA.

Albermarle

allanm02 said:

"I think UFPLS would be preferable to drawdown as most of the 25% tax free entitlement would remain invested."

Not sure about this bit. An UFPLS is equivalent to taking a tax free lump sum, moving the rest to drawdown, but then taking it all out of drawdown again on the same day. The net effect is the same, but for the far greater flexibility of true drawdown. If you want to remain invested, stick the TFLS in an ISA.

This is correct , from a long term investment point of view UFPLS and drawdown are the same .

For the OP and another poster - you should know that the usual safe withdrawal rates quoted for DC pension - around 3.5% are based on the very high chance that your pot will not run out before you are 90/95. However what is sometimes misunderstood is that assuming they are invested sensibly , there is very good chance that a significant % of the pot will be left when you die even if you live to 100 .
If markets were kind you could even have a bigger pot when you die than when you started withdrawing from it .

Dex58

Notepad_Phil said:

Dex58 said:

LHW99 said:

As you are both 63, you could potentially buy the remaining years to SPA if you retire from work early - and your wife could do that.

How far short of the maximum are you both? COPE was only relevant for your starting pension amount in April 2016.

Someone here could tell you how much extra you could get with the time you have available (and if your wife has already retired from work, she may be able to buy quite a few post-16 years).

Thanks, we both have 47 years of NI contributions to SP. I thought we had exceeded the requirements?

A specific number of years will only be relevant to people who have paid all of their national insurance under the new rules. You have paid into the old and the new systems and so you really should get specific pension forecasts rather than just assume that your 47 years will be enough.

Thanks, I have been on the govt gateway site & checked our entitlement at retirement age (66 in both cases) It says £9237 for me & £9141 for my wife. It’s not full entitlement due to approx 12 years contracted out in both cases (always a bit baffled by the whole contracting out thing!!) It also says it’s the maximum we can expect so I presume future NI contributions won’t make any difference. 

MX5huggy

I would Salary Sacrifice the absolute maximum in this last period of working (the maximum being the amount left above you being paid the National Minimum Wage). You’re saving the tax and NI and then only pay tax on 75% on the way out.

Then pay into a SIPP the rest of your earned income before you retire. Your wife should pay £2880 into a SIPP as well (you keep doing this as well after you retire) which is grossed up to £3600.

Live off your savings while you do this.