Are we on the right track? Advice welcome

Dew_2

Hi Everyone
I've read this forum on and off for a while, and admit some a lot of the great advice given goes over my head..!  Having said that I'd value any advice on mine and my fiance's joint retirement plan. Here goes:

Me:
55.  Earn £49,950 plus £4k car allowance. 
£275k in savings from recent house sale (split across different savings accounts/premium bonds)
£248k in SIPP - I pay in £600 gross a month
£20k in work defined contribution (non contributory) pension. Work pays in £468 a month
I'll probably aim to do a drawdown from these 

Fiance:
56. Earns £51,500
House worth c£375k no mortgage (which we're living in)
Has defined benefit pension 

Plan: 
Fiance retires at 60 to do up current house prior to selling 
I retire at 60 (about a year later) 
We buy a house outright for c£600k from the sale of his house and my £275k savings plus c£40k which I'll save between now and then 

At age 60 he'll have:
£100k savings 
£8k p.a. defined benefit pension
At age 60 I'll have:
Tax free lump sum from whatever personal pension has generated c£90k?l

At 67:
Both will have full state pensions 
He will have £14k p.a. from db pensions
I'll have c£11k p.a.from dc pensions

Is there anything we should be doing now or thinking about at age 60 /67?  I know standard savings accounts are a bad choice against a backdrop of rising inflation but I daren't risk my house money on stocks and shares over the next 4 - 5 years..

Dazed_and_C0nfused

Are you claiming higher rate relief on your SIPP contributions?

Have you both checked your State Pension forecasts on gov.uk (in detail) to see what you have accrued to date and how many more years are needed to reach the standard £179.60/week?

MX5huggy

Why do you want a £600k house? 

Nebulous2

I'm sure you'll get some good advice from others, here are some random thoughts.

The immediate standout for me is, why do you need / want a £600k house at 60? 

As people age moving becomes more difficult in practical and psychological terms - there is a point where many people just don't bother and end up rattling around in a house which is unsuitable for their needs. Is this intended to be a long-term home, would it be suitable for future-proofing / adapting for care needs, or would you anticipate moving again?

Figures look good, have you a figure in mind that you need in retirement to get the lifestyle you want?  

Taking a tax-free lump sum isn't always the best unless you have a plan / need for it. There may be an advantage in drawing the tax-free money over time, to allow more untaxed money every year. 

Albermarle

but I daren't risk my house money on stocks and shares over the next 4 - 5 years..

Understandable but of course you are doing exactly that with your DC pensions ( which are presumably invested and not held in cash ?) and still contributing to them . 

My first reaction is that between you , you should be increasing your pension contributions to take advantage of the tax relief.

In the case of your fiance at 60 he will have an £8K income until he gets the state pension at 67 . 

So if he set up a new DC pension/SIPP , he could at least contribute enough to generate enough income to fully utilise his tax personal allowance after 60 and before 67 ( currently £12570) . As he will get tax relief on the contributions of 20% and pay no tax on the way out , then a big tax gain ignoring any investments gains ( or losses) Approx he would need to add 7 X £4750 Gross = 7 X £3800 net .

If he added more then there would still be a tax benefit , but less. Same for you.

Tax free lump sum from whatever personal pension has generated c£90k?

Do not do this just for the sake of it, if you do not need the cash it is usually best left in the pension and taken gradually to keep your annual tax bills down .

Dew_2

Dazed_and_C0nfused said:

Are you claiming higher rate relief on your SIPP contributions?

Have you both checked your State Pension forecasts on gov.uk (in detail) to see what you have accrued to date and how many more years are needed to reach the standard £179.60/week?

I don't earn enough to pay higher rate tax (unless I've missed something?!). Yes we've checked Gov.uk. 4 years to go for me  and 3 3 for him to give 35 year contributions.

Dew_2

Dew_2 said:

Dazed_and_C0nfused said:

Are you claiming higher rate relief on your SIPP contributions?

Have you both checked your State Pension forecasts on gov.uk (in detail) to see what you have accrued to date and how many more years are needed to reach the standard £179.60/week?

I don't earn enough to pay higher rate tax (unless I've missed something?!). Yes we've checked Gov.uk. 4 years to go for me  and 3 3 for him to give 35 year contributions.

3 for him!

Dew_2

MX5huggy said:

Why do you want a £600k house? 

For our dream house 🙂

Dazed_and_C0nfused

Dew_2 said:

Dazed_and_C0nfused said:

Are you claiming higher rate relief on your SIPP contributions?

Have you both checked your State Pension forecasts on gov.uk (in detail) to see what you have accrued to date and how many more years are needed to reach the standard £179.60/week?

I don't earn enough to pay higher rate tax (unless I've missed something?!). Yes we've checked Gov.uk. 4 years to go for me  and 3 3 for him to give 35 year contributions.

Your original post suggests otherwise.

Me:55.
Earn £49,950 plus £4k car allowance. 
£275k in savings from recent house sale (split across different savings accounts/premium bonds)
£248k in SIPP - I pay in £600 gross a month
£20k in work defined contribution (non contributory) pension. Work pays in £468 a month
I'll probably aim to do a drawdown from these 

Dew_2

Nebulous2 said:

I'm sure you'll get some good advice from others, here are some random thoughts.

The immediate standout for me is, why do you need / want a £600k house at 60? 

As people age moving becomes more difficult in practical and psychological terms - there is a point where many people just don't bother and end up rattling around in a house which is unsuitable for their needs. Is this intended to be a long-term home, would it be suitable for future-proofing / adapting for care needs, or would you anticipate moving again?

Figures look good, have you a figure in mind that you need in retirement to get the lifestyle you want?  

Taking a tax-free lump sum isn't always the best unless you have a plan / need for it. There may be an advantage in drawing the tax-free money over time, to allow more untaxed money every year. 

We're aiming to buy a custom build new house that would be low maintenance and future-proof with downstairs shower room. We wouldn't intend to move again unless we were both incapable of living there.

Thank you for your thoughts around not necessarily taking a tax free lump sum. I guess the cautious part of me thinks if the markets crashed big time just after retirement I've  missed out on a big sum of 'real' money.

Dew_2

Albermarle said:

but I daren't risk my house money on stocks and shares over the next 4 - 5 years..

Understandable but of course you are doing exactly that with your DC pensions ( which are presumably invested and not held in cash ?) and still contributing to them . 

My first reaction is that between you , you should be increasing your pension contributions to take advantage of the tax relief.

In the case of your fiance at 60 he will have an £8K income until he gets the state pension at 67 . 

So if he set up a new DC pension/SIPP , he could at least contribute enough to generate enough income to fully utilise his tax personal allowance after 60 and before 67 ( currently £12570) . As he will get tax relief on the contributions of 20% and pay no tax on the way out , then a big tax gain ignoring any investments gains ( or losses) Approx he would need to add 7 X £4750 Gross = 7 X £3800 net .

If he added more then there would still be a tax benefit , but less. Same for you.

Tax free lump sum from whatever personal pension has generated c£90k?

Do not do this just for the sake of it, if you do not need the cash it is usually best left in the pension and taken gradually to keep your annual tax bills down .

Thank you for this, it's food for thought. We'll talk this through. I guess it feels more like spreading the risk by having liquid cash as well as a SIPP.  Stock markets are looking shaky and 5ish years doesn't give a lot of time for recovery if things really tank.