Three years post retirement ... how the finances are going

jamesd

I retired around then, though with less, and it's been a good financial three years overall. Around ten percent higher net worth, excluding property price change. A rise in the early years is pretty much expected when using safe withdrawal rates, unless you happen to have a bad start, so while it's nice it's not definitive.

Dead_keen

marlot said:

NoMore said:

re: the small uplift in DB pension, what does it matter if it breaks the LTA ? I would understand if it was a large amount you were going to be above but it seems like you may just cross it a little bit. So what! you'll pay a bit extra tax but you still end up with more money.

I know it's only a relatively small amount, but I'm not sure that's always true.  I think it depends on your tax rate and how the pension scheme handles the excess charge.

If we say the uplift is £500.  My gain is £500 less tax for seven years.

If we assume 20% tax that is a net income of (£500 - 20%) * 7 years = £2800.
If we assume 40% tax, that is a net income of (£500 - 40%) * 7 years.  = £2100.

As it's above the LTA, then the assessed value is £500 * 20 = £10,000.  The 25% LTA charge on that is £2,500.

I know it's only a small amount, but you can understand why I'd rather forfeit the money.

Would it make sense to ask the pension scheme to pay the LTA charge (with a reduction in your benefit)? The scheme administrator is liable for the tax (as you are too) and in practice I thought that the schemes always paid the tax.  That way you will always be better off because of the increase in benefits (less income tax).

JohnWinder

BritishInvestor said:

"I'm mostly invested in trackers.  That's probably a bit cautious. "

Don't understand this bit. You can vary your risk levels with trackers by mixing and matching surely?

Me either, but good to hear it's going well for you. If a diversified stock tracker is too 'cautious' then borrow to invest some more in it. That'll increase the returns if goes up, and increase the losses if it goes down. The level of caution can be fine tuned all the way to recklessness. And don't forget to revisit that 'probably a bit cautious' thought 3 years into the next bear market.

mark13

Great position to be in ,well done, 

ianthy

Thank you for sharing - this was really helpful to read. I stopped work just over 3 years ago. Slightly different circumstances, I transferred my DB deffered pension into a SIPP with AJ Bell and took the max TFLS. Plus we downsized from our family home into something more manageable. Currently I am living off BTL income and running down my limited company, fingers crossed I should be able to close it next year, without going thru the liqudation process.

The markets have been very kind to my SIPP amateur portfolio starting with circa £700k and now £1.2m. I plan to take some advice before starting drawdown after my Ltd co has closed.

We have been lifetime savers and I know we are comfortable but we still have a monthly meeting to check all is OK and discuss any bigger expenditure items. 

The bit I find most challenging is keeping an eye on any changes either taxation or investment markets, then applying it. I do like to keep things very simple. Retirement is great but it does bring a whole list of other issues around finances.

Albermarle

The markets have been very kind to my SIPP amateur portfolio starting with circa £700k and now £1.2m. I plan to take some advice before drawing starting drawdown 

Sounds like you do not need any advice ! Although you need some kind of strategy about being over the LTA limit .

bostonerimus

marlot said:

• I'm mostly invested in trackers.  That's probably a bit cautious.  The IFAs I met didn't inspire me.

Final thoughts:

• I am very fortunate to have DB pensions.  The combination of DB and DC gives me stability and flexibility.
• It is wonderful receiving payments every month from the DB schemes.  Even from the company that made me redundant!  Somewhere deep down, I have the irrational fear of one of them sacking me and the payments stopping!
• I'm still struggling to switch from being a saver to being a spender.

I retired at 53 and I'm almost a decade into retirement now. There is definitely a period of adjustment as you switch over from getting a salary to paying yourself with pensions and withdrawals, but if you have good understanding and control of your spending you soon get into a rhythm. I have a DB pension and, like you, I am grateful for the regular monthly check that arrives without any thought or effort. I also invest my DC and general money in trackers, but  because I have the stability of the DB pension I take more risk in those trackers than many retirees and I'm at 80% equities. It sounds as if you’ve arrived at a similar place to me and that we have similar opinions about IFAs wrt our finances - being in trackers might not be “sexy” but you can set up the asset allocation of tracker portfolios to span the risk spectrum.