Have 10% inflation and falling markets affected your drawdown plan?

redpete

What was the original question? ... Ah yes...

OH and I are both retiring at the end of this year (Dec 31st).  I have DB kicking in Oct 2023 that will cover 40-50% of budgeted outgoings, 2 full SPs due late 2024 that with DB would then cover around 80% of outgoings.

Plan was to start DC drawdown in Jan 23 to 'fill the gap' and use cash savings for some major spends such as new EV car and holidays.  Drawdown would probably be based on the prime harvesting model described by McClung.  

Plan is affected by drop in pension and ISA investments and cost of living increases.  I'm reluctant to start drawdown at a time when the sequence of returns hit would be greatest, and the bonds that would be sold for income hit more than most.  We are fortunate to have liquid savings / investments to cover 4+ yrs of budgeted 'normal' outgoings, so we are likely to be living from savings for a while, deferring major spend, and controlling regular spending (such as putting up with a cold office / spare bedroom right now when I might otherwise have heating on).  I will also be picking up contract work with my current company, maybe 10-20 hrs per week which is more than I was planning on when I starting thinking about the possibilities, there is also a possibility of additional income from apprenticeship assessments to fill more of the gap.  So - overall feeling fortunate that our savings and investments allow mitigation of threats to our original plan that I'm relatively comfortable with.

I engaged an IFA to recommend the strategy for the first couple of years (and for specific advice on managing LTA).  His report is imminent and it will be interesting how his recommendations might have changed in the couple of months since we had our first conversation.

eric4395

Audaxer said:

bostonerimus said:

eric4395 said:

I have just retired I am 68 in December. We have no debt or mortgage to pay and keep in good health.
I have had a pension lying since I was 60 in Royal London( set up for  flexible income drawdown) that I haven't  touched. Over the past year it has lost more than  £20,000..it currently has approx £305,000   in it
My current pension with Aegon has approx £185,000  left in it at the moment down approx £40,000 in the last 12  months.  My income now is I receive the government pension of approx £800  per month which i have had for last 2 years and  which was getting taxed at 40 %  (so I sensibly put 12000 extra contribution into my Royal London pension and got tax relief on it making it 15,000 however it has disappeared in the figures in the last 12 months) and my wife  receives about  £750  per month gov and ex works pension. 
My question is should I combine both my pensions by putting current Aegon one in with the Royal London and set up for flexible income drawdown. We are in the fortunate position of having savings to fall back on for the next few years so really don't have to touch it. Bearing in mind our ages and 75 year old the cut off for taking 25 % tax free from  my pension pot I believe) . I'm not sure what the best plan off action is. Would really like to protect as much as I can with regards to my son and daughter and 3 grandchildren benefitting out of this for there futures. Is it just a case off  handing over lump sums to them on a regular basis  before it all gets taxed or who knows goes to care home fees eventually although I believe there are limits on that as well. Any advice appreciated.

What jumps out at me is your combined pensions are 490k and last year you withdrew 40k which is 8% and that is very high even for someone who's 68. Gifting money is a good tax strategy to get money to your heirs as long as you live long enough, but IHT doesn't look like it will be an issue for you and if you are spending 8% of the pot each year and it is also being reduced by market losses and maybe fees then you have more important things to consider than tax. I would try to reduce your spending.

I read the post from @eric4395 that his Aegon pension has lost approximately £40,000 in value over the last 12 months, not that he withdrew £40,000. Maybe I've read it incorrectly?

No you read it correctly it has lost approx 40,000 in the past 12 months. I havent withdrew or touched my pensions.

Workerdrone

Deleted_User said:

NannaH said:

I do believe that people like my Daughter, who is now into her 10th year of Maths teaching,  should have their student loans written off,  partly to incentivise staying in Teaching at a time when they are leaving in droves. 

Ten years is a fair timescale,  she has paid back a fair whack.  She was very lucky to get a STEM bursary for her PGCE but still had to fund her Maths degree. 

Quite. For any profession with shortages it makes sense to incentivize training and education on the condition that individuals either spend a certain number of years working in the field within the country or repay the funding. 

Ive always felt this about nursing qualifications. It strikes me as quite a barrier to entry to have to do a degree where there's only really one end employer and the entry level salary is pretty poor. To me they should be fully funded conditional on completing the course and working for x number of years in the NHS, if you drop out or leave within that timescale the full amount becomes repayable.

enthusiasticsaver

bostonerimus said:

Times are tough and look as if they will stay that way for at least a couple of years. If you are in drawdown inflation and the drop in the markets are two enormous challenges when you have to live off your investments. So have recent events affected you plan? Are you reducing spending, living more off cash reserves or just sticking to your plan because such hard times were baked into it?

Our initial plan when we took early retirement in 2018 was to take our DB pensions and live off that plus our cash buffer and drawdown £10-£20k per annum from our SIPPs/DCs and S and S ISAs so we are 4 years in and so far have drawn zero in fact we put money into our SIPPs. . Partly because the expensive holidays planned for 2020 didn’t happen until 2022, partly because there seemed little point keeping a large cash buffer given our DB pensions covered our costs and we weren’t drawing much on the cash buffer and partly due to low interest rates on savings and market downturns. Now we are less than 2 years from DH drawing his state pension and 3 years from me drawing mine we have decided to bite the bullet and start drawdown from 2023 as our cash buffer is down to £10k once we have gifted money to our DDs for property purchases etc. our investments are back in positive territory so I think it is time. So yes is the answer to your question even though ideally we should have drawn in 2021 when the market was higher. 

Nebulous2

Workerdrone said:

Deleted_User said:

NannaH said:

I do believe that people like my Daughter, who is now into her 10th year of Maths teaching,  should have their student loans written off,  partly to incentivise staying in Teaching at a time when they are leaving in droves. 

Ten years is a fair timescale,  she has paid back a fair whack.  She was very lucky to get a STEM bursary for her PGCE but still had to fund her Maths degree. 

Quite. For any profession with shortages it makes sense to incentivize training and education on the condition that individuals either spend a certain number of years working in the field within the country or repay the funding. 

Ive always felt this about nursing qualifications. It strikes me as quite a barrier to entry to have to do a degree where there's only really one end employer and the entry level salary is pretty poor. To me they should be fully funded conditional on completing the course and working for x number of years in the NHS, if you drop out or leave within that timescale the full amount becomes repayable.

Nursing students are paid a bursary in Scotland. They aren't tied into remaining for a set period of time however. 

[Deleted User]

Workerdrone said:

Deleted_User said:

NannaH said:

I do believe that people like my Daughter, who is now into her 10th year of Maths teaching,  should have their student loans written off,  partly to incentivise staying in Teaching at a time when they are leaving in droves. 

Ten years is a fair timescale,  she has paid back a fair whack.  She was very lucky to get a STEM bursary for her PGCE but still had to fund her Maths degree. 

Quite. For any profession with shortages it makes sense to incentivize training and education on the condition that individuals either spend a certain number of years working in the field within the country or repay the funding. 

Ive always felt this about nursing qualifications. It strikes me as quite a barrier to entry to have to do a degree where there's only really one end employer and the entry level salary is pretty poor. To me they should be fully funded conditional on completing the course and working for x number of years in the NHS, if you drop out or leave within that timescale the full amount becomes repayable.

I don’t know the stats but anecdotally it seems that NHS survives by importing nurses educated elsewhere, mostly developing countries. Which is akin to robbing developing countries of their resources.  They even go out and recruit in third world countries. 

Nebulous2

Deleted_User said:

Workerdrone said:

Deleted_User said:

NannaH said:

I do believe that people like my Daughter, who is now into her 10th year of Maths teaching,  should have their student loans written off,  partly to incentivise staying in Teaching at a time when they are leaving in droves. 

Ten years is a fair timescale,  she has paid back a fair whack.  She was very lucky to get a STEM bursary for her PGCE but still had to fund her Maths degree. 

Quite. For any profession with shortages it makes sense to incentivize training and education on the condition that individuals either spend a certain number of years working in the field within the country or repay the funding. 

Ive always felt this about nursing qualifications. It strikes me as quite a barrier to entry to have to do a degree where there's only really one end employer and the entry level salary is pretty poor. To me they should be fully funded conditional on completing the course and working for x number of years in the NHS, if you drop out or leave within that timescale the full amount becomes repayable.

I don’t know the stats but anecdotally it seems that NHS survives by importing nurses educated elsewhere, mostly developing countries. Which is akin to robbing developing countries of their resources.  They even go out and recruit in third world countries. 

Yes - a lot of our nurses go to practice in places with better terms and conditions of service - Australia, Canada the US of A. Then we import nurses from places where our conditions improve their lot - India, the Philippines, Nigeria and previously EU countries such as Spain. 

Albermarle

Nebulous2 said:

Deleted_User said:

Workerdrone said:

Deleted_User said:

NannaH said:

I do believe that people like my Daughter, who is now into her 10th year of Maths teaching,  should have their student loans written off,  partly to incentivise staying in Teaching at a time when they are leaving in droves. 

Ten years is a fair timescale,  she has paid back a fair whack.  She was very lucky to get a STEM bursary for her PGCE but still had to fund her Maths degree. 

Quite. For any profession with shortages it makes sense to incentivize training and education on the condition that individuals either spend a certain number of years working in the field within the country or repay the funding. 

Ive always felt this about nursing qualifications. It strikes me as quite a barrier to entry to have to do a degree where there's only really one end employer and the entry level salary is pretty poor. To me they should be fully funded conditional on completing the course and working for x number of years in the NHS, if you drop out or leave within that timescale the full amount becomes repayable.

I don’t know the stats but anecdotally it seems that NHS survives by importing nurses educated elsewhere, mostly developing countries. Which is akin to robbing developing countries of their resources.  They even go out and recruit in third world countries. 

Yes - a lot of our nurses go to practice in places with better terms and conditions of service - Australia, Canada the US of A. Then we import nurses from places where our conditions improve their lot - India, the Philippines, Nigeria and previously EU countries such as Spain. 

From a couple of recent hospital visits, there still seems to be quite a lot of 'EU nurses' working in the NHS. Presumably they were here already and have applied for permanent status ( if that is the right expression ) 

Sea_Shell

Nebulous2 said:

Deleted_User said:

Workerdrone said:

Deleted_User said:

NannaH said:

I do believe that people like my Daughter, who is now into her 10th year of Maths teaching,  should have their student loans written off,  partly to incentivise staying in Teaching at a time when they are leaving in droves. 

Ten years is a fair timescale,  she has paid back a fair whack.  She was very lucky to get a STEM bursary for her PGCE but still had to fund her Maths degree. 

Quite. For any profession with shortages it makes sense to incentivize training and education on the condition that individuals either spend a certain number of years working in the field within the country or repay the funding. 

Ive always felt this about nursing qualifications. It strikes me as quite a barrier to entry to have to do a degree where there's only really one end employer and the entry level salary is pretty poor. To me they should be fully funded conditional on completing the course and working for x number of years in the NHS, if you drop out or leave within that timescale the full amount becomes repayable.

I don’t know the stats but anecdotally it seems that NHS survives by importing nurses educated elsewhere, mostly developing countries. Which is akin to robbing developing countries of their resources.  They even go out and recruit in third world countries. 

Yes - a lot of our nurses go to practice in places with better terms and conditions of service - Australia, Canada the US of A. Then we import nurses from places where our conditions improve their lot - India, the Philippines, Nigeria and previously EU countries such as Spain. 

I wonder why USA, Australia and Canada don't just recruit directly from India Philippines Nigeria etc. ?

Miss out the UK. 😉

[Deleted User]

Sea_Shell said:

Nebulous2 said:

Deleted_User said:

Workerdrone said:

Deleted_User said:

NannaH said:

I do believe that people like my Daughter, who is now into her 10th year of Maths teaching,  should have their student loans written off,  partly to incentivise staying in Teaching at a time when they are leaving in droves. 

Ten years is a fair timescale,  she has paid back a fair whack.  She was very lucky to get a STEM bursary for her PGCE but still had to fund her Maths degree. 

Quite. For any profession with shortages it makes sense to incentivize training and education on the condition that individuals either spend a certain number of years working in the field within the country or repay the funding. 

Ive always felt this about nursing qualifications. It strikes me as quite a barrier to entry to have to do a degree where there's only really one end employer and the entry level salary is pretty poor. To me they should be fully funded conditional on completing the course and working for x number of years in the NHS, if you drop out or leave within that timescale the full amount becomes repayable.

I don’t know the stats but anecdotally it seems that NHS survives by importing nurses educated elsewhere, mostly developing countries. Which is akin to robbing developing countries of their resources.  They even go out and recruit in third world countries. 

Yes - a lot of our nurses go to practice in places with better terms and conditions of service - Australia, Canada the US of A. Then we import nurses from places where our conditions improve their lot - India, the Philippines, Nigeria and previously EU countries such as Spain. 

I wonder why USA, Australia and Canada don't just recruit directly from India Philippines Nigeria etc. ?

Miss out the UK. 😉

Joking aside, US and Canada don’t make it particularly easy for nurses to immigrate. Very tough to get credentials recognized if you are from a third world country.  For doctors it’s extremely hard. Not unless they plan on driving taxes.