Ongoing or one-off IFA tax advice going into retirement

older_and_no_wiser

I will be turning 55 in a few months. I plan to retire in around 3 years. I currently have more than enough in my portfolio to retire at any point (stress tested with various retirement modeling software) but am contributing around 60% of my monthly salary into pension and ISA/savings accounts just to be on the safe side.

I am comfortable self managing my own portfolio and happy with asset allocation. Pension is all in DC SIPPs mainly with Interactive Investor but workplace SIPP with HL - which gets transferred every so often into II save on platform fees. I am comfortable with my asset allocation percentages and have no intention of ramping down equity allocation as I'll be remaining invested throughout retirement.

I don't have any requirements to leave a legacy or avoid IHT when I die as I have no children.

My only concern for when I go into retirement is how I schedule withdrawals to be as tax efficient as possible. I've read many threads here (and YouTube videos) on flexi access drawdown, UFPLS etc. and understand the concepts. I just have a niggle that I'm not sure how best to plan my withdrawals. 

Is it worth me using an IFA or Wealth Planner(?) to put my mind at ease now and/or at retirement? Or will I be entitled to free advice at 55 on this. I guess any free government backed advice wouldn't look at my personal circumstances and just show me the different options in a generic way. If I went Independent, is a one off session sufficient - as I can supply full details of all my finances, withdrawal needs etc in full detail as I have it all logged on spreadsheets and apps in great detail! Or should I engage on a regular basis?

El_Torro

Based on what you say it doesn't sound like you need an IFA. I am not near to retirement myself but if all your money is tied up in DC pensions then it's just a case of making sure you don't take too much out in any given tax year. You may also want to take into account your state pension, which will be a few years after you retire.

Do you also have money in ISAs and elsewhere? If so that might affect your best drawdown strategy.

Like I say I don't think you need an IFA. Go with the decision that makes you most comfortable though.

dunstonh

Is it worth me using an IFA or Wealth Planner(?)

It will not be worth using a wealth planner (assuming you mean an FA that is set up to hoover up assets under management to put on their in-house investments/DFM).    You wan't financial planning rather than investments.

 I guess any free government backed advice wouldn't look at my personal circumstances and just show me the different options in a generic way. 

There is no free government backed advice. 
a) its guidance, not advice.
b) its paid for by a levy on financial services companies.  So, you paying for it indirectly.
c) its not personalised and doesn't cover all the options.  I have had many people that got an idea in their head of what they would do after the pensionwise meeting only to end up doing something different that they were not told about.  Its good basic information. Especially for those that are completely unaware.  it's not so good when you are multi-wrapper or more knowledgeable.

If I went Independent, is a one off session sufficient - as I can supply full details of all my finances, withdrawal needs etc in full detail as I have it all logged on spreadsheets and apps in great detail! Or should I engage on a regular basis?

The first meeting with an IFA is free.  But that is just a getting to know each other and seeing if there is scope to proceed further or not.

Once you know what drawdown strategy you are using and then what investment strategy and what methodology you are going to apply (bucketing, guardrails, ratcheting, floor & ceiling, boundaries, interaction with multiple tax wrappers etc), then its unlikely that ongoing advice would be needed if you are doing the rest of it things.   It really depends on how good you are at following plans or not.

older_and_no_wiser

El_Torro said:

Based on what you say it doesn't sound like you need an IFA. I am not near to retirement myself but if all your money is tied up in DC pensions then it's just a case of making sure you don't take too much out in any given tax year. You may also want to take into account your state pension, which will be a few years after you retire.

Do you also have money in ISAs and elsewhere? If so that might affect your best drawdown strategy.

Like I say I don't think you need an IFA. Go with the decision that makes you most comfortable though.

Yes I have ISAs and cash savings, so can mix and match in retirement. I should be around these figures at point of retirement aged 58:

£480,000 in DC SIPP
£100,000 in stock ISAs
£30,000 in high interest cash savings
Full state pension at 67

I need to withdraw max £24,000 annually for a very comfortable lifestyle. There may be the odd larger sum withdrawal along the way.

Pat38493

If you have ISAs and other cash assets, one thing to keep in mind is to make sure you use all of your personal tax allowance in each tax year - some people live of savings for the first part of their retirement and leave their personal allowance unused - better to draw money out from SIPP up to your PA and then re-invest it outside if possible.  This is probably marginal gains in the grand scheme of things but still makes sense to do.

older_and_no_wiser

Pat38493 said:

If you have ISAs and other cash assets, one thing to keep in mind is to make sure you use all of your personal tax allowance in each tax year - some people live of savings for the first part of their retirement and leave their personal allowance unused - better to draw money out from SIPP up to your PA and then re-invest it outside if possible.  This is probably marginal gains in the grand scheme of things but still makes sense to do.

Yes that's a good tip! I'll have around £12,000 tax free allowance each year if I'm not working. There's also the 25% tax free element of the SIPP which presumably I'll need to factor in?

Pat38493

older_and_no_wiser said:

Pat38493 said:

If you have ISAs and other cash assets, one thing to keep in mind is to make sure you use all of your personal tax allowance in each tax year - some people live of savings for the first part of their retirement and leave their personal allowance unused - better to draw money out from SIPP up to your PA and then re-invest it outside if possible.  This is probably marginal gains in the grand scheme of things but still makes sense to do.

Yes that's a good tip! I'll have around £12,000 tax free allowance each year if I'm not working. There's also the 25% tax free element of the SIPP which presumably I'll need to factor in?

Yes if you haven't already taken the tax free cash.  I probably should have said to take taxable amount from your SIPP up to PA.

Dazed_and_C0nfused

older_and_no_wiser said:

Pat38493 said:

If you have ISAs and other cash assets, one thing to keep in mind is to make sure you use all of your personal tax allowance in each tax year - some people live of savings for the first part of their retirement and leave their personal allowance unused - better to draw money out from SIPP up to your PA and then re-invest it outside if possible.  This is probably marginal gains in the grand scheme of things but still makes sense to do.

Yes that's a good tip! I'll have around £12,000 tax free allowance each year if I'm not working. There's also the 25% tax free element of the SIPP which presumably I'll need to factor in?

If you have no other earnings/pension income in a given tax year and haven't applied for Marriage Allowance then you can take £16,760 without incurring any tax liability.

£4,190 TFLS + £12,570 taxable income.

And that leaves you with the full savings starter rate band for your high interest cash savings.

Pat38493

older_and_no_wiser said:

Pat38493 said:

If you have ISAs and other cash assets, one thing to keep in mind is to make sure you use all of your personal tax allowance in each tax year - some people live of savings for the first part of their retirement and leave their personal allowance unused - better to draw money out from SIPP up to your PA and then re-invest it outside if possible.  This is probably marginal gains in the grand scheme of things but still makes sense to do.

Yes that's a good tip! I'll have around £12,000 tax free allowance each year if I'm not working. There's also the 25% tax free element of the SIPP which presumably I'll need to factor in?

The other option you could research if you have ISA savings or other cash type funds is during your last year or two of retirement - you may find that you can save a lot of tax by paying your entire salary into your pension fund (or at least as much of it as you can without busting any limits) and living of your ISA - this way you can also save a lot of tax in your last x months of working.  You have to do some maths and spreadsheets to figure it out.

Pipthecat

you can take £16,760 without incurring any tax liability.

£4,190 TFLS + £12,570 taxable income.

And that leaves you with the full savings starter rate band for your high interest cash savings.

Does the starter saving rate stack with the other allowances?  

• Starter saving rate £5,000
• Personal Savings allowance £1,000
• Dividend Allowance £1,000

So based on this year's allowances could you engineer £23,760 tax free if you have the investments to deliver the dividends and interest? 

JohnWinder

Why wouldn’t one go to a tax agent for taxation advice?