My retirement journey is about to start

Bianchiintenso

Hi, due to work events I am going to (almost) retire very soon.  I have a small home based Ltd company, just myself and my partner, the vast majority of work will come to an end soon, but small pockets will come in, which I plan to continue to do 1 or 2 days a week or on evenings. I would have preferred to wait until markets started show signs of improvement before using drawdown, but time and life are marching on!

I started this new ‘slower’ working practice a month ago and in 3 month time I will have a better idea of what annual income to expect from this part time work ( I am estimating between £4k-12k p.a., but very much an unknown at this stage). 

Any earnings over and above our needs would be added to wife’s sipp or an ISA.

The below is an outline of where I’m at financially and what my plan is, I’d be grateful for any thoughts/pointers or ideas as I start this journey:

Age 65 this November, state pension due Nov ‘24 (£11,417.72) Partner age 57 state pension due  May ‘33 (£9660.86)

House value £500,000 no mortgage, no plans to equity release or downsize only as a last resort. 

Children both now self sufficient.

Savings £25,000

Debts £5,000 left on 0% card to pay off for Solar PV investment

My Pension with Zurich (no drawdown option) so will need to be moved to a SIPP, currently £380,000

Partners pension in SIPP with AJ Bell 50/50 mix of Vanguard LS 60 and HSBC Global Strategy balanced currently £88,000

After doing much research and much reading of this forum, I’m ‘planning’ to open a SIPP with AJ Bell for the £380,000 and using a mix of majority of Vanguard LifeStrategy 60% Equity A Acc and HSBC Global Strategy Balanced C Acc with a smaller percentage in HSBC Global Strategy Adventurous AC (do I need to leave some in cash?)

I am not planning on taking the upfront Tax Free Lump Sum but withdraw a sum £25,000 in first year plus use savings and reduce to £20,000 when SP kicks in with 25% tax free on each withdrawal.

For the first year before SP kicks in will use savings and whatever work income comes in and/or drawdown if necessary then drawdown as needed to leave enough savings

I have an appointment booked with pensionwise for mid July.

Thanks for taking the time to read this any thoughts/pointers or ideas on how I can optimise my plan to make sure I'm in as fit a financial state possible as I start this journey or indeed if I've missed something obvious, gratefully received.

Marcon

Bianchiintenso said:

Hi, due to work events I am going to (almost) retire very soon.  I have a small home based Ltd company, just myself and my partner, the vast majority of work will come to an end soon, but small pockets will come in, which I plan to continue to do 1 or 2 days a week or on evenings. I would have preferred to wait until markets started show signs of improvement before using drawdown, but time and life marching on!

I started this new ‘slower’ working practice a month ago and in 3 month time I will have a better idea of what annual income to expect from this part time work ( I am estimating between £4k-12k p.a., but very much an unknown at this stage). 

Anything earnings over and above our needs would be added to wife’s sipp or an ISA.

The below is an outline of where I’m at financially and what my plan is, I’d be grateful for any thoughts/pointers or ideas as I start this journey:

Age 65 this November, state pension due Nov ‘24 (£11,417.72) Partner age 57 state pension due  May ‘33 (£9660.86)

House value £500,000 no mortgage, no plans to equity release or downsize only as a last resort. 

Children both now self sufficient.

Savings £25,000

Debts £5,000 left on 0% card to pay off for Solar PV investment

My Pension with Zurich (no drawdown option) so will need to be moved to a SIPP, currently £380,000

Partners pension in SIPP with AJ Bell 50/50 mix of Vanguard LS 60 and HSBC Global Strategy balanced currently £88,000

After doing much research and much reading of this forum, I’m ‘planning’ to open a SIPP with AJ Bell for the £380,000 and using a mix of majority of Vanguard LifeStrategy 60% Equity A Acc and HSBC Global Strategy Balanced C Acc with a smaller percentage in HSBC Global Strategy Adventurous AC (do I need to leave some in cash?)

I am not planning on taking a Tax Free Lump Sum but withdraw an annual sum £25,000 in first year plus use savings and reduce to £20,000 when SP kicks in with 25% tax free.

For the first year before SP kicks in will use savings and whatever work income comes in and/or drawdown if necessary then drawdown as needed to leave enough savings

I have an appointment booked with pensionwise for mid July.

Thanks for taking the time to read this any thoughts/pointers or ideas on how I can optimise my plan to make sure I'm in as fit a financial state possible as I start this journey or indeed if I've missed something obvious, gratefully received.

Just checking - your limited company is making the contributions (assuming it has the cash to do so), rather than you or your wife making personal contributions...? If so, those contributions can be more than earnings.

Bianchiintenso

We have been making personal contributions from drawings/dividends and lump sums from as and when profits allow. I'm not convinced we have been right in doing it this way, our accountant said it didn't really matter in our circumstances.

Marcon

Bianchiintenso said:

We have been making personal contributions from drawings/dividends and lump sums from as and when profits allow. I'm not convinced we have been right in doing it this way, our accountant said it didn't really matter in our circumstances.

Without knowing your circumstances, it's impossible to comment - but I'd certainly ask your accountant to spell out exactly what those 'circumstances' are to ensure that is still the case.

Bianchiintenso

Yes I will, thanks for the push on that!, apart from that does anything ring alarm bells? It's a big step and like a lot of people going from being a saver to a spender is taking some getting my head around. The usual worries of will the money last etc, one particular friend says "lets be honest, you're not going to live long enough to spend it"

saveallmymoney

If your withdrawal amounts are enough to live on, your asset amounts look fine to support them. (consider downsizing a backup option later if needed).

Bianchiintenso

saveallmymoney said:

If your withdrawal amounts are enough to live on, your asset amounts look fine to support them. (consider downsizing a backup option later if needed).

Thanks for that, there's a certain amount of guesswork with withdrawal amounts, as a retirement lifestyle may change our money spending patterns for better or worse.

FIREDreamer

saveallmymoney said:

If your withdrawal amounts are enough to live on, your asset amounts look fine to support them. (consider downsizing a backup option later if needed).

The oft quoted 4% rule would indicate a supportable drawdown of just under £16,000 per annum. So £25,000 reducing to £20,000 is a bit punchy?

Bianchiintenso said:

saveallmymoney said:

If your withdrawal amounts are enough to live on, your asset amounts look fine to support them. (consider downsizing a backup option later if needed).

Thanks for that, there's a certain amount of guesswork with withdrawal amounts, as a retirement lifestyle may change our money spending patterns for better or worse.

The 4% rule is for a 30 year retirement. I know you are 65 but your wife is a lot younger so that may be something to think about?

Pipthecat

What's the main driver for choosing AJ Bell for your drawdown?  Is it cost or do they offer better flexibility or functionality?  I'm about to start researching my options for drawdown.

Bianchiintenso

FIREDreamer said:

saveallmymoney said:

If your withdrawal amounts are enough to live on, your asset amounts look fine to support them. (consider downsizing a backup option later if needed).

The oft quoted 4% rule would indicate a supportable drawdown of just under £16,000 per annum. So £25,000 reducing to £20,000 is a bit punchy?

Bianchiintenso said:

saveallmymoney said:

If your withdrawal amounts are enough to live on, your asset amounts look fine to support them. (consider downsizing a backup option later if needed).

Thanks for that, there's a certain amount of guesswork with withdrawal amounts, as a retirement lifestyle may change our money spending patterns for better or worse.

The 4% rule is for a 30 year retirement. I know you are 65 but your wife is a lot younger so that may be something to think about?

Thanks, I make it £18,400 from the £460,000?

Once wife’s pension kicks in in 10 years and spend naturally reduces with age, mobility etc I think we should be ok, but your right it’s probably tighter than I would like

Bianchiintenso

Pipthecat said:

What's the main driver for choosing AJ Bell for your drawdown?  Is it cost or do they offer better flexibility or functionality?  I'm about to start researching my options for drawdown.

Latest research was showing it as one of the cheapest for drawdown 0-0.25%, as I use it already for wife’s SIPP, I’m comfortable with using the online platform and choices available. 

I am fairly sure of my fund choices, but will research more about the aj bell ready made portfolios as an alternative, and talk to pensionwise  and aj bell before pressing the submit button.

As I say it’s the start of a journey, I’m within my comfort zone all things taken into account, I don’t have exaggerated expectations, I’ll be more than happy if at the end of it all we can say “yes that worked out ok”