Looking for advice 5 years from retirement

Grandst2

Safe withdrawal rates are 4% in the US if you want your investments to last 30 years in retirement. In the UK its closer to 3%, add in high charges and you're looking at something closer to 2%. I would be trying to get the charges down.

RichardS

Albermarle said:

Bostonerimus1 said:

Your FA is very expensive so get them to earn their money and ask them your questions.

Seriously at those level of fees your FA is a major drag on your returns.

I would sit down and do a budget to see how much retirement income you need, then take off your guaranteed income sources like DB pensions and see how much your investments need to generate. Then think about your asset allocation and how you might generate the required income, then drop the FA and yoi'll have an immediate 1.3% windfall.

As far as I know the OP Has not fully clarified what they are paying. 
Whether it is 1.3% advisor alone or whether it is 1.3% all in, including advisor, platform and fund costs.
The latter is in acceptable territory for an advised portfolio . A DIY portfolio could cost anything from 0.2% to 2 % ( if expensive managed funds were picked on an expensive platform ) .
The OP is not clear on charges for their other pension either.
Thanks. I guess one option might be to transfer the personal pension into my Scottish Widows company pension. I’m not 100% sure of the charges but I guess they are a lot lower.

I requested confirmation from my FA what the full charges are and they confirmed that ON TOP of the 1.3% there are additional charges of 0.27% so the full charge for me is 1.57% (which they claim is very reasonable for a Discretionary Management Service)

Albermarle

RichardS said:

Albermarle said:

Bostonerimus1 said:

Your FA is very expensive so get them to earn their money and ask them your questions.

Seriously at those level of fees your FA is a major drag on your returns.

I would sit down and do a budget to see how much retirement income you need, then take off your guaranteed income sources like DB pensions and see how much your investments need to generate. Then think about your asset allocation and how you might generate the required income, then drop the FA and yoi'll have an immediate 1.3% windfall.

As far as I know the OP Has not fully clarified what they are paying. 
Whether it is 1.3% advisor alone or whether it is 1.3% all in, including advisor, platform and fund costs.
The latter is in acceptable territory for an advised portfolio . A DIY portfolio could cost anything from 0.2% to 2 % ( if expensive managed funds were picked on an expensive platform ) .
The OP is not clear on charges for their other pension either.
Thanks. I guess one option might be to transfer the personal pension into my Scottish Widows company pension. I’m not 100% sure of the charges but I guess they are a lot lower.

I requested confirmation from my FA what the full charges are and they confirmed that ON TOP of the 1.3% there are additional charges of 0.27% so the full charge for me is 1.57% (which they claim is very reasonable for a Discretionary Management Service)

We have seen higher, but of course it is more than you can pay if you DIY, and most likely your SW workplace pension will be cheaper. Most likely somewhere between 0.4% and 0.7% depending on what discounts your employer has negotiated and what fund(s) you are invested in.
However then it will be for you to manage.

enthusiasticsaver

We  started off preparing for retirement  at around 50 intending to go at 60.

We made a start by overpaying the mortgage so that was gone before we retired. 

Then I set up a spreadsheet putting in cashflows from 60 to 66 which is when my state pension kicks in in 2026.  My husbands kicks in next year. We therefore had a gap from 60 to 66 to cover but luckily had good DB pensions plus SIPPS, stocks and shares ISAs and a DC pension for my husband. In the end we went at 58 due to good DB pensions and a healthy return on the ISAs so we are 5 years in now with 2.5 years until both our state pensions have paid out.  

We did use an IFA and still use him now and he cashflowed to show how much we could afford to draw to supplement our pensions.  We are drawing about 4% on SIPPS, DC pension and ISAs to supplement DB pensions. We probably will not need that once the state pensions pay out though.  

I think you need to settle on a number you need as income in retirement.  Bear in mind that you will be paying less tax presumably and no NI and no pension contributions. However you also need to work  out what sort of lifestyle you will want.  We have just changed my car and have used a fair chunk of savings to pay out for that but we only change cars every 9-10 years but if you want to change yours more frequently you need to work out how much you need for that.  Similarly we tend to do about four holidays a year, one overseas and three UK ones.  If you want  to travel more frequently that is something you need to think about.  Eating out and things like leisure subscriptions, or golf memberships etc also need to be considered for lifestyle. 

I would not say your aim of retiring in 5 years is unachievable but if you plan on taking £60k a year out of your savings/pensions it does not take a genius to see your savings will not cover not only the 5 years early retirement but also top up the state pension which is a fraction of that. Work out how much you actually will need monthly as a starting point and work backwards to see how to achieve that.  So if  you need £2500k per month how will you  get to that by drawing on pensions/isas you have at the moment? 

enthusiasticsaver

RichardS said:

wjr4 said:

Can you actually afford to retire? What income do you need in retirement? As it’ll have to be a lot less than £60k per annum. 

Current projections show income of around £30k (from aged 67) for me and also around £30k for my wife (from aged 67). So my objective is to see if I can afford to bridge the gap between 62 and 67

So essentially around £150k for you for those 5 years?  Where did you get that £30k projection from? 

RichardS

enthusiasticsaver said:

RichardS said:

wjr4 said:

Can you actually afford to retire? What income do you need in retirement? As it’ll have to be a lot less than £60k per annum. 

Current projections show income of around £30k (from aged 67) for me and also around £30k for my wife (from aged 67). So my objective is to see if I can afford to bridge the gap between 62 and 67

So essentially around £150k for you for those 5 years?  Where did you get that £30k projection from? 

30k projection from came from my FA looking at the two pensions and my ISA from aged 62 (assuming I keep up contributions) (and the State Pension) from aged 67. So it was basically £20k from 62 and £30k from 67

enthusiasticsaver

RichardS said:

enthusiasticsaver said:

RichardS said:

wjr4 said:

Can you actually afford to retire? What income do you need in retirement? As it’ll have to be a lot less than £60k per annum. 

Current projections show income of around £30k (from aged 67) for me and also around £30k for my wife (from aged 67). So my objective is to see if I can afford to bridge the gap between 62 and 67

So essentially around £150k for you for those 5 years?  Where did you get that £30k projection from? 

30k projection from came from my FA looking at the two pensions and my ISA from aged 62 (assuming I keep up contributions) (and the State Pension) from aged 67. So it was basically £20k from 62 and £30k from 67

How much will you actually need to cover your lifestyle? 

wjr4

RichardS said:

enthusiasticsaver said:

RichardS said:

wjr4 said:

Can you actually afford to retire? What income do you need in retirement? As it’ll have to be a lot less than £60k per annum. 

Current projections show income of around £30k (from aged 67) for me and also around £30k for my wife (from aged 67). So my objective is to see if I can afford to bridge the gap between 62 and 67

So essentially around £150k for you for those 5 years?  Where did you get that £30k projection from? 

30k projection from came from my FA looking at the two pensions and my ISA from aged 62 (assuming I keep up contributions) (and the State Pension) from aged 67. So it was basically £20k from 62 and £30k from 67

Are you only planning on living for 12 years? As 20k is too high to be taking without depleting your investments very quickly. You need to be saving a LOT more before retiring. 

hallmark

LHW99 said:

 I am due the full state pension at 67

Have you actually checked that, and read all the page? You are under transitional rules so could need anything between around 29 and 49 contribution years (from what others have said here).

Is that a typo or am I misunderstanding something?  I thought 35 qualifying years was all anybody needed...

RichardS

@wjr4 my FA predicts £16k from the Fidelity Pension from aged 62 and £4k from the Scottish Widows Pensions (assuming contributions continue at current levels for the next 5 years) ?