Bold leap into retirement

grimsalve

MallyGirl said:

That is all perfectly normal. A bit of time invested in some reading will help you with the basics and that can form a solid foundation for moving forward. At the moment you may not even know the questions to ask, let alone be equipped to understand the answers. That can make the idea of handing it all over to someone else very appealing but it will take a slice out of your future funds. If you can, if interested, get a grasp of the fundamentals then you can DIY or make a better match with an IFA.

you hit the nail on the head right there!

Cobbler_tone

grimsalve said:

nicknameless said:

@grimsalve

I would echo the post above about looking at some of the freely available info before deciding between IFA and DIY.  I've just retired @53 (3 months ago - tapping this on holiday from the Black Forest!!).  As a couple we are in a lucky position to have some DB provision to draw on in coming years (approx. £20k per annum - very lucky to have).  We also have about £500k mostly in SIPPs, with a small amount in ISAs.  Our investments are split approx. 80/20 equities and bonds, with about 3 years of expenses in bonds / cash ISAs.  Equities all simple global equity ETFs.  Will draw on cash / bonds and rebalance as we go.  Have modelled retirement plans myself with tools that are easily accessible and have spreadsheets of my own to back that up.  Perhaps I don't know what I don't know, but much happier this way than paying an IFA to do essentially the same.

Edited to add that I am pretty sure you could buy a fee only plan for retirement from an IFA / financial planner.  

Many thanks @nicknameless - I think my biggest problem at the moment is "the fear" - fear of retiring, fear of investing in the wrong funds, fear of not understanding the terminology, fear of running out of money, etc.

The biggest fear I sense on here (from those who have a basic understanding of their options) is FOMO. That you could have more (you will never find the optimal path) and that you've missed a trick, or get overly obsessed on a singular issue like your tax bill. Get someone else to do it and you have the fear that someone else could have done things better, or that you should have just done it yourself.
Pick your path, own it and don't look back. If you have a comfortable amount to live on, does it matter that you could have (potentially) had another £100k before you meet your maker?

If you lack that basic understanding, then definitely educate yourself and/or get professional advice. Some people clearly make some very basic mistakes. Even there, if they are extremely affluent, does it really matter and they will navigate the rest of their life without an issue or even knowing.

LHW99

And if you do decide to use an IFA (some people don't want to spend as much time with spreadsheets etc as some here do), understanding more of the basics will make the conversation much more meaningful, rather than everything going over your head.

HUSKYPAL

grimsalve said:

nicknameless said:

grimsalve said:

I had a chat with an IFA yesterday and I was shocked at the prices he quoted (around £2,000 for their report and then a 3% charge if I decide to go ahead with their suggestions). I'm not sure what to do next.

Run in the opposite direction would be my advice.  3% charge on your assets will make your retirement decidedly less comfortable, and further away if you are currently accumulating towards it.  I DIY so not intimately acquainted with typical fees but those sound outlandish.  Suppose that might depend on the size of your assets.

Have you no desire to learn and DIY?

Ballpark figure of £500k currently in a SIPP that I'm thinking of turning into an annuity or something similar when I retire just so I get a reliable income of around £20k a year. No dependants, no debts, no commitments, etc. so I thought it would be a very quick and easy job for an IFA with the only questions being a 100% annuity, a percentage split between an annuity and drawdown, or just leave it as a drawdown (and then maybe a quick assessment of risk to make sure it's in the right fund).
By my calculations the 3% fee, plus the report, plus VAT, etc. would be around £20k which seems a bit excessive.
Would it be difficult to arrange an annuity without an IFA?

You don't need an IFA to set up an annuity. Looked into this recently. Check Moneyhelper.org for free annuity calculators. If you want to derisk, annuity is a way to go, you can also put part annuity, part drawdown for some secure income and some flexible. 

DT2001

grimsalve said:

nicknameless said:

grimsalve said:

I had a chat with an IFA yesterday and I was shocked at the prices he quoted (around £2,000 for their report and then a 3% charge if I decide to go ahead with their suggestions). I'm not sure what to do next.

Run in the opposite direction would be my advice.  3% charge on your assets will make your retirement decidedly less comfortable, and further away if you are currently accumulating towards it.  I DIY so not intimately acquainted with typical fees but those sound outlandish.  Suppose that might depend on the size of your assets.

Have you no desire to learn and DIY?

Ballpark figure of £500k currently in a SIPP that I'm thinking of turning into an annuity or something similar when I retire just so I get a reliable income of around £20k a year. No dependants, no debts, no commitments, etc. so I thought it would be a very quick and easy job for an IFA with the only questions being a 100% annuity, a percentage split between an annuity and drawdown, or just leave it as a drawdown (and then maybe a quick assessment of risk to make sure it's in the right fund).
By my calculations the 3% fee, plus the report, plus VAT, etc. would be around £20k which seems a bit excessive.
Would it be difficult to arrange an annuity without an IFA?

I would, as others have suggested, spend more time doing your own research. I watched some YouTube videos including James Shack and read more threads on this forum. I think you then get an idea of what you are willing to do yourself. The key questions for me were not how much will out pots produce but what do we need for our retirement plans (definitely not as simple as some make out as you might have a bucket list which will then front load your expenditure), how flexible you want to be with your expenditure (not at all then guaranteed income is important) and how to handle the psychology of a fluctuating fund.

The more you know the better questions you can ask (on here or of potential IFAs). 

How much do you need - I’m not sure how old you are and if/when you will receive your state pension? Maybe at SPA, if a few years away, you will end up with more income than you need if you use the whole of your pot for an annuity.

We were paying an IFA 0.5% p.a. but they wanted to increase that to 1% (max £10k) as their costs were rising (and I think the demand for their services) so I researched for quite a few months (from a base of an interest in finances but not detailed). My findings showed the investment approach of the IFA to be similar to other knowledgeable people (Lars Kroijer, Warren Buffet, James Shack and quite a few forumites) - I decided I would not beat the average so parted company with the IFA, bought diversified ETFs, created a cash buffer and used low cost platforms. This is saving me £1k p.m. which initially I am putting aside for one off advice when I need it in the future. 

I do check my investments too often however I have a good idea of the original costs so keep in mind that when the market drops I have just made a few % points less and not ‘lost’ money. If the market crashes/corrects, at the wrong time for me, will my income requirements still be met?

Use this forum to question your approach, I did and it has tempered my approach (one comment was “if you have won the game why are you still playing?” - this made me consider exactly what I wanted rather than what I thought I wanted).

Good luck 

grimsalve

DT2001 said:

grimsalve said:

nicknameless said:

grimsalve said:

I had a chat with an IFA yesterday and I was shocked at the prices he quoted (around £2,000 for their report and then a 3% charge if I decide to go ahead with their suggestions). I'm not sure what to do next.

Run in the opposite direction would be my advice.  3% charge on your assets will make your retirement decidedly less comfortable, and further away if you are currently accumulating towards it.  I DIY so not intimately acquainted with typical fees but those sound outlandish.  Suppose that might depend on the size of your assets.

Have you no desire to learn and DIY?

Ballpark figure of £500k currently in a SIPP that I'm thinking of turning into an annuity or something similar when I retire just so I get a reliable income of around £20k a year. No dependants, no debts, no commitments, etc. so I thought it would be a very quick and easy job for an IFA with the only questions being a 100% annuity, a percentage split between an annuity and drawdown, or just leave it as a drawdown (and then maybe a quick assessment of risk to make sure it's in the right fund).
By my calculations the 3% fee, plus the report, plus VAT, etc. would be around £20k which seems a bit excessive.
Would it be difficult to arrange an annuity without an IFA?

I would, as others have suggested, spend more time doing your own research. I watched some YouTube videos including James Shack and read more threads on this forum. I think you then get an idea of what you are willing to do yourself. The key questions for me were not how much will out pots produce but what do we need for our retirement plans (definitely not as simple as some make out as you might have a bucket list which will then front load your expenditure), how flexible you want to be with your expenditure (not at all then guaranteed income is important) and how to handle the psychology of a fluctuating fund.

The more you know the better questions you can ask (on here or of potential IFAs). 

How much do you need - I’m not sure how old you are and if/when you will receive your state pension? Maybe at SPA, if a few years away, you will end up with more income than you need if you use the whole of your pot for an annuity.

We were paying an IFA 0.5% p.a. but they wanted to increase that to 1% (max £10k) as their costs were rising (and I think the demand for their services) so I researched for quite a few months (from a base of an interest in finances but not detailed). My findings showed the investment approach of the IFA to be similar to other knowledgeable people (Lars Kroijer, Warren Buffet, James Shack and quite a few forumites) - I decided I would not beat the average so parted company with the IFA, bought diversified ETFs, created a cash buffer and used low cost platforms. This is saving me £1k p.m. which initially I am putting aside for one off advice when I need it in the future. 

I do check my investments too often however I have a good idea of the original costs so keep in mind that when the market drops I have just made a few % points less and not ‘lost’ money. If the market crashes/corrects, at the wrong time for me, will my income requirements still be met?

Use this forum to question your approach, I did and it has tempered my approach (one comment was “if you have won the game why are you still playing?” - this made me consider exactly what I wanted rather than what I thought I wanted).

Good luck 

Many thanks. I think I'm slowly getting the hang of it (or at the very least grasping the basics!) and I'm tempted to investigate the DIY approach eg. move most of my existing investments into a low cost SIPP platform with a passive global index fund, create a cash cushion in case of major downturns, corrections, crashes, etc.

Pat38493

HUSKYPAL said:

grimsalve said:

nicknameless said:

grimsalve said:

I had a chat with an IFA yesterday and I was shocked at the prices he quoted (around £2,000 for their report and then a 3% charge if I decide to go ahead with their suggestions). I'm not sure what to do next.

Run in the opposite direction would be my advice.  3% charge on your assets will make your retirement decidedly less comfortable, and further away if you are currently accumulating towards it.  I DIY so not intimately acquainted with typical fees but those sound outlandish.  Suppose that might depend on the size of your assets.

Have you no desire to learn and DIY?

Ballpark figure of £500k currently in a SIPP that I'm thinking of turning into an annuity or something similar when I retire just so I get a reliable income of around £20k a year. No dependants, no debts, no commitments, etc. so I thought it would be a very quick and easy job for an IFA with the only questions being a 100% annuity, a percentage split between an annuity and drawdown, or just leave it as a drawdown (and then maybe a quick assessment of risk to make sure it's in the right fund).
By my calculations the 3% fee, plus the report, plus VAT, etc. would be around £20k which seems a bit excessive.
Would it be difficult to arrange an annuity without an IFA?

You don't need an IFA to set up an annuity. Looked into this recently. Check Moneyhelper.org for free annuity calculators. If you want to derisk, annuity is a way to go, you can also put part annuity, part drawdown for some secure income and some flexible. 

It's correct you can set up an annuity without using an IFA, but sometimes an IFA can get you a better deal, even after taking into account their fees, especially if you have any health conditions that could be used with the application.

MetaPhysical

I am starting to write down a plan of what I am going to do after I retire in January.  My last day is New Year's Eve!  I am retiring because I just can't face the world of sales and work and the constant stress and hustle any longer at 58 and constantly reinventing myself and being in hock to an ever changing agenda and priorities.  I have many hobbies and interests, some with others and some on my own, but I have no doubt that at times I might get a bit bored, especially in winter.  Maybe retiring in winter is not the best of times but I just cannot stand it another month even.   I may also do some charitable work for the Canal Trust and some other things.  How long this "plan" survives reality will remain to be seen but I know I need to get out there a bit more once the social aspect of work has gone.  I'm a very sociable and happy person but sometimes like time by myself too.

Speaking to other retired people, I have come to realise that I have to get out of the mindset that watching a TV series or a boxed set, or tinkering around with my guitar, bike or piano in the daytime is "wasting time" and that if that's what I want to do on a particular day then that's fine.   We've got plenty of time when retired!  That mindset is a hangover from the world of work where I wouldn't think of "wasting" a Saturday or Sunday doing that but when retired it's different.  Ever since five years old, maybe earlier in some cases, your day is run to a calendar set by others. all through school and the world of work.  For 54 years I have been subject to that calendar.  From January I wont be.  Yeah, it scares me a bit if I am honest.  I'm going to cycle with others more and go walking in the dales more with others and find some groups.