Change of plan - How to use a SIPP.

jamesd

When it comes to investments inside the pension, your initial best course seems to require almost £50,000 withdrawing so that'd be in cash, uninvested.

The rest and any recycled money would be OK in cash for a while as you sort out which path to take. Then you'd look at how fast you're withdrawing and likely want a year or two of that withdrawing rate in cash as well. That could be complemented by a global equity tracker fund and a global bond fund. Or one of the Vanguard Lifestrategy combination funds to keep it simpler. IFA advice might suggest something different and is likely to recommend moving on from HL once the initial bits described earlier have been done.

SSTJCKel

jamesd said:

Your situation is worrying, in part because you mentioned rent. Are you in a part of the UK where a cheap flat can be bought for £50-60k? If you are, buying one may be a good move to remove the rent risks. You'd also want to discuss equity release with a mortgage broker so you can get some if your capital back to support a better lifestyle.

Hmmmm..... I live in Kent. I'm not sure its at all possible to buy a cheap flat let alone one for £50-60k. I would agree my situation is worrying..... The rest of your answers are very informative and have given me things to look at that I didn't know about so thanks I'll have a close look at all your suggestions but purchasing a property is not a possibility as far as I can see. I'm starting to think paying for an IFA may not be such a bad idea.  

jamesd

Kent is definitely not promising for housing costs!

Time to put serious thought into relocating to a cheaper area in retirement or as soon as possible if job allows.

The state pension is the same wherever you live so being in a cheaper area can make a huge difference to your costs and lifestyle, lower rent helping a lot even if you can't buy. Parts of NE England or maybe Welsh valleys can be shockingly cheap.

Living in a cheap home is one of they keys to what I've achieved in lifestyle.

Albermarle

Sharkb0y said:

You may find this quite helpful as it will let you see how long your pension would last using drawdown. You can play around with figures to vary the amount/length in years etc. It's also worth remembering that when you drawdown part of your pension is still invested so has potential for growth (and loss unfortunately!)

https://www.which.co.uk/money/pensions-and-retirement/options-for-cashing-in-your-pensions/pension-income-drawdown/income-drawdown-calculator-making-your-money-last-ajWVD8L3bN92

Be careful, the financial info from Which is not the best. As pointed out already this drawdown calculator is too optimistic on withdrawal rates. Better just to rely on them for TV and vacuum cleaner reviews.
Posters on here have contacted Which in the past to correct inaccuracies, but to no avail.

Sharkb0y

Albermarle said:

Sharkb0y said:

You may find this quite helpful as it will let you see how long your pension would last using drawdown. You can play around with figures to vary the amount/length in years etc. It's also worth remembering that when you drawdown part of your pension is still invested so has potential for growth (and loss unfortunately!)

https://www.which.co.uk/money/pensions-and-retirement/options-for-cashing-in-your-pensions/pension-income-drawdown/income-drawdown-calculator-making-your-money-last-ajWVD8L3bN92

Be careful, the financial info from Which is not the best. As pointed out already this drawdown calculator is too optimistic on withdrawal rates. Better just to rely on them for TV and vacuum cleaner reviews.
Posters on here have contacted Which in the past to correct inaccuracies, but to no avail.

How about this one then? The same sort of tool with similar outcomes. https://www.hl.co.uk/retirement/drawdown/calculator

jamesd

That one has the same issue and will give the same optimistic by about 50% answers. All have the problem that they make no allowance for bad early years even with average or better than average performance over the whole time.

If there's no mention of "sequence of returns risk" or the phrase "safe withdrawal rate" the answer is likely to have this issue.

Albermarle

jamesd said:

That one has the same issue and will give the same optimistic by about 50% answers. All have the problem that they make no allowance for bad early years even with average or better than average performance over the whole time.

If there's no mention of "sequence of returns risk" or the phrase "safe withdrawal rate" the answer is likely to have this issue.

Also as far as I can see there is also no account taken of inflation. It assumes that if you put in the calculator, say £1000 p month, then you will take £1000 per month for the next 20 or 30 years. By which time it will be worth a lot less in real terms.

jamesd

Inflation can be handled by reducing the growth rate for the investments appropriately. For example, I'd usually describe the long term returns of the UK stock market as about 5% plus inflation and every calculation done with that number would automatically be in today's money.

Same for contributions, stipulate inflation increases.