Over Pensioned

fcandmp

Bostonerimus1 said:

leosayer said:

I see no point in paying 40% tax on pension drawdown just to put it straight into an ISA which you might never spend.

Try not to get too hung up on the tax rate you pay. Is your current approach stopping you from doing some things you'd like to do?

What would you do if the 40% tax threshold dropped to £40k?

What would you do if increased to £60k?

I agree with this, don't let paying a bit of tax drive your planning. But there are things to consider...so are you leaving your home to your children as this can increase the effective IHT threshold and are you married? as you can pass on unused nil rate band when a spouse dies. Other than that you can manage your pot size and avoid tax by charitable giving and also by giving gifts to family over a period of years.

Giving to local charities can be very rewarding as you can often see the results. I give to a couple of churches in my home town as they were a source of comfort and fellowship to my mother in the last couple of decades of her life. This year my donation is being used to renovate the kitchen in the church hall which makes me feel good and has helped a bit in my tax planning...although that's very secondary.

Many thanks for all the ideas. I think my general take from all responses is to update the annual budget we set out when I retired and factor into it a 5 year giving / spending plan, as IHT will become a broader issue given the value of our house and other savings. We are very fortunate to be able to live as we do, with very little outside our grasp financially. Perhaps we are still transitioning our mindset from a savings orientation to a spending and giving orientation.