Do I need to speak to an IFA?

dunstonh

With a pot that size is lifestyling the right option?

It's not down to pot size.  it's down to your retirement planning method.

Aegon offer multiple lifestyling options to suit different methods.   In some cases, no lifestyling should be done.

For example, do you plan to use the 25% TFC up front or take it over time (latter is better financially)?   Are you planning to use drawdown or UFPLS (single, monthly, annual or whatever)?   Or will it be an annuity or a combination of methods (increasingly common)?

Once you know how you are taking your retirement benefits, you match the investments to that.

Albermarle

tacpot12 said:

Are you sure the lifestyling is aimed at drawdown? Most lifestyling schemes I have seen are aimed at buying an annuity at your retirement age and are not suited to drawdown. 

That was the case but not necessarily anymore.
I know one of my ex employer schemes now defaults to a drawdown lifestyle plan.

Most likely though there are still many people in old lifestyle annuity plans when they should not be.

Albermarle

With a pot that size is lifestyling the right option? Should I seek the advice of an IFA and invest? The lifestyling is aimed for a person to go into a drawdown pension at retirement.I am very good at budgeting but no clue about investments. I don’t know if the cost of an IFA is worth it?

One of the more common questions on the forum and with no black and white answer.

If you are really not interested in learning about basic investing and pensions, then the answer is probably yes.

However as suggested in previous posts, it is possible to learn with a bit of effort/interest, especially as you seem to be OK with numbers etc.

One conundrum is that to get the best value from an IFA, you need to have basic understanding your self. You can compare it to talking to a mechanic at the garage, it is better if you some inkling about what they are talking about, and about choices being presented.

Then if you have a basic understanding maybe you do not need an IFA anyway.

Also a one off consultation will be cheaper than an ongoing relationship and will point you in the right direction, but then you have to do most of the legwork yourself.

leosayer

The 5 years before retirement is the most critical time for financial planning. 

I'm a similar age to you and have spent the past 10+ years treating my own financial planning as a second job and yet I am still contemplating getting an IFA to give my plans the once over because I am always learning new things, particularly from this board but also from newspaper articles and Youtube videos.

You are those on who cares most about your own finances but the risk is that you may miss opportunities that  that will have a lasting impact on your finances - the unknown unknowns.

In addition to the technical aspects, IFAs should also be able to counsel around managing the emotions that come with market volatility and spending the money you have earned so that you make most of what you have earned.

Ibrahim5

When they take a big chunk of what you have earned it's not really making the most of it.

DT2001

taper said:

Hi,

I’m having a few little panics about how best to plan for our financial future so thought I’d post here. I regularly read these posts and find them a great source of information.

A bit about me, I’m 51 and about to be made redundant. I have a dc pot in a lifestying fund with Aegon currently worth £475k. I will be adding £80k from my redundancy to that pot. That is £60k for this tax year and utilising unused allowance from the previous couple of years.

With a pot that size is lifestyling the right option? Should I seek the advice of an IFA and invest? The lifestyling is aimed for a person to go into a drawdown pension at retirement.

I am very good at budgeting but no clue about investments. I don’t know if the cost of an IFA is worth it?

Also a tax question, as I will be utilising previous years unused allowance do I need to speak to HMRC or anything? My redundancy is a large sum so although £80k is going into my pension I am still expecting to receive £60k after deductions. If I don’t work again this tax year I assume I will have to do a self assessment as I will probably have overpaid some tax?

One final question is my partner, age 61, has £120k in a pension with SJP. I have read negative reviews on them and wondering if he should consider moving that? He is likely to start drawing on that pension in the next 3/4 years.

many thanks in advance for any help!

I have an IFA. I first used one when I received a large payment on the sale of a business. Prior to that we had been investing for a number of years and had a built up investments of a few hundred K so I think we had reasonable financial knowledge. He saved me money when initially setting up my pension and put in place a plan to achieve what we thought were our retirement plans. I do not feel the need to continually research the markets (I do regularly read the money section of papers and ask questions of my IFA) so am happy to pay an ongoing fee. We can retire as our goals have been met (however my OH enjoys her work) so I think it depends partly on your requirements - how much income do you want and to get that how much risk do you need to take? Will you get another job and if so how much is that likely to pay. Sorry, waffled on, as far as I am concerned an IFA is about planning including risk/reward rather than getting a better return from doing it yourself (you might but with more risk than you need to take).

You will probably have overpaid tax but maybe you can find out how best to deal with it on HMRC Customer forum to see if you have to wait for the end of the tax year or can submit something soon after receiving the payment.

Nebulous2

On the face of it you are in quite a strong position. You have more pension provision than most people will ever achieve already, at 51 and you have a useful chunk of cash at hand as well. 

However - we don't know anything about you. What you earn, how much you will need in retirement, or any outstanding financial commitments, such as a mortgage. 

I like simplicity and planning a retirement is much like any project at work - although the implications for you are greater. 

Questions to consider - not necessarily answer here. 

1. What is your goal?  What will you need in retirement? What do you intend to do, are there any expensive ones in there, such as world travel? At what age do you want to retire? What's the gap between stopping work and state pension age, which you will need to fund at a higher rate from your own provision,  then it can be reduced when state pension kicks in. Do you want or need to move home? 

2. Where are you now? What do you earn - how much do you spend? You say you are good at budgeting, what have you spent in the last couple of years and how much of it will you need in retirement? Heating the house may increase, spending on work clothes and commuting will decrease. Any mortgage left? 

3. What is the gap between 1 and 2? How are you going to get from 2 to 1?  Any compromises needing to be considered- such as working an extra year versus giving up an expensive hobby? 

This is all very individual. There are people on here who would be happy to retire on what you have already. There are others with more who worry it won't be enough. 

I haven't answered your question about an IFA.  I haven't used one, but I have predominantly a defined benefit pension from working in the state sector most of my life. I'm choosing my own investments and managing it myself for the money we have that falls outside that. I've made mistakes with that, mainly from trying to be too clever, but I have the confidence of knowing most of my requirements are secure, and they all will be once I reach state pension age. 

squirrelpie

Ibrahim5 said:

When they take a big chunk of what you have earned it's not really making the most of it.

When who takes a big chunk for what reason?

taper

MEM62 said:

taper said:

I have a dc pot in a lifestying fund with Aegon currently worth £475k.

What is your reason for lifestyling?  Is this an appropriate tactic for your retirement planning?  

Hi,

The only reason it is in a lifestyling fund is because I wouldn’t have a clue what other funds would be best to invest in! 

taper

Thank you for all your replies. 

I will be taking a break from work now. It’s been a stressful few years there. Ideally I would like to find a part time job going forward. I work in finance thought and part time jobs are very rare or very low grade/paid. I may have to accept this and take a step down if part time is more important though.

I paid off my mortgage last year and have no debt. We like holidays both abroad and staycations but I wouldn’t say we are extravagant. Ideally between us we would like a pension of 40/45k annually.

My dc pot will be approx £560k once my redundancy goes in and my OH who is 61 has a dc pot of £120k. He will get full state pension at 68. I will also get full state pension but obviously have a long wait for mine being 10 years younger than him.

We also have S&P isa £57k with Vanguard and £20k fixed cash isa. I will invest a further £20k in this tax year into my isa from my redundancy.

OH is working but his health hasn’t been the best lately so I worry how many more years he can continue. He loves working so doesn’t want to stop but that decision may be taken from him. Nothing life threatening but he has a very physical job.

I don’t know if we have enough saved if we were to stop working now or at what point we will have enough?

One day I also stand to inherit about £150k but don’t like to include that in case it’s needed for care home fees. Hopefully not!

Via Unbiased I have been put in touch with a company called The Private Office who should be contacting me later today re IFA. Has anyone heard of them or had any experience of them? It will just be an initial intro call today!