Moving to cash

Triumph13

Annuity definitely looks the way to go.  If OP is married, a compromise might be use the 75% taxable to get a 100% joint life, RPI indexed annuity of just over £3k pa and then they could put the TFLS into cash as per their original plan, if that's what they feel more comfortable with.  If single, then as above except the annuity would be closer to £4k pa leaving most of the TFLS for whatever they fancy.

SVaz

Why on earth would you put the lot in cash if you only need £4k a year?
You could have 5 years worth in a short term money market fund while rates are still above 5% and the rest invested in income funds to replace what you’re taking so you don’t have to sell and hopefully keep pace with inflation. 

dunstonh

Like everyone else, I've no idea how it's going to perform in the future. 

And that is the normal for everyone at all times.

If I sell the funds, and just leave it as cash, then I'll know where I am. Just leave it in the SIPP, but withdraw £4k per year, until it's all gone. Maybe increasing the drawdown each year by a couple of percent. 

Pretty much guaranteeing you will run out of money and statistically likely to be the worst option.

Assuming I'd be absolutely fine, knowing that the money would run out in say 20, 25 years or whatever, (which I am),  is this a reasonable idea? 

No. Its daft.   You are planning to run out when you still have a good chance of being alive.

You may as well buy an annuity as that will give you more and not run out.

I know what you're saying, but in 30 years time, I'll be 95. If the value of it has halved, I'll probably not be too bothered. However, in theory , left as it currently is, it could halve tomorrow. 

Why would it halve tomorrow?  Are you invested that high risk?     Risk is not on/off.  It is a sliding scale.   Looking at investment risk at either end of the scale but nothing in between is not a good idea.

You should either buy an annuity or bucket your portfolio to reflect your drawdown plan.  Going 100% into cash is a really bad idea.

eastcorkram

SVaz said:

Why on earth would you put the lot in cash if you only need £4k a year?
You could have 5 years worth in a short term money market fund while rates are still above 5% and the rest invested in income funds to replace what you’re taking so you don’t have to sell and hopefully keep pace with inflation. 

Basically, because I don't know what I'm doing. I know what I would like it to do, and that's for me to have £4k a year from it. So I'm trying to figure the best way to do that.

Now, clearly, my plan of moving it to cash, and almost treating it like a savings account, is not the best option by the sound of it. But, at least it's simple and straightforward. I hadn't realised the annuity would be worth as much as it appears to be, so could well be the way to go. In those links, what does the 5 year guarantee mean? Also, if selecting level, does that just mean the yearly amount stays the same? If so, what's the difference between that, which people are advocating, and the original idea, which people say.... inflation?!?

I spoke to HL, in messages, and then on the phone, a couple of weeks ago, but didn't really understand what they were talking about. 

What I don't want, is to be having to go online, and keep faffing about, making sure there was enough cash to withdraw. Presume I'd have to do that, if I had put say £20k into a money market fund. Would a money market fund even pay much more than HL are paying in interest anyway? I'm sure it might pay more, and therefore last longer etc, but I've no idea how much of a faff it would be. 

In short, if I ask HL to sort out an annuity, can they do that, or do I have to do it independently? 

FIREDreamer

eastcorkram said:

SVaz said:

Why on earth would you put the lot in cash if you only need £4k a year?
You could have 5 years worth in a short term money market fund while rates are still above 5% and the rest invested in income funds to replace what you’re taking so you don’t have to sell and hopefully keep pace with inflation. 

Basically, because I don't know what I'm doing. I know what I would like it to do, and that's for me to have £4k a year from it. So I'm trying to figure the best way to do that.

Now, clearly, my plan of moving it to cash, and almost treating it like a savings account, is not the best option by the sound of it. But, at least it's simple and straightforward. I hadn't realised the annuity would be worth as much as it appears to be, so could well be the way to go. In those links, what does the 5 year guarantee mean? Also, if selecting level, does that just mean the yearly amount stays the same? If so, what's the difference between that, which people are advocating, and the original idea, which people say.... inflation?!?

I spoke to HL, in messages, and then on the phone, a couple of weeks ago, but didn't really understand what they were talking about. 

What I don't want, is to be having to go online, and keep faffing about, making sure there was enough cash to withdraw. Presume I'd have to do that, if I had put say £20k into a money market fund. Would a money market fund even pay much more than HL are paying in interest anyway? I'm sure it might pay more, and therefore last longer etc, but I've no idea how much of a faff it would be. 

In short, if I ask HL to sort out an annuity, can they do that, or do I have to do it independently? 

You can get annuity quotes here and buy one too. I did this a year ago to give me the courage to retire this summer and a nice relaxed summer it was too.

https://www.hl.co.uk/retirement/annuities/best-buy-rates

af1963

In those links, what does the 5 year guarantee mean? Also, if selecting level, does that just mean the yearly amount stays the same? If so, what's the difference between that, which people are advocating, and the original idea, which people say.... inflation?!?

An annuity normally stops when you die. A 5 year guarantee ( or any other period ) means that if you die within the first 5 years, it will pay out the rest of the money you would have received for that guaranteed period. It ensures that your family get something back if you're unlucky enough to die early.

"Level" means it never increases.  It's a reasonable option if you mainly need or want more income in the earlier years, as it starts at a higher rate than inflation-linked annuities. But the value of that fixed payment will be eroded by inflation and eventually the inflation linked annuities will overtake it even though they started lower.

eastcorkram

dunstonh said:

Like everyone else, I've no idea how it's going to perform in the future. 

And that is the normal for everyone at all times.

If I sell the funds, and just leave it as cash, then I'll know where I am. Just leave it in the SIPP, but withdraw £4k per year, until it's all gone. Maybe increasing the drawdown each year by a couple of percent. 

Pretty much guaranteeing you will run out of money and statistically likely to be the worst option.

Assuming I'd be absolutely fine, knowing that the money would run out in say 20, 25 years or whatever, (which I am),  is this a reasonable idea? 

No. Its daft.   You are planning to run out when you still have a good chance of being alive.

You may as well buy an annuity as that will give you more and not run out.

I know what you're saying, but in 30 years time, I'll be 95. If the value of it has halved, I'll probably not be too bothered. However, in theory , left as it currently is, it could halve tomorrow. 

Why would it halve tomorrow?  Are you invested that high risk?     Risk is not on/off.  It is a sliding scale.   Looking at investment risk at either end of the scale but nothing in between is not a good idea.

You should either buy an annuity or bucket your portfolio to reflect your drawdown plan.  Going 100% into cash is a really bad idea.

Thanks for that. You need to bear in mind though , I won't run out of money. The money in that sipp will run out. Big difference.

I'll look at an annuity, but can't help initially thinking this. 
 
My daft plan, that money runs out when I'm in my 90s. My other pension income carries on.

My daft plan, if I die at say 75, I'll have taken out £40 odd thousand, the balance would go to whoever was on the EOW form. 
 
With annuity, if I die at 75, that's it. 
 
Substitute any age into that, and the annuity only becomes better as I get well on towards being a hundred. 

I do though, like how simple an annuity would be once set up! 

Bostonerimus1

eastcorkram said:

dunstonh said:

Like everyone else, I've no idea how it's going to perform in the future. 

And that is the normal for everyone at all times.

If I sell the funds, and just leave it as cash, then I'll know where I am. Just leave it in the SIPP, but withdraw £4k per year, until it's all gone. Maybe increasing the drawdown each year by a couple of percent. 

Pretty much guaranteeing you will run out of money and statistically likely to be the worst option.

Assuming I'd be absolutely fine, knowing that the money would run out in say 20, 25 years or whatever, (which I am),  is this a reasonable idea? 

No. Its daft.   You are planning to run out when you still have a good chance of being alive.

You may as well buy an annuity as that will give you more and not run out.

I know what you're saying, but in 30 years time, I'll be 95. If the value of it has halved, I'll probably not be too bothered. However, in theory , left as it currently is, it could halve tomorrow. 

Why would it halve tomorrow?  Are you invested that high risk?     Risk is not on/off.  It is a sliding scale.   Looking at investment risk at either end of the scale but nothing in between is not a good idea.

You should either buy an annuity or bucket your portfolio to reflect your drawdown plan.  Going 100% into cash is a really bad idea.

Thanks for that. You need to bear in mind though , I won't run out of money. The money in that sipp will run out. Big difference.

I'll look at an annuity, but can't help initially thinking this. 
 
My daft plan, that money runs out when I'm in my 90s. My other pension income carries on.

My daft plan, if I die at say 75, I'll have taken out £40 odd thousand, the balance would go to whoever was on the EOW form. 
 
With annuity, if I die at 75, that's it. 
 
Substitute any age into that, and the annuity only becomes better as I get well on towards being a hundred. 

I do though, like how simple an annuity would be once set up! 

An annuity isn't an investment, it's insurance that guarantees an income for life from the returns the insurance company makes on your money and also from the money of people who die before you. I think you need to do some reading about investing and income generation as your idea of going all cash is a really big mistake. I would probably used part of your pot to buy an annuity and then invest what remains aggressively in a global equity index fund because once you have secured your $4k/year for life (either flat of RPI) you don't need what's left and can take some risk in the hope of good gains.

Moonwolf

Basically, because I don't know what I'm doing. I know what I would like it to do, and that's for me to have £4k a year from it. So I'm trying to figure the best way to do that.

If you haven't used it yet, the government Pension Wise service offers a free appointment.

It offers free and impartial guidance* and is paid for by the governement/taxes

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

* It is guidance, they won't tell you what to do with your money but they will explain some of the terms and your options.

eastcorkram

Bostonerimus1 said:

eastcorkram said:

dunstonh said:

Like everyone else, I've no idea how it's going to perform in the future. 

And that is the normal for everyone at all times.

If I sell the funds, and just leave it as cash, then I'll know where I am. Just leave it in the SIPP, but withdraw £4k per year, until it's all gone. Maybe increasing the drawdown each year by a couple of percent. 

Pretty much guaranteeing you will run out of money and statistically likely to be the worst option.

Assuming I'd be absolutely fine, knowing that the money would run out in say 20, 25 years or whatever, (which I am),  is this a reasonable idea? 

No. Its daft.   You are planning to run out when you still have a good chance of being alive.

You may as well buy an annuity as that will give you more and not run out.

I know what you're saying, but in 30 years time, I'll be 95. If the value of it has halved, I'll probably not be too bothered. However, in theory , left as it currently is, it could halve tomorrow. 

Why would it halve tomorrow?  Are you invested that high risk?     Risk is not on/off.  It is a sliding scale.   Looking at investment risk at either end of the scale but nothing in between is not a good idea.

You should either buy an annuity or bucket your portfolio to reflect your drawdown plan.  Going 100% into cash is a really bad idea.

Thanks for that. You need to bear in mind though , I won't run out of money. The money in that sipp will run out. Big difference.

I'll look at an annuity, but can't help initially thinking this. 
 
My daft plan, that money runs out when I'm in my 90s. My other pension income carries on.

My daft plan, if I die at say 75, I'll have taken out £40 odd thousand, the balance would go to whoever was on the EOW form. 
 
With annuity, if I die at 75, that's it. 
 
Substitute any age into that, and the annuity only becomes better as I get well on towards being a hundred. 

I do though, like how simple an annuity would be once set up! 

An annuity isn't an investment, it's insurance that guarantees an income for life from the returns the insurance company makes on your money and also from the money of people who die before you. I think you need to do some reading about investing and income generation as your idea of going all cash is a really big mistake. I would probably used part of your pot to buy an annuity and then invest what remains aggressively in a global equity index fund because once you have secured your $4k/year for life (either flat of RPI) you don't need what's left and can take some risk in the hope of good gains.

Then if it's that simple, show me in simple terms, how big a mistake it would be.

How old would I have to be to benefit financially, from the annuity route?