Plan for critique (please)

WillC999

Hi all, like many on here, I've been a background viewer for some time, and greatly appreciative of all the useful advice. Now it's time for me to share my retirement plan in the hope of some useful critique. 

Me (54): SIPP 420k (est. @55), DB 18k@65 with no TFLS (or 13k@55), full SP, cash savings 50k
OH (52): SIPP 120k (est. @55) , DB 15k@65 with no TFLS (or 10k@55), full SP, cash savings 10k
~300k house with mortgage paid off

Me + OH not married - though would consider a civil partnership if it makes things easier.
I can take my SIPP at 55, the OH at 57 due to the coming changes. 

We're fairly modest spenders with combined annual run costs (bills, food, car etc) at 20k ish. Anything else is fun, excepting the odd exploding boiler.

We're both fairly middling risk takers so the SIPP investments are typical 60:40 shares/bonds funds. 

The initial idea was the default DBs at 65, with the SIPPs filling the gap from 55 to 65 (plus SP at 67 we hope). Then I considered taking DBs at 55 - bit less but for longer. It seems to come to the same eventual payout somewhere in the mid 80s. 

I like the idea of the DBs at 55 because they will pay for all bills (feels a bit like an index-linked annuity), with the SIPP acting like a fun pot, which can be spent front-loaded when the legs still work. Leaving the DBs until 65 makes us richer later when we probably won't need it.

No kids, but the nephews and nieces are welcome to the house sale if it doesn't become a care fund. Plans do not consider receiving any inheritance from remaining parents.

My spreadsheet has the SIPP income as UFPLS with 25% tax free, but I'm also playing with the idea of taking the entire SIPP TFLS up front then taking the rest fully taxable. The TFLS would be spent/ dripped into a S&S ISA, to protect against a government doing something nasty with the TFLS (maybe unlikely but these are odd times). This also seems to make little real difference, other than to complicate the spreadsheet. 

Things I've picked up from here: 
- Don't let your income go into the 40% tax band 
- Not a bad idea to drip your SIPP pot into a S&S ISA (i.e. make use of the 20% band)
- Retire as soon as you are reasonably able - health problems can come out of the blue
- Spend hours on 'the spreadsheet' (I have...)

As far as 'coping' with not working, we both have outdoor interests, the OH is also into crafts - me less so, and slightly concerned about the winters. 

I think that's about it. Comments welcome. 

Marcon

WillC999 said:

Me + OH not married - though would consider a civil partnership if it makes things easier.
I can take my SIPP at 55, the OH at 57 due to the coming changes. 

Romance may be dead(!), but the tax advantages of marriage or civil partnership, and the certainty of a partner's pension from a DB scheme (they don't all pay out to unmarried partners, or where the marriage took place just before death), not to mention ease of administration in other areas... I'd make that top of your list - and updating your wills.

Albermarle

As above and makes a significant difference to IHT liabilities too.

badmemory

Don't forget power of attorney x 2 each.  How the house is owned is also something to think about.  An unfortunately worded will can cause a lot of problems.

squirrelpie

As per what @Marcon said, plus are you sure that your OH can take their pension at 55. i.e. are you sure it doesn't automatically change to 57 as the SIPP does?

Taking the DBs early sounds like a good plan, mid-eighties is pretty much your life expectancy now. Taking the TFLS from your SIPP with £20k each tax year means you can put it straight into an ISA. You can always take the remainder out in a single large chunk if legislation makes it a good idea and just live with the extra tax on interest for a while.

Triumph13

Looks good to me.  Taking DB's early gives you £20k+ each post tax once your state pensions are in payment vs spending of £20k total at the moment.

If you retire tomorrow about 2/3 of your DC pots would be taken up with bridging the gap to when all the DBs and SPs are online.  The remaining 1/3 would give you about another £5k pa on top.

Another vote for civil partnership sooner rather than later.  Besides the inheritance issues, survivor's pensions and healthcare proxy issues, marriage allowance will save you a few quid in the years before OH can access their pension.  

WillC999

All helpful stuff, thank you. Will consider romantic options ;-)

cfw1994

We went to a “Secure the Pensions Day” at witnesses for two pals earlier this year….or Civil Partnership, as the Government prefer to call it 🤣
They wanted minimal formality & got it, although we pressed them to come for a nice lunch afterwards.  

They did it purely for that reason.  We witnessed their wills and indeed the LPoAs a few weeks later.
It is just life admin, well worth sorting out as you would both like 👍

Your plan(s) sound basically fine….it is the tweaking of how you do things that is the tricky part.

I feel like you need to focus a bit more on how you will spend your time.   

Maybe a lot more 🫣 - this could hopefully be 30+ years of fun ahead 🤷‍♂️

One thread on that topic I started is here.

You make no mention of your work….maybe one option might be to reduce hours, free up days and see how things might go.  Or maybe you (both?) prefer the idea of ditching it entirely.

I personally feel that stepping away in spring avoids that first winter, but you are concerned about that time so ought to put some thought to that 👍

WillC999

badmemory said:

Don't forget power of attorney x 2 each.  How the house is owned is also something to think about.  An unfortunately worded will can cause a lot of problems.

Jointly owned - both of us on the deeds. That ok? 

Wills are mirrors.

WillC999

squirrelpie said:

As per what @Marcon said, plus are you sure that your OH can take their pension at 55. i.e. are you sure it doesn't automatically change to 57 as the SIPP does?

Taking the DBs early sounds like a good plan, mid-eighties is pretty much your life expectancy now. Taking the TFLS from your SIPP with £20k each tax year means you can put it straight into an ISA. You can always take the remainder out in a single large chunk if legislation makes it a good idea and just live with the extra tax on interest for a while.

Good point re. the DB pension age, it’ll be 57 too I expect. Which means I’ll need to fund my OH for 2 years - can’t be leaving her grafting.

WillC999

@cfw1994 - wise words. The winter issue bothers me. Summer will be fine. I’m generally a ‘self-starter’ and find things to do. Will think further.
I freelance in IT, so could potter on, but you need to stay up to date so there’s a minimum viable workload. 

OH works in public sector admin and I think would leave tomorrow without a care, for all the usual reasons.