Look at my DIY plan, comments suggestions and criticism welcome

FIREDreamer

ali_bear said:

I looked again at some annuity quotes - prohibitively expensive!

They really aren’t.

JoeCrystal

ali_bear said:

I looked again at some annuity quotes - prohibitively expensive!

Actually it has been much better for a while! Not exactly 'prohibitively expensive'. Unless you think you should be getting double digits annuity then that is just very unrealistic goal.

dunstonh

ali_bear said:

I looked again at some annuity quotes - prohibitively expensive!

I'm doing annuities like hotcakes.   They are great value at the moment and are at 18 year highs.

ali_bear

Leaving aside any fixed term annuity, if I was to buy a single life RPI linked at age 60. What income do you think I should be aiming for from that? Or alternatively what proportion of my DC fund should I spend on it. How do you decide on that? 

FIREDreamer

ali_bear said:

Leaving aside any fixed term annuity, if I was to buy a single life RPI linked at age 60. What income do you think I should be aiming for from that? Or alternatively what proportion of my DC fund should I spend on it. How do you decide on that? 

£750k buys 7.5 x £4,672 = £35,040 based on my table above.

Work out how much you need or want and adjust accordingly.

FIREDreamer

And for interest, compare the rates above to what you could have bought in November 2011.

ali_bear

I know that rates were depressed for a long period. Possibly now they have returned to the new normal. But even if rates are good I am surprised to be recommended to put so much into one. 

FIREDreamer

ali_bear said:

I know that rates were depressed for a long period. Possibly now they have returned to the new normal. But even if rates are good I am surprised to be recommended to put so much into one. 

Just buy the guaranteed income you need. You could always annuitise the lot (after taking PCLS) and if it is too much, add it to an ISA which can hold the same investments as your DC pension.

I bought an annuity with 70% of my DC pot in 2023 and rates are now even better I am considering annuitising the rest. If you have won the game, why keep your cards on the table?

Any excess which is unspent will go into an ISA.

EDIT : inheritance tax on pension pots from 2027 are also forcing this decision and an annuity makes it easier to give away money from an actual income with no inheritance tax worry.

Hoenir

ali_bear said:

I know that rates were depressed for a long period. Possibly now they have returned to the new normal. But even if rates are good I am surprised to be recommended to put so much into one. 

Also consider that investment returns for a period have been abnormal. Easy to become accustomed to something and assume it will always be this way. 

ali_bear

So at those rates I could get an income of 14k for 300k, and it "breaks even" after about 21 years. That income plus my small DB and the state pension covers my monthly 2k. Nice.