Retirement

20122013

Thank you for reading my post. 

I have been trying to plan my retirement and I am still unsure whether it will work or I have missed something out?.

Some information:

I do have some savings which is earning interests not enough to live off completely, S&S ISA and a private work pension. 

Excluding State Pension, I was budgeting for £40K per year net spend  from 1/2026 to pay for UK and overseas living. Depends on how things work out I think the minimum I will need would be £30K pa. (My plan is to be flexible and anything left over will get reinvested as I know there is a high chance I will need more money as I age)

I am hoping by the time I withdraw most of my savings or investment it would be minimum tax or under the ISA wrapper. I would like to work out my pensions  (see later on)

 My current pots are

*£ in Cash ISA
*£ in S&S ISA   Index tracker (today’s value)
*£ (net) from Sale of property (btl)
Under £100K SW Pension (will do volunteer contribution as not working)

I have savings till end of 12/2027 and I am expecting more funds  *£150-180K (net) in the next 24 months These are excluded from the above figures *

My State Pension currently is 185.43/ week  (The max I can get will be £230.25pw  or £12014.12pa

All the * amount should last till at least around State Pension starts or beyond – how long for I do not know.

BTL

I am due to complete the sale of my BTL in the next two weeks. As I have maxed out my ISA, so i would like to find other options to make this money work for my retirement.

My initial plan is to spread this into higher interest savings accounts 4 - 5%, I am expecting rates to fall (managing my own expectations). I was looking into alternative or even annunity. As I do not understand these (and worry I will be tied in but I have to remind myself I have 5 years spending money and also I can sell the S&S ISA if need be).As I do not intend to trade a lot maybe once a year, ) why not invest most into funds?  As long as I do not sell and make a gain than I will not be taxed ? I can gradually  switch them into S&S ISA each year gradually (if ISA still exists)? I have at least 10 years to invest.

WORK PENSION

I would have used up all my pension within 3- 4 years would I still benefit from a draw down plan? As it looks complicated from what I have read or maybe my pension value is too low ?

Another option is to weigh up whether I will benefit from rejoining the NHS and its pension scheme (I have till September 2026 to rejoin and make up the missing 4 months) It will be £500pa index linked pension. If I do that for 10 years, I will live off any cash that is not tax free and max out on my Salary sacrifice till I am 66/ 67 yo. I think I may get more back from my pension and I will  do my travels and have a better quality of life while working.  or another alternative is to invest my salary into funds (and not S&S ISA as my £280K net from the sell of my BTL would still be maxing out each year's ISA allowance.   

My next step will be the cash ladder?

Any comments most welcome.

tacpot12

Whether or not you need to make any voluntary contributions of NI to make up your state pension to the maximum depends on whether you will return to work or not. If you return to work, you will probably make most of the contributions you need to maximise your state pension, even if you only return part time. 

You will be much richer in retirement if you return to work, not because of the NHS pension, but just because you will be living off your salary and not drawing from your savings, so these have more time to grow. If you can also invest some more, so much the better. 

BUT, and it is a big BUT; do you want to carry on working? I retired at 53 because the professional job I was doing was stressful and my employer didn't seem to value me or my contribution. 

I'm much happier being retired. I volunteer and have taken up a new hobby. I have more time to exercise and eat properly. I have more flexibility with my time, so my partner and I have been abl eto go down to one car. 

I retired with a much smaller pot than you have. Eight years ago, I started with a SIPP of £360K, a Cash ISA with £40K, and a rental property worth £125K. I sold that property and bought a cheaper one closer to where I live. 

I now have SIPP worth £400K and S&S ISA worth £100K and rental property worth £85K. I've also received £155K in dividends that I have withdrawn for income. After tax and including the rent, my income has been about £20K pa. (My total return has been about 7% across all assets). 

From a tax perspective, you would be better off drawing down your SW pension in the years before you start drawing your state pension.

Secret2ndAccount

Trying to add up all your numbers, you appear to have a pot of £1 million. Some people will tell you you can draw down from a pot at a rate of 4%. You are cautiously invested, and your pot might have to last a long time, so I would suggest 3% should be pretty safe for you. That's 30k/yr, increasing a little each year to cope with inflation.

Your pot will be 600k cash and 400k invested. That's a lot of cash. Why not transfer the cash ISA into S&S ISA and buy more of the index fund. Some of that money has to hold its value for 30-40 years, so a bit of growth would be helpful.

You mention working for the NHS, but you don't say how much pension it will pay. 

If you have no income, you can earn up to £18,570 in interest before you pay tax, though I suspect you might be quite close to that number. Maybe in a few years you have moved more cash into ISA's, spent some, and interest rates have fallen slightly. Then you would start drawing your pensions to use up your £12,570 tax free allowance. Want to do that before the State Pension kicks in.

At 30k, your plan seems achievable. At 40k you will need things to go your way, but certainly it could work out.

20122013

@tacpot12  Appreciate your post, as it gives me some comfort to hear your journey (and I maybe ok). I have stopped working for a while now due to similar reasons. Hence, I have already had a run on what my budget may look like.  

I have not thought about drawing down the SW pension before SP as I was going to leave it to the very end and live off my savings or sell down my SW pension and put into a SIPP? 

The reason I thought I will return to work is because it will be good for my well being and also I may feel less worry about running out of money (as I am more certain now it will be me me me to be depended on) As I have decided to leave the rental market so have not had any rental income for a while now.  Not easy to find suitable tenants and all the changes.

20122013

Secret2ndAccount 

Appreciate your reply, I do not think that is the amount I have.  I am using the max ISA allowance, so need to think of an alternative to reduce my tax.

NHS Pension, I did say if I can rejoin it will be about £500 pa index linked.  I still have a lot to think about, how to draw down my pension, and how to invest the proceeds from the sell of my property and cash ladder but at least no draw down plan which I find very confusing.