Government Bonds V Annuity

grumpsthegit

DRS1 said:

I think you'd be looking at long gilts for yields over 5% - maturing in 2038 or later.  Is that what you want for your gilt ladder?

Using the tool helpfully created by Lategenxer:

https://lategenxer.streamlit.app/Gilt_Ladder 

It looks like I can create a Gilt Ladder that runs for 32 years (till I hit 90!) with a Yield of 5.14%.

The ladder inside my SIPP will enable me to make the max withdrawl within my 20% tax band and cover all of my essential costs and leave a bit left over in the SIPP for small amount of Equities in case I live past 90 (fat chance!). I will then have a combination of Cash/ISA/GIA funds to access for the fun stuff and unexpected surprises. That's the theory, I just need to make the leap

 

Ciprico

On the assumption the state pension pretty much mops up the zero tax allowance I'm surprised no one has mentioned low coupon gilts to produce a low tax income  via tax free capital gains...

I appreciate very low coupons are getting rarer but saving tax on a chunk of pension must be helpful and move the needle towards gilts and away from annuities....?

QrizB

Ciprico said:

On the assumption the state pension pretty much mops up the zero tax allowance I'm surprised no one has mentioned low coupon gilts to produce a low tax income  via tax free capital gains...

Possibly because that's not really relevant to investments held inside a pension, and this thread is all about pensions.

grumpsthegit

Lowtrawler said:

grumpsthegit said:

So I am still seriously considering a gilt ladder to give me peace of mind plus flexibility, so wondering if I should cash out now whilst the market is at a high and yields are just over 5%. But I wonder what might happen if the autumn statement sends the cost of government borrowing up like Truss did a while back. Would that be good ie would the face value of gilts reduce pushing up the yields? Thanks

Whether you go for an annuity or a ladder, trying to time the markets is futile. What is important is whether you can purchase the income stream you require. If you can do so today, you can take the leap and then stop having to worry about market movements. That's essentially the whole purpose of choosing a gilt ladder or annuity over drawdown.

My Index-Linked ladder is now fully setup to commence from my expected retirement date. It gives me peace of mind to know that element of my portfolio is no longer subject to market risk. I am currently building a conventional ladder to extract the PCLS and make additional tax efficient withdrawals until my full pensions are payable. I have already got post-ladder (85) funds invested in a market tracker fund. As these will not be required for over 20 years, I won't be trying to manage them for the next 15 years and will ignore market movements.

I am taking the leap now also - just consolidating my pensions together and converting to cash to purchase the Gilt ladder as soon as I can - Now I have made the decision I just want the consolidation process over and done and no market swings please for the next few weeks whilst this takes place !

Cobbler_tone

grumpsthegit said:

Lowtrawler said:

grumpsthegit said:

So I am still seriously considering a gilt ladder to give me peace of mind plus flexibility, so wondering if I should cash out now whilst the market is at a high and yields are just over 5%. But I wonder what might happen if the autumn statement sends the cost of government borrowing up like Truss did a while back. Would that be good ie would the face value of gilts reduce pushing up the yields? Thanks

Whether you go for an annuity or a ladder, trying to time the markets is futile. What is important is whether you can purchase the income stream you require. If you can do so today, you can take the leap and then stop having to worry about market movements. That's essentially the whole purpose of choosing a gilt ladder or annuity over drawdown.

My Index-Linked ladder is now fully setup to commence from my expected retirement date. It gives me peace of mind to know that element of my portfolio is no longer subject to market risk. I am currently building a conventional ladder to extract the PCLS and make additional tax efficient withdrawals until my full pensions are payable. I have already got post-ladder (85) funds invested in a market tracker fund. As these will not be required for over 20 years, I won't be trying to manage them for the next 15 years and will ignore market movements.

 no market swings please for the next few weeks whilst this takes place !

Depends what you mean by 'market swing'. With borrowing costs at a 27 year high the FTSE may struggle. With the tariff shenanigans the US market may decline. All relative of course as the YTD figures hold up. 
September has traditionally been a poor month (at least in the US) for equities. Dropping 4% over the last 5 years and more than 2% over the last 10*

*source CNBC

dunstonh

Annuity rates are increasing again.     Get an updated lifetime annuity and Fixed term annuity quote before you commit.

grumpsthegit

Cobbler_tone said:

grumpsthegit said:

Lowtrawler said:

grumpsthegit said:

So I am still seriously considering a gilt ladder to give me peace of mind plus flexibility, so wondering if I should cash out now whilst the market is at a high and yields are just over 5%. But I wonder what might happen if the autumn statement sends the cost of government borrowing up like Truss did a while back. Would that be good ie would the face value of gilts reduce pushing up the yields? Thanks

Whether you go for an annuity or a ladder, trying to time the markets is futile. What is important is whether you can purchase the income stream you require. If you can do so today, you can take the leap and then stop having to worry about market movements. That's essentially the whole purpose of choosing a gilt ladder or annuity over drawdown.

My Index-Linked ladder is now fully setup to commence from my expected retirement date. It gives me peace of mind to know that element of my portfolio is no longer subject to market risk. I am currently building a conventional ladder to extract the PCLS and make additional tax efficient withdrawals until my full pensions are payable. I have already got post-ladder (85) funds invested in a market tracker fund. As these will not be required for over 20 years, I won't be trying to manage them for the next 15 years and will ignore market movements.

 no market swings please for the next few weeks whilst this takes place !

Depends what you mean by 'market swing'. With borrowing costs at a 27 year high the FTSE may struggle. With the tariff shenanigans the US market may decline. All relative of course as the YTD figures hold up. 
September has traditionally been a poor month (at least in the US) for equities. Dropping 4% over the last 5 years and more than 2% over the last 10*

*source CNBC

Oh, that will be just my luck to push the button just as we see a drop!

grumpsthegit

dunstonh said:

Annuity rates are increasing again.     Get an updated lifetime annuity and Fixed term annuity quote before you commit.

Thanks for the info, yes once I have all my funds consolidated and cashed in I will do a sanity check before pushing the button. Currently getting a 5.2% yield projected on the ladder so that's still pretty good.