Allocations and wrappers

Ecee76

Hello

We're hoping to retire in the next few years and I have worked out a cashflow ladder allocation across cash/cash-like things, Ruffer, VLS60, a global all cap fund and a dividend-paying equity fund.

What I'm struggling with is how you marry that up with the different ways we'll be holding assets- my husband's pension, my pension, our ISAs and quite a lot unwrapped. Is there any rule of thumb for how to do this? Presumably it makes sense to have the highest growing/yielding assets in the most effective wrappers, but I also need to be sure that we're able to access the right assets at the right time and top things up as we go, without having to take too much from each pension to push us into a higher tax band. It seems impossibly complicated- is it just a question of looking at the allocations each year and working it out as we go?

DRS1

There are threads on here from people saying how they propose to take their money.  Worth having a look through the board.

The starting point seems to be to work out what you are likely to spend in retirement.

Then where will it come from.

Some people have a base income taken from eg a DB pension, the state pension an annuity or just drawdown.  This is to cover essentials.  Then they draw on their SIPP as and when to cover luxuries. 

If you were born in 1976 that means you may be retiring at 50.  In that case you will have a period before you can touch the pension.  People would cover that by drawing on their GIA or ISA depending on where their assets are.  You may want to start with the GIA on the basis that it is a taxable thing and you may want to reduce the amount of taxable income you have from that preserving the ISA (and of course selling out of the GIA to top up the ISA). Of course you may not be paying tax on the income from the GIA or the cash you hold outside an ISA (but I think you get the idea - use up what is taxable before you touch what is tax exempt).

The other gap which people try to cover is the period from when they can access their pension (55/57) up to when the state pension kicks in (67/68).  They tend to draw an increased amount from the SIPP for that period on the basis they can reduce the draw when they get to SPA.

These are gross generalisations and of course they may not apply to your particular situation.

Albermarle

Simplest option is to pay an IFA to sort it out for you, but of course it costs.

Linton

Generally I regard all investments together as a single pot, rather than treat some things as his and some as hers.  This does have the disadvantage that I may wish to sell an investment that happened to be held in my name to buy more of another that is currently  held in my wife's.  So it may be necessary to accept single funds spread over multiple accounts or devise a balancing trade to avoid any need to move cash around.

The different types of investment are allocated to optimise tax, taking into consideration that I am near to being a higher rate tax payer. So all investment income is generated within S&S ISAs to be withdrawn tax-free, cash is either held in current accounts for convenience or PBs with zero tax on income. We have no unwrapped investments, thus avoiding tax and hassle with CGT.

Our pensions have now been mainly depleted by annuities and withdrawals with most investments held in S&S ISAs.  The pensions are only used for Wealth Preservation funds as there is no intention to withdraw that money unless absolutely necessary.