£600K - prioritise ISA v SIPP for new money?

Vook

In your position I would salary sacrifice down to minimum wage (NLW) and transfer £20,000 a year from the GIA to the ISA.  How would that course of action affect your pre-retirement plans?

Opening a SIPP and transferring some of the DC pots may save on fees.  If the SIPP provider and Aviva both allow partial transfers then it would be possible to keep contributing by salary sacrifice but hold most of the value in the SIPP.

Aminatidi

See now that's where it gets interesting and touches on something I hinted at in a previous thread.

As someone on a decent salary and used to a monthly income with no fixed plans on exactly what I might do and when it's really really hard to overstate how alien that suggestions sounds to me.

I'm not saying it's a good or bad suggestion - and I'm not talking about the maths - that's the psychology side.

Aminatidi

So 12 months on and the current situation is.

I'm now 50.

£725K (ish) total - rough numbers -

SIPP £120K approx 60/40

ISAs £330K approx 60/40

Workplace Pension £92K approx 75/25

GIA £140K approx 60/40

Cash savings £35k

The last couple of years I've done a bed and ISA to sell down from the GIA and use my CGT allowance and the full £20K ISA allowance.

Workplace pension has around £1900/month added through me and my employer.

Depending on other spending £1500-2000/month goes into the SIPP.

I still only spend around £1500/month on average.

I'm starting to give more thought to any kind of "wind down" plan and I'm acutely aware that by most standards I've won and I'm trying to balance accumulation with "winning by not losing".

The usual suggestion is salary sacrifice more - I know the pros and cons of this and due to the way I spend my money (lumpy) right now I'm happy with the trade off of getting a bit less relief in return for flexibility.

Not sure there's a specific question here but any comments or critique would be appreciated.

El_Torro

If you continue to spend £1,500 a month in today's money then you can retire today if you want to. Your ISA and GIA will take you to your state pension (and beyond) and when you do start taking your state pension that will cover most of your expenses. You mention a DB pension in your opening post, even less need to use your investments when that starts paying out.

Sure, maximise your pension, especially since you can do it via salary sacrifice. Ultimately though you're not going to be short of money, as long as your modest spending doesn't increase.

Aminatidi

https://forums.moneysavingexpert.com/discussion/comment/82126494#Comment_82126494

Yeah it's a first world problem so I'm very fortunate in that regard.

I keep looking for something like Voyant or some proper financial planning software just for some sort of backup I suppose but I can't spot anything immediately obvious that I could be doing more other than using SS if I wanted to give up some flexibility in return for a little more tax relief.

I'm single with no kids so quite a bit of what I read or get fedback is also reminding me that I do actually need to spend some of it too.

SpeedSouth

I'm in a similar quandary to you at present. My numbers are reversed in that my SIPP is larger than yours (little bit more than your total) and my ISAs are less, in your GIA territory figures.

I'm at the point where I want to get out sooner than I originally thought was possible. Im opposite way round that to accelerate that I need to accept im going to be paying 40% tax and even more if i breach child benefits to get as much money as I can in ISAs / GIA in the next few or a bit years.

That is a difficult pill to swallow at present and not committed to it yet.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82132482#Comment_82132482

Is there no option whereby you could continue avoiding the higher rate threshold through pension contributions, get out when you'd otherwise have done so, and then find a way of earning some money during the time you bridge pension access age?

SpeedSouth

https://forums.moneysavingexpert.com/discussion/comment/82132494#Comment_82132494

Yes maybe.. im 44 currently and the bridge pot has a very long time to last. Realistically id need to be on a decent salary for a few years yet. I could suffer the 40% rate and prioritise ISAs to accelerate the program. Assuming a nominal growth and state pension being avaliable to me, when i get there id either never be able to spend my pension or end up paying 40% on it anyway if i keep contributing at current rates.

Of Course there could be a reversal to affect the game.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82132510#Comment_82132510

That is quite a long time to bridge.

It would be a fair assumption that you'd have at least 10 years between pension access age and state pension if it is still there (I think it probably will be).

During those 10 years you'd be in a position to draw down the equivalent of £66k per year including tax free cash without crossing the HR tax threshold (i.e during your 60s). That is likely to put a dent in the pot. Then £50k-ish pa thereafter.

A pension pot that grows to a million in today's money could become problematic. Which is one reason to put lower growth assets in your pension if you don't need to take the risk.

penners324

Far too much in cash & isas. Get it in the pension asap.