strategy for withdrawing pension / reinvesting

Bostonerimus1

I'd draw as much as you can from DC pensions each year while staying within the 20% tax bracket. Get as much into ISAs and then GIAs and get ready to pay CGT when you sell. You are at the stage when the tax man will inevitably come for the tax advantage retirement savings you squirreled away so just be grateful that you have a large amount on which to pay taxes.

You say that because you don't have children you don't have an IHT problem. Well you'll still be leaving money to someone so you still need to plan. Presumably you have some relatives so a gift giving plan might be useful and I would give to charities as well. When your net worth is in the seven figures tax planning is probably more important than investing and it can actually be difficult to reduce your net worth when a 10% annual increase in the stock markets increases it by 100ks.

Albermarle

Unlike others who have suggested seeing an IFA, if your current objective is tax free  or low tax capital accumulation, I would suggest consult a wealth manager

In other previous threads, it has been mentioned that a 'normal' IFA should be able to easily handle clients with wealth up to Couple of Million, as this can usually be accommodated within standard models, such as using pensions and ISA's, with pretty standard investment funds etc .
Once you get to £3Million and above it gets more complicated, and a Wealth manager is probably a good idea, as long as they actually are an experienced one. We know many advisors dress themselves up as Wealth Managers as they think it sounds good.

poseidon1

Albermarle said:

Unlike others who have suggested seeing an IFA, if your current objective is tax free  or low tax capital accumulation, I would suggest consult a wealth manager

In other previous threads, it has been mentioned that a 'normal' IFA should be able to easily handle clients with wealth up to Couple of Million, as this can usually be accommodated within standard models, such as using pensions and ISA's, with pretty standard investment funds etc .
Once you get to £3Million and above it gets more complicated, and a Wealth manager is probably a good idea, as long as they actually are an experienced one. We know many advisors dress themselves up as Wealth Managers as they think it sounds good.

Sadly the wealth manager appellation has become somewhat ambiguous.

I am referring to what would have been known as old school  'stockbrokering firms'  before the advent and popularity of the retail investment platforms who now also provide execution only stockbrokering.

Current stockbrokering wealth managers would include the likes of Rathbones, Brown Shipley, Killick & co, Arbuthnot Latham, Walker Cripps, Canaccord Genuity  etc. 

 These are the kind of wealth managers which the top firms of private client Accountants and Solicitors would refer their clients with £1 million+ to invest. However I appreciate that  outside of those professional circles, not exactly names that would be mentioned much on an MSE forum.

TJ666

Thank you for the comments,.  For clarity I already put money into  S+S ISAs every year.  Being able to live off our SPs is for NON DISCRETIONARY spending.  Don't worry we have some discretionary spending planned, but not necessarily in a regular, every year manner, it may be lumpy, and it may take us a while to get into our stride. 

The pessimist in me likes being in a position to live cheaply if we need to (super insulated house, negative energy bills, don't need a car and prefer to cycle).  It also means I can be more comfortable with risks in my investments. 
The optimiser in me likes to consider whether I'm missing something by not maximising the basic rate tax band.

Also, I have some recent observance of the effect of one person in a couple having a stroke and needing 24/7 care, at about £100k / year.  Devastating for him and the finances.  Our needs can change in an instant, and I'm sure my life will get more expensive when my husband dies.

I haven't been impressed with the IFAs I have come across over the years; whereas I have often been impressed with the helpful comments from most MSE forumites. Maybe it is time to step up to a wealth manager, if I can find one that gets us and where we're coming from.  So thank you again.

poseidon1

TJ666 said:

Thank you for the comments,.  For clarity I already put money into  S+S ISAs every year.  Being able to live off our SPs is for NON DISCRETIONARY spending.  Don't worry we have some discretionary spending planned, but not necessarily in a regular, every year manner, it may be lumpy, and it may take us a while to get into our stride. 

The pessimist in me likes being in a position to live cheaply if we need to (super insulated house, negative energy bills, don't need a car and prefer to cycle).  It also means I can be more comfortable with risks in my investments. 
The optimiser in me likes to consider whether I'm missing something by not maximising the basic rate tax band.

Also, I have some recent observance of the effect of one person in a couple having a stroke and needing 24/7 care, at about £100k / year.  Devastating for him and the finances.  Our needs can change in an instant, and I'm sure my life will get more expensive when my husband dies.

I haven't been impressed with the IFAs I have come across over the years; whereas I have often been impressed with the helpful comments from most MSE forumites. Maybe it is time to step up to a wealth manager, if I can find one that gets us and where we're coming from.  So thank you again.

I mentioned wealth managers on the basis they can offer more bespoke investment management strategies coupled with tax efficiencies ( eg gilt portfolios and offshore bonds holding stockbroker discretionary managed investment portfolios).

However given each of you have no immediate beneficiaries to inherit on 2nd death, a wealth manager in conjunction with a suitably qualified solicitor, could explore the option of you and your partner creating an enduring charitable trust ( in your names).

This would be a pilot trust established  intially with a nominal sum,  which would eventually receive estate assets on 2nd death. The Trust  remains invested thereafter with a view to either annually  benefiting charitable causes of your choice, or specific charitable objectives  you devise during your lifetime.  100% IHT avoidance is of course a satisfying by product.

As a couple who can in my view be accurately described as HNW  (as opposed to mass affluent), you therefore have potential access ( should you wish) to more tailored made investment and estate planning solutions via wealth managers, so worth exploring what they may have to offer.

DRS1

poseidon1 said:

TJ666 said:

Thank you for the comments,.  For clarity I already put money into  S+S ISAs every year.  Being able to live off our SPs is for NON DISCRETIONARY spending.  Don't worry we have some discretionary spending planned, but not necessarily in a regular, every year manner, it may be lumpy, and it may take us a while to get into our stride. 

The pessimist in me likes being in a position to live cheaply if we need to (super insulated house, negative energy bills, don't need a car and prefer to cycle).  It also means I can be more comfortable with risks in my investments. 
The optimiser in me likes to consider whether I'm missing something by not maximising the basic rate tax band.

Also, I have some recent observance of the effect of one person in a couple having a stroke and needing 24/7 care, at about £100k / year.  Devastating for him and the finances.  Our needs can change in an instant, and I'm sure my life will get more expensive when my husband dies.

I haven't been impressed with the IFAs I have come across over the years; whereas I have often been impressed with the helpful comments from most MSE forumites. Maybe it is time to step up to a wealth manager, if I can find one that gets us and where we're coming from.  So thank you again.

I mentioned wealth managers on the basis they can offer more bespoke investment management strategies coupled with tax efficiencies ( eg gilt portfolios and offshore bonds holding stockbroker discretionary managed investment portfolios).

However given each of you have no immediate beneficiaries to inherit on 2nd death, a wealth manager in conjunction with a suitably qualified solicitor, could explore the option of you and your partner creating an enduring charitable trust ( in your names).

This would be a pilot trust established  intially with a nominal sum,  which would eventually receive estate assets on 2nd death. The Trust  remains invested thereafter with a view to either annually  benefiting charitable causes of your choice, or specific charitable objectives  you devise during your lifetime.  100% IHT avoidance is of course a satisfying by product.

As a couple who can in my view be accurately described as HNW  (as opposed to mass affluent), you therefore have potential access ( should you wish) to more tailored made investment and estate planning solutions via wealth managers, so worth exploring what they may have to offer.

You would want some legal advice on this.  An easy route would be to set up a general charitable trust with power to make donations to other charities.  I say easier because if your plan is to establish and maintain a cricket pitch for the inhabitants of Nether Wallop then you may have some debate about whether that is a valid charity.  To have a grant giving trust is easier than to set up your own version of the National Playing Fields Association.

Because such a general charitable trust would have wide powers and objectives you would need to give some serious thought as to the trustees of this trust.  Most people who set up this sort of charitable trust like to fund it while they are still alive and be involved in the decision making themselves (ie they are themselves trustees).  For a charitable trust operating after your death you are going to want people as trustees who share your outlook - if you are a cat lover you don't want someone who gives it all to the Dog's Trust.

Pipthecat

NoMore said:

Linton said:

What are you going to do with the amount of money invested?  With low living costs and no obvious beneficiaries  you risk dying leaving most of your hard-earned savings untouched.  Under those circumstances does it really matter whether you pay higher rate tax or not?

I agree with this, maybe you should think about spending some of it, instead of keeping accumulating it. 

I totally agree.  You should plan to spend and do all the things you want to do while you can.  Paying a little extra tax now might be the price of that.  Alternatively I would like to thank you in advance for leaving most of your estate to the Inland Revenue.

I'm 53 and have seen a close friend become very ill, another need an elbow replacement after an accident, nearly all my aunts and uncles die or lose their mobility before 80 and it has totally changed my view to greater front loading of spend in retirement.

Cobbler_tone

I am definitely front loading mine to retire as soon as physically possible. I lead a modest lifestyle with a few finer things. I will gift out to my kids as much as I can afford, which will make a tangible difference to them now. The message will be "if there is anything left when I'm gone it will be a bonus."
I anticipate that my capital will increase due to inheritance but if it doesn't then no biggie, I haven't factored anything for it. Every person I know has got more comfortable the older they get. As for squirreling away £500k for care homes, not on my radar, although there isn't a masterplan to end with nothing. I'd imagine that is very difficult for most people to achieve! 
Like many, many people. I have been (closely) surrounded by people sadly passing away too soon, or elderly people who suffering with illness before spending their last days at home or in hospital. With the current support network, my parents certainly won't end up in a home. It is one motivation to retire, to spend more time with them and help where needed, although they are incredibly stubborn and independent despite their years. I know this is going to present a significant sad and challenging time but one most of us have to face. 

Albermarle

Pipthecat said:

NoMore said:

Linton said:

What are you going to do with the amount of money invested?  With low living costs and no obvious beneficiaries  you risk dying leaving most of your hard-earned savings untouched.  Under those circumstances does it really matter whether you pay higher rate tax or not?

I agree with this, maybe you should think about spending some of it, instead of keeping accumulating it. 

I totally agree.  You should plan to spend and do all the things you want to do while you can.  Paying a little extra tax now might be the price of that.  Alternatively I would like to thank you in advance for leaving most of your estate to the Inland Revenue.

I'm 53 and have seen a close friend become very ill, another need an elbow replacement after an accident, nearly all my aunts and uncles die or lose their mobility before 80 and it has totally changed my view to greater front loading of spend in retirement.

You never know though.
My OH is planning a visit to her Aunt for her 102nd birthday . She lives in a very posh care home ( £100k pa ?) . She moved there with her husband but he sadly died at 99.
My OH has also recently visited the Mother of a friend who is 100. She lives on her own in her own house, and is 100% lucid, just with some arthritis. No carers. 

Cobbler_tone

Albermarle said:

Pipthecat said:

NoMore said:

Linton said:

What are you going to do with the amount of money invested?  With low living costs and no obvious beneficiaries  you risk dying leaving most of your hard-earned savings untouched.  Under those circumstances does it really matter whether you pay higher rate tax or not?

I agree with this, maybe you should think about spending some of it, instead of keeping accumulating it. 

I totally agree.  You should plan to spend and do all the things you want to do while you can.  Paying a little extra tax now might be the price of that.  Alternatively I would like to thank you in advance for leaving most of your estate to the Inland Revenue.

I'm 53 and have seen a close friend become very ill, another need an elbow replacement after an accident, nearly all my aunts and uncles die or lose their mobility before 80 and it has totally changed my view to greater front loading of spend in retirement.

You never know though.
My OH is planning a visit to her Aunt for her 102nd birthday . She lives in a very posh care home ( £100k pa ?) . She moved there with her husband but he sadly died at 99.
 

You've got to have an expensive house and/or plenty of money if you plan for that 'exit' and intend to last that long.
It's a good use of it though if you want the most comfortable final years.