Retirement at 60, the plan:

magd36

Marcon said:

OP - stop posting for a minute and read (carefully) the replies you've received. 

One more question. If I plan to buy a £15k SIPP with the available allowance this year in a lump sum, do I have to wait until March once the years earnings have built up?

Isthisforreal99

magd36 said:

Marcon said:

OP - stop posting for a minute and read (carefully) the replies you've received. 

One more question. If I plan to buy a £15k SIPP with the available allowance this year in a lump sum, do I have to wait until March once the years earnings have built up?

No, but do remember your actual payment should be 80% of the earnings figure. Also should she stop work and not earn the £15k then any excessive relief will need to be clawed back.

magd36

Isthisforreal99 said:

magd36 said:

Marcon said:

OP - stop posting for a minute and read (carefully) the replies you've received. 

One more question. If I plan to buy a £15k SIPP with the available allowance this year in a lump sum, do I have to wait until March once the years earnings have built up?

No, but do remember your actual payment should be 80% of the earnings figure. Also should she stop work and not earn the £15k then any excessive relief will need to be clawed back.

Thanks. Is the 80% to allow for her DB contributions (inc her employers)

MallyGirl

magd36 said:

Isthisforreal99 said:

magd36 said:

Marcon said:

OP - stop posting for a minute and read (carefully) the replies you've received. 

One more question. If I plan to buy a £15k SIPP with the available allowance this year in a lump sum, do I have to wait until March once the years earnings have built up?

No, but do remember your actual payment should be 80% of the earnings figure. Also should she stop work and not earn the £15k then any excessive relief will need to be clawed back.

Thanks. Is the 80% to allow for her DB contributions (inc her employers)

It is so that the gross contribution (hers plus tax relief) don't exceed her salary

magd36

MallyGirl said:

magd36 said:

Isthisforreal99 said:

magd36 said:

Marcon said:

OP - stop posting for a minute and read (carefully) the replies you've received. 

One more question. If I plan to buy a £15k SIPP with the available allowance this year in a lump sum, do I have to wait until March once the years earnings have built up?

No, but do remember your actual payment should be 80% of the earnings figure. Also should she stop work and not earn the £15k then any excessive relief will need to be clawed back.

Thanks. Is the 80% to allow for her DB contributions (inc her employers)

It is so that the gross contribution (hers plus tax relief) don't exceed her salary

Got it. Thank you.

Isthisforreal99

magd36 said:

MallyGirl said:

magd36 said:

Isthisforreal99 said:

magd36 said:

Marcon said:

OP - stop posting for a minute and read (carefully) the replies you've received. 

One more question. If I plan to buy a £15k SIPP with the available allowance this year in a lump sum, do I have to wait until March once the years earnings have built up?

No, but do remember your actual payment should be 80% of the earnings figure. Also should she stop work and not earn the £15k then any excessive relief will need to be clawed back.

Thanks. Is the 80% to allow for her DB contributions (inc her employers)

It is so that the gross contribution (hers plus tax relief) don't exceed her salary

Got it. Thank you.

Are you sure? You said the same a couple of years ago on a similar topic.

Perhaps it might be an idea to get some proper advice before you make a potentially expensive miatake. 

To complicate matters the amount being paid into the DB scheme may reduce taxable salary below the £15k.

Smudgeismydog

magd36 said:

I’m planning to retire at 60 in 3 months time.  Here’s my rough intention:

Needs: (excluding state pension):

8 years at 45k until state pension kicks in.

3 years at 35k until wife’s state pension kicks in.

Anyone see any flaws and will a Financial Advisor find any earth shattering improvements?

If you will reach 60 in December, then your state pension age is 67. The above reads as if you believe you reach state pension age when you turn 68.

magd36

Isthisforreal99 said:

magd36 said:

MallyGirl said:

magd36 said:

Isthisforreal99 said:

magd36 said:

Marcon said:

OP - stop posting for a minute and read (carefully) the replies you've received. 

One more question. If I plan to buy a £15k SIPP with the available allowance this year in a lump sum, do I have to wait until March once the years earnings have built up?

No, but do remember your actual payment should be 80% of the earnings figure. Also should she stop work and not earn the £15k then any excessive relief will need to be clawed back.

Thanks. Is the 80% to allow for her DB contributions (inc her employers)

It is so that the gross contribution (hers plus tax relief) don't exceed her salary

Got it. Thank you.

Are you sure? You said the same a couple of years ago on a similar topic.

Perhaps it might be an idea to get some proper advice before you make a potentially expensive miatake. 

To complicate matters the amount being paid into the DB scheme may reduce taxable salary below the £15k.

4 years ago!!! I can’t remember what I did yesterday 😀 just refreshing my memory that’s all.

magd36

Smudgeismydog said:

magd36 said:

I’m planning to retire at 60 in 3 months time.  Here’s my rough intention:

Needs: (excluding state pension):

8 years at 45k until state pension kicks in.

3 years at 35k until wife’s state pension kicks in.

Anyone see any flaws and will a Financial Advisor find any earth shattering improvements?

If you will reach 60 in December, then your state pension age is 67. The above reads as if you believe you reach state pension age when you turn 68.

I know. It’s just rough numbers. Looking for general advice rather than that precise. Thanks.

Triumph13

I always prefer to start at the position where both state pensions are in payment and work backwards from there.  

I've assumed that your wife will have £12k SP plus £6k DB, whereas you will have £12k SP plus £9k DB (to get to your £15k total), plus drawdown income on your DC1 - let's say £187k at 3.5% drawdown giving £6.5k pa.  Add all that up and it works out as £41.5k pa post tax.

Now work out the cost of the missing years of SP - using 7 and 10 years, rather than 8 and 11 as Smudgeismydog points out.  You will be fully using your personal allowance, so your SP only adds £9.6k pa post tax.  Your wife's DB will only use half her PA, so her SP adds £11k post tax.  7 years @£9.6k plus 10 years @ £11k comes out at roughly £180k, so that's what you need to set aside as a bridging fund.  £162k of it comes from the lump sums from the DBs and DC1, the other £18k from your ISAs, leaving say £90k in your ISAs.  3.5% drawdown on that gives you another £3k pa tax free, so that's £44.5k pa overall.  Looks pretty good to me. And you still have DC2 for emergencies.

If you don't have anyone you want to leave the DC1 pot to when you've both shuffled off this mortal coil, then you may want to look at annuities rather than drawdown for that pot - currently you'd probably get somewhere north of 4% for an indexed annuity will full survivor benefits, beating the 3.5% drawdown assumed above.