Retirement , have I planned correctly or …not!?

moral_shopworker

Hi, looking for some affirmation on my ‘plan’ or advice if I have missed something. I’ll list my situation and then ‘the plan’ .
60 retirement age 67
Not working -  left of own accord so am not claiming anything.(I know I could but..) 
Full NICs -  so done and dusted can’t improve on c£12.3k.
House - paid up  (current value £330k desireable location )
Savings- £225k ( inc £190k wrapped in fixed Cash ISA, 35k accessible/taxable savings)
Private Pension- current value £ 145k .
Outgoings- currently £350/m (variables like petrol/food/Hsekeep/fun not included)

I’ve saved since I was 14y.o and benefitted from high interest rates and first house purchase in ‘91  (he paid the deposit , not together now , he got the house and I took the endowment policy, cashed in for my own deposit in ‘96)  
I quit work in May, chose not make a claim after the 13wks as I do have morals, I have zero intention of working again , life’s too short , saving’s great but if you’re not alive to reap the benefits of a pension etc.
I’m frugal. I am paying myself an £800 wage/month - that’s roughly what I was earning for the last 7yrs and to be honest it’s sufficient . I never qualified for any benefits because ‘savings’ for a better life when you retire are frowned upon aren’t they??!! 
I’ve taken a ‘holiday’ from my pension payments ‘til Jan ‘26. 

The plan - to not work,to stop pension payments, take max lump sum from pension and make it work in accessible accounts/ISAs, and/or use the existing accessible savings that I’m already dibbing into (which potentially will last me 3yrs anyway even factoring in Min wage increases too)
That will leave me 3-4 yrs to pay myself  from the pension lump - and then at 67 it will be time for State Pension and purchase an annuity with what’s left in the ‘dormant’ PP (prob on a K tax code understood ) .I will still have the majority of original ISA money to supplement needs and the bricks&mortar which can sell if I get put in a home I suppose. There is only me in any planning.

Is this too simple ? Should I leave the PP alone ,loathe to because it’ll get eaten up in tax with the SP. Should I take the lump sum and ‘self save’ it or do a draw down , does that earmarked portion still potentially grow or even diminish - if it’s  going to diminish even a little   I feel I want it out . I know not paying in to the actual intact pension going forward will still cost me management fees , silly/not silly ? I’ve had the Pensionwise appt , I also had a free 1hr Indie.F.A  appt - ultimately 
I need to decide -any opinions? Also If I opt to take lumpsum in one hit I shall do that myself, but the IFA when I purchase an annuity  , the IFA said he could negotiate a better ‘price’ than I would be able to, is that true? Using him I know there’d be % fee for him regardless, I just feel the pension people could diddle me, trust issues but it needs to be right  .   * can’t remember the term but there’s no special clauses to the pension. 

PS … for those wondering, my boss really p**d me off for the last time after 16yrs, I went on SSP for 6wks to get my head sorted. I no longer belonged to USDAW but was told I stood a good chance of winning Constructive Dismissal by ACAS - but what was the point,fight or peace of mind? I feel vindicated and that’s good enough for me. I had a fantastic career for 32yrs elsewhere until this… ‘job’! I didn’t claim JSA because I’m not going to look for a job and I won’t fib that I am . Anything I have left is going to Animal charities ,  I want to do the garden,get a dog, walk, do jigsaws and I’m pretty good at carpentry so will make my own coffin which should fit in the loft. Happy days!       (not spell checked ,sorry for any blips)

kimwp

Dogs are expensive, so you will need a higher income than you are currently paying yourself.

Unless you have never used the NHS, including GP, NHS dentist and never used a library, happy to not have firefighters, police etc, then you have benefited from the public pot in the same way that people who legitimately claim benefits do. 

El_Torro

You have a significant amount of money in cash. Any particular reason? If you transfer some of your Cash ISAs to a Stocks & Shares ISA this will give you more money to play with in future. 

Looking at your cash holdings and your pension then paying yourself £800 a month seems fine, especially since you will have a full state pension when the time comes. Remember that prices tend to go up, hence my comment about having more money in investments and less in cash. 

If you're happy living on £800 a month as you have been for the last 7 years then financially you seem fine, enjoy your retirement. 

DRS1

I think if you are not using up all your personal allowance with taxable income then you should do so.  That may mean taking UFPLS payments from the pension in the period from 60 - 67 when you otherwise have no or little taxable income.  Once the state pension kicks in you will have much less headroom (if any) to draw taxable income without paying tax on it.

Your outgoings figure leaves out some "essential" elements like food so you might want to rework that if only to give yourself an idea of what your necessary income level would be.

Simon11

I was going to say the same as above- why have £190k wrapped in fixed Cash ISA? Work out what you need for the next few years + your emergency fund which can remain there, then shove the rest in stock & shares ISA (must be at least £100k). Over 5-10 years you should see double the returns of fixed cash ISA plus can take money out as you need it. 

Looking at the performance of my Stocks & shares ISA (in Halifax), it has increased by 33% over the last two years. Whereas you are looking at around 8-10% if that was in fixed cash ISA for an equivalent period. Make the money work for you!

As for a dog, they are very expensive and you will need to budget that in. As an alternative, you could see if local dog homes need volunteers or could offer to look after dogs while friends and neighbours are on holiday.

dunstonh

I need to decide -any opinions? Also If I opt to take lumpsum in one hit I shall do that myself, but the IFA when I purchase an annuity  , the IFA said he could negotiate a better ‘price’ than I would be able to, is that true? Using him I know there’d be % fee for him regardless, I just feel the pension people could diddle me, trust issues but it needs to be right  .   * can’t remember the term but there’s no special clauses to the pension. 

An IFA works for you. Not the pension company.   An FA can work for the pension company.   
Yes, the IFA can usually get better terms if the fund is large enough and there are health issues.    If there are no health issues, then the terms will be similar (if not close to identical) to you buying one yourself and paying for a non-advised annuity.     There is a percentage commisson if you don't use an IFA.  So, you cannot avoid distribution costs.

MarlowMallard

The obvious point is it's more tax-efficient to take out of the private pension from now to 67 and leave the ISAs for later.   After you turn 67, state pension will use up your personal allowance so withdrawals from pension will be partly taxable, but withdrawals from ISA should never be taxable, barring a war or similar disaster. 

You can take £16.7k per year out of private pension from now to 67 with no tax via "UFPLS",   25% is tax-free and the other 75% is inside your £12.5k personal allowance.  If you don't spend it all you can put surplus into ISA. 

moral_shopworker

El_Torro said:

You have a significant amount of money in cash. Any particular reason? If you transfer some of your Cash ISAs to a Stocks & Shares ISA this will give you more money to play with in future. 

Looking at your cash holdings and your pension then paying yourself £800 a month seems fine, especially since you will have a full state pension when the time comes. Remember that prices tend to go up, hence my comment about having more money in investments and less in cash. 

If you're happy living on £800 a month as you have been for the last 7 years then financially you seem fine, enjoy your retirement. 

 Thank you! I see your point, re investing in S&S , the IFA said the same - I am a bit risk averse ,I put 20k in a Lloyds one and left it for 7 yrs got 21k back… it seemed like a let down. Granted the world was in turmoil during that time, Covid and Ukraine , it didn’t seem like the best return. Even the Trump Administration now seems to have dented my pension pot !  £800 does me just fine and considering I rarely spend the whole of the extra 450 (350 definites + 450 for the variables)   I just make sure I start the month with £800 - if I’m fortunate to reach SP payment I might just treat myself.  I PMd you about how to reply…so ignore it ..I googled it in the end , Martin needs to review the instruction page!! 

moral_shopworker

DRS1 said:

I think if you are not using up all your personal allowance with taxable income then you should do so.  That may mean taking UFPLS payments from the pension in the period from 60 - 67 when you otherwise have no or little taxable income.  Once the state pension kicks in you will have much less headroom (if any) to draw taxable income without paying tax on it.

Your outgoings figure leaves out some "essential" elements like food so you might want to rework that if only to give yourself an idea of what your necessary income level would be.

Thanks for replying.. yes exactly my aim …don’t know what UFPLS stands for - but at a guess it’s what I’ve outlined, it seems ridiculous to ‘sit’ on the pot when I may not be here to benefit from it .  At the top of my post, Outgoings £350 this is the current ‘definites’ -utilities/C.tax/TV.Lc/Mobile and Charity DDs. Giving myself an £800 wage actually gives me £450 for food/housekeeping,petrol, all the variable costs that come up and because I don’t spend £450 I’m usually quids in so the overage pays the various seasonal price increases , or a treat ,I’m aware of inflation and think using NMW as guage to give myself a payrise will work, any big problems I do have the funds to bail myself out so I think I’m all covered   . Since finishing work I’ve actually ‘saved’ from June- Sept enough to pay my MOT and Car Ins - I’m clean, well heeled and happier in the head!  

moral_shopworker

Simon11 said:

I was going to say the same as above- why have £190k wrapped in fixed Cash ISA? Work out what you need for the next few years + your emergency fund which can remain there, then shove the rest in stock & shares ISA (must be at least £100k). Over 5-10 years you should see double the returns of fixed cash ISA plus can take money out as you need it. 

Looking at the performance of my Stocks & shares ISA (in Halifax), it has increased by 33% over the last two years. Whereas you are looking at around 8-10% if that was in fixed cash ISA for an equivalent period. Make the money work for you!

As for a dog, they are very expensive and you will need to budget that in. As an alternative, you could see if local dog homes need volunteers or could offer to look after dogs while friends and neighbours are on holiday.

Thank you for replying, I hear what you’re saying - see my reply to “El Torro” . It just doesn’t sit well for me … I nearly had a heart attack when I rang for a current pension value it was £152k and rang the following week in prep for my Pensionwise appt and it had dropped to £140k - yes, it has recovered but that feeling at the time of ‘all too risky’ I can’t cope with.  Yes, I know…when working full time I had indoor cats , my last girl was diagnosed with thryroid problem and that stung me for £100 a month and the bloods on top…but she got to 21. And the reason I went from full to part time at work and stepped down from mngment was because I ‘inherited’ a 12 y.o dog…who had a skin allergy , and that was an expensive variety of meds too but she made it to 18. Cat and dog,at the same time,well fed, loved and cared for -and no pet insurance!  I dibbed in the savings to keep the car on the road and some of the meds ,but I managed ,I was a bit skinnier but they wanted for nothing. Hence the Animal Charity Will intention - I never had children so animals have always been priority, 5 yrs without a dog has been too long..I’m pretty sure I will get a pay-rise without compromising the longterm goal           

moral_shopworker

dunstonh said:

I need to decide -any opinions? Also If I opt to take lumpsum in one hit I shall do that myself, but the IFA when I purchase an annuity  , the IFA said he could negotiate a better ‘price’ than I would be able to, is that true? Using him I know there’d be % fee for him regardless, I just feel the pension people could diddle me, trust issues but it needs to be right  .   * can’t remember the term but there’s no special clauses to the pension. 

An IFA works for you. Not the pension company.   An FA can work for the pension company.   
Yes, the IFA can usually get better terms if the fund is large enough and there are health issues.    If there are no health issues, then the terms will be similar (if not close to identical) to you buying one yourself and paying for a non-advised annuity.     There is a percentage commisson if you don't use an IFA.  So, you cannot avoid distribution costs.

Thank you again.. I PMd you , but finally worked out how to post a personal reply so this is a ‘public thank you’ , so anyone reading knows I’m grateful for your useful advice and time