Pension (SIPP), ISAs and Retirement

the_medium_bear

dunstonh said:

Just wondering what peoples thoughts are given retirement plans of about ~6 years (and what is potentially around the corner)

Unless you are buying an annuity or planning to withdraw the lot and spend it on your first day of retirement, then your timescale is not ~6 years 

Also appreciate the time in the market, just wondering if i should be more diversified with time in the market not being on my side potentially if there is a huge crash (2008 crash took S&P ~15 years to recover)

a) You are mistaken.  The peak was May 2007.  The trough was March 2009.  It recovered in 2010 to previous peak but a couple of short term drops in the following years meant that August 11 was the final time it was at the 2007 peak.
b) You are a UK investor. So, you don't get S&P500 performance unless you currency hedge.
b) why are you looking at just one index?

A worse period was the first decade of this millennium.  

your right, im definitely not going to buy an annuity or actually have any need to take any of the SIPP lump sump out, just it in draw down mode and so your right in 6 years i defiantly wont need all of that cash straight away (perhaps its a physiological thing?)

oh yes my mistake on 2007, i meant 2000-2013

ref being a UK investor, yes i get that i dont get the whole perf due to currency, but the FTSE Global all caps does bring in world stock listed companies too. It was always my opinion/ thought that this was a good hands off ind of place for my investments (that and LS100)

the_medium_bear

Albermarle said:

Everybody is different, but personally I would be a bit nervous being 100% equities after such a good bull run.
On the other hand, you could be looking at a 30/35 year retirement on top of the 5 years before you retire, so you probably do not want to get overcautious.
If you read the pensions forum, you will see regular discussions on different strategies and many threads with similar questions to yours.
Pensions, annuities & retirement planning — MoneySavingExpert Forum

Thank for the pointers i will go and take a look at those link and get some other opinions too. Agree that i dont need all that money on day 1 of retirement, and perhaps the >10 years is actually more sensible to be thinking about here.

I really did come here for opinions of others and to explore options that I may not have known about or considered

the_medium_bear

EthicsGradient said:

No one else has mentioned the option of paying off your mortgage (up to the limit before there's a repayment fee) that you talked about. This seems a reasonable idea to me - it's a payment you'd have to make some time (would you have done it with your tax free cash from the SIPP when you reach 57?), and so doing it now would mean you're not effectively borrowing to be in a market you don't like the look of, and to which you're otherwise exposed (or, if you move some to bonds, then you are effectively borrowing to invest in bonds). 

thats a good point, borrowing to be in the market essentially, i did not plan to take it from my SIPP (however if i waiting until retirement by tax free allowance would cover that)

Initially thought I would take it from ISA (although if i decided to make that decision now it would be from ISA as i cant touch SIPP until im 57)

there is something to be said about having a paid for roof over your head (i guess it comes down to risk/reward) 

artyboy

the_medium_bear said:

EthicsGradient said:

No one else has mentioned the option of paying off your mortgage (up to the limit before there's a repayment fee) that you talked about. This seems a reasonable idea to me - it's a payment you'd have to make some time (would you have done it with your tax free cash from the SIPP when you reach 57?), and so doing it now would mean you're not effectively borrowing to be in a market you don't like the look of, and to which you're otherwise exposed (or, if you move some to bonds, then you are effectively borrowing to invest in bonds). 

thats a good point, borrowing to be in the market essentially, i did not plan to take it from my SIPP (however if i waiting until retirement by tax free allowance would cover that)

Initially thought I would take it from ISA (although if i decided to make that decision now it would be from ISA as i cant touch SIPP until im 57)

there is something to be said about having a paid for roof over your head (i guess it comes down to risk/reward) 

I've frequently banged the drum as an advocate of paying down the mortgage as early as possible. Knowing that, whatever else life brings, you have a secure and fully owned abode... well that outweighs any investment opportunity cost IMO.

Now if you'll excuse me, I am off to count my bricks 

Albermarle

your right, im definitely not going to buy an annuity or actually have any need to take any of the SIPP lump sump out, just it in draw down mode

With a SIPP/DC pension, you can not take taxable drawdown income, without taking some of the tax free cash first/at the same time.
In fact with some pensions, you have to take all the 25% tax free first, before drawing down any taxable income. 
With a more modern pension/SIPP, this is usually not necessary, but you still have to take some tax free cash as you go along.

the_medium_bear

artyboy said:

the_medium_bear said:

EthicsGradient said:

No one else has mentioned the option of paying off your mortgage (up to the limit before there's a repayment fee) that you talked about. This seems a reasonable idea to me - it's a payment you'd have to make some time (would you have done it with your tax free cash from the SIPP when you reach 57?), and so doing it now would mean you're not effectively borrowing to be in a market you don't like the look of, and to which you're otherwise exposed (or, if you move some to bonds, then you are effectively borrowing to invest in bonds). 

thats a good point, borrowing to be in the market essentially, i did not plan to take it from my SIPP (however if i waiting until retirement by tax free allowance would cover that)

Initially thought I would take it from ISA (although if i decided to make that decision now it would be from ISA as i cant touch SIPP until im 57)

there is something to be said about having a paid for roof over your head (i guess it comes down to risk/reward) 

I've frequently banged the drum as an advocate of paying down the mortgage as early as possible. Knowing that, whatever else life brings, you have a secure and fully owned abode... well that outweighs any investment opportunity cost IMO.

Now if you'll excuse me, I am off to count my bricks 

Thank you for banging that drum speaking to my wife about this last night we have agreed that paying down the mortgage is actually a sensible thing, as you say whatever happens we will have a home

the_medium_bear

Albermarle said:

your right, im definitely not going to buy an annuity or actually have any need to take any of the SIPP lump sump out, just it in draw down mode

With a SIPP/DC pension, you can not take taxable drawdown income, without taking some of the tax free cash first/at the same time.
In fact with some pensions, you have to take all the 25% tax free first, before drawing down any taxable income. 
With a more modern pension/SIPP, this is usually not necessary, but you still have to take some tax free cash as you go along.

From what I have read (or understand) I can use UFPLS to withdraw money where 25% is tax free if I don't take a lump sum, sounds like I better check if this really is the case

Albermarle

the_medium_bear said:

Albermarle said:

your right, im definitely not going to buy an annuity or actually have any need to take any of the SIPP lump sump out, just it in draw down mode

With a SIPP/DC pension, you can not take taxable drawdown income, without taking some of the tax free cash first/at the same time.
In fact with some pensions, you have to take all the 25% tax free first, before drawing down any taxable income. 
With a more modern pension/SIPP, this is usually not necessary, but you still have to take some tax free cash as you go along.

From what I have read (or understand) I can use UFPLS to withdraw money where 25% is tax free if I don't take a lump sum, sounds like I better check if this really is the case

Yes that is fine, it was just the way your posts were worded, I was wondering if you fully understood how it worked.
We have had posters on here before who were confused.

Maybe confusingly taking a UFPLS payment is often referred to as taking a lump sum ( that is what the LS in UFPLS stands for ) 

the_medium_bear

Albermarle said:

the_medium_bear said:

Albermarle said:

your right, im definitely not going to buy an annuity or actually have any need to take any of the SIPP lump sump out, just it in draw down mode

With a SIPP/DC pension, you can not take taxable drawdown income, without taking some of the tax free cash first/at the same time.
In fact with some pensions, you have to take all the 25% tax free first, before drawing down any taxable income. 
With a more modern pension/SIPP, this is usually not necessary, but you still have to take some tax free cash as you go along.

From what I have read (or understand) I can use UFPLS to withdraw money where 25% is tax free if I don't take a lump sum, sounds like I better check if this really is the case

Yes that is fine, it was just the way your posts were worded, I was wondering if you fully understood how it worked.
We have had posters on here before who were confused.

Maybe confusingly taking a UFPLS payment is often referred to as taking a lump sum ( that is what the LS in UFPLS stands for ) 

yes probably typing on my phone does not help here, obviously things can change nearer the time etc, but right now i dont play to take the lump sum with the aim for the capital to grow even while drawing down (and hopefully not running out) its very hard to know and plan how much would be needed in retirement though, so many variables

the_medium_bear

artyboy said:

the_medium_bear said:

EthicsGradient said:

No one else has mentioned the option of paying off your mortgage (up to the limit before there's a repayment fee) that you talked about. This seems a reasonable idea to me - it's a payment you'd have to make some time (would you have done it with your tax free cash from the SIPP when you reach 57?), and so doing it now would mean you're not effectively borrowing to be in a market you don't like the look of, and to which you're otherwise exposed (or, if you move some to bonds, then you are effectively borrowing to invest in bonds). 

thats a good point, borrowing to be in the market essentially, i did not plan to take it from my SIPP (however if i waiting until retirement by tax free allowance would cover that)

Initially thought I would take it from ISA (although if i decided to make that decision now it would be from ISA as i cant touch SIPP until im 57)

there is something to be said about having a paid for roof over your head (i guess it comes down to risk/reward) 

I've frequently banged the drum as an advocate of paying down the mortgage as early as possible. Knowing that, whatever else life brings, you have a secure and fully owned abode... well that outweighs any investment opportunity cost IMO.

Now if you'll excuse me, I am off to count my bricks 

just sold some liquidated some of my ISA/Premium bonds to pay down the mortgage ! Thanks for your insight here