Soon to retire - how to take my saved money

NotTightJustCareful

I am 66 and will be retiring at 67 in a few months time. I am already benefiting with a full state pension. I have a very small NHS DB pension of £700 per year. I have £80K in savings , 60 in ISA's rest in fixed term bonds. I have 2 DC pension pots , £600,000 and another will be £12K. I am a saver but I want to spend the majority of my pension before I die. I have modest requirements of around £1500 per month after tax for my normal expenditure. I have some health issue so when I used the annuity calculator on moneyhelper it stated L&G would offer me 8.4% level at 67. Using £100000 on an annuity would boost my incoming's to approx £1650 net . it would force me to spend more in my early retirement. The rest of the DC would go into 60/40 draw down. I am currently with Royal London and I might stay with them or not.

I hear that annuities come with big fees which is off putting.

Any better suggestions ?

Marcon

I hear that annuities come with big fees which is off putting.

Any better suggestions ?

Maybe find out the facts as they apply to you, rather than relying on hearsay? If you then decide the 'big fees' are big enough to put you off the idea, then at least you've made a choice based on reality.

Useful reading: https://forums.moneysavingexpert.com/discussion/6658567/diy-annuity-purchase#latest

Smudgeismydog

For someone who is a saver, I think it’s very sensible to consider annuities, and converting the DC pot into an income often feels easier to spend than drawing down from a pot.

I’m not sure of the accuracy of ‘big fees’ you’ve heard about. Yes, if you use a professional to arrange this for you, there will be a charge for their work, but you are paying for expert help from someone who can secure the best rate for your circumstances.

Good luck

ali_bear

Seems like a good plan to me, OP.

Taking that annuity will land you another 33k of TFC on your hands. You have a large cash buffer, regular pension income to cover your living costs and a pretty decent DC fund remaining to draw upon when you need more money for whatever life brings.

You can relax now, you've done the saving part well enough.

daveyjp

Its one plan, but it may be worth having a read of this recent thread:

https://forums.moneysavingexpert.com/discussion/6657950/ifa-vs-diy

.

Albermarle

With the annuity fees if you use an IFA they will charge you, but should be able to access better rates.

If you use a broker, then they will get a commission that will reduce the annuity rate.

As far as I know, the IFA route is better if you are looking for an enhanced annuity due to ill health.

If you get to an income of £1650 per month, that will cover your regular needs.

However you will still have around £600K in DC pension and savings and you said this '

 I am a saver but I want to spend the majority of my pension before I die. 

So do you have a plan to do that ? Spend more maybe ? Gifts to family/charity ?

NotTightJustCareful

I will be spending down the DC pension over time and plan to leave some in my will but no more than £350K inc my house. I am not giving the tax man any benefit from my estate !

Yorkie1

You mentioned a level annuity - without having to reveal your particular circumstances, consider whether you'd want to risk only having a level income in times of potentially unpredictable inflation.

If you don't want to have an inflation-proofed annuity, you could consider alternative options such as one which is capped at a certain % inflation, and/or taking a combination of annuities with level and an element of inflation.

Veloflyer

My basic aim is to purchase either an annuity or a gilt ladder - possibly index-linked - plus SP to cover all future essential spend, and if anything is left from the total pension pot, to create some sort of (relatively) low risk global tracker based 100% equity portfolio to draw on as and when for unexpected events/holidays/etc. This equity portfolio will hopefully grow over the years, and also have the potential for something remaining to pass on. An additional possibility - belt and braces perhaps - is to also have a cash buffer for the equity portfolio. The thinking being that I am carrying a low risk with the essential spend so I can take a greater risk with having a 100% equity portfolio plus cash buffer.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81918606#Comment_81918606

However most likely ( not certain) that your investments will continue to grow, quite possibly faster than you can spend them. It is not easy increasing spending significantly if you are not that way inclined.

penners324

Retire tomorrow, you've got more than enough saved.

You need a very good holiday every year