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Am I missing any tricks in my retirement plan
Comments
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As far as I'm aware they don't need to know (or care).
But HMRC will automatically update your tax info in due course and it would be sensible to have the DB pension as your "main" source of income for tax purposes, even if it isn't necessarily the largest amount every single tax year.
Don't forget you need to consider all sources of taxable income when considering your overall tax situation and higher rate tax.
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The most important piece of info you need to make any decisions about how to manage different income streams is your monthly spend.
If the salary and DB cover that your DC can remain untouched.0 -
My wife was promised 55, so 56 is a compromise, and this will only be 6 months of relying on my income alone until my state pension kicks in.
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I have to admit I would hate to not spend enough of the DC, especially with a DB backing everything up. I am hoping this strategy of using the previous years returns as the basis for the next years withdrawals will work. In years that are zero or negative, I will use my cash fund. Also in those early years if negativity persists one of us is still paying into a pension and benefiting from the downturn. And when my state pension kicks in, technically we may not need anything.
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This was helpful as I had not thought of the advantage of picking DB as my main income.
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It tends to make things simpler from a tax perspective.
Ultimately it has no impact on the tax payable but given your DB pension, which will no doubt be payable for the rest of your life, is already above your Personal Allowance it seems the sensible option.
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ISA has no effect on IHT liability. Any money in an ISA will be treated as part of your estate, just like any other asset.
The advantage of saving in an ISA is that there is no tax on the interest.
and the plan is for my wife to retire at 56 (for no other reason than it was meant to be 55 until the government changed the rules)"
To be pedantic- The Govt has no control over anybody's retirement age. You or your wife can retire when you want.
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If you choose a flexible ISA, then if you need to withdraw money in an emergency (boiler blows up, roof needs repair, IT breakdown at pension provider….) you would be able to replace that money later in the same tax year.
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I will definitely do this.
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For some reason I believe that using the previous years returns is a reasonable way to calculate withdrawals so in Sept I will use Sept 25- Sept 26 portfolio returns up to that point and withdraw the investment gain if any
I have to admit I would hate to not spend enough of the DC, especially with a DB backing everything up.
If your desire is to attempt to deplete the DC pot over your expected lifetime, then an amortisation withdrawal approach is well suited to that. Each year, use ONS stats to guesstimate your expected remaining years of life, then guesstimate a post-fees future real return rate for your portfolio and plug these numbers plus your current portfolio value into the PMT() spreadsheet function to tell you how much to spend this year. Repeat next year, etc.
This approach should help prevent you from hoarding the DC via an overly conservative withdrawal approach (given your circs), and then realising later you've run out of health in which to spend it.
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