The Ten Year Plan... How does this compare to others?

WindfallWendy

I think I have a plan and wanted to test it against the great minds on here, if you don't mind.

We are due to re-mortgage in Nov 2026. Borrowing will be £240k, I'm hoping our new deal will allow us to repay £1500/month for the next ten years. Currently at 40% LTV.

Also for the next ten years I'm also going to put £500/month into a new SIPP.

I currently have £95k in an ISA and over the next three years I'm going to (hopefully - subject to limits) put another £60k into (2027, 28 and 29). I pay lump sums in at the start of each tax year.

In 2036 we'll sell the house and use the equity to pay off any outstanding mortgage and the remaining equity to downsize. I'm working on the basis that we may have up to £500k equity.

2036 = 'Retire'
I'll take out the tax free maximum from my SIPP (expecting ~£20k) and use ISA returns as an income for ten years. I will drawdown from my SIPP mindful of any income tax triggered, alongside any income I continue to generate (I'm planning to re-train over the next ten years, to add a few new strings to the bow to keep myself entertained in 'retirement').

I also have a USS and a civil service pension (and a small LGPS) which I will ideally only crack open in 2045, but might start to use before then. I have some lump sums that will be due and in total, at 67 should have around £18-20k coming in from these three. Plus a state pension and ISA returns, I feel like this will work out.

Anyone want to point out any flaws in the plan? Or do it sound like I'm on the right track?

WindfallWendy

I guess one option could be to put the lumpsums into the SIPP rather than the ISA and boost the SIPP sooner with the automatic rebate extra from the government.

Sam_666

I take it you cant inrease work pension contributions?
What will your sipp be invested in?

vacheron

Not knowing your age at the "2036=Retire" date makes it difficult to predict any issues, you could be 57 or 70 🙂
From extrapolation I am guessing the former.

vacheron

I'm planning on retiring in July (it was going to be in a couple of years, but a redundancy opportunity just landed in my lap!), so I am currently running a lot of numbers.

One thing to remember is to make sure that you use your entire personal allowance every year. If you have some side income coming in that is below this, use your pension income to supplement your income to max your personal allowance. Even if you immediately re-invest in exactly the same funds inside a stocks and shares ISA.

The plan is to get as much of your taxable money out of the SIPP and into a tax free wrapper each year.

Edit: I assume you'll have sufficient income to get the tax relief on the full £20k you are considering putting into your SIPP over the next few years?

One big factor is how much your £500K equity will be retained, (is this before or after settling your current mortgage?), it also depends how far much you are planning to downsize? will it be to somewhere £100K cheaper or £500K cheaper?

LHW99

Have you checked you are on course for a full SP? (35 years isn't relevant unless you started work in 2016 - you could need as few as ~28 years or as many as 50).

Any partner? Usually best to plan together if you have.

Any children likely to need support?

MarlowMallard

https://forums.moneysavingexpert.com/discussion/comment/81971133#Comment_81971133

Given her age is likely mid-40s, it can't possibly be 50 years because most of her NI years will be post-2016. Could be about 37 if she was contracted out for 15 years, or maybe 32-33 with some SERPS.

WindfallWendy

Ooo, thanks for all this, guys!

I am 48.

My workplace pension doesn't offer an investment builder option, and I think over payments only offer additional years to enhance my annual pension rather than build a chunk of money I could use. I looked into it last year and didn't think it was worth it. I might check again, now I have a plan.

I do need to work out what my SIPP options would be. I'm considering a robo -SIPP just because I haven't the energy to keep tabs on things. Probably 'funds' but this will be my next consideration as I've only just decided I want to go down this route.

@vacheron - yes, indeed, very useful pointers. Thank you. My salary is ~£46k but I do need to check what is recorded as my own contribution via my employee contribution to my CSP pension. Thank you for your comments here as I do need to look at these issues a bit more before instigating The Plan.

Re. downsizing.... If we were to sell today, we'd clear the mortgage and have ~£350-400k cash to buy elsewhere/cheaper. I imagine we will focus our property search based on spending all the released cash, but may seek to save a chunk to plonk into ISAs. Does that all make sense?

Full SP by 2036. No kids. Husband. He's probably retiring maybe 5 years after me.

LHW99

https://forums.moneysavingexpert.com/discussion/comment/81971235#Comment_81971235

Indeed, but a reminder to others reading this thread.