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  • FIRST POST
    • Amateurretiree
    • By Amateurretiree 10th Nov 19, 8:39 PM
    • 3Posts
    • 0Thanks
    Amateurretiree
    OK, Here goes, tell me what you think
    • #1
    • 10th Nov 19, 8:39 PM
    OK, Here goes, tell me what you think 10th Nov 19 at 8:39 PM
    First post, but have seen all the excellent advice given so just asking for some opinions.

    Background

    Iím a retired nurse aged 57 receiving 14000 pa NHS pension, SP at age 67
    We have one adult son who has a wonderful partner and a little girl

    OH retired at age 60 in March with a SIPP of 400000 with True Potential( I know , I know, a few of his colleagues all did it at the same time, I was very wary and remain wary, but we shall see how it goes, itís hard trying to persuade OH to move it)

    Our SIPP is in cautious funds ( 40 % equities, 40 % bonds, 20 % cash )
    We took the MTFLS paid off the mortgage, gave our son and his partner a good deposit and have had some really good long haul holidays etc.

    So things have settled down, my pension pays all of the household bills, food and transport costs . I know that we are lucky in this respect. If I pop my clogs first, OH gets 50 % of my pension which will cover everything but food, if he pops his clogs first ( canít believe Iím making a joke of it!) then obviously I have my pension, the remainder of the SIPP and my SP

    We have 300 000 left in the SIPP and 50 000 in savings.

    We plan on carrying on with our USA / Canada holidays for the next few years while we are still fit enough to go, OH has knee problems which donít limit him too much but will probably get worse. We are spending about 10000 a year on holidays, but apart from other bits and bobs, spoiling our beautiful granddaughter etc we donít spend money on anything else.

    We know if there was to be a crash we would just stop the holidays for a bit and live on my pension and our savings.

    We have worked out that we can spend up to 20 000 for the next 5 years from the SIPP, then OH SP will kick in, then 5000 for the next 5 years until my SP kicks in, by which time OH will be 71 and we will likely not be doing the long haul stuff , and so should be able to leave the SIPP alone after that, should be about 175 000 left.

    Our house is currently worth 150 000 and we are mortgage free.

    Just wondered if that basic plan sounds feasible?
    One thing that concerns me is would that be enough for Long term care if we needed it?

    Also worried about Sequence of Returns risk , in this uncertain environment, Brexit etc

    What would you experts do( apart from leave True Potential)
    I feel the plan is a bit too simple but we live a very simple life, we want for nothing materially and just want to enjoy our holidays and look after our little family.
Page 1
    • Alice Holt
    • By Alice Holt 10th Nov 19, 9:20 PM
    • 3,389 Posts
    • 3,942 Thanks
    Alice Holt
    • #2
    • 10th Nov 19, 9:20 PM
    • #2
    • 10th Nov 19, 9:20 PM
    Have you both checked your state pension entitlements at SPA.

    I wonder as you have 10 years to go, but (I assume) are not making further contributions, if your SP may be below the maximum payable. If so, consider making voluntary contributions.
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
    • Amateurretiree
    • By Amateurretiree 10th Nov 19, 9:25 PM
    • 3 Posts
    • 0 Thanks
    Amateurretiree
    • #3
    • 10th Nov 19, 9:25 PM
    • #3
    • 10th Nov 19, 9:25 PM
    Yes we have both checked as we were both in contracted out pensions. We are both currently entitled to 150 pounds per week, considering doing the top up.

    Thank You
    • El Torro
    • By El Torro 10th Nov 19, 9:27 PM
    • 462 Posts
    • 450 Thanks
    El Torro
    • #4
    • 10th Nov 19, 9:27 PM
    • #4
    • 10th Nov 19, 9:27 PM
    If your husband's SIPP will last you until you both start receiving your State Pension, by which time his SIPP will be worth £175k, I don't see a problem.

    The £175k in the SIPP, plus the £150k in your house, plus your other income sounds like a lot to cover long term care. However care costs aren't cheap so you may want to do more research on how long that money would actually last.

    We know if there was to be a crash we would just stop the holidays for a bit and live on my pension and our savings.
    Originally posted by Amateurretiree
    In my opinion life is too short to base your holiday plans on how well the stock market is doing. I think you have enough (in your SIPP and elsewhere) to ensure that you can keep your level of spending as it is during a downturn, just don't sell your equities.

    Our SIPP is in cautious funds ( 40 % equities, 40 % bonds, 20 % cash )
    Originally posted by Amateurretiree
    In your position I would be tempted to look at this and perhaps up the risk a bit. Say 60% equities and 40% bonds. Especially since you are not planning to touch a large chunk of the SIPP, unless either of you needs care. That depends on your appetite for risk though. Maybe keep the cash as it is but spend it first.

    Bear in mind that the way the SIPP is structured now it will do well to beat inflation.
    • Amateurretiree
    • By Amateurretiree 10th Nov 19, 9:50 PM
    • 3 Posts
    • 0 Thanks
    Amateurretiree
    • #5
    • 10th Nov 19, 9:50 PM
    • #5
    • 10th Nov 19, 9:50 PM


    In your position I would be tempted to look at this and perhaps up the risk a bit. Say 60% equities and 40% bonds. Especially since you are not planning to touch a large chunk of the SIPP, unless either of you needs care. That depends on your appetite for risk though. Maybe keep the cash as it is but spend it first.

    Bear in mind that the way the SIPP is structured now it will do well to beat inflation.
    Originally posted by El Torro
    Thank you for your advice. We are very risk averse and new to this game, we feel we would be happy if the fund stayed the same ( ie of course it would be nice if it grew !)

    Iím pretty sure we are going to engage the services of an IFA in the not too distant future as I am just not reassured at the moment we are on the right track.

    So grateful for everyoneís input on here .
    • drumtochty
    • By drumtochty 10th Nov 19, 10:15 PM
    • 299 Posts
    • 172 Thanks
    drumtochty
    • #6
    • 10th Nov 19, 10:15 PM
    • #6
    • 10th Nov 19, 10:15 PM
    Look at paying Class 2 NI by doing some trading, the first £1,000 of that income is tax free, you only need to declare say £200 if you register as a self-employed dog walker and you then can pay circa £150 a year to add a year’s state pension to your existing amount to get it up to £168.60 at this year’s state pension value.

    Due to being contracted out previously, you are both short of say 4 years to maximise the state pension.



    Look at also paying £2,280 a year into a SIPP, in your case that gets you £180 a year in tax relief due to your NHS pension and depending on what your husband takes out of his SIPP annually, he could get £720 a year tax relief if his taxable earnings are a touch under £10,000.
    • Mick-H
    • By Mick-H 10th Nov 19, 10:34 PM
    • 15 Posts
    • 7 Thanks
    Mick-H
    • #7
    • 10th Nov 19, 10:34 PM
    • #7
    • 10th Nov 19, 10:34 PM
    We are in a very similar place to you, my Mrs also works for nhs on flexi she's doing another 2 years max then calling it a day.
    She's 57 I'm 58 and retired we've £300000 in various places plus the Mrs pension of £14000 per year.
    Once I hit 67 I get a lump sum of £35000 Ish a small works pension of £7000 + state pension, The Mrs will have her £14000 + state.
    We've not had any financial advice because I'm tight and it cost to much but we've done ok so far.
    You say that your plan is simple, many will agree but why should it be any other way.
    If simple works for you stick with it.
    • JohnWinder
    • By JohnWinder 11th Nov 19, 12:11 AM
    • 55 Posts
    • 41 Thanks
    JohnWinder
    • #8
    • 11th Nov 19, 12:11 AM
    • #8
    • 11th Nov 19, 12:11 AM
    That’s an impressive overview and engagement with your situation.
    This fellow knows his beans and talks to your situation, as long as you can translate the complexity of USA retirement income elements to UK ones: https://earlyretirementnow.com (for Becky and Stephen post).
    And if you get through it, you might find his withdrawal series good stuff, including SoR risk.
    And thanks for your years nursing.
    Last edited by JohnWinder; 11-11-2019 at 9:00 AM. Reason: correct mistyping
    • Triumph13
    • By Triumph13 11th Nov 19, 7:55 AM
    • 1,592 Posts
    • 2,245 Thanks
    Triumph13
    • #9
    • 11th Nov 19, 7:55 AM
    • #9
    • 11th Nov 19, 7:55 AM
    A few thoughts. Firstly, as others have said, make sure you pay the voluntary NICs to get full SP as it is the best deal in town.

    As regards the SIPP, once you are happy that you have it somewhere with reasonable charges, you might want to consider managing it as two separate pots. The first pot is to cover your holidays etc over the next 10 years until both SPs are in payment - at which point it sounds like the £29k pa post tax you'd have coming in should be pretty comfortable for you. This needs to be pretty conservatively invested as you are spending it over a relatively short timescale.
    The second pot is for possible long term care or, hopefully, inheritance if you don't need care. That has a much longer time horizon and could be invested much more in equities for long term growth.
    • cfw1994
    • By cfw1994 11th Nov 19, 8:45 AM
    • 479 Posts
    • 425 Thanks
    cfw1994
    That’s an impressive overview and engagement with your situation.
    This fellow knows his beans and talks to your situation, as long as you can translate the complexity is USA retirement income elements to UK ones: https://earlyretirementnow.com (for Becky and Stephen post).
    And if you get through it, you mind find his withdrawal series good stuff, including SoR risk.
    And thanks for your years nursing.
    Originally posted by JohnWinder
    I’d echo the “thanks”

    On the SoR risk......I really don’t know the solution if that happens early in a retirement (which is the key risk).
    Read lots about SoR, not read many “solutions” to it.....any thoughts welcome on that one!

    As far as I can see, having the ability to decide to NOT draw on the SIPP for some years appears to be the only real thing you can do. The trouble is, that “some years” could potentially be “quite a few, maybe 6+“

    Markets tend to recover, *usually* within a year.
    That said, as I read here, they can take years to reach the previous high. Read the whole article, it explains quite scary numbers when you consider inflation, etc.....but offers no real solutions!
    Edit: reading his comments, he tells people to read “Glide Path, Bond Tent. See SWR Series Parts 19 and 20”. So moving things to lower-risk assets....more reading for later!

    Broadly speaking though, as other have already said, your plan looks sound to me......& being from your profession, you will be practical & pragmatic: I figure if things *really* went south for the markets, we would just have to spend considerably less: cut the cost to suit the cloth, as my mum would have put it!
    Last edited by cfw1994; 11-11-2019 at 8:50 AM.
    • LHW99
    • By LHW99 11th Nov 19, 9:26 AM
    • 2,243 Posts
    • 2,089 Thanks
    LHW99
    With regards to long term care and answer #9, we are wondering if we would each need a "long term care" SIPP pot, since a SIPP is owned by one person, it would presumably have to be used on that person's care, possibly leaving the survivor with nothing?
    • JohnWinder
    • By JohnWinder 11th Nov 19, 10:05 AM
    • 55 Posts
    • 41 Thanks
    JohnWinder
    Don't have a full answer to SoR risk (if it means running out of retirement money before running out of life), but a couple of observations:
    If you have enough at the start to sustain a certain % withdrawal each year, then keeping to that % in down times eliminates SoR risk, but it might mean eating cat food in bad years. It's withdrawing the same amount of money in bad years that does the damage.
    The Bogleheads have a variable percentage withdrawal spreadsheet that asks you each year or so in retirement to re-assess your life expectancy, assess your assets and make the necessary withdrawal adjustments. It has the advantages of working towards running out of money as closely as possible just as you die, as well as giving you the assurance that your financial future is accurately mapped out so that you can avoid being spooked into doing something silly during bad downturns (because you know it's all going to work out).
    Lastly, markets do tend to recover, but not always within a year. I think the French stock (accumulation!) market took 100 years to recover in real (not nominal) terms after WW1. An argument in favour of diversification.
    • Triumph13
    • By Triumph13 11th Nov 19, 10:32 AM
    • 1,592 Posts
    • 2,245 Thanks
    Triumph13
    With regards to long term care and answer #9, we are wondering if we would each need a "long term care" SIPP pot, since a SIPP is owned by one person, it would presumably have to be used on that person's care, possibly leaving the survivor with nothing?
    Originally posted by LHW99
    If your husband predeceases you, then you can inherit any remaining funds in his SIPP so don't worry too much about whose name things are in. Yes there will always be a possibility that one of you will use up all the care budget leaving nothing left over for the second one, but would that be different if you put the money in separate pots?
    • LHW99
    • By LHW99 11th Nov 19, 11:03 AM
    • 2,243 Posts
    • 2,089 Thanks
    LHW99
    If your husband predeceases you, then you can inherit any remaining funds in his SIPP so don't worry too much about whose name things are in. Yes there will always be a possibility that one of you will use up all the care budget leaving nothing left over for the second one, but would that be different if you put the money in separate pots?
    Originally posted by Triumph13
    As my OH has a 4x larger SIPP pot, our intention is to use that initially for drawdown, until both pots are approximately equal, then drawdown equally from each, so that any residue can be inherited either way, and if one is emptied due to care needs, the other remains for use of the survivor. Not a perfect solution, if one requires care early on, but the best we can think of now.
    • Albermarle
    • By Albermarle 11th Nov 19, 11:42 AM
    • 1,748 Posts
    • 1,126 Thanks
    Albermarle
    I’m pretty sure we are going to engage the services of an IFA in the not too distant future as I am just not reassured at the moment we are on the right track.
    At first glance your general plan looks OK and simple and not really needing an IFA.
    However as the SIPP is cautiously invested you need to be sure that charges do not mean that you are not even keeping up with inflation .
    True Potential quote an average charge of 1.16% ( do you know what your charges actually are ?)
    An IFA would probably charge you about 0.7% but probably move you to a cheaper pension ( note the word 'probably' though )
    A 40% equity fund in a mainstream SIPP would cost in total between 0.7% and 0.4%

    Over 30 years that difference could have a significant effect.
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