Done IT- is the pot big enough
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AndyAdams
Posts: 58 Forumite
Well that's it, confirmed I am finishing work at the end of month.
Nearly 53 got a pot of around £800,000, mixture of ISAs and Pensions (approx 50:50 split) Got 37 years contibutions but only 34 years for the new pension, so currently 1 year short. My wife still works, brings in around £800/mth and she also has defined benefit pension of £7200/yr linked to CPI (starts at 60, 10 years time for her), will have another smaller projected DB pension of around £2k/yr once she retires from current employer
Do you think I have got enough or will I need a part time job? No mortgage and reckon I need about £2500 a month.
My spreadsheet says I have but maybe I'm wrong, also concerned about the, in my opinion, current asset bubble!
Any thoughts?
Nearly 53 got a pot of around £800,000, mixture of ISAs and Pensions (approx 50:50 split) Got 37 years contibutions but only 34 years for the new pension, so currently 1 year short. My wife still works, brings in around £800/mth and she also has defined benefit pension of £7200/yr linked to CPI (starts at 60, 10 years time for her), will have another smaller projected DB pension of around £2k/yr once she retires from current employer
Do you think I have got enough or will I need a part time job? No mortgage and reckon I need about £2500 a month.
My spreadsheet says I have but maybe I'm wrong, also concerned about the, in my opinion, current asset bubble!
Any thoughts?
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Comments
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It all depends on your outgoings, but looks doable.
How much in cash? Will you keep your investments as they are, but switch some to income rather than accumlation units? will the natural yield of your isas give you the income you desire, or will you run them down?0 -
As mentioned I think i need £2500 per month when factoring everyting in plus a bit of a safety buffer.
I have cash of around £200k, rest is in mixture of acc and income funds (income is reinvested). I am planning on running the pot down.0 -
Initial impression: certainly looks rosy.
A few thoughts:
1. don't look at the ISA and pension money together. They are very different, both in terms of access (you can't get the pension for another 2 years) as well as tax treatment.
2. investment strategy. You can have a similar investment strategy for the ISA as for the SIPP. Or you could view the SIPP as your protected fund, with the ISA more cautious.
3. Depletion strategy. Simplistically, you should be doing the following:
a) depleting the ISA first until you hit 55 and can access the SIPP.
You will no doubt have used up your personal allowance 2017/18 by this point in the tax year, so you might as well draw from the ISA up to 5/4/18 and enjoy a tax rebate cheque.
For tax year 2018/19 I suspect it might be quite advantageous to do a bit of part time work perhaps, to get you to the personal allowance / NIC threshold, and then make up the monthly difference to your £2500 living cost through wife salary and partial ISA depletion.
Once you hit 55, then the smart thing would be perhaps to take £12,000 (or whatever the Personal Allowance is by then) from the SIPP, then the excess from your ISA (ie leave your SIPP invested for IHT and tax reasons).
You really ought to create a nice spreadsheet, modelling the timing and amount of all future income cash flows, then work out the shortfall, then calculate where (ISA or SIPP) this should come from and what is the better tax approach for both you and your wife.
Frankly though, you could set a pretty low Safe Withdrawal rate on the sums noted, and still hit way in excess of your £2500 "number".0 -
Legal and General Investment Managers today suggested bracing for a market correction of 30% next year. Uncertainty as to how Central Banks are going to unwind years of support (cheap money) will make for interesting times.0
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Thanks ex-Pat Scot some good thoughts. I have considered getting a part time job, doing something I want to do rather than something I have to do.
Yes I think I need spreadsheet No2 to model my withdrawal plans.
Interesting about the correction, I think 30% may be optimistic I can see a 40 to 50% correction, once the market gets momentum (in either direction) it is often difficult to stop.0 -
ex-pat_scot wrote: »Once you hit 55, then the smart thing would be perhaps to take £12,000 (or whatever the Personal Allowance is by then) from the SIPP, then the excess from your ISA (ie leave your SIPP invested for IHT and tax reasons).
If you don't plan to take tax free cash, you could use UFPLS to take £15k out of the pension of which £3k would be taxfree, and the remaining £12k would be your personal allowance (or whatever the correct numbers are by then).0 -
If you're worrying about this, and a 50% market "correction", I'm not sure you're mentally ready for retirement yet. Going from a steady income to no income but still with substantial outgoings is a shock to the system in a lot of ways. It's clear you've been a saver, so the transition to being a total spender will be hard. You're still relatively young at 53 and could easily work for another 12 years. I don't think you "need" to work, but you might find after a while that you want to. Good luck either way.0
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Thanks ex-Pat Scot some good thoughts. I have considered getting a part time job, doing something I want to do rather than something I have to do.
Yes I think I need spreadsheet No2 to model my withdrawal plans.
Interesting about the correction, I think 30% may be optimistic I can see a 40 to 50% correction, once the market gets momentum (in either direction) it is often difficult to stop.
Most people would jump at the chance of leaving work with those kind of funds and future pensions. A nice little part time job as you say doing something you like. Savers often end up with more money due to being generally cautious to start with. I left work early with a lot less and have never looked back since.
£800,000 with an income of 3-4% is within reach even in equities. The FTSE 100 has averaged over 3.5% and is forecast 4% next year. Why worry about market crashes when the dividends are rolling in. Good luck.
http://www.iii.co.uk/sites/default/files/Dividend%20yield.png0 -
Thrugelmir wrote: »Legal and General Investment Managers today suggested bracing for a market correction of 30% next year. Uncertainty as to how Central Banks are going to unwind years of support (cheap money) will make for interesting times.
So maybe down 17% with a fully diversified portfolio if that prediction was correct?? The crash predictors will, of course, be correct at some point.0 -
So maybe down 17% with a fully diversified portfolio if that prediction was correct?? The crash predictors will, of course, be correct at some point.
A certain quote springs to mind.
"You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch0
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