Redundancy at 52, retire now?
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Have you obtained a new state pension statement?
My statement says based on my NI record to 5th April 18 I can have £140.53 per week but with another 6 years of contributions it would be £164.35.
I already have 35 years of contributions, but mostly contracted out hence the reduction. If I am not working will I be able to buy the extra 6 years in the future, even though I already have 35 years?0 -
You're planning to keep a SIPP, and ISAs, and a dealing account all at HL. In your shoes I'd be very keen to diversify providers. If HL get in the soup - even just the IT soup - you'd be very vulnerable.
I hadn't thought of that, thanks for pointing that out.
It's not wise! I know I have taken a gamble so far with equities but with money in BTL I thought the diversification with property was sufficient. When I sell the BTL I will invest the cash much more responsibly and balance the portfolio accordingly. A thought though! The idea of de-risking closer to retirement or "lifestyling"- was that approach not aimed at a time when you had to buy an annuity? Surely at 52 with potentially 30+ years exposure to the stock market through draw down, can you not take a more adventurous approach?As for all equities: is that wise? Once you are "deccumulating" rather than accumulating surely there's a strong argument for diversifying investments? Your current plans to replace a BTL by equities goes in the opposite direction. In your shoes I'd think of DB pensions as being like very superior bonds and ask myself whether I was happy with my equity:bond ratio. (There was an old US rule of thumb %bonds = your age. If so you should have about 50% in bonds.) Other diversification assets: gold, commodities, property, cash inc FX.
Yes it is growing. I was told £1470 a couple of years ago, now it is over £1600.But I'm puzzled that you are not intending to draw DB1 immediately. Why not? Is it growing in deferral?
Thanks for the other suggestions and the links to a bit more reading.0 -
Yes, I've seen it discussed here before. Ordinary BTL rents are not earnings for pension purposes, holiday home rents are. (I suppose the reason is the amount of work that has to be put into a holiday home, especially the regular cleaning and laundry.)
Rental incomes does not count unless it is from a holiday letting business. If you own the property through a comany though it can pay you a director's pension.
The reason is probably the feeling some people have that rents aren't earned income.0 -
When I was young an older person at work said to me “A year before 60 is worth two after it” I always remembered this and retired at 52, 22 years ago. The best thing I ever did, go for it.0
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My statement says based on my NI record to 5th April 18 I can have £140.53 per week but with another 6 years of contributions it would be £164.35.
I already have 35 years of contributions, but mostly contracted out hence the reduction. If I am not working will I be able to buy the extra 6 years in the future, even though I already have 35 years?
It's only worth buying an extra 5 years not 6. Each year is worth 1/35 of the total, so £4.70 a week, and costs about £750 to buy so a fantastic bargain. 5 years gets you so close to the maximum that the sixth year would only get you an extra 34p a week - so that one's not such a good deal!0 -
The idea of de-risking closer to retirement or "lifestyling"- was that approach not aimed at a time when you had to buy an annuity? Surely at 52 with potentially 30+ years exposure to the stock market through draw down, can you not take a more adventurous approach?
That must indeed be a large part of it. Another part is that you will no longer have much opportunity to repair an investment disaster by advancing your career earnings.
Perhaps a good low-risk investment policy would be to rely on taking the DB pensions, and State Pension, later and using the other assets earlier. In which case a 30+ year horizon would be too long. I would want to spread some of my other assets out of equities. Probably not to bonds, though.
In a way you have "won" the investment game, to use an American expression. The art now is to preserve your winnings. I'd ask "what future liabilities can I insure myself against, using my heap of capital"?Free the dunston one next time too.0 -
You have £480k outside pensions and £100k inside (all of which you could get out tax free)
Good point: then there's a good case for doing the SIPP-money-go-round from 19/20 onwards.You therefore have not £18k pa but £28k pa absolutely nailed on. What you should be asking is what to do with your spare £230k?
Do Tesla do motorhomes?Free the dunston one next time too.0 -
What strategy would you use to get it all out tax free?
Suppose you have £100k in pensions at age 55. You might hope for more since you'll be adding (won't you?) £2,880 net = £3,600 gross from 19/20 onwards, but maybe there will be stock market losses to cancel that. Anyway, £100k to be withdrawn over 11 years; circa £9,000 per year. 25% of that is tax-free, so the tax-exposed bit is £6,750. In addition you will be adding £2,880 p.a. net, keeping it in cash for a couple of months until the tax relief arrives, and then taking out £900 TFLS plus £2,700 tax-exposed. Your DB1 pays you about £1,600 tax-exposed so there you have a total tax-exposed of about £11,000. Your personal allowance against income tax will be about £12,000 so you will pay no income tax on this lot. (Plus you have tax-free lump sums totalling about £3k.)
Next you use your hitherto unused £1k of personal allowance and your £2k dividend allowance to pocket £3k of dividends untaxed. Now we've reached a grand total of £11k + £3k + £3k = £17k and still paid no tax. Now you still have at your disposal your £1k of savings interest allowance plus the unused part of your Starting Rate from Savings allowance (£5k - £2k = £3k). At current interest rates (will they still be current in three years time?) you will be hard-pressed to raise that £3k + £1k of interest, but remember that it needn't all be interest on cash: income from bonds and bond unit trusts counts too.
So that's how you'd get to £18k p.a. or more without paying income tax. You could supplement it with sales of equities within your CGT allowance. Capital Gains of £11k added to your £18k gives you £29k with no tax to pay. Yippee!
All this would mean that your investments within ISAs could be left alone to fructify. Since you are limited to adding only (!) £20k per annum to your ISAs you obviously don't want to be taking money out at the same time. The ISAs are your insurance in case bad times arrive.
P.S. Don't forget to subtract from your total wealth the £2,880 you will have added to the SIPP, which will presumably come from the capital liberated when you sell enough equities to make a capital gain of around £11k.Free the dunston one next time too.0
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