£780k pot how much would you drawdown each year
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[QUOTE=You_need_to_be_careful_about_following_a_strategy_of_only_"drawing_what_you_need_to_live_on"_as_suggested_by_some_posters_as_if_the_pension_pot_continues_to_grow_you_might_find_yourself_with_a_tax_liability_when_the_pension_pot_is_revalued_at_age_75.[/QUOTE]
Could someone please explain what is meant by the comment above, regarding the tax liability when the pot is revalued at 75?
I was thinking of possibly using some of my Drawdown fund as part of my estate planning in the future, so am now confused.0 -
Could someone please explain what is meant by the comment above, regarding the tax liability when the pot is revalued at 75?
I was thinking of possibly using some of my Drawdown fund as part of my estate planning in the future, so am now confused.
The idea is that you use slightly larger withdrawals over the years than your strict income requirements to fill up a lower tax band than the one you'll be in later on when your pension is assessed. If you do this you should put excess money into an ISA.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
Lifetime Allowance. There's an LTA test at age 75 on any uncrystallised funds and also on any increase in value of any crystallised funds.Could someone please explain what is meant by the comment above, regarding the tax liability when the pot is revalued at 75?
I was thinking of possibly using some of my Drawdown fund as part of my estate planning in the future, so am now confused.
The basic rate band issue mentioned above is another thing to consider but it has nothing specifically to do with age 75.0 -
I would draw around £30k a year, which would be taken from the natural yield of the investments.
What is meant by the term “natural yield “? Is this simply dividend payments or dividend+growth? How do you arrive at this £30k figure?? Thanks"For every complicated problem, there is always a simple, wrong answer"0 -
I would stick to your £27k/annum or less if you can in case another crash comes which could potentially reduce your pot from £814k to £400k unless you have £60k/£70k in savings from your TFLS to tide you over until it recovers!I'm now 2 years into drawdown. I started out with a pension pot (after 25% tax fee) of £705K. Initially I started drawing £27K/annum (£2,250/month) which was my estimated natural yield at the time, however many of my funds, particularly Global Equity funds, have done much better than expected (partially due to Brexit & the £) and as a result my pot now stands at £814K. As a result I increased my annual drawdown amount to £30K (£2,500/month) which again should be covered by the natural yield as stated by other posters and also keep me within basic rate tax limits.
You need to be careful about following a strategy of only "drawing what you need to live on" as suggested by some posters as if the pension pot continues to grow you might find yourself with a tax liability when the pension pot is revalued at age 75.0 -
What is meant by the term “natural yield “? Is this simply dividend payments or dividend+growth? How do you arrive at this £30k figure?? Thanks
Just the dividends, for example Murray International yields 3.86% (£30,108 on £780k), City of London yields 3.92% (£30,576 on £780k).
You could easily build a globally diversified Investmemt Trust portfolio that would get you a sustainable £30k from £780k.0 -
Unless you aloow for inflation then you are effectively living off the capital even if it doesn't appear so in nominal terms. (Although this is not a problem as long as you have factored it in, no pockets in shrouds and all that)Just the dividends, for example Murray International yields 3.86% (£30,108 on £780k), City of London yields 3.92% (£30,576 on £780k).
You could easily build a globally diversified Investmemt Trust portfolio that would get you a sustainable £30k from £780k.I think....0 -
Withdraw as much as you can up to basic rate tax limit and move surplus into ISAs for you and spouse. Once you hit SPA, your pension will use up much of your tax free personal allowance, and so you may find you are unable to to deplete your pension without paying HRT.
Once in ISA, save and increase capital or draw income without tax consequences.
(Don't confuse maximum recommended drawdown rate from pension with drawdown rate from total savings!)
C0 -
Unless you aloow for inflation then you are effectively living off the capital even if it doesn't appear so in nominal terms. (Although this is not a problem as long as you have factored it in, no pockets in shrouds and all that)
Is it reasonable to assume that if you live of the natural yield (ie dividends) that expected growth in the underlying assets will grow over time to cover inflation? I presume that depends on the yield of the assets, ie high yielding are likely to grow less, so may not cover inflation?? It's a simple model if it did / could work that way!"For every complicated problem, there is always a simple, wrong answer"0 -
Knew from the knowledge here there would be some great advice and the differing way people see things.
Given me more food for thought! Moving money into ISA's, running the pot down before SPA kicks in etc.
I have a diversified portfolio with a fair proportion as cash (rightly or wrongly) to cover crashes.
I need to look into areas I haven't looked at before. Just getting the transfer out and drawdown started was quite a job. I need to be having conversations, researching what to do best as I go on.0
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