£780k pot how much would you drawdown each year
GSP
Posts: 887 Forumite
Hi,
I am four months into drawdown fund of £780k. The wife will be eligible for a fund of £150k in 4.75 years time. SPA age for me is 12 years time, my wife 15 years and we have to make 5 years contributions for full SPA.
She has given up work and we intend to have some good holidays though keeping an eye on the fund.
I have been reading posts regarding safe withdrawal rates etc. Some posters are cautious, but some say enjoy what you can.
I will be having reviews with my IFA but with differing opinions out there be interesting to know how much people would withdraw each year. Excluding shopping, all regular household bills are less than £500 a month, no loans or mortgage.
Thanks
I am four months into drawdown fund of £780k. The wife will be eligible for a fund of £150k in 4.75 years time. SPA age for me is 12 years time, my wife 15 years and we have to make 5 years contributions for full SPA.
She has given up work and we intend to have some good holidays though keeping an eye on the fund.
I have been reading posts regarding safe withdrawal rates etc. Some posters are cautious, but some say enjoy what you can.
I will be having reviews with my IFA but with differing opinions out there be interesting to know how much people would withdraw each year. Excluding shopping, all regular household bills are less than £500 a month, no loans or mortgage.
Thanks
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Comments
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I would draw around £30k a year, which would be taken from the natural yield of the investments.
First £7.5k would be tax free, then use the £11k personal allowance and pay 20% tax on the rest.0 -
Have you drawndown your 25% tax free yet?0
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Thanks so far.
Lokolo, I withdrew £11,500 taxable and had to claim some c£3.5k back due to no tax code. Withdrew the rest tax free. Intend to do that part and part. Assume my tax free portion has a chance of growing still further being invested.0 -
be interesting to know how much people would withdraw each year.
Hopefully, no more than they need to draw. General rule of thumb is to only draw what is needed for financial need and/or tax efficiency.
What other people draw is really of no benefit to you.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I agree with Dunston in that you should only draw what you need to. From a tax efficiency point of view you should each draw up to the personal allowance so no tax to pay.
Our regular bills amount to around the same as you and we aim for income of £2500 per month. This is mainly met by DB pensions though rather than drawdown.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
Isn't it worth moving the tfls as quickly as possible (given annual isa allowance) from the pension wrapper to an isa wrapper?Hopefully, no more than they need to draw. General rule of thumb is to only draw what is needed for financial need and/or tax efficiency.
What other people draw is really of no benefit to you.
To answer the op cfiresim can be used to model safe withdrawal rates but someone like jamesd is much more inowledeable in how to cinfigure your idividual scenario.
As a rule of thumb you could use excel solver to work out what level income you could get including your and dw state pensions once they become payable with 2% return on your remaining funds which are exhausted at age 100.I think....0 -
Hi dunstonh and good to have you back.
Quite agree everyone has different circumstances. I was interested in views and opinions from the cautious to not so cautious. I am drawing £28k p.a. to start with. Should be enough for us but could we be drawing out more?0 -
Hi dunstonh and good to have you back.
Quite agree everyone has different circumstances. I was interested in views and opinions from the cautious to not so cautious. I am drawing £28k p.a. to start with. Should be enough for us but could we be drawing out more?
Honestly, that rule of thumb is pretty solid. Only what you need for your objectives and tax efficiency (the latter could be to utilise personal allowances to feed other allowances for example. i.e. someone needing £8k may be better to draw £14k to use up their personal allowance for tax free income and put the excess into a S&S ISA. 14k being split between 75%/25% to give £11k taxable.)
So, if you need £28k then that is what you would draw. Using phased flexi-access if possible to keep the tax down and avoid crystallising the whole fund at once.
The pension is not part of your estate. It is invested tax free. So, taking more out than you need and paying tax on it is just wasted money.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thanks for your replies.
Agree paying no tax is the goal. I could crystallised the whole amount and taken nearly £200k tax free, but decided as wasn't going to use left it invested so it might grow a bit more. Know amounts and limits will change but based on today was hoping to take out say £16.5k tax free each year which should last 11 years.0 -
Just wondering whether money in a pension is likely to be more at risk if some left wing, communist, zealot got into power in 5 years time and upped the tax rate significantly while finding it more difficult to tax ISA income.0
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