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  • FIRST POST
    • kevfm
    • By kevfm 13th Sep 18, 3:59 PM
    • 16Posts
    • 2Thanks
    kevfm
    Another Ready for Retirement Thread
    • #1
    • 13th Sep 18, 3:59 PM
    Another Ready for Retirement Thread 13th Sep 18 at 3:59 PM
    Hi, another first time poster looking for some guidance

    So I'm getting near retirement. I’m 57 Y 7 M, working FT . Wife 1 Y older, semi-retired, working PT. No mortgage. Just wondering what sort of income I can expect at 60 and what difference 59 would make. Like most I expect to spend more initially.

    Although I’ve asked for a CETV for my DB pensions I’m assuming that’s going to be a bad idea. I’ve done some sums/spreadsheets but I’m not sure what to expect from the DC pot. We’ll both get full SP at 67 so I’m thinking some sort of flexible drawdown. I’m not looking to leave anything to my kids other than the house.

    I’ve seen an IFA for an initial consultation and will go back to him or someone else. Some more details:

    Me - DB Pensions (2) currently £25k + £5k p.a., NRA 60, indexed, 50% spouse benefit, 4% p.a. early payment. DC pension £320k now, increasing by £2800 pm
    Wife - DB Pension c. £10k currently taking but working PT.
    Savings – c£70k ISAs, Cash, Shares

    thanks
Page 1
    • kidmugsy
    • By kidmugsy 13th Sep 18, 4:21 PM
    • 11,598 Posts
    • 8,122 Thanks
    kidmugsy
    • #2
    • 13th Sep 18, 4:21 PM
    • #2
    • 13th Sep 18, 4:21 PM
    Me - DB Pensions (2) currently £25k + £5k p.a., NRA 60, indexed, 50% spouse benefit, 4% p.a. early payment. DC pension £320k now, increasing by £2800 pm
    Wife - DB Pension c. £10k currently taking but working PT.
    Originally posted by kevfm
    You have mountains of money, all you have to do is (i) avoid high fees, and (ii) avoid tax.

    On the second point it might be useful to fund some DC pension contributions for your wife so that if she stops work before State Pension Age she can drawdown some DC pension to use up her Personal Allowance against income tax. The "shares" you own you probably want to sell, with the capital going into tax shelters. Or make sure that ownership is split so that you can each use your £2k p.a. dividend allowance.

    As for you at age 60, you'd presumably take your £30k p.a. in DB pension, and drawdown enough from the DC to use your Personal Allowance, so ca £16k p.a.. Plus there would be 33% of that as Tax Free Lump Sum, so approx another £5k p.a. Would a total income for you alone of £51k p.a. suit you? If not, take more TFLS. If in fact you have some earned income in that first year of retirement, modify the sums accordingly.

    Another trick would be for you to take the whole TFLS at the beginning and plunk it into savings and investments, including ISAs and those that would use up the Savings Allowance of both of you, and - for your wife if she has given up work - the Savings Starting Rate band.

    If you really want to get through all that wealth before you both
    die, and yet avoid higher rate tax ... I think you are going to have to arrange your own death before age 75 so that your wife can draw money out of your DC fund tax-free.
    Free the dunston one next time too.
    • Linton
    • By Linton 13th Sep 18, 4:34 PM
    • 9,730 Posts
    • 9,979 Thanks
    Linton
    • #3
    • 13th Sep 18, 4:34 PM
    • #3
    • 13th Sep 18, 4:34 PM
    Very roughly for a sensibly invested DC pot it would be reasonable to assume a sustainable inflation adjusted gross drawdown of perhaps 3.5% of initial capital. Were you to adjust your drawdown according to market conditions up to 5% may be reasonable though you could need a sufficiently large cash buffer to replace the drawdown during the bad times.


    Rather than use your DC money just to supplement your DB pension from an early retirement date it could be better use it to provide all the retirement income until the NRA when the full DB pension becomes payable.
    • eastcorkram
    • By eastcorkram 13th Sep 18, 6:10 PM
    • 143 Posts
    • 34 Thanks
    eastcorkram
    • #4
    • 13th Sep 18, 6:10 PM
    • #4
    • 13th Sep 18, 6:10 PM
    Given your age, shouldn't state pension start at 66 rather than 67??
    • Audaxer
    • By Audaxer 13th Sep 18, 9:47 PM
    • 1,283 Posts
    • 772 Thanks
    Audaxer
    • #5
    • 13th Sep 18, 9:47 PM
    • #5
    • 13th Sep 18, 9:47 PM
    Me - DB Pensions (2) currently £25k + £5k p.a., NRA 60, indexed, 50% spouse benefit, 4% p.a. early payment. DC pension £320k now, increasing by £2800 pm
    Originally posted by kevfm
    I certainly wouldn't consider taking the DB pensions early, even if you decide to retire before your NRA of 60.

    When you take the DB pensions have you considered whether you will take a tax free lump sum?

    I'm impressed you are increasing your DC pension by £2,800 per month - interested to know if that's from existing savings or salary?
    • Maggiebroom
    • By Maggiebroom 14th Sep 18, 12:02 PM
    • 2 Posts
    • 0 Thanks
    Maggiebroom
    • #6
    • 14th Sep 18, 12:02 PM
    • #6
    • 14th Sep 18, 12:02 PM
    I do t know if I am on the correct thread but I. annot find out how to start a new one.
    I. am a pensioner who retired in 2002. I had a personal pension plan which I forgot about until I got a letter that told me the plan matured on my 75th birthday in May. I now have to decide what I want to do with the money and I am completerly stumped.. Can anyone help?
    • Maggiebroom
    • By Maggiebroom 14th Sep 18, 12:04 PM
    • 2 Posts
    • 0 Thanks
    Maggiebroom
    • #7
    • 14th Sep 18, 12:04 PM
    • #7
    • 14th Sep 18, 12:04 PM
    Apologies for intruding on this thread. Pleas pass me on to the correct forum if necessary.
    • Albermarle
    • By Albermarle 14th Sep 18, 12:29 PM
    • 48 Posts
    • 17 Thanks
    Albermarle
    • #8
    • 14th Sep 18, 12:29 PM
    • #8
    • 14th Sep 18, 12:29 PM
    You are on the correct forum but you really need to start a new thread .
    On the front page of the pensions and annuities forum you will see a bright pink/red button that says New Thread.
    Also you will have to give more details to get good advice. Such as how large is the sum of money involved for a start.
    • kevfm
    • By kevfm 14th Sep 18, 5:57 PM
    • 16 Posts
    • 2 Thanks
    kevfm
    • #9
    • 14th Sep 18, 5:57 PM
    • #9
    • 14th Sep 18, 5:57 PM
    Thanks for the replies. It's clear now that minimising tax should be one of my main aims. I realise I'm lucky in having had a good job with a decent pension, had my kids quite early and haven't been divorced. A few questions/answers...

    As for you at age 60, you'd presumably take your £30k p.a. in DB pension, and drawdown enough from the DC to use your Personal Allowance, so ca £16k p.a.. Plus there would be 33% of that as Tax Free Lump Sum, so approx another £5k p.a. Would a total income for you alone of £51k p.a. suit you? If not, take more TFLS. If in fact you have some earned income in that first year of retirement, modify the sums accordingly.
    Yes £51k plus wife's DB is about what I was hoping for (I might have to give her some though ). Not sure what is meant by "Plus there would be 33% of that as Tax Free Lump Sum, so approx another £5k p.a"


    Rather than use your DC money just to supplement your DB pension from an early retirement date it could be better use it to provide all the retirement income until the NRA when the full DB pension becomes payable.
    yes I understand that - my NRA for the DB schemes is 60 so if I go at 59 I wouldn't take it early but live off savings/SC lump sum until 60.

    Given your age, shouldn't state pension start at 66 rather than 67??
    don't think so - I was born in 1961...

    I certainly wouldn't consider taking the DB pensions early, even if you decide to retire before your NRA of 60.

    When you take the DB pensions have you considered whether you will take a tax free lump sum?

    I'm impressed you are increasing your DC pension by £2,800 per month - interested to know if that's from existing savings or salary?
    See above, no I won't take the DB early. I hadn't thought about taking a DB lump sum - I suppose it's down to my tax situation but my initial reaction is no.

    And yes, total contribution is a bit less that I said but over £2700/month (including employers contribution). Mortgage is paid and kids have (almost) gone.
    • atush
    • By atush 15th Sep 18, 4:16 PM
    • 17,180 Posts
    • 10,743 Thanks
    atush
    yes I understand that - my NRA for the DB schemes is 60 so if I go at 59 I wouldn't take it early but live off savings/SC lump sum until 60.
    No you didnt quite get that. dont live off savings/TFLS when youc an Drawdown tax free up to your PA?
    • Audaxer
    • By Audaxer 15th Sep 18, 6:57 PM
    • 1,283 Posts
    • 772 Thanks
    Audaxer
    No you didnt quite get that. dont live off savings/TFLS when youc an Drawdown tax free up to your PA?
    Originally posted by atush
    Yes, and if the OP was thinking he didn't want to drawdown from his DC pension early as he wanted to keep the money invested, he could always drawdown up to his PA anyway and reinvest it in the same or similar fund in an S&S ISA. So that way I think he would get the tax benefit of drawing up to his PA, but still be spending from his savings.
    • EdSwippet
    • By EdSwippet 15th Sep 18, 10:52 PM
    • 779 Posts
    • 738 Thanks
    EdSwippet
    DB Pensions (2) currently £25k + £5k p.a., NRA 60, indexed, 50% spouse benefit, 4% p.a. early payment. DC pension £320k now, increasing by £2800 pm
    Originally posted by kevfm
    Since nobody else has mentioned it, I'll just insert a quick warning here about the potential for a 25% tax penalty if you save into pensions past the Lifetime Allowance (LTA).

    The LTA is currently £1,030k. Your £30k total DB pensions are valued for LTA purposes at 20x, and adding a £320k DC pension puts you at £920k, so you are already at 89% of the LTA. Allowing for investment growth (4% real) on your DC pension alone, adding £2,800/m would put you above the LTA in only two years.
    • wjr4
    • By wjr4 16th Sep 18, 10:14 AM
    • 420 Posts
    • 268 Thanks
    wjr4
    Another trick would be for you to take the whole TFLS at the beginning and plunk it into savings and investments, including ISAs
    Originally posted by kidmugsy
    This wouldn’t be a good idea if there is an IHT issue.
    I am an Independent Financial Adviser (IFA). Any posts on here are for information and discussion purposes only and should not be seen as financial advice.
    • kidmugsy
    • By kidmugsy 16th Sep 18, 10:25 AM
    • 11,598 Posts
    • 8,122 Thanks
    kidmugsy
    This wouldn’t be a good idea if there is an IHT issue.
    Originally posted by wjr4
    But he's not said that there is.
    Free the dunston one next time too.
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