Martyn,
I have been reading every ones comments with interest. I retired at 50 three and a half years ago and will say to any one that can to do it.
I am busier than before with all i want to do and did not realise until i saw the Dr recently (routine check up) how stressed i was before retirement. When i retired my resting heart rate was 76, now it is 62. There are benefits that go beyond what you initially think.
So best of luck, keep active and enjoy your life.
The truth is no one really knows.
Spain in particular wants the weekly tourist to continue to flood out Benidorm and they also value the expats who bring their retirement pots over from the UK, therefore little change is expected. Mobile phone charges (roaming) and the EHIC system for health care will probably be extended and extended and extended. But no one knows for certain.
The only thing that may change is heavier death duties when the expats expire this mortal coil. Death duties used to be 35%, the EU forced Spain to reduce it to 17.5% and they fumed over that, so it could possibly revert back to 35%.
Changes afoot apparently re tax treatment in Portugal, might be of interest (from today’s Financial Times): Portugal set to curb tax breaks for wealthy foreigners https://on.ft.com/3aW72Qf
Further coverage in the Torygraph. If you sign up you can read one article free per week.
https://www.telegraph.co.uk/tax/inco...x-free-status/
Quick question. If you take pensions from the UK such as a SIPP on drawdown how do you make sure you are only taxed in 1 country. My retirement is likely to be in Thailand (albeit in 20 years) and most pensioners there seek to pay UK tax and just hide it from Thai authorities but that's hardly sustainable in the long term.
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most countries are in agreements that means you avoid double taxation. Can’t say about Thailand, but Portugal does. There is a current agreement with Portugal for non-habitual residents (NHR), who can receive a UK pension income (in either country tax free for ten years). This is not Brexit affected, but Britain may claw back the tax post-Brexit much like Norway did with their NHR scheme. Obviously - take professional advise on this.
just read the article above about possible 10% tax rate on foreign investments.
in any case we are not moving here for the tax breaks although that is nice, more for the lifestyle, weather and relaxation.
M
Last edited by MartynJC (UK); 31st January 2020 at 22:54.
Plans firm now. After spending most of 6 weeks viewing it most be between 10 and 15 properties valued between 350.000€ and 550.000€.
We have had an offer accepted on a property in Portugal. Three bed, own water supply, central heating, wood burner, open plan kitchen and sitting / dining area, single story, 10x5m swimming pool, 8000sqm land currently (approx 2acres) mostly orange orchard, but we have plans. Amazing panoramic views down to the sea which you can just see as its 25mins drive to the coast. Big bonus it was a private sale so less than any of the agent properties.
We have a local lawyer (friend recommended) who is dealing with the legalities. Luckily we know one of the two UK qualified surveyors in Portugal so are getting a reputable impartial survey done. If all goes to plan we should complete by May!!!
back in the UK on Monday to see if our UK house is still in one piece. Apparently there’s been some high winds or something? Still plan to sell up in UK, but no pressure as this was priced well enough that we don’t need to sell immediately.
really can’t wait to start the next phase of our lives. Very excited. A bit of trepidation moving country but we are still young enough to do it and fortunate enough to be in a financial position to do so.
Not sure how this will affect abilities to trade in watches with UK folks post-Brexit, but that is another topic for a different thread (and forum).
Martyn
Last edited by MartynJC (UK); 13th February 2020 at 00:09.
Good luck to you Martyn, I'm sure a place out there toward the top.of that budget will be incredible. You'll miss a few things but it'll more than net out positive. Might even be easier to get a waitlist or two for something nice!
Sounds perfect. All the best
Congrats!
Pics please!
congrats; after a tricky few weeks your plan sounds more appealing by the day!!
Just re read this thread and wondered how many plans have now dramatically changed ?
Scary times indeed
Been thinking the same thing. Things have taken such a battering and I don’t think ‘worldwide pandemic’ is a factor in most people’s planning.
Don't get me started on death duties..............too late, I've started, so I'll finish
We live in France, and do not have any kids. Therefore the French state will take 60% of everything we leave behind - that is not solely confined to our assets in France, it is 60% of all our worldwide assets. They'd better pray that I die a quick sudden death, because if I outlive the wife and then get told I've got x amount of time left - I'll go on the biggest bender France has ever seen .
Well one of my funds currently stands at 14% up in one year to the end of March.
Mind you, some of the others are not so good.
Conversely one of mine is 20% down.
Took early retirement 15 months ago. My fund is down 11% since beginning of year so reasonably happy. Had about £20k worth of holidays booked so my expenditure will be down this year by a big chunk.
No real changes planned as was prepared for at least 2/3 big drops during my retirement. Whole lot better position to be in than working!
My 'best' performing fund over 12 months is Fundsmith Equity which is -1.5%. Worst is Marlborough Special Situations at -16%.
A decent IFA would have done the scenario testing to ensure the future plan could support significant and sustained market events. When I looked into early retirement a couple of years ago my IFA "forced" me to sit through several sessions of "what if" to ensure that our plan achieved our goals with a conservative investment strategy. At the time I thought it was overkill but now I have to say he did a great job. As it turns out the majority of my funds are in cash right now so fortunately I have avoided significant value erosion.
Bottom line. Get a decent IFA before making major long-term financial decisions.
Yep this!
Went through a whole load of scenarios with my IFA too. Did seem like overkill. My funds are fully invested but strategy was “to not lose too much” rather than “to gain lots” so exposure to equities is less than 50%. I’m fortunate that my income isn’t huge compared to fund size.
mine remain unchanged and are working out just fine. I started drawing my DB scheme on April 6 taking the maximum tax free lump sum from the scheme. Toping up pension income from my cash payoff should last another 12 / 18 months I reckon until I need to touch the DC.
So leaving the DC alone but moved most into cash and most of what’s left into risk Level 2 - bonds; gilts etc some are left into volatile trusts.
Before lockdown applied and got NHR status in Portugal before end March deadline and tax residency there too. Potential for 0% tax on pension income for 10y - still not clear state of play there.
Last edited by MartynJC (UK); 12th April 2020 at 18:48.
Down 6.5% from the start of the year, but almost 11% from the February peak. Not a disaster yet.
I “stopped work” on Feb 28th with a view to moving the remaining work funds into the Vanguard LF 60 over the following weeks, but events took over, so was still probably 70-75% equities at that point and haven’t tried to change.
My spreadsheet modelling was based around historic worst case scenarios. In theory should be fine, but the worst cases do lead to a fair amount of squeaky bum time in places. For example if you put £1million into the model in August 1929 it shows a drop of 25% in the first 3 months followed by 6 months of recovery, but the actual low point doesn’t happen until month 34 when the fund drops to £277K! It wouldn’t surprise me if a similar trend happens this time, but hopefully not breaking any new ground!
One other thing I noticed watching the money in my Vanguard LF 60 fund - the initial losses (following the markets) were quite sharp, but in the second half of March further drops in the market didn’t seem to be quite as closely followed. I assume this is because the equity part had dropped considerably such that the 60:40 fund was actually now 50:50 or less. Vanguard don’t say when they rebalance the funds, but if it’s quarterly for example it would have a damping effect on short term fluctuations (downwards). Any views/inside knowledge on that one?
In terms of a rethink, I wasn’t planning to touch any of this money for a couple of years anyway while my wife continues to work, but it has made me think seriously about a few recent approaches I’ve had to go back to work.
Most of my pension is DB, but I do have a smaller DC pension.
When the FTSE rebounded by 20% (although still 20% off the peak), I converted my DC pension from significant % higher risk equities to effectively a zero risk deposit fund.
In 6 months I will switch it back from deposit to equities, on the basis I think there is going to be carnage on the stock market in the short term.
One of my biggest failing in general management of my finances is inertia, so I am trying to combat this, this time.
Like for like figures, each in GBP, to 31st March 2020:
1 Year
Fundsmith Equity = 0.73%
PH Equity = 14.27%
3 Years
Fundsmith Equity = 33.13%
PH Equity = 65.47%
5 Years
Fundsmith Equity = 102.12%
PH Equity = 263.76%
10 Years (though 8 months short of this for Fundsmith as it launched on 1st November 2010)
Fundsmith Equity = 327.84%
PH Equity = 1,076.46%
The defensive element: 18th November 2019 to 9th April 2020
Fundsmith Equity = Down 3.23%
PH Equity = Up 2.28%
And the charges are lower as well.
Sorry if stupid question but what is PH Equity ?
Thanks
https://private-client.intelligentmoney.com/ph-equity/
PH=Pistonheads
55 I was off.
Mortgage free
Kids sorted
13 years on and still surviving very comfortably.
Best decision ever
Three years after retiring, today I officially became a pensioner (59) and I started draw down from my SIPP. Only a small amount, but necessary to make sure I get tax codes sorted out.
First time in ages since I saw money entering that account.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
Not really. I could have taken my tax free allowance, but then what? Put it in a ISA and got a very small return on it or left it in my SIPP and hoped for a better than 1% return.
Actually given the crash in the market in March I should have simply converted it all to cash.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
No, I didn’t miss the point. I could have taken the money, but because I didn’t need it, all I would have done with it is either put it under the bed or put it in a bank - both of which would have delivered the square root of bugger all in interest. Alternatively I could leave it in my SIPP account and benefited from increases in the market (which until Jan I had).
I could have taken the money and put it back into my SIPP, but this is not considered very legal by HMRC, plus would have put me over my LTA
In hindsight I should have taken the money and bought gold Britannia’s, but that’s the beauty of hindsight.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
Andy I think you did miss the point they were both making - you could have taken up to your annual allowance without paying any tax on it. You don’t take it and it’s gone. You’ll probablyhave to pay At least 20% In the future to get it out unless your pension fund is small.
Agreed I could have taken it out, but there was no point in me doing it as I had no need for the money - debt free and all of that . Consequently money would have just sat in my account earning me next to nothing. Plus any earnings would easily be easy eaten up by inflation, currently running at about 1.5% higher, than any interest I might expect. So lose lose.
Had I had a mortgage to pay, or interests rates were above 4% then I would used my allowance.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
You just don't get it, do you? It's just logical to take the money out of your pension fund each year - up to the income tax threshold of 12.5k. That money is paid as income but free of income tax.
As it is, come the glorious day you decide to take that 12.5k (multiplied by the four years of opportunity you have missed) you will pay tax on it - at least 20%.
So, 4 x 12.5k = 50k. 20% tax = 10k.
That's the opportunity cost of not having done the planning - and that's all that has been pointed out to you.
It has nothing to do with being debt free / not needing the money etc. It is simply to do with maximising your tax allowance in each and every year.