Update:
Well it's been a few months into retirement for me.
Background:
Luckily I have a fairly large DB plan (transfer value approx 70% of LTA) and a smaller DC scheme (approx 20% LTA) - decided to keep the DB plan and when necessary draw down on the DC scheme but keep the DC in high risk funds for maximum gain.
Past:
First month was busy helping re-painting my wife's flat that provides rental income. And she already has the state pension.
Financial planning: I've put maximum cash I could, including previous years allowance contributions into my DC pension scheme to recover some of the 40% tax on my redundancy payment that nearly took me nearly to the 45% bracket. Then immediately drew down the maximum 25% tax free amount as a lump sum leaving the balance in a crystallised draw-down state. And I can claim back 20% tax on that cash contribution at the end of 2019-20 tax year if I have no other income - so it's a win-win really. I also need to transfer a small 2y USS schema to DC plan - need to sort that out.
Current Living expenses:
I calculate that lump sum + remaining redundancy should last about 2 years, at our current burn rate. This is without taking any pension income. I could also draw up to the Income tax free amount from my DC scheme (assuming there is a tax free threshold)
Future:
We are selling our house (at pre-planning phase with developers) and want to move to a somewhat smaller property - so could release something like £xxxK equity depending where we move to. Also, in 2 years time I plan to take the DB pension which gives about £xxxK tax free and then a pension around £xxK / annum. And also can draw down on the crystallised DC yearly if we need extra cash, until state pension kicks in at 67. We have some cash (approx £xxxK) in various accounts (ISA etc) too consider. So will take stock again after completion of the house sale and move.
Plans
phew - after nearly 40y of working for other people I have a few 'hobbies' to continue to catch up on:
Bee Keeping
Photography
Music (singing and clarinet)
Fine Art - just started
Hiking
Gym - got keep fit
Watches?!
Gardening
I'll check back in 6 months when the house situation may be firmer (as well as our countries economic climate).
I decided to xxx out the actual values - but you get the idea.
Martyn
Last edited by MartynJC (UK); 25th November 2019 at 19:12.
Well done Martyn. Only observation I have is why take the full 25% PCLS in one go. It was sitting in a tax free environment - you could have drawn it out as you needed it leaving the rest to grow. Doing that could have resulted in slightly more TFC potentially. Have fun with those hobbies !!
Sounds like a great future planned Martyn, Enjoy
I guess am just hedging my bets - I feel the world economy is on a rough ride and the remaining money is in high risk funds - so felt I should keep it in cash reserves. But you are right - I could have done multiple draw downs to the 25% limit - in hind site perhaps I should have left some until later. I hope to move my 2y USS pension over to this scheme so I'll leave that alone. It's well below the £30K value so doesn't need an IFA to sanction the move across.
When you still have enough health to enjoy your wealth. And enough wealth to enjoy your health.
(Can’t take it with you - of course depends on if you want to leave anything for kids etc or are they on their own?).
I figured the optimal spending phase for me is between 60 and 80. So need to cover lifestyle costs for approx 20years. So plan investments accordingly.
Passed that I figure I will probably want a more gentle life. I want to spend time with my prettier half as she is a bit older than me and neither of us is getting younger.
Last edited by MartynJC (UK); 2nd January 2020 at 18:58.
Im 60 tomorrow....
I will retire in the early summer...probably June.
I honestly cant wait! I work as a train driver..so do stupid shifts, starting and finishing ridiculous times of the day!
I have had a look at what pension I will get....it looks fine to me..Everybody is different, as to when they want to retire/how much money they neeed etc etc..
Personally......I cant wait! I will spend the winter months in Thailand, and the rest of the time ,home in sunny south wales...or wherever I want to be...as long as my health holds up...
I had a beer with a mate of mine over Christmas and he said he’d been offer a multiple of 51 times his annual DB pension to cash it in.
His DB pension is worth £20k, so that’s a cash in of over £1 million, which bumps him up to the personal allowance if he goes ahead with it.
I’ve only ever heard of maximum multiples of 35 before this.
That really is the million dollar question, and I expect it will be causing headaches for a growing number of people as more and more of us are sitting on a lump sum with no guarantee of income.
How much do you need to live on when you retire, how long are you going to live for, how will your retirement pot change in value over that time and what will inflation be? Just answer all of those and you’re well on your way ;-)
I'll retire in Thailand and figure if I spent £40k a year there with no rent to pay that'll be perfect. So a pension pot of £1m would do that kept invested in an index tracker whilst maintaining the balance and no need to take equity from properties.
No DB pension for me as I was too young to benefit from these schemes so all done via private pension like most millennials. I'm 42 so a while to go anyway.
Advice would be to stick as much as you can as early as you can into a pension. For example if you had £100k in a US market tracker at age 35, then even if you didn't pay a single penny into it thereafter you would have over £1m in today's money by age 65 assuming historical growth continues. Or put it another way, instead of subscribing to the banal vanity project of buying your newborns a pointless Rolex to hand over at age 21 why not stick £10k at birth into aforementioned index tracker as that would be the same £1m in today's money by age 65 which means your gift to your child would be to help them focus on enjoying their lives knowing that their retirement was sorted already.
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put it another way, instead of subscribing to the banal vanity project of buying your newborns a pointless Rolex to hand over at age 21 why not stick £10k at birth into aforementioned index tracker as that would be the same £1m in today's money by age 65 which means your gift to your child would be to help them focus on enjoying their lives knowing that their retirement was sorted already.
Interested in this, my kids 4&7 each have about £10k each in savings accounts, anyone know at what age I could stick it in some sort of pension for them ?
I guess to lose that money over the next 50 years would be annoying rather than life changing
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You could put £2,880 into a pension for your children every year. With tax relief it takes it to £3,600. Quite a few grand parents and a few parents have done this. They say if you did it from birth to 18 they would never have to worry about retirement.
The only disadvantage is that it can’t be accessed to 55 . . . .
The biggest advantage is it can’t be accessed to 55 . . . .
Ryan it’s worth taking into account that £1m today will have a lot less buying power into say 10 or 20 years times so that pot may need to be £1.5m by then (if the LTA rises of course). That said £1m then will still be far more than most people will ever have and you can always take more in,the early years until the state one kicks in.
I've been paying £84 a month into a SIPP for each of my two children since birth. The government adds another £21 to that. £84 because that was the child allowance at the time my daughter was born.
My daughter is 18 in March and she has about £46,000 in her SIPP, & my 10 year old son has about £20K. Not a bad start for them and something for them to build on when they start working.
Last edited by trident-7; 16th January 2020 at 23:45.
Out of interest, who on the forum has retired the youngest?
I’m mortgage free with savings. 35 and work for myself. I suppose I could “retire” at any time but I would be worried about future income so I keep going. (Mostly property related investments). I was thinking the other day, I’d probably be happy with house around £650k in uk paid for, house abroad somewhere hot to live in say £350k and £50k a year for next 30 years min so I reckon a £2.5 million pot would see me out! (I’m quite far away so will keep going!)
I don't know anything about sipps but presumably the child cannot access the money until they are 55?
Never say never...
From the Pensions Advisory Service:
Personally I’m targeting 62, although may increase that depending on my wife’s circumstances closer to the time.In a consultation document from 2014, the government proposed that the normal minimum pension age (the earliest age you may be able to take your pension benefits) should increase from age 55 to age 57 in 2028. It would increase at the same rate as the increase in the State Pension age from then on. This means that the minimum pension age would remain ten years below State Pension age.
However, there is currently nothing in the legislation to state that the normal minimum pension age will increase in 2028.
From my perspective I have an autistic son and whilst he is only 6 and who knows the future I want to plan for the fact that he may not be able to care for himself when we are gone. So by putting all into a SIPP that he can access at 60 or whatever I figure one of myself or my wife will still be around then and he will have ample funds for whatever care he may need, plus access to what is left of my SIPP, the value of my property in London, he has Land in Thailand also.
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Have you sought financial advice on this? Certain types of trust can be set up to provide care for vulnerable dependents, with special tax treatment. I have a relative who is beneficiary to one of these, to ensure they still have an income and good quality of life in future.
Could be worth considering creating a trust where he has a regular income stream instead of having access to all of the capital which is what would happen at 18 unless you have a Will in place with specific instructions. Also bare in mind if you have life cover for your mortgage and/or through work your assets could be a lot more than you think as most people don’t tend to consider that (as they aren’t an asset unless someone dies). Might also be worth writing that in trust as well if you haven’t already.
Rather than a SIPP for children, also consider a Stakeholder. Lower charges and still a reasonable choice of funds.
this, go for a stakeholder or PP with a recognised large provider with low charges, for initially small fund values the cost of most SIPPs will be a bit toppy and unnecessary. I'd suggest going high risk as this money doesn't need to be worried about in the way that us approaching retirement do and you can forget about the day to day worry about volatility for the next 30-40 years.
the least exciting thing you can do for kids or grand kids but a really useful financial planning tool for gifting, IHT planning & their long term wealth planning.
Sipps are mostly cheaper than stakeholder charge levels these days. Also despite long term being better for high risk you can’t just assume high risk is appropriate without first doing a risk appetite assessment / discussion with the person. I have plenty very cautious clients with over 25 yrs till they retire who wouldn’t dream of taking anything approaching high risk. Horses for courses and all that.
Agree with everything else you said though
once you get to the new tax year it may be worth drawing the personal allowance if you have no other taxable income. This will be 0% tax on £12,500 (19/20 allowance) once the taxman realises you have no other income and you can squirrel away a small extra sum for a couple of years into your ISAs or similar. Fairly small amount considering your overall position but every penny counts. Check the USS value too as I had a client recently where the revaluation took it over £30k and i had to get involved.
the multiplier on DB transfers varies massively and we've seen them as low as 18 (leave the hell alone) and as high as mid 40s; hard to weigh up the pro's & con's as there really isn't a right answer but best to be informed. Ongoing low gilt rates seem to be holding up the high transfer values but the regulators & PI providers are being very particualr over what they see as a 'good' transfer; rightly so.
A lot have people have stumbled into SIPPs thinking they are somehow superior to a conventional PP & incur annual fees with some providers and high fund charges without realising; it was more a general cautionary note to take care of the charges overall.
As for the risk factor; whilst a tad simplistic, my point was that lots of people treat the money as if they need it today when this clearly isn't the case. If this is grandchildren money it could be invested for up to 50-60 years, so people probably need to reconsider the risk rating slightly. I'm not suggesting investing in the 3.30 at Ascot but equally most children's savings are in cash or low risk due to the nature & timeline of the savings; whereas this is a slightly different approach. The vast majority of my clients are pre-post retirement and fairly cautious but I do have the risk/reward chat with a different perspective on this subject; particularly as we are usually drip feeding in annually a relatively small amount due to the contribution limits/gift allowance etc so I try to treat this as a risk strategy in isolation from clients general planning.
but, as you say; horses etc
this chat is making me think about retirement asap for myself too!
Last edited by westberks; 6th January 2020 at 15:28.
The total charge on my sons stakeholder is 0.55% which I’m ok with. As it’s got 40 ish years to run it’s invested 100% in equities (various funds) as there is no point in being cautious over that sort of time frame.
My own funds are far more cautious now I have retired as I’m looking for steadier growth (to cover what I draw down) with less volatility.
Last edited by craig1912; 6th January 2020 at 17:47.
Thanks for the advise - yeh could be useful - though if my DB scheme gets triggered if I need the tax free lump sum - the income provided per year will be £19K taking me into the basic rate tax bracket.
Situation has become interesting.
We are in Portugal looking at properties and we both really adore one property that is modern design and good location and within budget - but only if I draw on my DB scheme as we have not sold our UK property yet (unlikely to complete for another 6 months). Seller is willing to be flexible on the completion date anyway.
So question - anyone got experience of emigrating to Portugal...
I thought it may be difficult to buy / sell so many watches to the UK - though round trip flights are not expensive I realise!
Martyn
Useful tax advantages if you apply for Non-habitual residency in Portugal
https://www.qropsspecialists.com/uk-...g-to-portugal/
Slight update:
Decision made: we are moving to Portugal, permanently. Wife and I have agreed on this next phase of our journey.
We have consulted with tax accountants here in Portugal (still in the middle of an extended stay looking at properties and to get a feel for life beyond the 2 week break) today and all looks promising.
Have a short list of three properties and we have made an initial offer on one, though it was rejected (as expected).
All rather exciting. Of course we will miss out ties to the UK, but we were planning to move anyway, so don’t see that so much of an issue.
:smiley face:
Martyn
That sounds very exciting! So will you sell up completely in the UK and move wholesale to Portugal or still keep a base here?
Either way, that view looks great.
Congratulations Martyn, this is an exciting time for you both and I look forward to following your journey via TZ. My wife and I are quite the gypsies and often ponder on where we may live later in life and Portugal is at the top of the list. I loved Porto when I spent a week there last year.
Planning to sell up in UK And become resident in Portugal, though the wife has a little 2 bed flat she lets out in UK, so could possibly return. Wife’s family from Calif. USA so a bit more bother to get there from Portugal I guess. I only see my sister at Christmas time year on year so no change there. It is a £50 flight back to Gatwick so very feasible to pop back for a visit.
I think we may have a few visitors so getting a property with a spare bedroom in mind!
Martyn
That's so exciting Martyn! Wish you and the wife all the best with the move - Portugal sounds lovely. I will miss your pots of honey though - unless you're doing it in Portugal :)
Sounds good and looks lovely. Added logistics re Cali but not like you'll be doing that monthly. How long until you're bee keeping over there?
The cost of living in Portugal is even cheaper than in Spain and as been previously stated, if you play your cards right, your UK income that you transfer into Portugal will be tax free for 10 years.
I have a Villa in Spain and use it for 24 weeks a year and it makes retirement so much better. The thought of spending say 45 weeks every year in the UK during retirement would drive me nuts.
The only advice I would offer is the same advice that I was given and of course ignored is to rent for the first six months. This gives you time to pick the most suitable area for your needs. Also chat to the local ex pats who will know all the pros and cons of every district in the locality.
Me and the wife are currently having "discussions" over Spain. I like having a foot in both Spain and the UK whereas she wants to move full time to Spain due to the better weather and lifestyle. I am slowly coming around to her way of thinking.
You are definitely making the right decision.
As my wife is Spanish we're 5-6yrs away from moving there ourself. I'll be taking early retirement, I'm happy with trading pension value for more years of semi/retirement. Wife will be picking up a job (for at least 5 years, probably 10) so that she qualifies for Spanish State pension (which is considerably more generous than here). We have a flat already so will use it as a base to find or build a retirement villa for ourselves.
I know we're probably going to need to take some specific advice as Spanish taxation does vary within regions - espeically things like spousal transfers and property inheritance, but if anyone's got advice, then I'd be happy to hear it?
Last edited by Scepticalist; 28th January 2020 at 11:49.