Retirement

[moanjam]

Sorry as may be being thick and youve probs already explained but where did the 16760 figure come from

It's the amount you can take tax free per year if you spread your 25% tax free portion of your pension annually on top of your £12,500 personal allowance.

 

[Barista]

Defo gonna give it a go mate. My wife is 8 years my senior so will try and reduce to part time towards the end so we can spend quality time together

Just need to decide whether to stick all of my spare money after mortgage is paid into my work pension or diversify. Guess it's best to go and speak to a financial advisor

In 17 years time the minimum age for accessing a personal pension will likely be 60+ yrs. Therefore you will need to ensure you have enough money in ISAs to live off if you retire before 60, so a mixture of ISAs and personal pension will be needed with the optimal proportions of each depending on your personal circumstances. As you say, an advisor would be able to help you to work this out.

 

[Swindon On Tour]

This is the problem when people compare notes as his £200k inheritance could be a game changer. I was on a Cruise recently with a couple who were a retired Gym Instructor and a Teacher and I couldn't understand how they could afford all the luxury booze/dining/SPA packages until he mentioned his wife had inherited £1m from her mother.

My Mate younger than me benefited from 2 houses inheritance within 6 months.
Kids all left home. Lives in Leeds and meet up at all the Northern Swindon away games. He looks so healthy and living life to the full.
Was an Ops Manager on the railway thus also gets free train travel.
Lucky bastard, cracking lad.

 

[Abdol00]

In 17 years time the minimum age for accessing a personal pension will likely be 60+ yrs. Therefore you will need to ensure you have enough money in ISAs to live off if you retire before 60, so a mixture of ISAs and personal pension will be needed with the optimal proportions of each depending on your personal circumstances. As you say, an advisor would be able to help you to work this out.

Cheers Barista. Greatly appreciate any comments as I'm a novice when it comes to pensions, savings etc.

Being realistic, it will probs be early 60s when I do go. Hopefully find a decent little job to tide me over

 

[Matt Hopkins]

Sorry as may be being thick and youve probs already explained but where did the 16760 figure come from

As @moanjam has said.
If you are retiring before SP age you should always make use of your tax allowance.
So you would put £16760 into drawdown, out of that amount you'd get 25% tax free which is £4190.
That then leaves £12570 which is what most people personal allowance is so then that can be paid @ £1047.50 /month without attracting any tax.
Also bear in mind if you wanted a bigger tax free lumper one year you could put say £40k into drawdown get the £10k tax free lump sum then still just draw £1047.50/month and not pay any tax

 

[elder]

This is the problem when people compare notes as his £200k inheritance could be a game changer. I was on a Cruise recently with a couple who were a retired Gym Instructor and a Teacher and I couldn't understand how they could afford all the luxury booze/dining/SPA packages until he mentioned his wife had inherited £1m from her mother.

The wife will inherit something like that when her (divorced) parents pass away. Her dad is immortal though, he’ll outlive both of us

 

[42]

Wouldn’t like to be relying on an inheritance in order to retire , I guess many do though

Its not something im factoring in, however if parents do have a bit of wealth & do intend to leave some inheritance, its best to start gifting bits here & there before its too late.

I do suspect in next 10 years mine might start doing it, theyve already started paying for family holidays which benefits them as they get to spend quality time with grandbairn, and paying for stuff for bairn that then eases financial pressure off us

 

[elder]

I assumed it is something known i.e. second parent has died and just waiting on house sale.

I haven't assumed anything in my own calculations, me mam could end up in a care home, so not relying on a penny

A mate of mine sells rooms/appartments in care homes and the business model is almost criminal. Fortunes being made off people who have no other option.

Churns through peoples money in no time

 

[Darlo1973]

This is the problem when people compare notes as his £200k inheritance could be a game changer. I was on a Cruise recently with a couple who were a retired Gym Instructor and a Teacher and I couldn't understand how they could afford all the luxury booze/dining/SPA packages until he mentioned his wife had inherited £1m from her mother.

With increasing life expectancies the age when people get inheritances is also going up so a lot of people are getting them in their 60s when they don't actually need the money so it gets blown on luxuries.

 

[Derby Mackem]

I don’t think things would go that far. Look what happened with the tariffs earlier in the year, he had to reduce them to a large extent when it looked like there were going to be issues with the US government bond (treasuries) market. The so called “bond vigilantes” had a quiet word with him and he was forced to scale them back.
Inflation is a killer for fixed interest bonds and would not be allowed to get that far out of control as too many rich and powerful people would have too much to lose.

In terms of your investments, then your equity portion should just be in a global tracker (which currently is made up of around 60% S&P 500). The proportion in equities vs cash/bonds will depend on your current circumstances and your risk appetite.
Shares are often considered to be too high, but if you cash out and sit on the sidelines then you could lose out as they continue to rise or stay at current levels. Also, if you did decide to sell up, then the difficult part is knowing at what level you buy back in. Say the market fell 20%, would you then buy back in, or would you think that things were going to get worse and hold off until that happens (or may never happen), and you then may be perpetually stuck on the sidelines waiting for things to crash further, and not sure whether to stick or twist.

It’s impossible to time the market, so just ensure you have a cash buffer to cover your expenses for at least 6 months if you are still working, or several years if you are retired. That way, if there was a crash you don’t have to sell shares at a depressed value and can wait until they recover.

So if you did have a cash buffer or were prepared to be flexible with your retirement age - why would you stick with default ‘target age’ fund that your employer puts you in which dips out or equities automatically and produces a poor return in the last few years of your working life.
I assume that individually you would also stick with the same level of risk with fund once retired.
Am I missing something here?
I recently checked through some of my companies L&G options and if you were in the target date 2045-2050 fund - the performance of that was lower than the FTSE100 which I found surprising.

 

[42]

With increasing life expectancies the age when people get inheritances is also going up so a lot of people are getting them in their 60s when they don't actually need the money so it gets blown on luxuries.

Its why people should start gifting the money as soon as they start to struggle to spend it due to health & mobility.

Reduces the risk of being lost to care home fees & IHT, and kids get it when they actually need it rather than when theyre pensioners themselves . Maybe its something say farmers should take on board.

 

[Town End Farmer Giles]

A mate of mine sells rooms/appartments in care homes and the business model is almost criminal. Fortunes being made off people who have no other option.

Churns through peoples money in no time

Grand a week.

 

[Darlo1973]

Its why people should start gifting the money as soon as they start to struggle to spend it due to health & mobility.

Reduces the risk of being lost to care home fees & IHT, and kids get it when they actually need it rather than when theyre pensioners themselves . Maybe its something say farmers should take on board.

Yep. That happened to a colleague whose parents had a big 5 bed house in Surrey. They downsized after retirement and gave their 3 kids £100,000 each plus money for the grandchildren and also liberated plenty of cash for them to blow on 10+ years of travel and living it up before slowing down in their 80s.

I'm starting to think about the my mam needing a care home in the next few years and the costs are just staggering. Could be cheaper to put her on a non-stop around the world cruise.

 

[Fletch]

If able to do and not all can , you’re prob better off helping your kids with their first car and house deposits , rather than keeping any money back as an inheritance , give them it while they are still young themselves

 

[dangermows]

Most will die before being in a position to retire.

 

[SurreyMackem]

If able to do and not all can , you’re prob better off helping your kids with their first car and house deposits , rather than keeping any money back as an inheritance , give them it while they are still young themselves

My kids are pretty self sufficient and if they don't ask they don't get, hope they don't read this.

 

[stapler]

If able to do and not all can , you’re prob better off helping your kids with their first car and house deposits , rather than keeping any money back as an inheritance , give them it while they are still young themselves

I'm not sure that's right. There is a balance to be struck, of course, but lessons in saving have a lifelong value far in excess of any first car or starter home.

I know plenty of people about my age (mid 40s) who have never been weaned off the parental financial teat. Most of them will be screwed when their folks retire / die, because the support hasn't come from mighty pools of family wealth, but from the parents' incomes.

 

[42]

If able to do and not all can , you’re prob better off helping your kids with their first car and house deposits , rather than keeping any money back as an inheritance , give them it while they are still young themselves

A lot of kids reach adulthood when their parents are only in late 40s & early 50s, who'll still have mortgages themselves & miles off retirement.

With people now having kids later on in life, it maybe something that next generation could do. What's probably becoming more common is pensioners giving a lot more to grandkids for this reason. But that can get complicated if numbers are unequal, which can lead to family arguments.

 

[JOEJA]

As @moanjam has said.
If you are retiring before SP age you should always make use of your tax allowance.
So you would put £16760 into drawdown, out of that amount you'd get 25% tax free which is £4190.
That then leaves £12570 which is what most people personal allowance is so then that can be paid @ £1047.50 /month without attracting any tax.
Also bear in mind if you wanted a bigger tax free lumper one year you could put say £40k into drawdown get the £10k tax free lump sum then still just draw £1047.50/month and not pay any tax

Ah get yus thanks Matt and @moanjam

 

[BILLY BUS PASS]

I now see inheritance tax as “money that I could have enjoyed”

If you can and without being reckless deny yourself nothing.