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Retirement

archiesdad said:
I've also an idea to take it in buckets. If I took 80 into drawdown 20k would be tax free so I could put that into an isa then live off the 60k until it was gone and repeat. I read that if you drip it out you actually get a smaller tax free amount vs in one go or in larger amounts. It's the only thing I need to decide on. We are using savings for a few mths also plus a couple of smaller DB pensions.
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Can't see that being true mind, although I'm willing to be educated 👍
 

archiesdad said:
I've also an idea to take it in buckets. If I took 80 into drawdown 20k would be tax free so I could put that into an isa then live off the 60k until it was gone and repeat. I read that if you drip it out you actually get a smaller tax free amount vs in one go or in larger amounts. It's the only thing I need to decide on. We are using savings for a few mths also plus a couple of smaller DB pensions.
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In my experience/opinion, provided the pot continues to grow, you get more tax free cash if you take a number of smaller withdrawals.
Say you had a pot of 200k you could take 50k tax free with 150 going into drawdown account ( and no further option to take any tax free cash). If you took 25k tax free, this would put 75 into drawdown and the remaining 100k would continue to grow. Let's say it grew over a couple of years to 120k, you could then take 25% tax free, ie 30k with remaining 90 going to drawdown. In this scenario you have ended up with 55k tax free. Without showing the maths if you did it in 3 "goes" over a period of time, you'd get even more.
Obviously this is on assumption that pot grows at a higher rate than what you would get in a cash ISA.
In my case, if I don't need the cash for anything in particular I just leave my pot until drawdown is nearly empty then just take a small tax free sum to generate the drawdown transfer of say 6 months worth of 'pension'
 
archiesdad said:
I've also an idea to take it in buckets. If I took 80 into drawdown 20k would be tax free so I could put that into an isa then live off the 60k until it was gone and repeat. I read that if you drip it out you actually get a smaller tax free amount vs in one go or in larger amounts. It's the only thing I need to decide on. We are using savings for a few mths also plus a couple of smaller DB pensions.
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Plus you can always take out £12,500 of "taxable" pension (assuming you have no other income) as your tax free allowance.
 
Matt Hopkins said:
Can't see that being true mind, although I'm willing to be educated 👍
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The example i read wasvs 500k pot. Option 1 was to take full tax free amount up front of 125k and draw down 1500 a mth. Example 2 was taking 1500 a mth inc the tax free % ie no lump for 10 yrs then deciding to take a tax free lump of the remainder. Example 2 was 115k total tax free money so 10k lower than example 1, hope I've explained that ok. I've not checked the math.
 
archiesdad said:
The example i read wasvs 500k pot. Option 1 was to take full tax free amount up front of 125k and draw down 1500 a mth. Example 2 was taking 1500 a mth inc the tax free % ie no lump for 10 yrs then deciding to take a tax free lump of the remainder. Example 2 was 115k total tax free money so 10k lower than example 1, hope I've explained that ok. I've not checked the math.
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By my reckoning that's wrong they both have £125k tax free. The way you end up with more tax free money not taking the lump in one go is the growth in the preretirement pot.
Look back on a few of my posts on this thread with a youtube link to Chris Bourne he explains it, although iirc his figures for MPAA /annual allowance are out of date now

In fact I'm such a canny lad here it is stopped at the right time as well 👍
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Matt Hopkins said:
By my reckoning that's wrong they both have £125k tax free. The way you end up with more tax free money not taking the lump in one go is the growth in the preretirement pot.
Look back on a few of my posts on this thread with a youtube link to Chris Bourne he explains it, although iirc his figures for MPAA /annual allowance are out of date now

In fact I'm such a canny lad here it is stopped at the right time as well 👍
You must be logged on to see media items
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bookmarked watch later
You can call me Al said:
+ 25% tax free = something like £16,750 with zero tax.
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think thats how missus will do it until SP kicks in , then use S+S ISA / cash to top up state pension
 
Matt Hopkins said:
By my reckoning that's wrong they both have £125k tax free. The way you end up with more tax free money not taking the lump in one go is the growth in the preretirement pot.
Look back on a few of my posts on this thread with a youtube link to Chris Bourne he explains it, although iirc his figures for MPAA /annual allowance are out of date now

In fact I'm such a canny lad here it is stopped at the right time as well 👍
You must be logged on to see media items
Click to expand...
Thank you that's really helpful. Now totally get the Flexi drawdown although will need to watch a again to understand the monthly udl thing.
My sipp is with vanguard. Does my drawdown pot just stay with them in a separate account thing?
 
TAD said:
Thank you that's really helpful. Now totally get the Flexi drawdown although will need to watch a again to understand the monthly udl thing.
My sipp is with vanguard. Does my drawdown pot just stay with them in a separate account thing?
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Yes once you start taking your pension you'll see 2 pots "pre retirement" and "drawdown" You can chose any fund to hold in either of them
 
Darlo1973 said:
The main problem is that people don't understand "risk" in the context of financial investments. It really means "uncertainty" - you don't know what the return will be compared to fixed rate accounts.

8% per year is a good rule of thumb for the long term but no investment account will advertise or guarantee this. In some years it can up up over 20% in others in can do down by that much in a few months (especilly if Trump opens his mouth) but over the long term there will be more good days than bad ones. Putting your money in a 2% cash account is virtually zero risk as you know what you will get but you are almost sure to lose money in real terms with respect to inflation.

When offered the choice of pension products a lot of people gravitate to "low risk" funds when they should be doing exactly the opposite.
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I was about to post the same thing.

People hear risk and think dangerous. But as you say, it is a specific financial term that means uncertainty of exact returns.

In common language terms, "low risk" is often more risky than "high risk" equity trackers because you are more exposed to decreasing purchasing power.
 
Dr Feelgood said:
In my experience/opinion, provided the pot continues to grow, you get more tax free cash if you take a number of smaller withdrawals.
Say you had a pot of 200k you could take 50k tax free with 150 going into drawdown account ( and no further option to take any tax free cash). If you took 25k tax free, this would put 75 into drawdown and the remaining 100k would continue to grow. Let's say it grew over a couple of years to 120k, you could then take 25% tax free, ie 30k with remaining 90 going to drawdown. In this scenario you have ended up with 55k tax free. Without showing the maths if you did it in 3 "goes" over a period of time, you'd get even more.
Obviously this is on assumption that pot grows at a higher rate than what you would get in a cash ISA.
In my case, if I don't need the cash for anything in particular I just leave my pot until drawdown is nearly empty then just take a small tax free sum to generate the drawdown transfer of say 6 months worth of 'pension'
Click to expand...

In your example, you've also a higher taxable pot.

What's best will depend on your other income/savings and the tax you are paying on them.

If you've got a lot in pension but not a lot outside then it may be beneficial to take the tax free pot quicker. And let it grow tax free outside of the pension (utilising ISAs, CGT allowance, savings interest allowance, Premium bonds for you liquid cash buffer etc.)

There's no one size fits all answer.
 
Edinburgh Black Cat said:
I was about to post the same thing.

People hear risk and think dangerous. But as you say, it is a specific financial term that means uncertainty of exact returns.

In common language terms, "low risk" is often more risky than "high risk" equity trackers because you are more exposed to decreasing purchasing power.
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This 👆

IMO the biggest risk is inflation, so the key is to invest in assets that will at least keep pace
 
I’ve downloaded a retirement countdown calculator and set it at 2 years and 10 months. Miles away I know but it is set at not “one more year” it is set at can I beat it by “one more year”. The company I work for give two full and free financial advisor sessions so I’m booking one in later this year and see how soon I can get the fuck out.
 
You can call me Al said:
I’ve downloaded a retirement countdown calculator and set it at 2 years and 10 months. Miles away I know but it is set at not “one more year” it is set at can I beat it by “one more year”. The company I work for give two full and free financial advisor sessions so I’m booking one in later this year and see how soon I can get the fuck out.
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I don't think that I can cope with many more Mondays.

Too many meetings with over-enthusiastic and ambitious 20- and 30-somethings trying to impress management over yet another corporate initiative which is doomed to failure. My manager keeps telling me that I need to be more focused on career goals. I tell her that at 54 that I don't have any.
 
Darlo1973 said:
I don't think that I can cope with many more Mondays.

Too many meetings with over-enthusiastic and ambitious 20- and 30-somethings trying to impress management over yet another corporate initiative which is doomed to failure. My manager keeps telling me that I need to be more focused on career goals. I tell her that at 54 that I don't have any.
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Feel your pain. Same shit recycled every 3 or 4yrs once staff turns over again. You've seen it before and know why it will fail. Surprisingly, I don't miss that...
 
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