[Misc] Retirement

[BrightonCottager]

Especially if you are Fulham STH .

Indeed. Luckily, I'm in the cheap seats (<£500).

 

[North of Robertsbridge]

Do double-check for yourself, but I found out yesterday that £600k will generate £30k pa INDEX-LINKED as an annuity. So the insurance company is taking the risk of what inflation might do AND taking the risk of you living longer than you might think yourself. Could be an attractive proposition if you are somewhat risk averse.

This figure is very different (i.e. significantly higher) than it was when I last looked 3 years ago!

Indeed, I went for a blend of annuity and drawdown, and have ISAs as a backup

 

[Triggaaar]

When we first "jumped" we thought we would want a new-ish car every 2-3 years

No one needs that.

 

[Sirnormangall]

Do double-check for yourself, but I found out yesterday that £600k will generate £30k pa INDEX-LINKED as an annuity. So the insurance company is taking the risk of what inflation might do AND taking the risk of you living longer than you might think yourself. Could be an attractive proposition if you are somewhat risk averse.

This figure is very different (i.e. significantly higher) than it was when I last looked 3 years ago!

Interest rates are a bit higher than a few years ago so annuity rates are more attractive. But you need to take care with annuities - check what your estate would get back (if anything) if you die early

 

[North of Robertsbridge]

Interest rates are a bit higher than a few years ago so annuity rates are more attractive. But you need to take care with annuities - check what your estate would get back (if anything) if you die early

Annuitiies are a bit design-it-yourself, you can trade off monthly income for various add-ons. In my case I went for 10-year guarantee, 50% to spouse after that and 3% annual increase.

 

[Sirnormangall]

Annuitiies are a bit design-it-yourself, you can trade off monthly income for various add-ons. In my case I went for 10-year guarantee, 50% to spouse after that and 3% annual increase.

Yes it’s great that the annuity market has developed massively in recent years. Far more options nowadays - so needs careful thought about choosing the right one

 

[Blue&WhiteSea]

A few providers like Just. and Standard Life are doing annuity style add ons to drawdown pots now as well, normally called something like guaranteed lifetime income where you trade some of your pot for an income

 

[happypig]

No one needs that.

I used to change my car every couple of years when I was working, as well as buying a load of stuff I didn't need. I think I was spending money to try and make me happy. Since I've retired I'm not buying a load of stuff (in fact I'm selling a load right now).

 

[BrightonCottager]

This is the Radio 4 Moneybox programme about financial planning for a 'comfortable ' retirement. It's a good intro for people (some on here will find it simplistic) and features interviews with and questions from people of various ages thinking of retirement options and one bloke who did it at 51.
The main takeaways for me were:
1 you need £35k / year as a single person or £22k each for a couple for a 'comfortable ' retirement (though work out what 'comfortable' means for you first)
2 start saving early, and often
3 if over 50, you can and should get advice from the Pension Wise service about options.

 

[Daddies_Sauce]

1 you need £35k / year as a single person or £22k each for a couple for a 'comfortable ' retirement (though work out what 'comfortable' means for you first)
2 start saving early, and often
3 if over 50, you can and should get advice from the Pension Wise service about options.

I listened too:

1. This is hogwash - everybody's situation is different, and depends on so many factors, it might be a guide, but the figures quoted come from the PLSA made up from insurances companies and investment firms, all have a vested interested in wanting you to save more money. You need to understand and have a handle on your budgets, wants and outgoings.
2. And in different vehicles, if you are in a DB scheme then you are mostly tied by the scheme rules when it comes to access, if you have a DC pension then you can access this 10 years (currently) before state pensions age which we all know is increasing. Better solution (in my view, I'm not a financial advisor) is to have sufficient monies in ISA's which you can access tax free when you want to, and earlier than you might be able to access any DC scheme you hold, should you have enough and wish to retire early. Many are starting to flip their views, i.e. how to get monies out of DC schemes before the IHT rules are rumoured to be changing, before burning through ISAs, savings etc.
3. Pensionwise cannot offer advice only guidance on options that might be available to you.

 

[Driver8]

I listened too:

1. This is hogwash - everybody's situation is different, and depends on so many factors, it might be a guide, but the figures quoted come from the PLSA made up from insurances companies and investment firms, all have a vested interested in wanting you to save more money. You need to understand and have a handle on your budgets, wants and outgoings.
2. And in different vehicles, if you are in a DB scheme then you are mostly tied by the scheme rules when it comes to access, if you have a DC pension then you can access this 10 years (currently) before state pensions age which we all know is increasing. Better solution (in my view, I'm not a financial advisor) is to have sufficient monies in ISA's which you can access tax free when you want to, and earlier than you might be able to access any DC scheme you hold, should you have enough and wish to retire early. Many are starting to flip their views, i.e. how to get monies out of DC schemes before the IHT rules are rumoured to be changing, before burning through ISAs, savings etc.
3. Pensionwise cannot offer advice only guidance on options that might be available to you.

It’s not a rumour IHT on pensions is changing. It was in the budget that it will apply from April 2027. The consultation is for how it will be paid not that it is happening.

 

[North of Robertsbridge]

This is the Radio 4 Moneybox programme about financial planning for a 'comfortable ' retirement. It's a good intro for people (some on here will find it simplistic) and features interviews with and questions from people of various ages thinking of retirement options and one bloke who did it at 51.
The main takeaways for me were:
1 you need £35k / year as a single person or £22k each for a couple for a 'comfortable ' retirement (though work out what 'comfortable' means for you first)
2 start saving early, and often
3 if over 50, you can and should get advice from the Pension Wise service about options.

1. This was the amount to spend, if all the income is taxable (ie pensions), that needs a gross of £41K for a single person. And excluded any ongoing mortgage or rent payments, which could easily take this to £50K (which is close to the point at which higher rate tax is payable)
2. Compound interest is definitely your friend, so start early; at the moment ISAs are also a good option alongside pensions
3. I found talking to Pension Wise useful to confirm the assumptions I was working to around my retirement options. If you don't want to hand over chunks of your hard-earned to a financial advisor, then the financial institutions will want you to have talked to Pension Wise

Everyone's circumstances are different - some would not consider these amounts to be comfortable, some might be glad at this level of retirement in income

 

[PeterT]

It’s not a rumour IHT on pensions is changing. It was in the budget that it will apply from April 2027. The consultation is for how it will be paid not that it is happening.

This was almost sneaked in but has potentially an enormous impact on the surviving beneficiaries

 

[Shropshire Seagull]

I listened too:

1. This is hogwash - everybody's situation is different, and depends on so many factors, it might be a guide, but the figures quoted come from the PLSA made up from insurances companies and investment firms, all have a vested interested in wanting you to save more money. You need to understand and have a handle on your budgets, wants and outgoings.
2. And in different vehicles, if you are in a DB scheme then you are mostly tied by the scheme rules when it comes to access, if you have a DC pension then you can access this 10 years (currently) before state pensions age which we all know is increasing. Better solution (in my view, I'm not a financial advisor) is to have sufficient monies in ISA's which you can access tax free when you want to, and earlier than you might be able to access any DC scheme you hold, should you have enough and wish to retire early. Many are starting to flip their views, i.e. how to get monies out of DC schemes before the IHT rules are rumoured to be changing, before burning through ISAs, savings etc.
3. Pensionwise cannot offer advice only guidance on options that might be available to you.

Your second point seems a bit self defeating. Taking funds from a DC to put it into an ISA will only save on IHT (post Apr 27) if you spend / gift it. Just moving it from a DC scheme to an ISA (and you can only put £20k pa into an ISA currently) will have a zero net impact on your estate value and so will not change IHT calcs.

The tax benefits, paying in and taking out, are what make pensions the best choice (usually).

 

[BrightonCottager]

I'm sitting down with MrsBC on Sunday morning to try to nail down our projected 'essential' and 'discretionary' spending for our retirement forecasting. I've worked out that my Fulham STs (I've also got one for my daughter that a mate uses) cost £136/month including travel, meal in an Italian cafe in Putney, couple of pints and a slice of Victoria Sponge. This is 'essential' in my view, but it makes it harder to query her gym and pampering expenditure!

 

[Daddies_Sauce]

Your second point seems a bit self defeating. Taking funds from a DC to put it into an ISA will only save on IHT (post Apr 27) if you spend / gift it. Just moving it from a DC scheme to an ISA (and you can only put £20k pa into an ISA currently) will have a zero net impact on your estate value and so will not change IHT calcs.

The tax benefits, paying in and taking out, are what make pensions the best choice (usually).

I did not say take money out of a DC and place into an ISA, I said drawdown from the DC 1st as it will be included in your eastate for IHT, then use ISAs.We wait for clarity and the outcomes of the consultation.

 

[Victor Chandler]

I did not say take money out of a DC and place into an ISA, I said drawdown from the DC 1st as it will be included in your eastate for IHT, then use ISAs.We wait for clarity and the outcomes of the consultation.

Agree the most sensible approach is to “wait for clarity and the outcomes of the consultation”.

At this stage, despite 2027 being mentioned in the budget as the implementation timescale, we have no idea when or what changes will be implemented.

If anything does ever get implemented there is an exemption known as ‘normal expenditure out of income’ that might become more useful as a tool to minimise IHT https://www.gov.uk/inheritance-tax/gifts.

 

[HalfaSeatOn]

This is the Radio 4 Moneybox programme about financial planning for a 'comfortable ' retirement. It's a good intro for people (some on here will find it simplistic) and features interviews with and questions from people of various ages thinking of retirement options and one bloke who did it at 51.
The main takeaways for me were:
1 you need £35k / year as a single person or £22k each for a couple for a 'comfortable ' retirement (though work out what 'comfortable' means for you first)
2 start saving early, and often
3 if over 50, you can and should get advice from the Pension Wise service about options.

Assume this is nett income rather than gross.

 

[North of Robertsbridge]

Assume this is nett income rather than gross.

Yes, they said this was spending, so net income

 

[PeterT]

All this investment nonsense, what’s wrong with stuffing under a good old fashioned mattress?