[Misc] Retirement

[Cheshire Cat]

Mrs Cat had to retire on ill health grounds some 5 years ago. Given her age at the time, we took out an annuity provided by her pension fund using her AVC as she could have another 30 or so years to go. It amounted to about another months pension each year. Annuity rates weren't very good at the time, but a regular draw down could have meant she ran out of cash before she might die.

Whether that was a good idea depends on how long she lives.

Who knows

 

[Eric the meek]

Interestingly very few people talk about taking out an annuity, less popular now? I have a pension pot but have also been piling cash into ISAs, makes so much sense now, tax free interest will support the pension pot, which I'll invest and draw down as required. Haven't taken the lump sum yet and not sure when I will.

Annuities have been out of favour for a while, due to poor rates, but I've just checked the latest rates and unsurprisingly, they've shot up. Single 65 year old 7.4%, joint 6.8%. I'm still a youngster at 63, so I'll look at them properly when I'm nearer the finishing line.

 

[Sirnormangall]

Always worth checking the rates of impaired life annuities i.e. if due to I’ll health your life expectancy may have reduced, you’ll get better rates from certain providers.

 

[Weststander]

Annuities have been out of favour for a while, due to poor rates, but I've just checked the latest rates and unsurprisingly, they've shot up. Single 65 year old 7.4%, joint 6.8%. I'm still a youngster at 63, so I'll look at them properly when I'm nearer the finishing line.

Annuity rates are much lower when the only sensible thing is done by taking an index-linking product.

4%.

 

[Eric the meek]

Annuity rates are much lower when the only sensible thing is done by taking an index-linking product.

4%.

I'm afraid those rates don't appeal to me, at least not at the moment. My circumstances may change, but I'm in the fortunate position of having an income from property which means I don't have to draw an income from my SIPP.

 

[Weststander]

I'm afraid those rates don't appeal to me, at least not at the moment. My circumstances may change, but I'm in the fortunate position of having an income from property which means I don't have to draw an income from my SIPP.

Nor most people, when they realise the latest little craze in mentioning annuities, plugs eye catching flat rates. Compound, in inflationary times, the real terms fall in income is rapid and painful. Ill advised when you might be relying on them for 30 years.

 

[Eric the meek]

Nor most people, when they realise the latest little craze in mentioning annuities, plugs eye catching flat rates. Compound, in inflationary times, the real terms fall in income is rapid and painful. Ill advised when you might be relying on them for 30 years.

Indeed. I agree with you. But I'm mindful that for some, annuities are very necessary, including some on this thread. That's why I don't trash them. My honest opinion of them is that - currently - I wouldn't touch them. I prefer to enjoy the markets. That's why I invested in property, the income from which rises gently with inflation, while also investing in my SIPP and ISAs.

 

[ofco8]

I find commiting to retirement a challenge. I'm past retirement age, but still working 2 to 3 days a week as a consultant QS, not whole days but charging by the hour.. Not really enjoying what I'm doing as it is all confrontational, but finding it hard to pull the plug. Money isn't a problem, its just accepting the end of something I'm really good at.

It must be the industry. I can't seem to stop working completely. I am a freelance estimator/surveyor and work for local builders. Enjoy it still but have also greatly limited my hours now.

 

[ofco8]

A week, or so, ago I retired. I chose to do so early, I'm 60, so I can enjoy some travel and sports before I'm too frail etc to do so.

I've sorted out a fair bit in terms of travel (interrailling) and sports but just wondered if anyone knows of a over 60's footie team? There are lots of walking football clubs but I'm not quite ready for that yet. I still play 5-a-side and 11-a-side wouldn't be beyond me if it was RORO.

Anyone got any trips planned or retirement tips, I'd very much appreciate it, thank you.

 

[The Antikythera Mechanism]

Indeed. I agree with you. But I'm mindful that for some, annuities are very necessary, including some on this thread. That's why I don't trash them. My honest opinion of them is that - currently - I wouldn't touch them. I prefer to enjoy the markets. That's why I invested in property, the income from which rises gently with inflation, while also investing in my SIPP and ISAs.

I’ve been very lucky, being in the right place at the right time enabled me to be part of a successful MBO that enabled me to sell my shares eight years ago. I invested in ISA’s, Bonds and property as well as two SIPP’s that will ensure financial security for my family. Had I made a different decision, it could all have been so different.

 

[ofco8]

Good choice Interrailing. Have seen much of Europe using this. Had always wanted to visit Zermatt/Matterhorn and included that on an extensive rail holiday. Unlike flying you see so much more of each country.

 

[Steve Foster]

As an IFA we have seen a bounce back in annuity interest this year. Perhaps it’s the improved rates, or certainty in an uncertain economic & political environment. Also many clients who went into drawdown a decade or so ago, wishing to take some risk off the table. The majority of our clients opt for drawdown but certainly annuities are worth considering.

 

[Eric the meek]

I’ve been very lucky, being in the right place at the right time enabled me to be part of a successful MBO that enabled me to sell my shares eight years ago. I invested in ISA’s, Bonds and property as well as two SIPP’s that will ensure financial security for my family. Had I made a different decision, it could all have been so different.

You sound well diversified. I struggle with diversification, and overtrade as a result. The properties take care of themselves, but otherwise I like to diversify by asset type - bonds, funds, index/passive, equities, ETFs and ITs. I also diversify by country. This results in safety but low growth. I wonder if I should just put it all in an index fund and leave it for years. But that wouldn't be much fun would it?

 

[dazzer6666]

You sound well diversified. I struggle with diversification, and overtrade as a result. The properties take care of themselves, but otherwise I like to diversify by asset type - bonds, funds, index/passive, equities, ETFs and ITs. I also diversify by country. This results in safety but low growth. I wonder if I should just put it all in an index fund and leave it for years. But that wouldn't be much fun would it?

I’m not particularly financially sophisticated , and don’t think I can do better than the average fund manager, so most of my modest pile is in funds (which I do research quite extensively). I have a bit of dosh I piss about with in shares, crypto and other stuff, but a boring spread of professionally managed stuff is probably sensible for me. The funds I have are very well diversified

 

[Weststander]

You sound well diversified. I struggle with diversification, and overtrade as a result. The properties take care of themselves, but otherwise I like to diversify by asset type - bonds, funds, index/passive, equities, ETFs and ITs. I also diversify by country. This results in safety but low growth. I wonder if I should just put it all in an index fund and leave it for years. But that wouldn't be much fun would it?

Going against the good diversification advice, I’ve found through trial and error, that there are three hopeless categories of investments. Certainly in the last 18 months, perhaps much longer.

UK equity funds (companies of any size), corporate bonds and both index-linked/other gilts.

Consistently awful, even when plugged by quality paper financial sections, and rated in many aspects by FT/Trust net/MorningStar. The performance has been atrocious. This is not universal eg some US or global equity funds have been fine.

What’s your experience?

 

[Eric the meek]

Going against the good diversification advice, I’ve found through trial and error, that there are three hopeless categories of investments. Certainly in the last 18 months, perhaps much longer.

UK equity funds (companies of any size), corporate bonds and both index-linked/other gilts.

Consistently awful, even when plugged by quality paper financial sections, and rated in many aspects by FT/Trust net/MorningStar. The performance has been atrocious. This is not universal eg some US or global equity funds have been fine.

What’s your experience?

One of the strangest experiences I had was straight after the Brexit vote, when the GBP crashed. It took me several days to pluck up the courage to go into my account and check the damage. When I opened it up, I couldn't believe it. I was up £30k. I was expecting to be down by at least £50k. Shows how much I know. It took me several hours to work out what had happened. Because the GBP had fallen, everything priced in foreign currencies had risen in price. Fortunately, because I was diversified mostly in foreign currencies, including the FTSE100 companies (70% of whom earn their money abroad), I benefited from it. I've never forgotten that.

Not sure how to answer your question though. I wouldn't attempt to categorise asset performance just based on my experience. Russia has obviously depressed share values across the globe. Everything has been hit to an extent. But within each asset type, there are successes and failures. Personally, I feel US big tech is undervalued, and once Putin is defeated, they will take off. But I could be wrong !

Hargreaves Lansdown published a chart of relative performance of each asset type over about 10-12 years. I'll try to dig it out and post it on here if I can.

 

[Tim Over Whelmed]

I retired earlier this year and had loads planned, unfortunately Prostrate Cancer and then Sepsis have put all plans on hold, but recovered now. Going to Italy, Posh Inter-railling, cycling around Lochs in Scotland, kayaking in South of France and a cruise to Norway. Hope to also walk the South Downs Way, or cycle it, and a few City breaks!

 

[dazzer6666]

Going against the good diversification advice, I’ve found through trial and error, that there are three hopeless categories of investments. Certainly in the last 18 months, perhaps much longer.

UK equity funds (companies of any size), corporate bonds and both index-linked/other gilts.

Consistently awful, even when plugged by quality paper financial sections, and rated in many aspects by FT/Trust net/MorningStar. The performance has been atrocious. This is not universal eg some US or global equity funds have been fine.

What’s your experience?

I’ve got very little in bonds and gilts (my small staff pension fund with my final employer was, performance was awful as you know) as I tend to take a higher risk approach. I’ve got a multitude of funds, not that much purely uk-based and have a very wide global spread. More by luck than judgement I haven’t been hammered by recent market falls…..lost some froth obviously but overall the winners are compensating the losers.

 

[jakarta]

Luckily, on the side of my normal work, I have somehow become an Hourly Paid Lecturer (HPL) Job for a certain London University.

I can do all work from home, it is not difficult (as it is based on what I have been doing for nearly 40 years) and payment is regular as clockwork. Looks like it will at least match my Personal Pension.

Can put up with all the diversity/inclusivity bollocks that some University people obviously make a living from while I can keep my students on line with their careers...

 

[Eric the meek]

Just looked at my SIPP, and I do have a couple of funds that @Weststander might be interested in:

Morgan Stanley Sterling Corporate Bond - down 12.7%
Legal & General Active Global High Yield - down 21.12% (US Corporate bonds)

These funds are on their final warning. Any more of this and I'll invest in frontier markets.