Very nearly 55 - strategy check

[Pheidippides]

Hi y'all. My last post was in June - to precis and update:

Hi All,

210K - SIPP - Single Names and some cash (all my choice) - Now 220
340K - Standard Life - Employer Lifestyle Fund - Now 366
260K - Fidelity - My choice of funds - Now 274
12K - Roy Ldn (2 x 6K Pensions) - Now 214

Total : 822 - Now 874, some contribution, some growth

Pheid

I am now less than 3 weeks away from 55 and my strategy was to take the 25% TFLS on my birthday from each of the four pension holders, reinvest the funds immediately into my offset account and then take the Cash ISA from my mortgage offset and purchase equivalent investments within an ISA wrapper, without losing any market exposure.

I had a Pension Wise appointment this morning. Very thorough, but not hugely more information that I have got from here in the past. I am still left with one question and am looking for some strategy advice. I was told by the advisor that she thought I would be unable to transfer pensions after taking TFLS but before entering drawdown.

I immediately rang AJ Bell, my SIPP provider, to check the timelines for transfers. This is going to make things REALLY tricky.

My Fidelity pension is in L&G Funds so they are likely to be able to transferred and reinvested in a good enough schedule.

Royal London is too small to worry about so I am going to just liquidate and transfer the cash across

My real problem is the Standard Life pension. This fund is definitely not on AJB's list so there is no opportunity to transfer. However the timelines for cash movement are ludicrous, somewhere between 3 and 6 weeks. In theory I could be out of the market for this period, and New Year is often when the market gets a fillip, that I don't want to miss.

Any advice welcome

Regards

Pheid

[Lootman]

My real problem is the Standard Life pension. This fund is definitely not on AJB's list so there is no opportunity to transfer. However the timelines for cash movement are ludicrous, somewhere between 3 and 6 weeks. In theory I could be out of the market for this period, and New Year is often when the market gets a fillip, that I don't want to miss.

If you have a significant sum out of the market for a few weeks and are worried about a melt-up in share prices, then I'd probably buy a call on the FTSE-100 index as a "reverse hedge". If the market lurches upwards then you will fully participate in that upside assuming you get the quantity right. If it lurches down then you are probably only out 1% or 2% - the cost of the option premium.

Whether 875K is enough to retire on at age 55 is a deeper question. If I employ the 4% rule then that has you living off 35K a year or so, pre tax. How does that sound?

[Pheidippides]

Whether 875K is enough to retire on at age 55 is a deeper question. If I employ the 4% rule then that has you living off 35K a year or so, pre tax. How does that sound?

Thanks for the reply. This is not my only income. I have 9K pa as a DB pension at 60 and Mrs Pheid has 12K at 65, plus 200K in cash and PB’s and another 120K in ISA’s, plus state pensions and an overseas property worth 300K that we could sell - I think we’ll be OK

Regards

Pheid

[Kantwebefriends]

This is not my only income. I have 9K pa as a DB pension at 60 and Mrs Pheid has 12K at 65, plus 200K in cash and PB’s and another 120K in ISA’s, plus state pensions and an overseas property worth 300K that we could sell

I think you should be giving us advice.

[flopski2]

Including 9x20 value of the DB pension, you look to be at the limit for Life Time Allowance (£180k+£874k). Does anyone have any thoughts on this and how to manage if the market moves up some more from here?

[Pheidippides]

Including 9x20 value of the DB pension, you look to be at the limit for Life Time Allowance (£180k+£874k). Does anyone have any thoughts on this and how to manage if the market moves up some more from here?

Spot on - As at yesterday I am just 4K short of the LTA. I'm hoping to take my 25% and then opportunistically trigger a BCE by entering drawdown early in Apr 20 after the new LTA (of ~1,074K) should kick in and on a market dip

Regards

Pheid

[fca2019]

"I think you should be giving us advice." Exactly

My thoughts,.. simply stop putting into a pension and retire early. If you are wealthy enough, you could gift the tax free lump sum under a Bare Trust to your children, or other relatives. This would be a PET and free from IHT if you survive 7 years.

You'd then drawdown £50k per annum to keep you at the basic rate, and if you need more draw on savings.

Otherwise you could be taxed 40% or more on your pension income.

[Gan020]

My real problem is the Standard Life pension. This fund is definitely not on AJB's list so there is no opportunity to transfer. However the timelines for cash movement are ludicrous, somewhere between 3 and 6 weeks. In theory I could be out of the market for this period, and New Year is often when the market gets a fillip, that I don't want to miss.

You have £874k and your wife £320k and a property £300k = £1,500k


Standard Life element of this is £340k. Largest market movement in 6 weeks won't be more than 5%=£17k and in all likelyhood given some of it will be in bonds is unlikely to be more than say 3% = £10k.

£10k compared to your total pot of £1,500k is irrelevant. It's just as likely to go up as down. I wouldn't think about it much longer. Or if it worries you makets rise into end December and usually fall back in Jan/Feb and sometimes until May. So, put the transfer instruction through at at time to increase your odds slightly.

[genou]

My real problem is the Standard Life pension. This fund is definitely not on AJB's list so there is no opportunity to transfer. However the timelines for cash movement are ludicrous, somewhere between 3 and 6 weeks.
Pheid

Is there really no fund which SL will let you move to that AJB will accept ? Sell/Buy at SL, then transfer the new fund in specie.

[Pheidippides]

"I think you should be giving us advice." Exactly

My thoughts,.. simply stop putting into a pension and retire early. /quote]

Tick - I FIRE'd in July, therefore no more non-investment earnings unless I get really bored...but I earned over the 40% bracket this tax year so I have about £28K little headroom on the £40K, this is a saving of £5,600, (20% of 28K)

"You'd then drawdown £50k per annum to keep you at the basic rate, and if you need more draw on savings. Otherwise you could be taxed 40% or more on your pension income.

This is exactly the plan. The £660K (874-25%) would be all used up by the time I am 70 (50K 'til 60, 41K 'til 67, 31K 'til 70) . What we don't spend I intend to put any excess into Mrs Pheid and my ISA allowances to then draw on post 70

Regards

Pheid

[MikeyWorld]

I don't understand why you have 200k in cash, 30k should be ample, unless it is in the mortgage offset. How much mortgage debt is outstanding?

You need to do a survival income for your present lifestyle.

You need to plan your future lifestyle.

Then do a second survival income for your future lifestyle.


Forget about your retirement plan, you need to plan what you will be doing in retirement.

[Pheidippides]

I don't understand why you have 200k in cash, 30k should be ample, unless it is in the mortgage offset. How much mortgage debt is outstanding?

100 of the 200 cash is in Premium Bonds

The mortgage is fully offset but 150K of that is in CASH ISAs awaiting release of the 25% from the SIPP so that the new investments can be tax-wrapped. This is partially why the transfer is a pain in the backside.

I suppose that I could move the cash ISAs soon and then “borrow” money from the offset account and reinvest as the SIPP money gets released

Regards

Pheid