My father is 59 and plans to retire at age 60 with a private pension retirement pot of 800k euro, which will be in a cash-based instrument when he retires. At age 67 he will receive a state pension of 23k euro per annum for the rest of his life.
He plans to spend 50k per year when he retires.
Now regarding his 800k private pension, the following rules apply:
He can take 200k cash free at retirement or he can take 300k and pay 20% tax on the entire 300k. He is inclined to take the 200k, to bide him over until he reaches 67. (My concern here is that he is overspending on an annual basis and his 200k will not last 7 years, and that by taking it, he undermines the compounding potential of the overall 800k pot.)
Of the remaining amount, law states he must put 63.5k into an investment which he cannot access for 15 years (75 years old). He has no idea what to do with this as he has been using active funds for decades. I believe he should take charge of this and invest 60:40 stocks to bonds using self-selected low cost diversified ETFs.
This leaves a balance of 800k minus 63.5k minus 200k = 536,500 euro, of which he must draw down 4% per year. This must also be invested in something and I would be inclined to think 55:45 stocks to bonds in self-selected low cost diversified ETFs.
My other instinct is that by spending 50k per year, he will exhaust his pot and therefore needs to reduce this to 40k per year at least.
He's old school and can barely type a message on his iPhone. The idea of him managing his own fund using online tools etc. troubles me. I don't want to administer his pension in case things go wrong and it affects our relationship, but I also want him to avoid active funds.
Any advice?
He plans to spend 50k per year when he retires.
Now regarding his 800k private pension, the following rules apply:
He can take 200k cash free at retirement or he can take 300k and pay 20% tax on the entire 300k. He is inclined to take the 200k, to bide him over until he reaches 67. (My concern here is that he is overspending on an annual basis and his 200k will not last 7 years, and that by taking it, he undermines the compounding potential of the overall 800k pot.)
Of the remaining amount, law states he must put 63.5k into an investment which he cannot access for 15 years (75 years old). He has no idea what to do with this as he has been using active funds for decades. I believe he should take charge of this and invest 60:40 stocks to bonds using self-selected low cost diversified ETFs.
This leaves a balance of 800k minus 63.5k minus 200k = 536,500 euro, of which he must draw down 4% per year. This must also be invested in something and I would be inclined to think 55:45 stocks to bonds in self-selected low cost diversified ETFs.
My other instinct is that by spending 50k per year, he will exhaust his pot and therefore needs to reduce this to 40k per year at least.
He's old school and can barely type a message on his iPhone. The idea of him managing his own fund using online tools etc. troubles me. I don't want to administer his pension in case things go wrong and it affects our relationship, but I also want him to avoid active funds.
Any advice?