Moneymakeover Mortgage cleared, pension maxed, what do we do now??

conor_mc said:
Run your thinking past us on this one… you say you’ve been investing 35-40k per year in a basket of individual stocks. Is this the “90k company shares” you listed in your assets? So add snother 12x 40k to that 90k and you get 570k, but before any growth?
Click to expand...
Kind of yeah…

We have €40k leftover per year after expenses. I am allowing for ~€4.5k of that to put to my AVC as a lump sum to max to the allowable limit for my age (my total salary is not known until year end due to bonus). The remaining ~€35.5k is invested into individuals stocks (about 50).

I have applied a 2.8% compounding real rate of return (8% growth less 33% CGT less 2.5% inflation). So with an end date of Jan 2037, the portfolio is estimated to be worth ~€570k.

We are estimating expenses of €51k in early retirement (increased from today’s expenses for travel). So that for 11 years would use up the €570k shares portfolio, after which we will be able to drawdown our pension pots for the remaining of our retirement (>60).

Make sense?
 
jpmackey said:
Make sense?
Click to expand...
Thanks for explaining, it does make sense. But with that info now, I would highly recommend getting your partner’s pension up and running to max out their tax relief at 20% and then drawdown on that ARF under income taxation rather than capital gains taxation…. Or rather a combination of both to minimise your tax bill.

Will you be able to access your own AVC’s via an ARF from age 50 while waiting for your DB pension from age 60? Again, better to have another income to use up tax credits rather than all CGT with minimal credits/allowances.
 
conor_mc said:
Thanks for explaining, it does make sense. But with that info now, I would highly recommend getting your partner’s pension up and running to max out their tax relief at 20% and then drawdown on that ARF under income taxation rather than capital gains taxation…. Or rather a combination of both to minimise your tax bill.
Click to expand...
The problem with using her pension as a strategy is that it won’t be accessible until age 60 at a minimum due to scheme rules. So whatever we put into her pension pot will have to be removed from our “bridging” pot and thus increase our risk from age 50-60. Regardless of that I will still look into setting her pension up to give flexibility.
conor_mc said:
Will you be able to access your own AVC’s via an ARF from age 50 while waiting for your DB pension from age 60? Again, better to have another income to use up tax credits rather than all CGT with minimal credits/allowances.
Click to expand...
Unfortunately not, I can only access DB and AVC pensions from age 60, hence the relatively large investment to stocks for bridging. As above, agree I should set her up with a pension income, thanks for pointing this out.
 
jpmackey said:
The problem with using her pension as a strategy is that it won’t be accessible until age 60 at a minimum due to scheme rules. So whatever we put into her pension pot will have to be removed from our “bridging” pot and thus increase our risk from age 50-60.
Click to expand...

From earlier posts you seem to be talking about the period from when you are between 50 and 60. With a 5 year age gap, her pension, even if accessed at 60, would partly cover half of the bridging period.
 
llgon said:
From earlier posts you seem to be talking about the period from when you are between 50 and 60. With a 5 year age gap, her pension, even if accessed at 60, would partly cover half of the bridging period.
Click to expand...
Good catch. I hadn’t thought of it that way.

However, with her now salary we are quite limited on how much we can fund into a pension. But take the point it would be more tax efficient overall.
 
Sarenco said:
Is there an actuarial reduction to your pension payout if you start to draw down at 60 as opposed to 65?
Click to expand...
Yes there is indeed. As it is a cost neutral adjustment I figured I’d roll that dice in order to increase the probability of success for the period 50-60. Bridging from 50-65 would be a stretch.
 
You must log in or register to reply here.
Back
Top