The Retirement Thread
7 lurkers |
174 watchers
Apr 2022
8:56am, 30 Apr 2022
4,481 posts
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bja61
One of the best things about retiring during lockdown was the absence of a leaving do! Had a very nice 30 min zoom call with the team and then just put my phone and passes etc in the post. The nicest touch was that a former CEO who had left a few months previously joined the call and said some very kind things. It was her leaving that prompted me to go too as we had worked together in various roles for nearly 20 years, and just I wasn’t on the same wavelength as her replacement and the new leadership team. I hope it all works out well for you V’rap. |
Apr 2022
9:03am, 30 Apr 2022
12,440 posts
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jda
For those wondering about retiring early, the possibility of being able to do a bit of freelancing or subcontracting can be a useful safety net and even if the income is reduced, you get other benefits such as WFH/part-time/only do things that are interesting. My wife and I never got proper jobs after returning to the UK from a long time abroad, only mid-40s, not really wanting to put our feet up at that point but a couple of mid-sized part-time contracts have kept us interested and involved in our community (scientific research) and have resulted in us growing rather than consuming our retirement funds. Probably giving up paid work for good now, brexit being a factor but not the only one. But retiring in our mid-50s doesn't seem quite so self-indulgent, and we may still dabble on a voluntary basis if something is sufficiently interesting 
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Apr 2022
10:03am, 30 Apr 2022
8,768 posts
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Northern Exile
I have been totally absorbed by this thread over the past couple of weeks, there has been a large amount of really interesting information and I have learned a lot. Whilst I hesitate to ask - I don't want anything to distract from the shock of Velociraptor's impending retirement (even if it's just a temporary career break), it's time for me to ask a serious question to the collective wisdom. Basically, it's a "what should I do" question. I retired about two years ago and had my rather nice and comfy MOD pension to fall back on, it's indexed link and absorbs all my personal tax allowances meaning that any other income I get is taxed at BR. I also have a smallish company pension pot that covers the time since my retirement from regular service and 2020, it's not massive but I thought it would cover the gap between retirement and getting my state pension nicely. It would be a fair statement that I've messed this up a bit. For starters, when CV19 broke out the value of the fund dropped a lot, it bounced back a bit and in a panic I converted it into a cash fund - just to guarantee that income between ages of 60 and 67 (I'm now 60). I took 25% of the pot as tax free cash and have been drawing the balance down ever since, the goal was for it to last up to that state pension date. Well, the pension providers (Legal and General) started sending me letters saying it was unwise to keep the fund in cash as there were no growth options and foolishly I listened to them and reinvested it in one of their low-risk funds, it has since dropped like a fecking stone and is at the point now where it will just support my current rate of drawdown to age 67, i.e. I won't be able to give myself any increases in the monthly drawdown rate. So, I guess the question is: What would you do? I feel like the safest thing to do is cut my losses and convert the fund back into cash. Yes, it will die against inflation and have no growth, but it might be safest given the prognosis for European economies over the next few years. If this appears to have been a particularly stupid thing for me to do, then I can only agree with you. I should add that against this backdrop I have been saving hard over the years and have an appreciable pot of cash that is doing absolutely nothing, the reason it had to be cash was that our plan was to buy another house on my retirement and the premise was that a significant amount of dosh might be required. That hasn't transpired and it occurs to me that this cash is being badly managed. Should I have invested in a SIPP since retirement? I wouldn't have used more than say 50% of that cash pot in buying a new home (I think). Any thoughts gratefully received. |
Apr 2022
10:29am, 30 Apr 2022
57,728 posts
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Velociraptor
Blimey, NE A low risk fund is likely to have dropped like a stone because bonds (corporate and government) have been doing badly recently. I've been caught out a little by that too, but my situation isn't quite like yours as I'm not currently drawing down and can take a longer view. I can see those fucking bond funds sticking out like big red sore thumbs in an otherwise profitable portfolio every time I look at my SIPP. Do you know what the actual composition of the L&G fund is? I can imagine that if you need to protect your current income against current and near future volatility ... well, who knows. It's a gamble in the short term, isn't it? No advice. I'd probably buy Premium Bonds, shrug my shoulders and say, "It's safe and I'm a sufficer, not an optimiser." |
Apr 2022
10:38am, 30 Apr 2022
21,178 posts
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Ness
Wish I could offer some advice, NE, but sadly I don't know enough to say anything!
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Apr 2022
10:50am, 30 Apr 2022
6,011 posts
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um
NE - I'd suggest (if you can bear it) getting a free 'intro' meeting with 4-6 IFAs (mix of individual & corporate) and lay out where you are and what options they'd recommend. You'll probably get the square of the number of IFAs number of alternatives, but it should give you a broad covering of recommendations. And choose some (as arbster will no doubt block) that offer fixed fee advice*, not just those that want a %age of your money each year. *My ex boss (referred to a few posts back) says he's been impressed with Aviva fixed fee advice. But I think they'll all do a free initial assessment and sales pitch. And in the current climate, I suspect all investment is a rollercoaster, not a steady ascent. Enjoy the ride, if you can. |
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Apr 2022
10:55am, 30 Apr 2022
8,771 posts
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Northern Exile
V'rap - this is the fund. Not one of my better investment decisions widgets-lgim.huguenots.co.uk |
Apr 2022
11:11am, 30 Apr 2022
1,378 posts
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arbster
Hi Northern Exile - sorry to hear about your situation. You could definitely chat to some IFAs to see what they have to say, although most will stop well short of giving you any really actionable advice during the intro meeting. You might still get some value out of the conversations, though, and being able to talk about your own specific situation might help identify options you'd not considered which would take the pressure off your dwindling pension pot. In terms of your remaining pension, it's very tough to know what the right thing is to do. 7 years is right in that no man's land between "don't invest money you will need in the next 5 years" and "investments typically rise over any 10+ year period". As V'rap says, the historically less volatile bond market is in turmoil at the moment, which has destroyed many of those "low risk" funds that companies still seem able to get away with selling. It's hard to know whether we're at the bottom or not, but my IFA friend has said he's currently not making any changes to his clients' portfolios (not advice). Regarding the cash pot - is there any reason you can't just live off it, and leave your pension to (hopefully) recover a bit? Either way, any cash you have ought to be earning interest somewhere. Premium Bonds are very safe, but have an average return of 0.9%. You can get 1.5% return on a Savings account from Chase Bank at the moment, and could put £85K there and remain protected by the FSCS. I wouldn't take a fixed rate savings deal anywhere at the moment, because interest rates are expected to rise quite steeply over the rest of this year (per Rishi Sunak, and the whole financial market). |
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Apr 2022
11:14am, 30 Apr 2022
1,379 posts
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arbster
V'rap - this is the fund. Not one of my better investment decisions widgets-lgim.huguenots.co.uk |
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Apr 2022
11:14am, 30 Apr 2022
57,729 posts
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Velociraptor
I can see why you chose it, though, NE. On paper, it sounds perfect for your requirements - "high income" - and its performance is roughly in line with its sector. The present time, with wars and pestilences and rising interest rates, is a bad time for that sort of asset, and if you bought it in June 2021 or thereabouts the drop must look terrifying. Were you saying that you've got a chunk of idle cash sitting around? I'd use that to bridge the gap between your MOD pension and your expenditure, and ask L&G to switch your fund to a global tracker, which is likely to do better in the longer term, and then ignore it for the next decade or so. But I speak from a position of utter unsophistication in financial matters. |
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