Financial planning for and during retirement
Discussion
Following on from the wonderful GT3 topic of enjoying retirement, I have decided to start a new topic of how to achieve a better retirement. Having the confidence of your knowledge of finances will make spending decisions easier.
Someone once quoted “ I’m not interested in pensions, I just want to enjoy my life “. It was a friend of mine! However, I’ve also heard the quote “ do think living in poverty in old age is better than understanding investments?”
For context, I’m retired, unfortunately because of ill health, but have dealt with IFAs, wealth managers you name it. Having had numerous bad outcomes, I now manage my own finances. After all, no one cares more about the outcome than me!
I would like to use this topic to get a wealth of information from other members to help everyone make educated decisions.
This will also include the psychology of investment etc. If someone has spent 50-60 years accumulating wealth, it is very difficult to change that mentality to decumulation.
All the best
Monty
Someone once quoted “ I’m not interested in pensions, I just want to enjoy my life “. It was a friend of mine! However, I’ve also heard the quote “ do think living in poverty in old age is better than understanding investments?”
For context, I’m retired, unfortunately because of ill health, but have dealt with IFAs, wealth managers you name it. Having had numerous bad outcomes, I now manage my own finances. After all, no one cares more about the outcome than me!
I would like to use this topic to get a wealth of information from other members to help everyone make educated decisions.
This will also include the psychology of investment etc. If someone has spent 50-60 years accumulating wealth, it is very difficult to change that mentality to decumulation.
All the best
Monty
Thanks for splitting out the topic.
As I said in the "Enjoying Retirement" thread, my main issue is finding financial advice I can trust.
I have read widely on pensions, ISAs, Tax Free Lump sums etc, and think that I understand the basics, and have things in place for my retirement. I am planning to retire next March, and would basically like someone to review what I have, and what I plan and maybe give me some options, This would not be on the actual investment strategy, that is all with various Vanguard trackers, but more around drawdown options, cashsflow ladders etc.
I think I need a "Financial Planner" rather than a "Financial Advisor", and am happy to pay a once of fee for the review, but not a ridiculous amount (Aviva only offered a full review service for my wife, and wanted £5K for it, when she only had some fairly simple queries about which other fund options she wanted.
As I said in the "Enjoying Retirement" thread, my main issue is finding financial advice I can trust.
I have read widely on pensions, ISAs, Tax Free Lump sums etc, and think that I understand the basics, and have things in place for my retirement. I am planning to retire next March, and would basically like someone to review what I have, and what I plan and maybe give me some options, This would not be on the actual investment strategy, that is all with various Vanguard trackers, but more around drawdown options, cashsflow ladders etc.
I think I need a "Financial Planner" rather than a "Financial Advisor", and am happy to pay a once of fee for the review, but not a ridiculous amount (Aviva only offered a full review service for my wife, and wanted £5K for it, when she only had some fairly simple queries about which other fund options she wanted.
Nice one Monty.
As I've mentioned on the other thread, I passed 50 last year so have started paying attention to my pension for the first time since starting it in my 20s.
Some basic sums suggest I should be able to retire anytime in my late 50s.
I feel the biggest change of mindset is going from always having some disposable income each month and a fresh pay cheque the next month, so you can not worry about bills or big purchases, to going to a lifestyle funded by a potentially ever dwindling pot of money.
It will be interesting to hear people's stories of balancing the spending and investing of your 'pots'.
As I've mentioned on the other thread, I passed 50 last year so have started paying attention to my pension for the first time since starting it in my 20s.
Some basic sums suggest I should be able to retire anytime in my late 50s.
I feel the biggest change of mindset is going from always having some disposable income each month and a fresh pay cheque the next month, so you can not worry about bills or big purchases, to going to a lifestyle funded by a potentially ever dwindling pot of money.
It will be interesting to hear people's stories of balancing the spending and investing of your 'pots'.
Edited by Truckosaurus on Wednesday 13th November 13:19
Burrow01 said:
Thanks for splitting out the topic.
As I said in the "Enjoying Retirement" thread, my main issue is finding financial advice I can trust.
I have read widely on pensions, ISAs, Tax Free Lump sums etc, and think that I understand the basics, and have things in place for my retirement. I am planning to retire next March, and would basically like someone to review what I have, and what I plan and maybe give me some options, This would not be on the actual investment strategy, that is all with various Vanguard trackers, but more around drawdown options, cashsflow ladders etc.
I think I need a "Financial Planner" rather than a "Financial Advisor", and am happy to pay a once of fee for the review, but not a ridiculous amount (Aviva only offered a full review service for my wife, and wanted £5K for it, when she only had some fairly simple queries about which other fund options she wanted.
Perhaps for your needs contacting a local FA and asking them for a quote to simply review your plans and / or perhaps prepare a list of questions for them may be worthwhile ?As I said in the "Enjoying Retirement" thread, my main issue is finding financial advice I can trust.
I have read widely on pensions, ISAs, Tax Free Lump sums etc, and think that I understand the basics, and have things in place for my retirement. I am planning to retire next March, and would basically like someone to review what I have, and what I plan and maybe give me some options, This would not be on the actual investment strategy, that is all with various Vanguard trackers, but more around drawdown options, cashsflow ladders etc.
I think I need a "Financial Planner" rather than a "Financial Advisor", and am happy to pay a once of fee for the review, but not a ridiculous amount (Aviva only offered a full review service for my wife, and wanted £5K for it, when she only had some fairly simple queries about which other fund options she wanted.
As soon as you get into cash flow ladders and software ( like Voyant ) that’s when the quote will escalate.
Drawdown is the relatively simple part once you have worked out what you actually need for income and whether that is coming from the Pension pot or other vehicles.
My plan is to build a large enough pot that I can withdraw desired income from but the pot still grows as I am taking out a smaller percentage versus the annual growth…. I’m 48 and started really focussing on my retirement funds (Pensions and ISAs) around 10 years ago. Plan is to have the option to retire at 57 if I choose to do so with same living standards of when working …. I believe I will need a pot circa 20-25 times the annual income I require to do this.
Edited by dphiggins007 on Wednesday 13th November 13:33
Edited by dphiggins007 on Wednesday 13th November 13:36
Edited by dphiggins007 on Wednesday 13th November 14:13
I know many on the other read have drawn up their own spreadsheet to model different scenarios - I did my own basic one and then played about with different rates of return and spending requirements.
My IFA did theirs and it wasn’t massively different using a return of 5% although I was more cautious!
He also ran through a questionnaire about my attitude to risk which again was broadly in line with my own assessment - I am in a balanced fund in the the middle of the risk spectrum.
My IFA did theirs and it wasn’t massively different using a return of 5% although I was more cautious!
He also ran through a questionnaire about my attitude to risk which again was broadly in line with my own assessment - I am in a balanced fund in the the middle of the risk spectrum.
Well done to set up a planning thread. I did a lot of work on pension funds at one time and that caused me to think for a the future for the first time in a different way:
(1) You can never start too early, particularly if you are funding your retirement yourself. I confess I only started to do this at about 45.
(2) At least in my case I did use an IFA and I just don't have any desire to personally manage investments.
(3) I was surprised over the years how many people do not fully understand their pensions and are surprised if the amount is lower than they expected, particularly for those who elected to retire early. If you retire at ( say) 50, best to understand the discount on you pension if you have a company scheme.
(4) Retirement planning and debt planning do together. There is a major difference among my friends who may have similar incomes but who had very different expenditure patterns. I live in a smaller house than most as it is unimportant to me, but the carrying costs are commensurately lower. Admittedly I blow money on cars but age will reduce that drastically.
(5) Inflation is a factor if you are on a fully fixed income.
(1) You can never start too early, particularly if you are funding your retirement yourself. I confess I only started to do this at about 45.
(2) At least in my case I did use an IFA and I just don't have any desire to personally manage investments.
(3) I was surprised over the years how many people do not fully understand their pensions and are surprised if the amount is lower than they expected, particularly for those who elected to retire early. If you retire at ( say) 50, best to understand the discount on you pension if you have a company scheme.
(4) Retirement planning and debt planning do together. There is a major difference among my friends who may have similar incomes but who had very different expenditure patterns. I live in a smaller house than most as it is unimportant to me, but the carrying costs are commensurately lower. Admittedly I blow money on cars but age will reduce that drastically.
(5) Inflation is a factor if you are on a fully fixed income.
Burrow01 said:
Thanks for splitting out the topic.
As I said in the "Enjoying Retirement" thread, my main issue is finding financial advice I can trust.
I have read widely on pensions, ISAs, Tax Free Lump sums etc, and think that I understand the basics, and have things in place for my retirement. I am planning to retire next March, and would basically like someone to review what I have, and what I plan and maybe give me some options, This would not be on the actual investment strategy, that is all with various Vanguard trackers, but more around drawdown options, cashsflow ladders etc.
I think I need a "Financial Planner" rather than a "Financial Advisor", and am happy to pay a once of fee for the review, but not a ridiculous amount (Aviva only offered a full review service for my wife, and wanted £5K for it, when she only had some fairly simple queries about which other fund options she wanted.
FWIW, I struggle to see the benefits of a one-off planning exercise. It's a service we used to offer, but we often had the feeling that the clients didn't have a robust ongoing framework in place for items such as:As I said in the "Enjoying Retirement" thread, my main issue is finding financial advice I can trust.
I have read widely on pensions, ISAs, Tax Free Lump sums etc, and think that I understand the basics, and have things in place for my retirement. I am planning to retire next March, and would basically like someone to review what I have, and what I plan and maybe give me some options, This would not be on the actual investment strategy, that is all with various Vanguard trackers, but more around drawdown options, cashsflow ladders etc.
I think I need a "Financial Planner" rather than a "Financial Advisor", and am happy to pay a once of fee for the review, but not a ridiculous amount (Aviva only offered a full review service for my wife, and wanted £5K for it, when she only had some fairly simple queries about which other fund options she wanted.
1. financial planning
2. investment management
3. tax planning and optimisation (over the lifetime)
4. a sustainable retirement income withdrawal strategy
and some non-financial challenges
5. Having a sounding board to challenge their thinking and prevent them from making suboptimal decisions.
6. Coping with declining financial literacy
7. Being confident to continue spending money during downturns.
so questioned how much value we were adding.
DIY or paying for an ongoing relationship are the better options, IMO.
Claret m said:
This will also include the psychology of investment etc. If someone has spent 50-60 years accumulating wealth, it is very difficult to change that mentality to decumulation.
This is a huge change in mindset. I suspect that it affects a lot of people, to the point where for some their retirement income is less than it could be to give them a more comfortable lifestyle.At 34 I’m managing all things myself. Workplace DC pension, SIPP, LISA, ISA.
It ain’t difficult if you are happy to settle for market returns from passive investing. Control what’s in your control (fees) and let compounding do its thing.
IFA’s on a one-off basis I can understand for advice regarding efficient drawdown, estate planning, inheritance etc but I wouldn’t dream of paying one an ongoing fee to invest my money for me - likely doing a worse job of it.
It ain’t difficult if you are happy to settle for market returns from passive investing. Control what’s in your control (fees) and let compounding do its thing.
IFA’s on a one-off basis I can understand for advice regarding efficient drawdown, estate planning, inheritance etc but I wouldn’t dream of paying one an ongoing fee to invest my money for me - likely doing a worse job of it.
Edited by AllyM on Wednesday 13th November 14:28
Thanks for starting this thread Monty,
A few years ago I suddenly realised that my retirement is rapidly approaching –(I’m 63 and still working full time) and I had done very little about it so in the summer time I joined the Meaningful Academy retirement planning course run by Pete Matthew. I now have access to the VoyantGo planning software which is used to generate future financial models of earnings, pension inputs, expenditure, savings planning, inflation and tax.
In the last six months or so and after an awful lot of data entry by me, I've learned quite a lot, I thought I knew quite a lot on this subject but I've been surprised how much I didn't know once you've got something like a VoyantGo plan in front of you.
You are able to adjust the data and see “what ifs” by changing and comparing plans that you can generate. It's quite reassuring for the planning that you're doing is on track. For now I’ll hold off paying for a “full blown” IFA and see how robust my plan will be.
As a member I’m able to renew my VoyantGo licence after the first year for £120 for another year.
Note: I've got no affiliation to Meaningful Academy but as I follow Pete on YouTube, I know he's got some deals coming up later for Black Friday to join the Academy at a reduced rate.
Note: Other IFAs also offer this VoyanGo plan for a similar amount.
A few years ago I suddenly realised that my retirement is rapidly approaching –(I’m 63 and still working full time) and I had done very little about it so in the summer time I joined the Meaningful Academy retirement planning course run by Pete Matthew. I now have access to the VoyantGo planning software which is used to generate future financial models of earnings, pension inputs, expenditure, savings planning, inflation and tax.
In the last six months or so and after an awful lot of data entry by me, I've learned quite a lot, I thought I knew quite a lot on this subject but I've been surprised how much I didn't know once you've got something like a VoyantGo plan in front of you.
You are able to adjust the data and see “what ifs” by changing and comparing plans that you can generate. It's quite reassuring for the planning that you're doing is on track. For now I’ll hold off paying for a “full blown” IFA and see how robust my plan will be.
As a member I’m able to renew my VoyantGo licence after the first year for £120 for another year.
Note: I've got no affiliation to Meaningful Academy but as I follow Pete on YouTube, I know he's got some deals coming up later for Black Friday to join the Academy at a reduced rate.
Note: Other IFAs also offer this VoyanGo plan for a similar amount.
I’m really glad that others are interested, and already people are coming up with their opinions. Unfortunately, retirement is a journey and you can’t start with one idea and then just keep to it going, it must evolve.
Here are a few starters.
Level of risk- IFAs will make you fill out lots of questionnaires to assess your level for risk, this is for their benefit to comply with regulatory requirements. I look at what risk do I need to take to reach my objectives. I’m very lucky to have a substantial SIPP from a DB scheme opt out. I therefore don’t want to see volatility in my portfolio.
Annuities- Last year I used 40% of my SIPP to buy an annuity, before I committed to the purchase I paid two IFAs for their advice. I am always prepared to pay for one off pieces of work. They both recommended the purchase. I now have a monthly income covering all expenses, I don’t need to think what shall I sell this month.
Having had a DB scheme originally, I was always going to half benefit when I die and when my wife dies the
income stops. I find it funny how a number of people wish for a DB scheme but wouldn’t buy an annuity for
loss of an inheritance.
All the best
Here are a few starters.
Level of risk- IFAs will make you fill out lots of questionnaires to assess your level for risk, this is for their benefit to comply with regulatory requirements. I look at what risk do I need to take to reach my objectives. I’m very lucky to have a substantial SIPP from a DB scheme opt out. I therefore don’t want to see volatility in my portfolio.
Annuities- Last year I used 40% of my SIPP to buy an annuity, before I committed to the purchase I paid two IFAs for their advice. I am always prepared to pay for one off pieces of work. They both recommended the purchase. I now have a monthly income covering all expenses, I don’t need to think what shall I sell this month.
Having had a DB scheme originally, I was always going to half benefit when I die and when my wife dies the
income stops. I find it funny how a number of people wish for a DB scheme but wouldn’t buy an annuity for
loss of an inheritance.
All the best
The first thing you really need to know is how much you want to live on, pa, once you retire. Ie, you need to know “your number”. You can peruse a MSE thread on that here. Feel free to hop forward - it’s been running longer than GT3 thread 
I’d STRONGLY recommend spending some time perusing and paying attention to James Shack on YouTube
His latest one addresses the planned changes to IHT, but he has plenty of top tips. Maybe start with https://youtu.be/9NGajZhp-C0?si=36zmDCCUtmSBtqqg
Taking some control is the first step for you. If it ends with you choosing to see an IFA, then fine, but you can do a LOT of preparation for that first.
https://www.youtube.com/watch?v=Ssi1U6aMCdU will give you some free tools to help 👍
I’d STRONGLY recommend spending some time perusing and paying attention to James Shack on YouTube
His latest one addresses the planned changes to IHT, but he has plenty of top tips. Maybe start with https://youtu.be/9NGajZhp-C0?si=36zmDCCUtmSBtqqg
Taking some control is the first step for you. If it ends with you choosing to see an IFA, then fine, but you can do a LOT of preparation for that first.
https://www.youtube.com/watch?v=Ssi1U6aMCdU will give you some free tools to help 👍
Be an interesting thread. Personally I’m recently 37 and I started to look seriously into all of this when I was 33 (March 2021 was our first meaningful investments.l).
Much like Allym above we have gone simple. Max out all available allowances and put them in a dumb tracker that costs nothing. Anything above that is a toss up between paying down mortgage and GIA in similar investment , probably do both until the point of 60% LTV and then I’ll run interest only until we retire. At which point we will buy out of London in cash.
Apparently we will hit the ‘number’ required when I’m 43, at that point I wouldn’t need to invest anything additional and just cover monthly costs. But more likely is that we will work until late 40’s and maintain the same level of investment till then.
It’s all fairly straight forward in the accumulation phase assuming stock market is vaguely doing what it has over past many decades. Suspect will need some fine tuning and decisioning nearer to retiring to make sure we pay as little tax as possible.
Much like Allym above we have gone simple. Max out all available allowances and put them in a dumb tracker that costs nothing. Anything above that is a toss up between paying down mortgage and GIA in similar investment , probably do both until the point of 60% LTV and then I’ll run interest only until we retire. At which point we will buy out of London in cash.
Apparently we will hit the ‘number’ required when I’m 43, at that point I wouldn’t need to invest anything additional and just cover monthly costs. But more likely is that we will work until late 40’s and maintain the same level of investment till then.
It’s all fairly straight forward in the accumulation phase assuming stock market is vaguely doing what it has over past many decades. Suspect will need some fine tuning and decisioning nearer to retiring to make sure we pay as little tax as possible.
Looking at the supposed average pot size in the UK whether through choice or lack of available money Pensions are a very boring topic and it’s not until later life when it may be too late to do something do they get really thought about generally.
I certainly didn’t really consider them when I was starting out but was lucky enough to work for a company that offered a DB scheme which if contributed to by 5% then added 13% or so of their money at the time.
Fast forward to when I was then 50 and despite the DB being stopped and frozen to be replaced by a DC scheme I started to really look at what the numbers were.
Being sad I had always kept a budgetary spreadsheet so on the assumption that we didn’t want to alter our lifestyle could I stop work ? I didn’t actually want to stop work as at that stage it was still more than 50% fun.
No.
I did the numbers again at 55 and this time the answer was probably but I was still enjoying work.
At 58 I used the CETV to cash in my DB Pension as the annual multiplier was pretty high at x40 and together with the smaller DC scheme transferred both to a private one where I could then control what drawdown I wanted plus the benefits of 100% transfer to my wife in the event of my death.
Along the way I had also accumulated various other investment pots of different types but had decided that I wanted to actually use the drawdown method and use what I had been saving for anyway.
My 3 adult children are all working but within their own different Industries their Pension plans ( which they all are contributing to ) won’t I suspect provide the same ability.
Maybe they are relying on the bank of m and d instead.
In short , know what you are spending or what to spend annually ( don’t fixate too much about modelling in inflation factors providing your capital growth numbers are kept modest and equally your spending past say 70 will in theory then reduce anyway ) and then see how either drawdown or annuity or pure Pension income translates.
1p more in than out( post tax ) and all is good.
I certainly didn’t really consider them when I was starting out but was lucky enough to work for a company that offered a DB scheme which if contributed to by 5% then added 13% or so of their money at the time.
Fast forward to when I was then 50 and despite the DB being stopped and frozen to be replaced by a DC scheme I started to really look at what the numbers were.
Being sad I had always kept a budgetary spreadsheet so on the assumption that we didn’t want to alter our lifestyle could I stop work ? I didn’t actually want to stop work as at that stage it was still more than 50% fun.
No.
I did the numbers again at 55 and this time the answer was probably but I was still enjoying work.
At 58 I used the CETV to cash in my DB Pension as the annual multiplier was pretty high at x40 and together with the smaller DC scheme transferred both to a private one where I could then control what drawdown I wanted plus the benefits of 100% transfer to my wife in the event of my death.
Along the way I had also accumulated various other investment pots of different types but had decided that I wanted to actually use the drawdown method and use what I had been saving for anyway.
My 3 adult children are all working but within their own different Industries their Pension plans ( which they all are contributing to ) won’t I suspect provide the same ability.
Maybe they are relying on the bank of m and d instead.
In short , know what you are spending or what to spend annually ( don’t fixate too much about modelling in inflation factors providing your capital growth numbers are kept modest and equally your spending past say 70 will in theory then reduce anyway ) and then see how either drawdown or annuity or pure Pension income translates.
1p more in than out( post tax ) and all is good.
I’ve been running a spending app’ for the last couple of years in readiness for my retirement.
If you’re relatively disciplined in adding spends it gives you an idea of what your number could be.
I just put in my direct debits for the month then everything else gets added as and when. I also put my notional retirement income as wages and see how it stacks up.
All spends are categorised within the app’ and you can drill down monthly and annual spends on specific items .
Appreciate it’s hardly exciting but this has given me a bit more confidence as to what my retirement income needs to be
If you’re relatively disciplined in adding spends it gives you an idea of what your number could be.
I just put in my direct debits for the month then everything else gets added as and when. I also put my notional retirement income as wages and see how it stacks up.
All spends are categorised within the app’ and you can drill down monthly and annual spends on specific items .
Appreciate it’s hardly exciting but this has given me a bit more confidence as to what my retirement income needs to be
Claret m said:
Level of risk- IFAs will make you fill out lots of questionnaires to assess your level for risk, this is for their benefit to comply with regulatory requirements.
Not sure why you believe this. They can be used as a starting point in a conversation to establish how much volatility you are willing to accept and how this fits in with the risk/return to ensure the success of your financial plan.
Some advisers choose not to use risk questionnaires, calling them "mumbo-jumbo questionnaires"
mikeiow said:
The first thing you really need to know is how much you want to live on, pa, once you retire. Ie, you need to know “your number”.
I have kept detailed accounts of all expenditure (operating and investment in both CHF/EUR) ever since we bought the house in Burgundy in 2013, in order to have an idea of where things were going there and at our primary residence in Geneva. This has given us a quite precise idea of how much we would need to keep both places going in future, and/or if we sold/rented out one or the other. Now aged 58 and 59, we can forecast reasonably well what we will need in any particular scenario.Claret m said:
Annuities- Last year I used 40% of my SIPP to buy an annuity, before I committed to the purchase I paid two IFAs for their advice. I am always prepared to pay for one off pieces of work. They both recommended the purchase. I now have a monthly income covering all expenses, I don’t need to think what shall I sell this month.
We will both benefit from a 100% UK state pension (at age 67) and 70% of a Swiss one at 65. I plan to retire and purchase an annuity from age 60 which will pay out 5.25%, calculated as to to make up the difference between the state pension income(s) and "our number." This would be from a portion of my workplace pension fund, where annuity rates are fixed at 5.25% from age 60, rising pro rata per year to 6% at age 65. Our forecast show that we can retire at 60 and be comfortable, so a few health issues mean that we would rather enjoy retirement sooner rather than later.This annuity will consume about 30% of our various pension pots and another 20% will be drawn down to finance the gap between age 60 and 65/67. The remaining 50% (plus any intervening growth) will be left as savings/investments once at a financial 'cruising altitude' where income sources are covering all expenses.
Edited by Michael_B on Wednesday 13th November 23:00
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