What to do with SIPP in retirement?
Posted: March 5th, 2019, 9:00 am
Longish post..
My wife is approaching retirement in 2.5 years and I am struggling with the decision of what to do with her SIPP; and eventually my own.
The SIPP's both form part of our 'retirement income' portfolio, including investments in a HYP strategy some and Investment Trusts.
I think my better options are:
1) Take the 25% tax free up front, then take the rest as yearly payments (to reduce charges) with some of that still being tax free as we'll mostly be under the personal allowance (most investments are in ISA's).
The idea would be to move the money from the SIPP to ISA's as soon as possible to empty the SIPP, minimising tax.
2) Use UFPLS and take annual payments to stay under the personal allowance, with 25% of each payment tax free - again this would be to empty the SIPP and move the money over time to ISA's, to be reinvested to produce income.
1+ 2 are very similar but I think 2 would produce slightly more dividend income and less payable tax.
or, 3) Withdraw (annually) only the natural yield using UFPLS, leaving both SIPP's alone otherwise and use the resultant income to live on along with income from ISAs and a small DB pension that she has.
We have no children or anyone to leave the money to apart from the odd charity should any money be left over after we are both dead.
I think the problem comes down that I can't decide on whether to live off only the natural income until we die, leaving what could be lots of capital.... or do some kind of controlled spending of capital as well as income so that we don't leave too much behind - obviously we can't predict when we'll die so the aim would be to leave some capital/income in case we live longer than expected but not to die leaving lots behind.
Whatever I do, it must be as simple as possible so that in the event of me dying first, it would be easy (preferably automatic) so that my wife could deal with it (she has no interest in finance).
I was wondering what those of you that have retired have done, or for those yet to retire what are you planning.
regards,
Darka
My wife is approaching retirement in 2.5 years and I am struggling with the decision of what to do with her SIPP; and eventually my own.
The SIPP's both form part of our 'retirement income' portfolio, including investments in a HYP strategy some and Investment Trusts.
I think my better options are:
1) Take the 25% tax free up front, then take the rest as yearly payments (to reduce charges) with some of that still being tax free as we'll mostly be under the personal allowance (most investments are in ISA's).
The idea would be to move the money from the SIPP to ISA's as soon as possible to empty the SIPP, minimising tax.
2) Use UFPLS and take annual payments to stay under the personal allowance, with 25% of each payment tax free - again this would be to empty the SIPP and move the money over time to ISA's, to be reinvested to produce income.
1+ 2 are very similar but I think 2 would produce slightly more dividend income and less payable tax.
or, 3) Withdraw (annually) only the natural yield using UFPLS, leaving both SIPP's alone otherwise and use the resultant income to live on along with income from ISAs and a small DB pension that she has.
We have no children or anyone to leave the money to apart from the odd charity should any money be left over after we are both dead.
I think the problem comes down that I can't decide on whether to live off only the natural income until we die, leaving what could be lots of capital.... or do some kind of controlled spending of capital as well as income so that we don't leave too much behind - obviously we can't predict when we'll die so the aim would be to leave some capital/income in case we live longer than expected but not to die leaving lots behind.
Whatever I do, it must be as simple as possible so that in the event of me dying first, it would be easy (preferably automatic) so that my wife could deal with it (she has no interest in finance).
I was wondering what those of you that have retired have done, or for those yet to retire what are you planning.
regards,
Darka