Savings and Investments thread

golfaddick

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuities are certainly back on the table since Liz Truss's terrible stint at being PM.  Best annuity rates for over 20 years, although be careful because any remaining monies left on a guaranteed policy after death will count towards your Estate like a DC pension pot once the new IHT rules come into force in 2027. 

golfaddick

Rob7Lee said:

redman said:

golfaddick said:

Only reason to go into cash nearing retirement is if you are contemplating buying an annuity. If not then best to stay fully invested. Maybe de-risk a bit if you are looking to take max TFC but if you are going into drawdown then you could be in the market for another 30+ years.

Excellent. Something I 100% agree with but have not actually heard many IFA's actually say. The Lifestyle plans, which were certainly around up until a few years ago transferred all equity to cash over the last 5 years of your working life. I never understood the logic, unless annuity was the likely option.

While talking of annuities, these have been out of fashion, but an IFA interestingly told me he thought these are likely to become more common place again. An example maybe after I have passed, this could be a good option for my wife if she is still in good health. Each year she would then have "excess income" which she could gift and this would be IHT free. 

Annuity rates are still quite poor in my view. Under £5,500 for joint life with 3% per £100k. Even without the 3% it's only around £7,500. Of course it's all guess work as to how long we'll all live!

Don't buy a joint life one then, look at a 10 year guarantee instead. And I wouldn't bother indexing it either. As you get older (75+) you don't do as much as you did at 65 and so your yearly expenditure is not so great.

Dont forget your State Pension is indexed so you'll have a proportion of your income already iinflation linked.

And if you have more than adequate savings then one off expenditure like holidays or new cars can come out of that. Keep your pension for day-day living.