SIPP Strategy - Expose the flaw!

[Greenmantle]

Just a little bit of hypothetical thinking!

Me - Over 55.
High rate tax payer.
very low monthly expenditure.

For the next 5 years I decide to put £48K into a new sip. (annual one off payments).
After 5 years the pot stands at £300K and I withdraw £75K.
I am assuming that by then I have zero income.
Live on that till state retirement.
Then full state pension plus 4% annual SIPP withdrawal.

I have omitted to mention:
High rate tax refund via SA
The cash is invested in safe non volatile stuff where capital is not at risk.

[oscmax]

How far over 55 you are might be helpful to know.

Ditto what you are actually asking/hoping to achieve!

[LordGrover]

If you're 56, in five years you'll be 61 - so six years until state pension is £12,500 p.a. - I think you'd do well to get by on that...

[Greenmantle]

Thanks for all the replies.
I'm 60 next year.
Details are still a little fluid and yes my lifestyle is kind of on the cheap / frugal side. I have other stuff to add into the mix.
All in all I'm looking at annual expenditure once retired of about £25k pa - £12k of that will be state pension.

[oscmax]

Isn't 4%pa withdrawal therefore going to leave you a bit light (albeit not by too much)?

[Greenmantle]

oscmax said:

Isn't 4%pa withdrawal therefore going to leave you a bit light (albeit not by too much)?

yep maybe but if things get tight I'll sofa surf at my kids houses - they'll love that!

[xeny]

I'd put it in at £4K/month to get some benefit from cost averaging the purchases No chance you can salary sacrifice to save NI?

[craig1912]

xeny said:

I'd put it in at £4K/month to get some benefit from cost averaging the purchases No chance you can salary sacrifice to save NI?

Cost averaging isn’t a benefit. It might be advantageous to pay monthly, equally it may not.

[av185]

Rachel Peeves could well reduce the 25% tax free lump sum on her subsequent tax grab.

[Greenmantle]

av185 said:

Rachel Peeves could well reduce the 25% tax free lump sum on her subsequent tax grab.

yep I did think that - and I have my fingers crossed that she gets hoisted by her own petard before it comes to the next pension tax grab and that subsequent chancellors are too scared to go near the "pension hot potato"!

[xeny]

craig1912 said:

Cost averaging isn’t a benefit. It might be advantageous to pay monthly, equally it may not.

I'm working on the basis the money is being accumulated through the year and saved up as a lump sum, at which point it is likely to be a benefit.