Your questions answered Vol 2 - IM Private Clients
Discussion
I'm sure this has been asked before but I can't find the answer.
IM Lifestyle Income vs Withdrawal. Can some explain in simple terms what the difference is? When I retire I'd like to take the 25% tax free lump sum and drawdown the rest. So which of these two options is most appropriate?
IM Lifestyle Income vs Withdrawal. Can some explain in simple terms what the difference is? When I retire I'd like to take the 25% tax free lump sum and drawdown the rest. So which of these two options is most appropriate?
chomer75 said:
I'm sure this has been asked before but I can't find the answer.
IM Lifestyle Income vs Withdrawal. Can some explain in simple terms what the difference is? When I retire I'd like to take the 25% tax free lump sum and drawdown the rest. So which of these two options is most appropriate?
The confusion here stems from a naming issue regarding the target date (often retirement) options.IM Lifestyle Income vs Withdrawal. Can some explain in simple terms what the difference is? When I retire I'd like to take the 25% tax free lump sum and drawdown the rest. So which of these two options is most appropriate?
There really isn't an IM Lifestyle for income and one for withdrawal, there is just IM Lifestyle and the question is when to press the stop button on its journey through the glide path.
This glide path is exactly the same for all during the growth phases, but a few years away from your target date it can either;
- Stop at a balanced stage which is designed for drawing down a long term income from your returns whilst leaving any additional returns above this for capital growth, or
- Continuing down the glide path lowering risk/reward towards a very defensive portfolio designed to minimise fluctuations whilst still allowing for some market growth.
We need to know what you would to happen with your glide path and so use the names 'income' and 'withdrawal' as the signpost for this.
So if you place 75% in the 'income' option and 25% in the 'withdrawal option (both with the same target date) you will achieve exactly what you are seeking.
Cheers
Julian
Couldn't decide if the isa or pension forum was more appropriate but think there are more frequent smart bods here.
Happy to provide more details if needed but essentially fact pattern is:
- due a decent bonus end of this month
- I will need a significant amount to invest in a new business next month or May, this would equal bonus, existing cash savings and some of my ISA (equal to a few years contributions)
- don't like the idea of large chunk of my bonus being reduced by tax (45% tax rate)
What I can't decide however is whether to use most of my bonus to add to pension (thereby recouping the tax) but will mean an equivalent amount more will need to be withdrawn from ISA to pay for new business. Or don't add to pension, meaning I don't have to withdraw more from ISA (as more of my bonus can be used to pay for new business).
Not sure if I'm over simplifying but it's essentially a conundrum of having more in ISA now so future withdrawals are tax free when I need it or having a larger amount invested today in my pension (c 45% more) but subject to an element of tax down the line when withdrawn (and subject to govt whims on punitive taxing of pension pots).
What would people do?
For context, pension age is 20 years away so that's potential investment horizon and my plan is that I shouldn't need mich of my savings in retirement as trying to follow FIRE and leave most of it to my kid(s) so in a way its not really saving for me.
Happy to provide more details if needed but essentially fact pattern is:
- due a decent bonus end of this month
- I will need a significant amount to invest in a new business next month or May, this would equal bonus, existing cash savings and some of my ISA (equal to a few years contributions)
- don't like the idea of large chunk of my bonus being reduced by tax (45% tax rate)
What I can't decide however is whether to use most of my bonus to add to pension (thereby recouping the tax) but will mean an equivalent amount more will need to be withdrawn from ISA to pay for new business. Or don't add to pension, meaning I don't have to withdraw more from ISA (as more of my bonus can be used to pay for new business).
Not sure if I'm over simplifying but it's essentially a conundrum of having more in ISA now so future withdrawals are tax free when I need it or having a larger amount invested today in my pension (c 45% more) but subject to an element of tax down the line when withdrawn (and subject to govt whims on punitive taxing of pension pots).
What would people do?
For context, pension age is 20 years away so that's potential investment horizon and my plan is that I shouldn't need mich of my savings in retirement as trying to follow FIRE and leave most of it to my kid(s) so in a way its not really saving for me.
pingu393 said:
Bubbas Grill said:
Train keeps rollin' . 
Nice work IM.
Am I the only one who looks forward to the big number crossing a threshold?Nice work IM.
Another threshold number was crossed this morning
Mr Pointy said:
pingu393 said:
Bubbas Grill said:
Train keeps rollin' .
Nice work IM.
Am I the only one who looks forward to the big number crossing a threshold?Nice work IM.
Another threshold number was crossed this morning
Stevil said:
Mr Pointy said:
pingu393 said:
Bubbas Grill said:
Train keeps rollin' .
Nice work IM.
Am I the only one who looks forward to the big number crossing a threshold?Nice work IM.
Another threshold number was crossed this morning
pingu393 said:
Bubbas Grill said:
Train keeps rollin' .
Nice work IM.
Am I the only one who looks forward to the big number crossing a threshold?Nice work IM.
Another threshold number was crossed this morning
.Along with a couple of recent transfers I am hoping to hit another threshold soon
Although now I’ve said that…………
pingu393 said:
Am I the only one who looks forward to the big number crossing a threshold?
Another threshold number was crossed this morning
I always like seeing a threshold passed, ATH hit etc.Another threshold number was crossed this morning
My spreadsheet has year end targets, I missed the 2023 target but hit that on 17 February, so catching up again.
It helps me keep on the ball with paying in additional contributions which is needed to get where I want to be in just over four years time, considering I'm more than half way there, and I've only really been taken my pension seriously for four years, it is so far going to plan, or pretty close to it..
Bubbas Grill said:
Stevil said:
Mr Pointy said:
pingu393 said:
Bubbas Grill said:
Train keeps rollin' .
Nice work IM.
Am I the only one who looks forward to the big number crossing a threshold?Nice work IM.
Another threshold number was crossed this morning
The funds, they mock me....
-Cappo- said:
Another one here, I've been on the cusp of crossing a significantly screenshottable threshold for a few weeks now. It goes up a bit, up a bit, up a bit, up a bit, DOWN A BIT. Rinse and repeat!
The funds, they mock me....
I had that for about two weeks. It was like.. 95,96,97,98,95,96,97,98,99,94,95,96,97,98 The funds, they mock me....
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