How to retire on £30k at 60?

tony4147 · 17 July 2017 at 10:59AM

My wife is 55 and is a teacher and as the workload is ridicules I would like for her to be able to retire at 60 before the job kills her.
I’m 54 and MIGHT want to retire at the same time.
We need an income of approx £30k / year.
My wife will get a pension of about £12k / year and a lump sum of around £35k.
I have DC pensions of £225k and £1.5k is paid monthly into it.
If I were to retire at the same time what would we need to do in order to achieve £30k at 60?
Obviously when we get to 67 we will have an additional income of £16.6k from the state pension.

ali-t · 17 July 2017 at 11:11AM

Could your wife not leave teaching and do something she enjoys? Working a couple of days a week in something you enjoy is very different than slogging away full time. That would give you both a safety net and prevent her from getting bored after leaving a full on job.

tony4147 · 17 July 2017 at 11:20AM

ali-t wrote: »

Could your wife not leave teaching and do something she enjoys? Working a couple of days a week in something you enjoy is very different than slogging away full time. That would give you both a safety net and prevent her from getting bored after leaving a full on job.

Well that would be a bonus, but would like to see what would be needed without that

Silvertabby · 17 July 2017 at 11:21AM

It's just about do-able if you:

Continue to pay £1.5K per month into your own pension

Take the maximum tax free cash from both pensions - and divide that over the 7 years until State pension age.

Of course, that assumes that you are still looking at £30K going past State retirement ages - your wife's £12K, plus £ £16.6k State pension = £28.6K plus your own draw-down.

However, if you are looking at £30K until State retirement age then £46.6K afterwards, then no you're not on track.

Private pensions aren't my forte, but I'm sure someone will come along with some suggestions.

Incidentally - you seem to be assuming that you will both get the full single tier pension of £159 per week - but your wife will have been contracted out during the time she was in the teacher's pension scheme and so may get her State pension under the old rules. Have you had a look at her forecast?

tony4147 · 17 July 2017 at 11:32AM

Silvertabby wrote: »

It's just about do-able if you:

Continue to pay £1.5K per month into your own pension

Take the maximum tax free cash from both pensions - and divide that over the 7 years until State pension age.

Of course, that assumes that you are still looking at £30K going past State retirement ages - your wife's £12K, plus £ £16.6k State pension = £28.6K plus your own draw-down.

However, if you are looking at £30K until State retirement age then £46.6K afterwards, then no you're not on track.

Private pensions aren't my forte, but I'm sure someone will come along with some suggestions.

Incidentally - you seem to be assuming that you will both get the full single tier pension of £159 per week - but your wife will have been contracted out during the time she was in the teacher's pension scheme and so may get her State pension under the old rules. Have you had a look at her forecast?

I thought it might be doable, I will get the full SP, not checked hers for a while but it will be down to about £130 ish / wk

Silvertabby · 17 July 2017 at 11:37AM

I thought it might be doable, I will get the full SP, not checked hers for a while but it will be down to about £130 ish / wk

If £130 per week is your wife's foundation amount (as at April 2016) then, going forward, as long as she works/pays NI then it will increase by approx £4.50 per week. Another 5 years teaching (or even a little part time job - as long as it pays over the NI limit) will give her another £22.50 per week, taking her up to £152.50.

tony4147 · 17 July 2017 at 11:47AM

I'm thinking my pot might be in the region of £500k @ 60
Lump sum = £125k + £35k (wife's TFLS) = £160k / 7 = £22.8k / yr

Drawdown my pension @ 4% = £15k / yr

Total = £22.8k + £15k + £12k (wife pen) = £49.8k / yr = £44.44k / net

Then at 67 when SP kicks in I think we will be around £40k.

I'm fortunate that I work contraxt so if I wish to work longer then I probably can, it was just at thought as to what would be needed to retire at 60

Silvertabby · 17 July 2017 at 12:07PM

Sounds good - I'd erred on the side of caution with your pot at 60, and hadn't factored in that you would start draw-down straight away.

We both intended to retire at 60 - in the event Mr S went at 58 because his Civil Service redundancy offer was too good to refuse. I carried on until 60, albeit part time for the last few years, retiring last year.

Absolutely no regrets - we keep ourselves busy with our joint and seperate interests and hobbies and are thoroughly enjoying ourselves.

xylophone · 17 July 2017 at 12:18PM

https://www.teacherspensions.co.uk/members/planning-retirement/when-can-you-retire.aspx

Your wife could make voluntary contributions to achieve a full state pension.

https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

kidmugsy · 17 July 2017 at 12:49PM

I don't see a problem. At 60 you should drawdown from your own pension at a rate equal to the Personal Allowance: say £12k p.a. Then you'll have £24k p.a. income, tax-free, between you. Additionally spend another £6k p.a. of TFLS: £4k of yours and £2k of hers, and you're home and dry.

Seven years later she'll still have ca. £20k of TFLS and you'll be due somewhere around £50k of TFLS. Doubtless you will in fact have drawn that money and plonked it into S&S ISAs. So you'll have £70k of ISA throwing off tax-free income, plus somewhere around £140k still in your DC pension Given that her £12k p.a. plus two State Retirement Pensions will already have you near to the required £30k p.a. you will have a fine safeguard against things going wrong.

tony4147 · 17 July 2017 at 4:16PM

Looks a possibility, pity we would have to dip into the TFLS as this was for some serious holidays over the first few years of retirement.
I'm looking for the equiv of £30k in todays money and I always seem to struggle modelling it with the effects of inflation

How to retire on £30k at 60?

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