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  • FIRST POST
    • tony4147
    • By tony4147 17th Jul 17, 10:59 AM
    • 270Posts
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    tony4147
    How to retire on £30k at 60?
    • #1
    • 17th Jul 17, 10:59 AM
    How to retire on £30k at 60? 17th Jul 17 at 10:59 AM
    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.
    Iím 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.
Page 1
    • ali-t
    • By ali-t 17th Jul 17, 11:11 AM
    • 3,732 Posts
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    ali-t
    • #2
    • 17th Jul 17, 11:11 AM
    • #2
    • 17th Jul 17, 11:11 AM
    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.
    If you always do what you have always done, you will always get what you always got!
    • tony4147
    • By tony4147 17th Jul 17, 11:20 AM
    • 270 Posts
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    tony4147
    • #3
    • 17th Jul 17, 11:20 AM
    • #3
    • 17th Jul 17, 11:20 AM
    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.
    Originally posted by ali-t


    Well that would be a bonus, but would like to see what would be needed without that
    • Silvertabby
    • By Silvertabby 17th Jul 17, 11:21 AM
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    Silvertabby
    • #4
    • 17th Jul 17, 11:21 AM
    • #4
    • 17th Jul 17, 11:21 AM
    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
    • By tony4147 17th Jul 17, 11:32 AM
    • 270 Posts
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    tony4147
    • #5
    • 17th Jul 17, 11:32 AM
    • #5
    • 17th Jul 17, 11:32 AM
    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?
    Originally posted by Silvertabby

    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
    • By Silvertabby 17th Jul 17, 11:37 AM
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    Silvertabby
    • #6
    • 17th Jul 17, 11:37 AM
    • #6
    • 17th Jul 17, 11:37 AM
    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
    • By tony4147 17th Jul 17, 11:47 AM
    • 270 Posts
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    tony4147
    • #7
    • 17th Jul 17, 11:47 AM
    • #7
    • 17th Jul 17, 11:47 AM
    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
    Last edited by tony4147; 17-07-2017 at 11:51 AM.
    • Silvertabby
    • By Silvertabby 17th Jul 17, 12:07 PM
    • 1,794 Posts
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    Silvertabby
    • #8
    • 17th Jul 17, 12:07 PM
    • #8
    • 17th Jul 17, 12:07 PM
    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.
    Last edited by Silvertabby; 17-07-2017 at 12:30 PM.
    • xylophone
    • By xylophone 17th Jul 17, 12:18 PM
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    xylophone
    • #9
    • 17th Jul 17, 12:18 PM
    • #9
    • 17th Jul 17, 12:18 PM
    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
    • By kidmugsy 17th Jul 17, 12:49 PM
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    kidmugsy
    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
    • By tony4147 17th Jul 17, 4:16 PM
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    tony4147
    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
    • kidmugsy
    • By kidmugsy 17th Jul 17, 6:47 PM
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    kidmugsy
    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
    Originally posted by tony4147
    There's no need to make a meal of it. Just assume that your contributions are going to be index-linked, so will her pension be, and both state pensions. Assume that your investments grow at the inflation rate too. Then all you need do is work in simple money terms: the inflation is automatically taken care of.

    As for extravagant holidays - don't be daft, man, you'll have £70k free, tax-free. How much more extravagant do you want to be? And you'll still have more than £100k in your pension pot, taxable at 20%.
    • chucknorris
    • By chucknorris 17th Jul 17, 7:06 PM
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    chucknorris
    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.
    Iím 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.
    Originally posted by tony4147
    Has your wife already bought the max allowed in additional pension within the TPS, if not, why not? I have bought the max allowed in the pre 2015 scheme, and when I join the post 2015 scheme in 2020 I will continue to buy more pension, fantastic value!
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now also hike, cycle and swim, less impact on my joints.

    For the avoidance of doubt Chuck Norris is an actor and an ex martial artist (not me)
    • Alexland
    • By Alexland 17th Jul 17, 7:43 PM
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    Alexland
    I missed how your 225k pot grows to 500k when only investing 1.5k per month for 6 years? What rate of investment return after fees are you expecting and have you considered inflation?
  • jamesd
    4% is far too low. That's for lasting thirty years but you don't need it to last that long, just bridge years until you get other money coming in.

    Take a look at the examples here and try some cfiresim simulations to see whether using all pensions and savings you could retire now.
    • Triumph13
    • By Triumph13 18th Jul 17, 9:28 AM
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    Triumph13
    I missed how your 225k pot grows to 500k when only investing 1.5k per month for 6 years? What rate of investment return after fees are you expecting and have you considered inflation?
    Originally posted by Alexland
    That one leapt out at me as well. To get to £500k in today's money even if you work on to 60, rather than retiring when your wife does a year earlier, you would need a net real return of over 8% pa which is way over what anyone would sensibly predict.
    You should still be okay though. If you do work to 60 a quick calculation shows you should probably be thinking in the region of £30k pa net 60-67 and then £35k to £36k net thereafter with something like £50k to £80k left over from your lump sums to blow on those holidays.
    One thing that you probably do want to think about is what happen if your OH predeceases you. If you go first the household just loses your SP. If she goes first you lose her SP plus 65% of her DB leaving you on £20-£21k pa net. Are you comfortable with that?
    • tony4147
    • By tony4147 18th Jul 17, 10:04 AM
    • 270 Posts
    • 38 Thanks
    tony4147
    That one leapt out at me as well. To get to £500k in today's money even if you work on to 60, rather than retiring when your wife does a year earlier, you would need a net real return of over 8% pa which is way over what anyone would sensibly predict.
    You should still be okay though. If you do work to 60 a quick calculation shows you should probably be thinking in the region of £30k pa net 60-67 and then £35k to £36k net thereafter with something like £50k to £80k left over from your lump sums to blow on those holidays.
    One thing that you probably do want to think about is what happen if your OH predeceases you. If you go first the household just loses your SP. If she goes first you lose her SP plus 65% of her DB leaving you on £20-£21k pa net. Are you comfortable with that?
    Originally posted by Triumph13

    I am working on achieving approx 6.5% growth which I have averaged out over the last few years and can increase my contributions a couple of % / year.
    As for my wife pre deceaseing me, we have savings of approx £70k and the house is worth £650k and can easily downsize if required.
    • mjfp509
    • By mjfp509 18th Jul 17, 10:18 AM
    • 141 Posts
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    mjfp509
    To be fair, you sound pretty fortunate in the pension stakes compared to a lot of people. A lot of people would be envious of that amount, so well done for acquiring it ! You say you need 30K a year? Do you definitely need that amount or could you get by on less?

    You might already do these things, but just things like switching broadband providers each year to get the best deal, ditto car insurance, etc. can save £100s of pounds a year. Going to cheaper supermarkets, buying a cheaper car to run, etc
    Last edited by mjfp509; 18-07-2017 at 10:20 AM.
    • tony4147
    • By tony4147 18th Jul 17, 10:28 AM
    • 270 Posts
    • 38 Thanks
    tony4147
    To be fair, you sound pretty fortunate in the pension stakes compared to a lot of people. A lot of people would be envious of that amount, so well done for acquiring it ! You say you need 30K a year? Do you definitely need that amount or could you get by on less?

    You might already do these things, but just things like switching broadband providers each year to get the best deal, ditto car insurance, etc. can save £100s of pounds a year. Going to cheaper supermarkets, buying a cheaper car to run, etc
    Originally posted by mjfp509

    I've already done those things cutting bills etc, but £30k is a minimum as I don't see why I should cut my standard of living when I've worked so hard for 40+ years.
    I always planned to work longer than 60, maybe 64 but if my wife retires early at 60 then I might. My only regret with pensions is not putting more away when younger but when younger I didn't have enough income (like most) to do that
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