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  • FIRST POST
    • andrewt632
    • By andrewt632 3rd Oct 17, 1:15 PM
    • 4Posts
    • 2Thanks
    andrewt632
    Can I retire at 55
    • #1
    • 3rd Oct 17, 1:15 PM
    Can I retire at 55 3rd Oct 17 at 1:15 PM
    Hi here's the situation.
    I'm 50 and work for a big automotive company who have just closed there db pension scheme. My CETV is £630,000 if I reinvested this could I realistically retire at 55.
    I'm married with 2 grown up daughters who should be self sufficient by then.i will be paying into a dc scheme now until I retire.we have no mortgage so plenty of equity in that.my wife has a small pension pot worth around £40000 at the moment but would probably be working for the next 10 years. So our main income will be from my pension.any impartial advice would be appreciated
Page 1
    • Triumph13
    • By Triumph13 3rd Oct 17, 1:19 PM
    • 1,071 Posts
    • 1,297 Thanks
    Triumph13
    • #2
    • 3rd Oct 17, 1:19 PM
    • #2
    • 3rd Oct 17, 1:19 PM
    More information needed. In particular, how much do you think you need to live on each year and will you both get full SP? Also how much can you bank into the DC per year over next 5 years?
    • andrewt632
    • By andrewt632 3rd Oct 17, 1:37 PM
    • 4 Posts
    • 2 Thanks
    andrewt632
    • #3
    • 3rd Oct 17, 1:37 PM
    • #3
    • 3rd Oct 17, 1:37 PM
    Hi yes we we will both get full SP could probably live quite comfortably on£21k my dc scheme would probably be £750 per months going in.
    • enthusiasticsaver
    • By enthusiasticsaver 3rd Oct 17, 1:44 PM
    • 4,416 Posts
    • 8,188 Thanks
    enthusiasticsaver
    • #4
    • 3rd Oct 17, 1:44 PM
    • #4
    • 3rd Oct 17, 1:44 PM
    It sounds like you are in a fortunate position but a bit more information needed.

    I personally would work on 3% drawdown so you can put that £630k into a pension calculator and see what this would give you depending on where it is invested and average yearly rate of return. That would give you £18900 per annum ignoring rate of return and inflation.

    Whether or not that is enough depends on your projected expenditure and how long a gap you have to bridge between that and SPA and the value of your DC pot by the time you retire.
    Countdown to early retirement on 21.12.17 3 months to go.
    • Triumph13
    • By Triumph13 3rd Oct 17, 2:05 PM
    • 1,071 Posts
    • 1,297 Thanks
    Triumph13
    • #5
    • 3rd Oct 17, 2:05 PM
    • #5
    • 3rd Oct 17, 2:05 PM
    That should be very easily achievable. Back of an envelope calculation:
    £670k now plus £9k a year for 5 years. Say 2% real investment growth over that period then 25% tax free invested to just keep pace with inflation and spent to bridge the gap to state pension. Remaining 75% drawn down at 3% pa (which should be low enough to keep the doom mongers happy). SPs at 68. Assumed wife same age as you and ignored her income after your retirement.
    That translates as £31k vs your £21k comfort level which is a pretty healthy safety margin.
    • Linton
    • By Linton 3rd Oct 17, 2:26 PM
    • 8,325 Posts
    • 8,221 Thanks
    Linton
    • #6
    • 3rd Oct 17, 2:26 PM
    • #6
    • 3rd Oct 17, 2:26 PM
    I agree with Triump13's back of the envelop calculation - you and the Mrs are in a good state...

    Say £800K in 5 years time including wife's pension. £200K tax free, 3% of £600K= £18K increasing with inflation, add in £200K over 13 years gives roughly £31K/year gross inflation adjusted. When you both reach SPA there will be an extra income of £16K gross inflation linked replacing the taxfree lump sum. And 3%/year is pretty pessimistic.

    Only one issue - are you happy with managing £800K of investments?
    • andrewt632
    • By andrewt632 3rd Oct 17, 2:34 PM
    • 4 Posts
    • 2 Thanks
    andrewt632
    • #7
    • 3rd Oct 17, 2:34 PM
    • #7
    • 3rd Oct 17, 2:34 PM
    Thanks for the replies that's the big question I've been asking myself "managing my investments " but I think the pros seem to out way the cons as in flexibility,passing down what (if any) is left to my children ,And being able to maybe draw more in the early years when I'm at my healthiest .
    • Triumph13
    • By Triumph13 3rd Oct 17, 3:13 PM
    • 1,071 Posts
    • 1,297 Thanks
    Triumph13
    • #8
    • 3rd Oct 17, 3:13 PM
    • #8
    • 3rd Oct 17, 3:13 PM
    I agree that being confident in managing the investments is the key thing - but there is enough slack there that OP can definitely afford to pay an IFA to help him with that.
    A key factor that would push me to take the transfer value in this case is the whole drawdown pot being inheritable by the wife if OP predeceases her vs only a percentage of the DB (although the scheme may offer a higher spouse pension in return for a reduction in his pension).

    The £31k is actually net rather than gross, both before and after SP.
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