Could I retire next year at 55?

ffacoffipawb · 4 February 2018 at 9:18PM

I think this is possible. But could someone check that I am not missing something.

Curent monthly requirement is £2,000 net.

DC pension currently £800k. Still contributing.
DB of £12,000 in todays money from age 60

(I realise that I am over LTA with no protection, still contributing as markets may fall)

Current Salary is £30,000 after pension contributions.

Current cash
£37,000 in NSI index linked certificates, both renewed last year
£30,000 in Premium Bonds
£10,000 in various savings accounts
£200,000 in S&S Isa with HL, investment trusts yielding £6,000 which is currently being reinvested.

Want to avoid LTA charge on DB pension so probably crystallise £500k next year for £125k PCLS.

Aim to take balance of LTA from DC after taking DB at age 60. Balance over LTA will remain untouched until age 75 or LTA abolishment should the latter happen.

How does it look? Am I missing something as it looks reasonably doable to me?

Need to spend £50k from PCLS next year for a new kitchen and bathroom (former is rather dilapidated) and possibly a newish car.

EDIT: No mortgage as was paid off a few years ago, house worth £250k.

Also still have 3 children at home, 1 still in Primary School. Wife not in employment.

Thanks

zagfles · 4 February 2018 at 10:13PM

Why not? Sounds easily enough without doing the maths. Have you considered taking the DB early to reduce the LTA charge?

ffacoffipawb · 4 February 2018 at 10:41PM

zagfles wrote: »

Why not? Sounds easily enough without doing the maths. Have you considered taking the DB early to reduce the LTA charge?

The ER factors on both the DB are rather penal, would take a 30% hit on those for 5 years early (6% per annum simple) and I don’t want to reduce my guaranteed benefits.

I suspect I cant take one of them too early anyway as that one is about 70% GMP with 7.5% revaluation as at date of leaving (deferred in 1993). I can take it from 60 anyway due to the Barber v GRE judgement. Female NRA was 60, male was 65 (and I am male, for the avoidance of doubt).

With kids still at school for a few more years I guess that limits what I can do with my retirement though, our youngest is 8.

Dont intend to take any PCLS from the DB pensions.

ams25 · 4 February 2018 at 11:01PM

Have to ask how you can live on £24k a year with 3 kids at home.... Presume not in the south east?

Can't see any problem with retiring...now..with c.£1m and the 12k db at 60....and SP to come. I am in a not dissimilar position and stopped over 18 months ago at 52...and 2 kids in primary (and spend a fair bit more..albeit my db is higher) You should be able to comfortably drawdown 3%pa inflation adjusted from your dc/isa investments so exceeding your target before the db and sp kick in. You not only need to think about the lta but also income tax. Does your wife have a pension? If all the pension/taxable income is in your name you're going to pay more tax than is ideal. (I have this issue also...have gifted some money to my wife. Need to do more!)

I'd ask why you're spending relatively so little given the numbers. You can leave a legacy to the kids/help them out, but best time to enjoy your hard earned savings is probably now.

Good luck.

ffacoffipawb · 5 February 2018 at 12:12AM

ams25 wrote: »

Have to ask how you can live on £24k a year with 3 kids at home.... Presume not in the south east?

Can't see any problem with retiring...now..with c.£1m and the 12k db at 60....and SP to come. I am in a not dissimilar position and stopped over 18 months ago at 52...and 2 kids in primary (and spend a fair bit more..albeit my db is higher) You should be able to comfortably drawdown 3%pa inflation adjusted from your dc/isa investments so exceeding your target before the db and sp kick in. You not only need to think about the lta but also income tax. Does your wife have a pension? If all the pension/taxable income is in your name you're going to pay more tax than is ideal. (I have this issue also...have gifted some money to my wife. Need to do more!)

I'd ask why you're spending relatively so little given the numbers. You can leave a legacy to the kids/help them out, but best time to enjoy your hard earned savings is probably now.

Good luck.

Thanks

Mortgage free, live up North.

We do get child benefit of about £200 per month and a similar amount of child tax credits on a £30k salary.

Not much left over at the end of the month though.

Can borrow on flex mortgage (currently nil) for this year and next year ISA repaying from the PCLS late next year.

May just go part time for a couple of years 3 days just to test the water a# dont want to get bored with the kids at school, though having said that I dont enjoy my office job that much after 31 years.

My wife will have a tiny DB of £200 pa, so may be worth considering a SIPP for her which I could manage I guess. Obviously contributions capped at £2880 net.

enthusiasticsaver · 5 February 2018 at 12:51AM

Yes I think you can afford to retire next year. As you say you need to keep an eye on the LTA as you will be over it with 800k in the DC pot and the DB pension. You need to look at your wife!!!8217;s position if she has no decent pension.

kidmugsy · 5 February 2018 at 1:05AM

ffacoffipawb wrote: »

a SIPP for her which I could manage I guess. Obviously contributions capped at £2880 net.

Top priority: pay by removing money from Premium Bonds or ISAs or TFLS - anything but ILSCs.

For LTA, probably wait for a market crash and then crystallise DC.

ffacoffipawb · 5 February 2018 at 6:01AM

kidmugsy wrote: »

Top priority: pay by removing money from Premium Bonds or ISAs or TFLS - anything but ILSCs.

For LTA, probably wait for a market crash and then crystallise DC.

Thanks

Regardless, I shall crystallise large proportion of DC at 55 because investment return likely to exceed CPI increases in LTA.

Market crash, maybe one is starting now. If not, a Corbyn government will oblige on that score. My DC pensions are 100% equity invested.

zagfles · 5 February 2018 at 8:50AM

ffacoffipawb wrote: »

Thanks

Mortgage free, live up North.

We do get child benefit of about £200 per month and a similar amount of child tax credits on a £30k salary.

And of course your CTC will go up if you retire - you'll get over £8k a year if your taxable income is less than £16k. You'd even get free school meals!

But could all stop with the transition to UC, as it has capital rules, but you might get transitional protection.

ams25 · 5 February 2018 at 12:11PM

ffacoffipawb wrote: »

Thanks

Regardless, I shall crystallise large proportion of DC at 55 because investment return likely to exceed CPI increases in LTA.

Market crash, maybe one is starting now. If not, a Corbyn government will oblige on that score. My DC pensions are 100% equity invested.

I was pretty much 100% equities before I stopped working. Have since glided down to about 55:20:10 (equity/bonds/cash) plus some Reit and absolute return funds. Although a crash will always be painful I know I don't need to touch equities in the short term which helps with sleep. Just before and just after you retire is when you are most at risk from sequence of returns risk (a crash and/or prolonged period of poor returns with less time to recover losses) so you don't want to be a forced seller of equities around that time. My plan, especially once the db kicks in, is a rising glide path of equities over time (maybe back to 70%) but right now (7 years until db) I want a safer asset allocation. Would suggest you consider this. You don't need to have such a high risk asset allocation given your funds/income requirement. Lots of reading on this but the benefit of 100% vs say 60% is probably not worth the volatility for an early retiree with 40years to fund. https://earlyretirementnow.com is a really great source of further reading on this topic.

Ps you've done really well to accumulate that level of funds, especially if that salary level is not a big reduction from earlier roles. Any tips on how you've done that. Even if you won the lottery you've resisted spending it all which is great:T.

westv · 5 February 2018 at 2:04PM

ffacoffipawb wrote: »

Market crash, maybe one is starting now.

If it is, can we just get on with it, get it out of the way and then forget about crashes for a few more years?

Could I retire next year at 55?

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