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• FIRST POST
• DCB1967
• By DCB1967 7th Feb 18, 2:00 PM
• 10Posts
• 17Thanks
DCB1967
Hi

First of all apologies as I have already made this post on 'The Numbers' thread but would like to obtain as much advice as possible.

We are hoping to retire when we both reach 55, I'm 51 this year and my wife will be 52, she has special class status in the NHS and can retire at 55 on full pension. I have made the calculation below with my basic financial knowledge, and would appreciate any feedback on whether I am making some glaringly obvious mistakes or over presumptions. The £35,000 per year before SRA is about £9,000 higher than our predicted requirement but have used this figure to smooth the pre / post SRA incomes.

Wife Retire at 55 with £21,945 / year NHS pension & £65,835 lump sum.

Me Retire at 55 with pension pot of £362,000*.
Take 25% lump sum = £ 90,500
Balance = £271,500

Need to fund 12 years gap until State Retirement Age (SRA).

Total of £35,000 net / year, made up of:

Wife £21,945 / year gross = £19,856 net**

Total Lump sum value ranging from £145,835* to £184,085, use lower amount for investment calculation:

£145,835 x 3% interest pa = £ 4,375

£35,000 - £19,856 - £4,375 = £ 10,769 / year to be taken from my pot.
12 years x £10,769 = £129,228

At SRA of 67

Me
Pension Pot Starting amount = £271,500
Minus 12 years bridge = £129,228
Balance = £142,272
= £142,272 x 4% draw down
= £ 5,691 Private
£ 8,300 State
£13,991 gross
£13,492 net

Wife = £21,945 NHS
£ 8,300 State
£30,245 gross
£26,496 net

Lump sum
£145,835 x 3% interest pa = £ 4,375

Total At SRA = £48,611 gross
£4,373 net

* Based on current (Jan 18) total pot value of £217,000 with annual contributions of
£1154 x 12 = £13,848 and average growth of 5% per annum.
If annual growth is 3% Pot Value = £320,000 £ 80,000 LS & £240,000 Balance
10% Pot Value = £435,000 £108,750 LS & £326,250 Balance
12% Pot Value = £473,000 £118,250 LS & £354,750 Balance

** Tax free allowance of £11,500
Page 1
• stoozie1
• By stoozie1 7th Feb 18, 2:24 PM
• 490 Posts
• 380 Thanks
stoozie1
Is there 1 year between you retiring?
Save 12 k in 2018 challenge member #79
Target 2018: 24k Jan 2018- £560
• stoozie1
• By stoozie1 7th Feb 18, 2:26 PM
• 490 Posts
• 380 Thanks
stoozie1
I'd be a bit more optimistic about the personal allowance.
Save 12 k in 2018 challenge member #79
Target 2018: 24k Jan 2018- £560
• DCB1967
• By DCB1967 7th Feb 18, 2:27 PM
• 10 Posts
• 17 Thanks
DCB1967
Yes, my wife retires 13 months before me.
• DCB1967
• By DCB1967 7th Feb 18, 2:28 PM
• 10 Posts
• 17 Thanks
DCB1967
I've just taken the allowances as at today for the calculation.
• crv1963
• By crv1963 7th Feb 18, 2:48 PM
• 243 Posts
• 583 Thanks
crv1963
Will your wife have full 40/80th pension at 55?

If she can delay retiring for a year she would gain another 2/80ths and if she worked 3 years she can get a final pension of 45/80ths. She'd have to check with her Trust Pension Officer or ring NHS Pension Agency but I think that this applies from the anniversary date of joining the scheme not your actual 55 birthday, so for example I joined September 85, birthday October so for me 55 October 2018 I'd have to wait until September 2019 to start accruing the extra 80ths, 11 wasted months for me in pension saving terms, I'd be nearly 59 to benefit.

Therefore in our circumstances it makes sense for me to retire either work bank or agency and save into a SIPP, if agency then salary sacrifice to avoid HRT.
Last edited by crv1963; 07-02-2018 at 3:33 PM.
CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
• tony4147
• By tony4147 7th Feb 18, 2:49 PM
• 284 Posts
• 45 Thanks
tony4147
It looks reasonable to me in simple terms, and I'd be interested to see what others say, as i'm looking to do a similar thing when I'm 60.

Note, personal tax allowance will increase over time, state pension will increase over time, residual lump sum will increase over time.
What you haven't done is factor in inflation but hopefully the above increases will cover or nearly cover that.
• DCB1967
• By DCB1967 7th Feb 18, 3:51 PM
• 10 Posts
• 17 Thanks
DCB1967
Hi

My wife will have 37 full years service in early May 2021, her birthday is in late April. Her intention is to leave with the 37 years as she has "done her whack"
• crv1963
• By crv1963 7th Feb 18, 4:43 PM
• 243 Posts
• 583 Thanks
crv1963
Hi

My wife will have 37 full years service in early May 2021, her birthday is in late April. Her intention is to leave with the 37 years as she has "done her whack"
Originally posted by DCB1967

A sentiment I understand fully. That's why Mrs CRV is looking for a change of direction/ career/ possible part time, whereas I enjoy the job but not the BS so am probably looking to go agency or bank for a few years.

She should once within 3 years of retiring be able to go on a Pre-Retirement Course run by her Trust- if she can tell her that I found my Trusts one very useful, thought provoking and helpful, others I have spoken to at other Trusts have said the same about theirs. There was discussion about making the pension last, using the time effectively, planning safely, changing careers etc.

Have you plans to set aside some monies for big expenses- kitchens/ bathrooms/ cars/ house repairs etc or will you be saving from income for them? We reckon well need 50k put aside for this sort of thing without it we'd have to use income.

On your figures it looks very achievable!

Good Luck
CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
• DCB1967
• By DCB1967 7th Feb 18, 4:54 PM
• 10 Posts
• 17 Thanks
DCB1967
Thanks for the info CRV

The big expenditure we are hoping to make before retirement while we both have incomes. Anything unforeseen shall come from either the original lump sum or new savings as we estimate that the £35K per year income is more than we need - probably about £26 K-£30 K
• crv1963
• By crv1963 7th Feb 18, 5:24 PM
• 243 Posts
• 583 Thanks
crv1963
Our aim is 24k pa with savings pots of 48k (in case we have to stop drawdown following a crash) and about 50k for big items - hoping if we live to 85 then in that 30 years from 55-85 we can afford replacement cars, carpets, kitchen and of course house repairs.

Your figures look healthier than ours!
CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
• Thrugelmir
• 7th Feb 18, 7:24 PM
• 57,892 Posts
• 51,257 Thanks
Thrugelmir
average growth of 5% per annum.
Originally posted by DCB1967
Historic long term growth (average of over a 100 years) is based on income being reinvested. Withdrawl of income results in a very different capital position. A common misconception.

Nor do markets move in straightlines as has recently been the case. A correction in the markets shouldn't come as any great surprise. Given that the era of cheap debt is slowly drawing to a close.
Financial disasters happen when the last person who can remember what went wrong last time has left the building.