Early-retirement wannabe

MallyGirl

https://forums.moneysavingexpert.com/discussion/comment/81895109#Comment_81895109

usually the complaints we see on here are how many hoops people have to jump through to do what they want. It sounds like you would have preferred more hoops which would be bucking the trend. Ultimately it is up to the individual to understand the rules or do some research before doing something financially significant. You are are lucky that they are letting you rollback the tax relief with just a bit of form filling

Top_of_the_Stocks

Again thank you all.

I'm not here to make a million. Just a bit of a flutter and get a better return than the building society.

Lose a few, gain more, that is the goal. Yes i could do better here or there.

I am gambling on a 100 horse race. If you can't afford to lose don't do it. If the horse falls at the first fence, cut and run.

I don't care if Beazley have not been taken over, or the MD has been put on bail. Recent past performance might indicate future gain!!!

Just remember, be happy, as the Tax woman will reap your rewards in IHT.

cockerWalker

My first post on this thread.

I'm 50 with wife of the same age and first started thinking about retirement options in my mid 40s. I think the financial independence part of FIRE had always appealed, but up until that point focus had been on paying off mortgage. I'd been paying into a pension only since early 30s so was a bit behind. We'd also prioritised ISAs over extra pension contributions for their extra flexibility. My wife had a smaller teaching pension, but had left teaching to train as a counsellor and now is starting her own business. This means that my income has had to pay 90+% of household expenses for some years.

We're now saving pretty aggressively, mainly though salary sacrifice into my workplace pension, with periodic transfers over to sipp to reduce fees, alongside a much smaller amount going in to s&s ISA still.

The ideal position that we'd hope to be in would be for an after tax income between us of £5000/month in retirement, partly to help pay for additional projects we've got vaguely in mind. This should be easily attainable on current savings levels if they were to continue to state pension age, but more challenging to achieve by (say) 60. Currently we're living in £4k per month, so there is some flexibility in the figures.

Given current DC pension pots totalling 320k, s&s ISAs of £200k and other bank savings of £80k (emergency fund and reserved for home improvements) and wife's £9k db pension at 60, we're placing a lot of reliance on saving aggressively now, about £45-50k per year.

Concerns are about my job, clearly we're very dependent on that income for living and spending. Currently my model works at 4% real return over next decade, but high current valuations do bother me. It's also a bit unclear at the moment how we'd best bridge the gap between early retirement and state pension, as state pension would still be part of the plan. Uncertainty about tax bands and inflation can also influence ideal balance between ISAs and sipp.

Once we're in a better position to have options then we can decide whether we want to make use of them!

hugheskevi

I am now retired, more than 15 years after this thread started!

My last day of service was 30th April 2026. My wife and I are now aged 48, no kids, and 1 dog.

My wife is still employed, but will depart on voluntary redundancy soon, probably around the end of summer, but maybe sooner. All figures assume she leaves at the end of this month, whatever she gets from working beyond that just goes straight into her DC pension.

The Number

It turns out that £77,649 p/a is The Number.

That is the annual amount of income we will have in all future years net of tax, increasing by uncapped CPI inflation.

Current assets (excl pension, wife and I combined)

Our non-pension assets net of all debt are shown below.

House	£780,000
Investment ISA	£269,000
Cash/near cash net of all debt	-£15,000

We have £88,000 outstanding on credit cards, all at 0% interest, which produces the negative cash balance. I roll these over as they fall due to new offers, ie, Stoozing. It gives several thousand pounds a year of interest, so it is a nice benefit.

The house value is largely irrelevant, although we will move to a smaller place around the age of 75 that will cost less - I do not factor this into plans, beyond our house being what would fund care in old age should it be needed.

The investment ISA will be used to fund us between age 48-55, before pensions become available (we both have protected minimum pension ages).

Taking into account my income tax refund and my wife's 26/27 redundancy, we will have a further £95,000 of cash (net) arriving in the coming months, all of which will go into cash ISAs.

We have finished all major expenses with our house refurb last year. I have allowed £3,600 for the remaining bits and pieces needed.

Pension assets (wife and I combined)

DC pension	£495,000
DB pension payable from 55 (gross)	£66,000 p/a
State Pensions payable from 68 (gross)	£25,000 p/a

After tax, our annual income from DB and State Pension will be £78,000 based on today's values and tax bands. The DC pension will be used to essentially replace the State Pension between age 55-68 (the figures in the table include actuarial reduction for early payment).

We don't yet have full contribution records for State Pension, but I have allowed for Voluntary Class 3 contributions from DC pension income in future years to ensure we have complete records.

Our DB income is quite equal across us both, but the DC pension is skewed toward me. I suspect we will both be higher rate taxpayers in every year from age 55 due to fiscal drag. I definitely will be, my wife may end up with some headroom - but with inflation and frozen tax bands I think all of that headroom will vanish in the next 10 years. Our DB pension is linked to uncapped CPI before and after it is commenced.

My wife will add about £45,000 to her DC pension as part of her redundancy.

Flexibility

We have an offset mortgage for just over £500,000 that is fully offset. This is fixed at 5.44% for the next 4 years, and I have mild FSCS concerns, but not enough to reduce the balance with a repayment penalty. I'll reduce the balance to the FSCS threshold at the end of the fix.

There will be £153,000 surplus (net) in our DC pension over what is needed to top-up DB pension for the 55-68 period and for Voluntary Class 3 contributions. So we can draw from the offset savings in the years immediately before age 55 if necessary, and replenish the offset from our DC Pension Commencement Lump Sums at age 55.

Expenses

	Annual	Monthly	Share
House bills, incl regular maintenance	£4,328	£361	34%
Council tax and green waste	£4,252	£354	33%
Pet costs (insurance, food, vet)	£1,375	£115	11%
Club memberships (running, rambling, concert band, leisure centre)	£1,130	£94	9%
Car bills (Insurance, VED, MoT, Breakdown, Service, Cleaning)	£685	£57	5%
Medical (Contact lenses, dental, and eye checks)	£503	£42	4%
Other (Mobile phones, VPN, password manager, haircuts, presents)	£572	£48	4%
Total	£12,844	£1,070	100%

That leaves £64,805 p/a for things excluded from the table above as these costs are very variable:

Travel, holidays, car / house repairs, clothes, food, entertainment (eating out, entrance costs, running races, parking, dog toys, etc) and capital spend (electronics, white goods, phone replacement, car replacement, etc),

Survivor benefits

The table below shows what would be paid when either of us die. This is based on the first death occurring after age 68. Should death occur before this, benefits would be better (DB could be enhanced or include a death benefit payment, and some DC would be inherited tax-free).

Survivor Pensions	Gross			Net
	Combined income	Survivor income	%	Combined income	Survivor income	%
I die	£90,777	£60,235	66%	£77,649	£48,709	63%
Wife dies	£90,777	£61,740	68%	£77,649	£49,612	64%

Fiscal drag will really hit survivor benefits, as taxable income becomes concentrated on a single person. So for example if I were to die, we would go from a gross combined income of £90,777, which is a net income of £77,649, to a single net income for my wife of £48,709.

Financial future

Financially, everything is pretty straightforward now, with the following income funding each lifestage:

Age	Income sources
48-55:	Savings Tax refund Wife redundancy Cash ISA Investment ISA Drawing on offset savings
55-68	DB pension DC pension
68-	DB pension State Pension House downsizing at age 75

Wherever there are funds left over from one of the age ranges, I may well delay one or both of our DB or State Pensions to enhance the permanent income value.

Social future

I don't see either of us working again.

There will be travel, but probably separately and for no more than a month at a time due to having a dog. In particular, I want to finally get around to visiting 100 countries, and I am currently on 90, so only another 10 to go.

Other than that it will be enjoying everyday life and activities in the local area.

Assumptions

All figures are based on current values and today's tax thresholds.

DC is implicitly assumed to increase in line with CPI net of costs. DB and State Pension are implicitly assumed to increase in line with CPI. Tax thresholds are implicitly assumed to increase in line with CPI.

The tax assumptions are probably optimistic, the DC return pessimistic, so hopefully it all balances itself out. They are set for simplicity rather than on the expected outcome.

AlwaysLearnin

I think you're going to be fine….😁. Congrat's. Enjoy!

Smudgeismydog

That is very comprehensive and well thought through, thank you for sharing and congrats on what you’ve achieved

MallyGirl

congratulations - you seem to have it all well planned.

A dog is definitely a constraint on travel plans. Our aging malamute copes with kennels thankfully but there is no way we would take him away anywhere anymore so spontaneity has to be put on hold. His insurance renewal has just come through at £250 pcm 😳

Dizee123

Congratulations and I hope you both have a long and happy retirement - you definitely deserve it after all that planning and hard work.

Our plan was to do lots of travelling when our last elderly dog died at 15 at the end of last year. However, the house felt so empty over the winter without any pets that we adopted another rescue dog in February. Holiday ambitions this year have downsized from Vietnam/Costa Rica to 3 nights in a shepherds hut in Dorset to test holidaying with the new hound……

barnstar2077

https://forums.moneysavingexpert.com/discussion/comment/81984708#Comment_81984708

Congratulations, your meticulous planning and hard work has paid off for you both massively!

Out of interest, do you have any plans to help keep your brain ticking over? Have you had a private project brewing for years that is finally going to get the green light?

Again congrats, and thank you for all the help you have given to people, including myself, over the years!

michaels

https://forums.moneysavingexpert.com/discussion/comment/81984708#Comment_81984708

Easy enough to do a real terms model with frozen tax thresholds to see how large the impact might be at 58, 68, 78 etc. Assume say 3% pa inflation?