Do we have enough for Early Retirement

May12

Hi all

I have been following this board for a while with great interest as my husband is approaching 55 and he would want to retire early.

Our financial situation is as following:

Husband
d/b pensions £30.000 per annual when take out at 65.
state pension
sipp and ave: £100,000

Myself
part time job earning £800 a month - will carry on working until 65.
state pension, no other pension

Between us:
savings and shares: £250.000
property worth £350.000

Our life style is moderate, we spend about £2000 a month at the moment.

We are thinking about if he retires we will try to live on AVC and savings, maybe downsize if needed, try not to take his pension if we don't have too.

Is this workable? Any advise.

Thanks for advise.

May

warwicktiger

Easy, come to France, I did 18 months ago with a lot less £ than you have!

Pollycat

May12 wrote: »

Hi all

I have been following this board for a while with great interest as my husband is approaching 55 and he would want to retire early.

Our financial situation is as following:

Husband
d/b pensions £30.000 per annual when take out at 65.
state pension
sipp and ave: £100,000

Myself
part time job earning £800 a month - will carry on working until 65.
state pension, no other pension

Between us:
savings and shares: £250.000
property worth £350.000

Our life style is moderate, we spend about £2000 a month at the moment.

We are thinking about if he retires we will try to live on AVC and savings, maybe downsize if needed, try not to take his pension if we don't have too.

Is this workable? Any advise.

Thanks for advise.

May

What would the value of your OH's pension be if taken early?

marlot

I created a spreadsheet, showing what came in and went out each year. helped me work out when savings would run out, etc

AlwaysLearnin

£30k per year pension will provide >£2k p/m net under current rules, plus you both have some state pension (suggest you both get forecasts next year to confirm your accrued amounts under the new rules). Assuming he won't be using his personal allowance elsewhere, he could take that amount out of the SIPP/AVC fund each year to get it out tax free before he's 65 too. That should give you the £100k + £250k after tax, which should be plenty to sustain £2k p/m for 10 years (unless you have any significant outgoings planned in that time....?)

In summary, I'd be looking to retire if I was him! You could think about it too if you wanted...

Edit: if any of the £250k is in unwrapped investments, you can also both start bed & ISA'ing those in to S&S ISA's over the next few years too, to both make use of any Capital Gain and ISA Allowances you might benefit from

May12

Pollycat wrote: »

What would the value of your OH's pension be if taken early?

He has a few DB pensions, they are all about 4 to 5% deduction a year when take out early,

May12

AlwaysLearnin wrote: »

£30k per year pension will provide >£2k p/m net under current rules, plus you both have some state pension (suggest you both get forecasts next year to confirm your accrued amounts under the new rules). Assuming he won't be using his personal allowance elsewhere, he could take that amount out of the SIPP/AVC fund each year to get it out tax free before he's 65 too. That should give you the £100k + £250k after tax, which should be plenty to sustain £2k p/m for 10 years (unless you have any significant outgoings planned in that time....?)

In summary, I'd be looking to retire if I was him! You could think about it too if you wanted...

Edit: if any of the £250k is in unwrapped investments, you can also both start bed & ISA'ing those in to S&S ISA's over the next few years too, to both make use of any Capital Gain and ISA Allowances you might benefit from

Thank you for advise. It sounds promising.

We will invest a motor home when he retires, nothing else significant. Our saving and investment spared out in varies things - ISA's, shares, saving accounts and current accounts to maximize return. we definitely need to go through them again and try to manage them better.

I only work from home on flexible hour as a freelance designer. I can scale up or down the work if needed. So I will keep it going to make sure we are not short of money.

Pollycat

May12 wrote: »

He has a few DB pensions, they are all about 4 to 5% deduction a year when take out early,

Ouch!
Makes sense not to take his pensions 10 years early then.

atush

Subtract from your savings any upcoming maintenance for the house, plus any improvements, car replacement, holidays and the motor home spend.

Then re run your figures.

Any reason you arent putting some/all of your 800/m into a pension? Will give it a boost, will help your retirement as you will have a PA too of 11K+ per yr

kidmugsy

You might like to check whether your husband might become exposed to the Lifetime Allowance restriction on pensions before he's 65. Depending on the result of your enquiries, it might be in his interest to withdraw the lump sum from the SIPP and AVC promptly, and take annual drawdown too. It might even be advantageous to take some of his DB pensions early, but it's too soon to tell.

It would probably be in your own interest to contribute to a pension to the maximum extent possible, currently £800 p.m. gross = £640 p.m. net.

May12

atush wrote: »

Subtract from your savings any upcoming maintenance for the house, plus any improvements, car replacement, holidays and the motor home spend.

Then re run your figures.

Any reason you arent putting some/all of your 800/m into a pension? Will give it a boost, will help your retirement as you will have a PA too of 11K+ per yr

That is good point. We were concentrating on saving for my husband, maybe it is better to start mine as well.

kidmugsy wrote: »

You might like to check whether your husband might become exposed to the Lifetime Allowance restriction on pensions before he's 65. Depending on the result of your enquiries, it might be in his interest to withdraw the lump sum from the SIPP and AVC promptly, and take annual drawdown too. It might even be advantageous to take some of his DB pensions early, but it's too soon to tell.

It would probably be in your own interest to contribute to a pension to the maximum extent possible, currently £800 p.m. gross = £640 p.m. net.

I have never considered the lifetime allowance because I thought he is far below it. I dont know how to get figure for DB scheme. Now I am worried about this because we still intend to top up his AVC before his retirement.

I never thought much point to contribute my private pension as I am self employed and don't earn that much. I am not sure if it is too late to do that?