Early retirement and most efficient way to bridge gap to DB pensions

m_c_s

I would appreciate any thoughts on the following early retirement plan bridging gap to DB pensions:

Current age 51 (higher rate tax payer) and aiming for full retirement at 55. Current provision:
1. DB pension Classic £18k index linked with £53k lump sum at 60.
2. DB pension CARE £5k index linked at 60 (actuarial reduction from 67 included)
3. SIPP pot £35k now with £650 (£812 gross) per month being invested until 55 projected pot £74k.. This also serves to take me out of higher rate tax.
4. S&S ISA just started with £1k per month being invested until 55 projected pot £50k.
5. Will have full £8.1k SP 67 (currently have 28 full new years plus 4 more at 55 and plan to pay for 3 additional years before 60).
6. Currently have £20k cash savings as emergency/fallback funds.

At 55 take 25% (£17k) out of SIPP and drawdown £11500 per annum tax free or 5 years. Using SIPP lump sum (cash saving or put into S&S ISA) and S&S ISA draw on additional tax free income £2.3k (at 3.5%). Total tax free income being £13800 per annum. Wife will then be main income stream for the 5 years to 60 before she retires with LGPS, a separate SIPP and full new state pension.

I wanted to know if this is the most tax efficient way of using available funds and bridging gap, any pitfalls or obvious things I have missed.
The alternative I have considered is focusing on SIPP only. While not crunching the numbers it seems to me that despite the grossing up and generating a much bigger pot whichever way I drawdown I will be paying more tax especially on income after 55 and potentially in years after 60.
Additional info: Mortgage already paid off and no other debts.

kidmugsy

I'd be tempted to contribute a bit more to the SIPP in expectation of (i) increases in the Personal Allowance and (ii) potential disappointment at the pot's growth. On the other hand, if either happens I could recirculate £2880 p.a. through the SIPP from 55 to 60 to take advantage of unexploited Personal Allowance.

So perhaps I'd settle for paying enough into the SIPP to avoid Higher Rate Tax and therefore carrying on as you are. That way flexibility is retained. Note, however, that contribution to a SIPP become worth 6.25% more than equivalent contributions to an ISA (that's 6.25% not 6.25% p.a.) so you might opt to contribute more to the SIPP in your last year or two of employment earnings.

Before I retired I might perhaps look to open such things as a couple of 0% credit cards to help me through the 55-60 gap. You may rebel at the thought, but I'd also look at the possibility of taking out a cheap fixed-rate mortgage. That's because if you are going to be a well off couple after age 60, and an even better off couple after State Retirement Age, then the trick is to bridge the gap using cheap borrowing (if it still is cheap in four years time). Shifting income about in time is exactly what borrowing is good for.