How to retire on £30k at 60?

kidmugsy

tony4147 wrote: »

Looks a possibility, pity we would have to dip into the TFLS as this was for some serious holidays over the first few years of retirement.
I'm looking for the equiv of £30k in todays money and I always seem to struggle modelling it with the effects of inflation

There's no need to make a meal of it. Just assume that your contributions are going to be index-linked, so will her pension be, and both state pensions. Assume that your investments grow at the inflation rate too. Then all you need do is work in simple money terms: the inflation is automatically taken care of.

As for extravagant holidays - don't be daft, man, you'll have £70k free, tax-free. How much more extravagant do you want to be? And you'll still have more than £100k in your pension pot, taxable at 20%.

chucknorris

tony4147 wrote: »

My wife is 55 and is a teacher and as the workload is ridicules I would like for her to be able to retire at 60 before the job kills her.
I’m 54 and MIGHT want to retire at the same time.
We need an income of approx £30k / year.
My wife will get a pension of about £12k / year and a lump sum of around £35k.
I have DC pensions of £225k and £1.5k is paid monthly into it.
If I were to retire at the same time what would we need to do in order to achieve £30k at 60?
Obviously when we get to 67 we will have an additional income of £16.6k from the state pension.

Has your wife already bought the max allowed in additional pension within the TPS, if not, why not? I have bought the max allowed in the pre 2015 scheme, and when I join the post 2015 scheme in 2020 I will continue to buy more pension, fantastic value!

Alexland

I missed how your 225k pot grows to 500k when only investing 1.5k per month for 6 years? What rate of investment return after fees are you expecting and have you considered inflation?

jamesd

4% is far too low. That's for lasting thirty years but you don't need it to last that long, just bridge years until you get other money coming in.

Take a look at the examples here and try some cfiresim simulations to see whether using all pensions and savings you could retire now.

Triumph13

Alexland wrote: »

I missed how your 225k pot grows to 500k when only investing 1.5k per month for 6 years? What rate of investment return after fees are you expecting and have you considered inflation?

That one leapt out at me as well. To get to £500k in today's money even if you work on to 60, rather than retiring when your wife does a year earlier, you would need a net real return of over 8% pa which is way over what anyone would sensibly predict.
You should still be okay though. If you do work to 60 a quick calculation shows you should probably be thinking in the region of £30k pa net 60-67 and then £35k to £36k net thereafter with something like £50k to £80k left over from your lump sums to blow on those holidays.
One thing that you probably do want to think about is what happen if your OH predeceases you. If you go first the household just loses your SP. If she goes first you lose her SP plus 65% of her DB leaving you on £20-£21k pa net. Are you comfortable with that?

tony4147

Triumph13 wrote: »

That one leapt out at me as well. To get to £500k in today's money even if you work on to 60, rather than retiring when your wife does a year earlier, you would need a net real return of over 8% pa which is way over what anyone would sensibly predict.
You should still be okay though. If you do work to 60 a quick calculation shows you should probably be thinking in the region of £30k pa net 60-67 and then £35k to £36k net thereafter with something like £50k to £80k left over from your lump sums to blow on those holidays.
One thing that you probably do want to think about is what happen if your OH predeceases you. If you go first the household just loses your SP. If she goes first you lose her SP plus 65% of her DB leaving you on £20-£21k pa net. Are you comfortable with that?

I am working on achieving approx 6.5% growth which I have averaged out over the last few years and can increase my contributions a couple of % / year.
As for my wife pre deceaseing me, we have savings of approx £70k and the house is worth £650k and can easily downsize if required.

Sun-Is-Fun

To be fair, you sound pretty fortunate in the pension stakes compared to a lot of people. A lot of people would be envious of that amount, so well done for acquiring it ! You say you need 30K a year? Do you definitely need that amount or could you get by on less?

You might already do these things, but just things like switching broadband providers each year to get the best deal, ditto car insurance, etc. can save £100s of pounds a year. Going to cheaper supermarkets, buying a cheaper car to run, etc

tony4147

mjfp509 wrote: »

To be fair, you sound pretty fortunate in the pension stakes compared to a lot of people. A lot of people would be envious of that amount, so well done for acquiring it ! You say you need 30K a year? Do you definitely need that amount or could you get by on less?

You might already do these things, but just things like switching broadband providers each year to get the best deal, ditto car insurance, etc. can save £100s of pounds a year. Going to cheaper supermarkets, buying a cheaper car to run, etc

I've already done those things cutting bills etc, but £30k is a minimum as I don't see why I should cut my standard of living when I've worked so hard for 40+ years.
I always planned to work longer than 60, maybe 64 but if my wife retires early at 60 then I might. My only regret with pensions is not putting more away when younger but when younger I didn't have enough income (like most) to do that