Time to go?

bigfer

Dear All,
I am looking for any views / second opinions on my current situation regarding whether or not I should pull the trigger on my wife and I to retire end of March 2018.
We are in the fortunate position to be mortgage and debt free, in reasonably well paid jobs, but the level of corporate B/S has gradually brought us down to the point we just want out.
We live a very conservative lifestyle - (I drive a 14 yo VW Polo) and do not undertake expensive holidays etc. which has allowed us to save regularly. However, we always hoped to loosen the purse strings once we gave up work!!
Over the past 6 years we have been lucky with the FTSE and investments plus a couple of family inheritances, to point when suddenly it looks like we are in the home stretch. The original plan was to go middle of 2019, but to be frank; I can’t stomach the prospect of additional personal reviews and more ethics training….
We will be both 56 in April 2018. One daughter at home hoping to go to Uni next year. She will receive the same level of financial support as my son did and we have ring fenced that capital from the figures below. One son educated and in employment with good job. No other dependent relatives left.
House mortgage free (value approx. £325K), not looking to downsize until we are 60.
I know the first question that needs an answer to is what “my number” is. I have tortured myself with this over several months with numerous lists and spreadsheets, and have decided that it is a very generous £60K (gross). As I mentioned we would like to enjoy ourselves whilst we still have our hair and own teeth.
Below is a very high level summary of our financials:
ISA savings : £600K (combined)
Cash / Bonds / Shares / Premium bonds: £230K (combined)
DC pension & private pension pots: £400K (all mine)
DB pension @ 65 : £42K / yr (combined)
State pension @ 67: ~£14K / yr (combined)
Life cover (joint policy) until 68 yo for £168K
The state pension is from a statement from the pension service although I am skeptical of its accuracy. We have both been in DC pensions and my wife worked part time for a while, but for the sake of this exercise let’s assume its about right.
I do have a financial advisor and will be going through this with him later this year, but having read all the comments and advice people have offered on this excellent forum, I was curious to see what other people, who are also interested in early retirement, think.
My original idea or rather the simplest to quickly model is to take a 3% drawdown on the whole of the pension pot (£400K) and drip feed in from the cash element of the savings, supplemented by makeup from ISAs such to minimize tax.
Given this is a high level review, I guess I am after reassurance we will not run out of money at 90 yo? It is not our intention to leave a large inheritance or plan for future health care, but obviously, what we do not use would be left for those willing to give me a bed bath.
As I would leave as much of the capital invested, I have assumed negligible effect of inflation.
As I said I will be going over this with IFA, but I would like reassure the wife that we will not be eating lentils and rice in our golden years.
So as The Stranglers would say……”should I stay or should I go?”
Any comments gratefully received……..Many thanks for your time.

ffacoffipawb

bigfer wrote: »

So as The Stranglers would say……”should I stay or should I go?”

Think that was The Clash?

Dazed_and_confused

If your number is £60k and your DB and State Pensions are going to be £56k is a £4k shortfall at the age of 90 that much of a concern

bigfer

yes the clash, i remember now. many thanks. lets hope my financial planning is better than my pop knowledge!!!!

marlot

Depending how much you both earn, you might each qualify for an extra year of state pension if you wait until the end of May.

I created a cashflow forecast to help my decisions - showing each of our gross incomes, tax, expected spending etc. Such a spreadsheet allows you to fine-tune your decision - in my case, I'll be drawing down my DC pension much quicker - getting as much of it out at 20% tax as I can (which I can then invest in an ISA).

I'd be very suprised if a similar exercise showed you running out of funds.

marlot

PS. You need to check whether you'll be affected by the pensions lifetime allowance (LTA). That might be another reason to crystalise the DC pot early.

AnotherJoe

In your position I wouldn't be going in to work after the weekend, and I'd only go in tomorrow to hand my notice in

marlot

You say you want 60k pa gross. You almost have that in DB pensions and state pension from 65/67.

So the question is - can you live to 67 on your other savings? That's only 11 years away, and you have well over £1m in savings.

Sounds like you'll have enough spare for a ferrari (or whever other new car you fancy)!

Stubod

..for me, with that amount of money it would be a no brainer....it would take me as long as it takes to send an e-mail and I'd be heading for the hills. BUT it really depends on your lifestyle and ongoing income expectations. Most people seem happy with a NUMBER around £24k per year, and for me £30k would be really comfortable with anything over that being a bonus. I pulled the trigger at the end of this year, but luckily I missed TOH as she has a better pension than me so we just decided to retire instead. However boredom is a big problem for me so I have started some part time "low level" work that adds a bit of "bonus" income. I would never want to go back to 5 day (+) working so consider ourselves lucky that we can stop when we did...and no where near your funds...

..go for it...you are a long time dead...

PeacefulWaters

I'd be gone tonight with that lot behind me.

Linton

Some random thoughts.....

Why is your joint SP only £14K when the current basic pension is about £8300? Have you considered paying voluntary contributions between 2018 and your SP ages. This could be very worthwhile.

Given your DB and SP pensions there may be some danger that you wont be able to take full advantage of your £400K DC pension during your lifetime without paying higher rate tax. You could consider drawing down more DC pension than you need at basic rate tax before you receive your pensions. Any excess drawdown can be moved into your S&S ISAs. On the other hand if your aim is to minimise IHT you would need to keep as much as possible within the DC pension.

I suspect you may find it difficult to spend £60K gross every year for the next say 35 years having been used to a "conservative lifestyle". After a time the frequent Michelin starred restaurant dinners and the hassle of one world cruise after another may pall a bit.

You say you have been "lucky with the FTSE". I would hope that if this means you are highly invested in the UK the IFA will do something about it. It is a high risk approach.

With your £56K gross guaranteed inflation linked income and £1M plus in assets it is difficult to see how you could be in any danger at all of running out of money even in extreme old age.