Is this feasible???

tony4147

Is this feasible –
I’m 54 y/o and my wife is 55 y/o.
My DC is currently worth £240k and I contribute £18k/yr.

From previous employments my wife will receive at 60 y/o DB pensions totalling £17k / yr and a TFLS of about £45k.

State pension - I will receive a full SP at 67 and my wife will receive about £6k as she has been contracted out (TPS) for a number of years.

We would like to keep the TFLS from both of us out of the equations, have these for some luxury holidays etc , what doesn’t get spent goes back into the pot, we have both worked hard so we feel we would like a good 10/15 years of holidays before we become more infirm.

I have worked out that we will require £30-35k / yr in today’s money to have the retirement we wish for. I do realise that we will not require the same amount of spending power as we get older, holidays, cars etc but may need money for care, in which case I would look at taking money from the sale of our house (currently worth £600k). We will probably stay in this property until 70-75 and then downsize to something more suitable as we get older.

So the question is, is it possible for us both to retire at 60 and receive £30-35k / yr without using the TFLS’s?

I have spoken to my IFA and he is suggesting that I would need to increase my contributions by about another £20k / yr for the next 6 years until I’m 60, this is something that I cannot afford.
I do have the possibility of maybe increasing my contributions to £24k / yr, but would rather not as we could both do with taking more holidays as we have stressful jobs.

mgdavid

Simplistically 6 more years at 18k pa will take your DC to c. 350k.
Using rule-of-thumb safe withdrawal rate of 4% gives 14k pa.
Adding wife's 17k gives total 31k so within the range.
However if you remove 25% TFLS from your 350k then you are short.

xylophone

and my wife will receive about £6k as she has been contracted out (TPS) for a number of years.

Your wife has at least ten years before she reaches State Pension Age.

Has she obtained a new state pension forecast?

https://www.gov.uk/check-state-pension

Is she currently working and paying or being credited with NI?

If not, has she considered voluntary contributions?

https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

If she is working, does her current employer offer a pension?

If she has no relevant earnings, she can still contribute £2880 to a pension and the pension provider will claim £720 in tax relief.

Triumph13

As long as you pay the voluntary NICs to get OH to a full pension, I think you are fully on track. 3% real growth pa on your pension gets you to roughly £400k in 6 years. £100k you snaffle for your holiday fund leaving £300k to draw down.
When both SPs are in payment those plus OH's DB yield nearly £31k pa post tax. To get to £35k post tax you just need £150k of your DC pot at a very conservative 3% drawdown rate. To bridge the gap from 60 to SP you need to draw about another £115k so that's £265k in total vs the £300k you expect to have.
The biggest remaining issue is whether you will have enough if your wife pre-deceases you as you'd lose her SP and, presumably, 50% or more of her DB.

tony4147

Not sure when reading through the above Royal London doc if my wife can top up her SP, she is classed as under the new pension and has worked since she was 18 to present 55 and subsequently to 60.
She is currently working as a teacher and will continue to work until 60, the figures I put in the original post are from the TPS and a previous DB scheme she had years ago before going into teaching. The TPS is a contracted out scheme, you cant opt in.

Triumph13

Contracting out doesn't exist any more. She will be one of the lucky ones who got the reduced NI under the old scheme, but now gets to top up to full SP post April 2016.

Linton

tony4147 wrote: »

Not sure when reading through the above Royal London doc if my wife can top up her SP, she is classed as under the new pension and has worked since she was 18 to present 55 and subsequently to 60.
She is currently working as a teacher and will continue to work until 60, the figures I put in the original post are from the TPS and a previous DB scheme she had years ago before going into teaching. The TPS is a contracted out scheme, you cant opt in.

You can continue to pay NI after the 35 years, but before your SP age, and receive an additional 1/35th of the full amount under the new rules until the full amount is attained. This is a very good deal for people with large COPEs.

Contracting out finished in April 2016.

xylophone

Your wife should obtain a new state pension statement.


See post above for link.

Contracting out ended in the TPS in April 2016.

https://www.teacherspensions.co.uk/news/employers/2016/02/cessation-of-contracting-out.aspx

tony4147

xylophone wrote: »

Your wife should obtain a new state pension statement.


See post above for link.

Contracting out ended in the TPS in April 2016.

https://www.teacherspensions.co.uk/news/employers/2016/02/cessation-of-contracting-out.aspx

She will get a new statement from the Gov gateway. At present the £6K SP in the original post is from the TPS website, it gives a breakdown.