Can I retire at 55?

scotty_does

Hi,

I have 3 pension pots that total roughly £520,000. I will be 55 in a few months. Its only recently dawned on me that I MIGHT be in a position to retire much sooner than I had always thought. I.E. at age 55. However...
£350,000 of the pot is in a Fidelity pension that I can keep an eye on daily. I’ve been alarmed that in the last 12 months it has hardly grown (less than 1% growth). I know that things go up and down, but its making me depressed!

I have no mortgage or any other debts and live a fairly frugal life. I’m a couple of years short of full state pension, but I can easily top that up.

So my plan is to drawdown £20,000 a year (inflation adjusted) and then reduce that accordingly when my state pension kicks in, and probably reduce it gradually sometime after that as I get ‘proper’ old. In my spreadsheets I'm putting in an inflation figure of 2.5% and a growth rate of 2%.

Can I ask if this seems like a do-able plan, or am I just dreaming and need to keep on working for a few years yet. After working continually since I was a teenager I am REALLY REALLY wanting to be done!

Thanks a lot in advance.

Dox

Put it this way...if you run out of money in 20 years, getting a job to top up your bank account is likely to be much harder than continuing to work for another few years now and getting the loot safely stashed away.

It must be very tempting to decide to pack it in, but things have a nasty habit of costing more than you ever thought they would. A few more years of work (?could you go part time) would give you a much greater safety margin.

scotty_does

Dox wrote: »

Put it this way...if you run out of money in 20 years, getting a job to top up your bank account is likely to be much harder than continuing to work for another few years now and getting the loot safely stashed away.

It must be very tempting to decide to pack it in, but things have a nasty habit of costing more than you ever thought they would. A few more years of work (?could you go part time) would give you a much greater safety margin.

Thanks for that (I think ). Not what I want to hear but I 100% see what you are saying. I was just hoping 520k would be enough.
Thanks again.

westv

I don't the plan is that far fetched. If you took the "a few more years" argument literally you would never retire.

scotty_does

westv wrote: »

I don't the plan is that far fetched. If you took the "a few more years" argument literally you would never retire.

Now you I like! :):)
To be fair, I should have said that £20,000 is not what I spend now. I actually live on less (more like £16,000). The extra money is to allow for the unexpected.

Brynsam

westv wrote: »

If you took the "a few more years" argument literally you would never retire.

Not if the 'few more years' starts now and ends in a few years - and it would make a lot of sense to bank some more cash while OP's earnings capacity is still strong.

Alexland

Have you factored in any capital expenditure that might occur during retirement such as new car, kitchen, bathrooms, etc?

scotty_does

Alexland wrote: »

Have you factored in any capital expenditure that might occur during retirement such as new car, kitchen, bathrooms, etc?

If I can get a growth rate of 2% then I would say yes. There will be the money available to take extra lumpsums when needed (within reason of course).

Prism

I would probably do it however try and be flexible. Don't do it straight after a stock market crash should there be one in the next few years. Be flexible about your yearly amount. If the markets are down then take out less, if the going is good then consider more.

I am aiming for about that amount by 55 too

Alexland

So are you expecting 2% above inflation and fees so around 5% market return per year? To get that return going forward you might need a high proportion of equities exposure which might leave you exposed to pound cost ravaging if continuing to withdraw during crash years. Your plan looks a bit tight to me.

Thrugelmir

scotty_does wrote: »

In my spreadsheets I'm putting in an inflation figure of 2.5% and a growth rate of 2%.

Inflation is running at a higher rate than that currently.

I’ve been alarmed that in the last 12 months it has hardly grown (less than 1% growth).

Does that include reinvested income.