Retire at 60 with 20k Pension - Possible?

bonnyrigger

First time post on this area of the forum so apologies if I am asking really obvious questions.
I have just turned 56 and have a pension pot worth 275k, I am looking to possibly retire at 60 with an income of 20k a year increasing with CPI. I have an LGPS pension currently at 1800/yr from 67 which should be worth 6k/yr approx by the time I'm 60 (drawing it from 67 obviously). Full state pension is payable from 67 taking a stab that this would be about 10k by 2029 - actually looks a bit low but worst case scenario.
I plugged all of the above into a spreadsheet, making the following assumptions:
1. CPI of 2% going forward
2. ROI on main pot of 3%/yr.
3. LGPS and State Pension would increase by CPI.
4. Personal tax allowance would be approx 13k by 2022/23 - not relevant but I wanted to

Obviously my draw from main pot reduces as State and LGPS kick in, I have assumed the main pot will start at about 300k in 4 years time (just over 2% achieves this). My calculation shows this lasting to over 100 (which I won't!) before the main pot is depleted. Am I way out with these figures?
I realise that if ROI is lower especially in the early years I'll have to tighten my belt to allow for this.

Brynsam

If your LGPS pension is worth £1800 now, how do you get to £6000 a year when you hit 60 in less than 4 years' time - not clear if you are still building up benefits in the scheme or relying on revaluation?

Robin9

You've looked at your income - have you looked at your expenditure ? Things like utilities, holidays tend to rise greater than inflation.

What do you want to do in your retirement

kidmugsy

Brynsam wrote: »

If your LGPS pension is worth £1800 now, how do you get to £6000 a year when you hit 60 in less than 4 years' time - not clear if you are still building up benefits in the scheme or relying on revaluation?

Could he have meant "I have an LGPS pension currently at 1800/yr from 60 which should be worth 6k/yr approx by the time I'm 67(drawing it from 67 obviously)"?

bonnyrigger

Hi - I'm still building benefits in the LGPS scheme - was allowing for 4 more years plus re-valuations and wage increases. I've no real issue with waiting until 61 or 62 either but thought 60 might be doable. My current salary is about 40k and the build up rate is 49ths using career average basis rather than final salary.
No - I haven't thought my personal inflation might be higher than CPI but it's a fair point.

Robin9

bonnyrigger wrote: »

No - I haven't thought my personal inflation might be higher than CPI but it's a fair point.

You will be at home more - using electricity, gas, meals, snacks, tea, coffee. Because you have more time you will take more holidays, eat out. On the credit side your commuting cost will be less.

AlanP_2

Have you looked at the AVC scheme you can open alongside your main LGPS? Get tax relief on contributions and can be taken as tax free lump sum (with limits) at same time as main scheme.

bonnyrigger

Thanks I was going to look at AVC once youngest graduates (next May hopefully) and I'll have a bit more spare cash.

simonfitba

I reckon you could take £12k max per year from £300k invested. Then add on other bits.

Silvertabby

bonnyrigger wrote: »

Hi - I'm still building benefits in the LGPS scheme - was allowing for 4 more years plus re-valuations and wage increases. I've no real issue with waiting until 61 or 62 either but thought 60 might be doable. My current salary is about 40k and the build up rate is 49ths using career average basis rather than final salary.
No - I haven't thought my personal inflation might be higher than CPI but it's a fair point.

£1800 to £6K in 4 years is doable (although £5.5K is more likely). I'm retired now, but when the LGPS CARE pension details were announced my collegues and I took bets on how long it would take before people realised just how generous - and ultimately unaffordable - it is.

kidmugsy

simonfitba wrote: »

I reckon you could take £12k max per year from £300k invested. Then add on other bits.

Really? From 67 he'll have SRP + LGPS of about £14.5 k (inflation- adjusted presumably) so he'll need another £5.5k. if he's prepared to exhaust his capital rather than leave it to his widow and children then how much would that need: less than £150k, maybe?

He's hoping his pot will be worth £300k by age 60, so he'll have more than £150k to spend down between 60 and 67. It's tight for £20k a year but not hopeless. Age 62 looks a more comfortable bet but there's no need to decide anything yet. If he did retire at age 60-62 he'd presumably want to turn a large part of his pot into some pretty defensive investments if he's aiming to spend a lot of his capital.