Can I really retire...

fred246

If you are living off investments you always have to have some degree of flexibility. Tighten your belt if things aren't good. Spend more if returns are good.

AlanP_2

Certainly looks doable.

I'd make sure I used up both tax allowances. Put the BTL income in wife's name and draw enough from DC pot taxable to use your allowance maybe from Age 55?

That would help to reduce the potential LTA issue as well.

You can both contribute £3600 gross (£2880 net) into a PP going forwards (your wife could start now). Alright, the income will be taxable but the HMRC top up in conjunction with the TFLS still produces a positive return that is better than cash savings rates.

WirelessWizard

fed246:
I am being generous by budgeting £4k net a month. My actual outgoings I estimate to be less but I wanted to add some margin and allow for the fact that I'd like to still be able to help my son's a little as they transition to becoming financially independent (One is there already, one more to go...). In my more detailed analysis I did model my outgoings reducing from 65 by 25% but in the end decided to keep them at £4k + inflation. I'm sure I will revise this once I actually retire.

mgdavid:
I fear you're right ;-) My wife seems to have a lot of plans for us once I quit the rat race!

Spreadsheetman

I've got no useful financial advice, but looking at the overall amount you have and the various pensions to come I'd say you've won - time to pack in work and live your life to the full!


A session with an IFA would be useful to come up with the optimum way of using your various investments, assets, cash and tax allowances. Mine always comes up with things I hadn't thought of, and I find a different (expert) perspective is extremely useful.

jamesd

You have 38k of guaranteed pension income from state pension age and 15k of rental income for a total of 53k against a requirement of 48k. You appear to be planning to greatly underspend because you also have 250k + 285k + 700k = 1235k and that can generate 61.75k of initial income for a 40 year retirement.*

Thus it appears that long term something more like 114k a year is doable. That doesn't take account of higher drawing rates until the various guaranteed pensions start but it helps to illustrate the huge disparity between what can be done and your target. I suggest that you plug your capital and known pension start dates into cfiresim and see what it says.

Your plan to draw on savings before DB seems poor. Your DB at 65 would be 260k of lifetime allowance and you have 700k of DC already, so you're already very likely to see growth taking you over the allowance. You need to be working on preventing that as soon as you can. Can't until 55 but then you can start to rapidly take benefits to get a lifetime allowance calculation done. You'll still struggle to avoid the check on growth at age 75, though. Assume 735k at 55 with 5% a year plus inflation growth. Take 25% of that and you have 551k in the pension. At 5% average growth that's 27.5k a year you need to be taking just to keep the pot from growing. With 13k DB and say 9k state pension that's 49.6k a year and higher rate tax territory, so worth at least drawing enough to fully use your basic rate band each year.

One thing that can sometimes help with the lifetime allowance and tax is taking a DB pension early. The 20x multiplier ignores the extra years in payment. Depends on the actuarial reduction and tax situation. You're looking at both higher rate tax and maybe lifetime allowance charge if you maximise income so how bad is the actuarial reduction and when can you take it?

So, back to the 114k that I said was useful but not actually possible at 50. What is possible?

For five years you're limited by BTL and savings and I'll assume you want 6 years for safety. So 15k + 535k/6 = 104k so that's not much of a limit.

At 55 you have say 25% of 735k available as a tax free lump sum, 183k. And access to the whole pot. With DB at 60 and 65, or maybe earlier, this isn't that much of a limit either.

But for tax efficiency it's nice not to draw on the ISA money, so maybe 15k + 250k/5 = 65k a year until you're 55. But given your high income potential it's worth looking at taking both DB as soon as possible to level out the income throughout retirement.

And that ignores interest and such on 535k! Even 3% is 16.5k, though nothing allowed for inflation.

Something over 80k a year starting now seems doable if you've a use for the money, particularly if you take DB money.

*Guyton-Klinger drawdown rules for UK with 60:40 equity:bonds split after 1.5% of costs is 5%.

Spreadsheetman

Spreadsheetman wrote: »

I've got no useful financial advice, but looking at the overall amount you have and the various pensions to come I'd say you've won - time to pack in work and live your life to the full!


A session with an IFA would be useful to come up with the optimum way of using your various investments, assets, cash and tax allowances. Mine always comes up with things I hadn't thought of, and I find a different (expert) perspective is extremely useful.

e.g. @jamesd !!!

jamesd

Spreadsheetman wrote: »

e.g. @jamesd !!!

Heh, I'm not an IFA, though.

This one seems more about what they can enjoyably spend now rather than when they are much older, since spending declines substantially between 65 and 85, more so for those with plenty of money. Given that, provided they can use it enjoyably, taking more while young seems like a good move.

Spreadsheetman

jamesd wrote: »

Heh, I'm not an IFA, though.

This one seems more about what they can enjoyably spend now rather than when they are much older, since spending declines substantially between 65 and 85, more so for those with plenty of money. Given that, provided they can use it enjoyably, taking more while young seems like a good move.

You just play one on TV

ams25

WirelessWizard wrote: »

Thanks for your response ams25 - much appreciated. It's definitely re-assuring to get a view from someone who speaks from experience. Good to hear you're enjoying your retirement!

You are welcome. I know this is a difficult decision point. I've been there. But your numbers are so solid you do not need to have doubts.

And your 50s and 60s are likely to be the best years for enjoying an active retirement (and spending more) as you will most likely slow down in your 70s and 80s (spending less). So every year delayed is a prime year lost. There is no getting it back.

And it is true what they say (unless you are Marine Life) that you do wonder how you ever had time to work once you quit.

Spreadsheetman

ams25 wrote: »

.... So every year delayed is a prime year lost. There is no getting it back.

Well said. Running out of money is only a possibility, running out of time is a certainty.