Can I really retire...

enthusiasticsaver

It certainly looks doable. I think maybe focusing on your wife's pension arrangements would be useful from a personal allowance point of view. Maybe open a SIPP in her name and put in the maximum as she is not earning of £2880 to get the £720 HMRC contribution. You should take this from the cash pot which looks very high and is probably earning a low return. She can draw in this prior to her SPA to maximise her PA. She can also transfer 10% of her allowance to you until she is 67.

As you say the LTA may be a problem for you given your £700k DC pot and £13k DB pension. Maybe taking the DB pension early would be worth considering.

You already have the BTL income but presumably you are taxed on this? Is this in both names and are you a higher rate tax payer? Drawing on cash/isas until 55 sounds sensible so 5 years. After that I would think it depends on how close you are to the LTA as to whether you take the DB early or drawdown on the D.C. pot.

However you do it I think you certainly have a solid financial plan. I am not sure what an IFA can add to what you have already done. We retired at 58 and would thoroughly recommend it. We though used some of our cash assets to help our DDs with house deposits/weddings so not sure if you need to build that into your plan if you intend doing this although as someone suggested you could sell the BTL. You will also need to decide what to do with the cash raised from downsizing.

Marine_life

WirelessWizard wrote: »

...but I think I’m scared of giving up on the regular income.

It does not have to be all or nothing. why not ask to go part time for a couple of years to test drive your retirement?

WirelessWizard wrote: »

It feels like a big step even though I've been planning for this since I was in my early 20's

Have you?

And what ambitions did you have?

Is there anything other than 'giving up the regular income' that is holding you back?

WirelessWizard

It does not have to be all or nothing. why not ask to go part time for a couple of years to test drive your retirement?

That's definitely an option I have been considering. I couldn't do that in my current role due to the nature of the position but my background in software engineering would potentially allow me to go contracting..

Have you? And what ambitions did you have?

Life experience, my father was taken ill and had a major operation brought on fundamentally by job, stress, lifestyle when I was 18 years old. At this point I decided that I was going to try and retire at 50. This has always been my ambition, clearly that changed to 55 when the rules changed but the intent has always been there. Very easy to say at 18 I know but I've been fortunate in that I've always been in work. I started out at 16 as an Apprentice in Electronic Engineering, carried on studying part-time (A-Levels, Degree etc) and have stayed working in the field all of my working life. I think this background of always working is why I'm hesitant to actually retire but I'm coming round to the idea. Only I can decide but the OMY syndrome seems to keep coming into play.

WirelessWizard

You already have the BTL income but presumably you are taxed on this? Is this in both names and are you a higher rate tax payer

It's all in wife's name as I'm a high rate taxpayer at the moment.

Thanks for the comments.

WirelessWizard

Dear All,

I’ve been a reader of this forum for some time but haven’t posted until now.

I’m 50 and my wife will also be 50 in Nov 2019, both healthy and active. My wife has already retired , she left her job 18 months ago and is enjoying the freedom that this has given her. I’m still working full-time but I’m finding it increasingly difficult to maintain my motivation levels as I did when I was younger (stress, business travel, politics etc). We’ve both saved diligently through our working lives and now find ourselves in a very fortunate position in that I think I could consider joining her at some point. I think I’ve analyzed the financials to the point where I think I will be able to pull the trigger on early retirement, but I think I’m scared of giving up on the regular income. It feels like a big step even though I've been planning for this since I was in my early 20's. I’d really appreciate any advice/opinion/thoughts on whether I can *really* retire early.

We have two sons (aged 24 and 22), one working and the other in his final year of Uni.

Desired Income in retirement: £48k net

Property
House (mortgage free): £800k (plan to downsize between 60-65)
BTL flat (mortgage free): £15k pa income gross

Savings
Cash/SS ISA’s (Combined): £250k
Cash/Bonds etc (Combined): £285k

Pensions
DC (Me): £700k
DB at 65 (Me): £13k pa
DB at 60 (Wife): £7k pa
SP at 67 (Combined): £18k pa

My plan would be use the BTL income plus draw down the ISA’s and Cash first, leave the DC for as long as possible. I will need to keep any eye on LTA as this may come into play quicker than I think. I'm not currently paying into my DC pension due to concerns over LTA but my employer is providing a pension replacement payment of 14% of salary which I'm funnelling into our ISA's.

Does this all sound sensible? I’m considering taking to an IFA to validate our plans and to provide some specific advice, but I’ve never really sought any financial advice before (I probably should have done) so any opinions on the value of doing this now would also be appreciated.

All advice/comments gratefully received.

Thanks for your time.

Its been 18 months since I posted the above and I thought I'd provide an update. I'm still currently working full time but have made the decision to retire in Dec 2020 (I'll be 53 in Jan 2021).

Both of my son's (Aged 23 and 25) are now in full time post graduation employment and pretty much financially independent :j We helped our eldest son buy a property in 2019 with a deposit and have reserved the same amount for the other son when he decides the time is right.

Following the advice I received on this forum, I rechecked our state pension forecasts (me £10200 at 67 and my wife £800 at 67), I opened a SIPP for my wife in 2018 and have been contributing £2880 pa. I also made contributions of £8k in 2018 and 2019 into my DC pension resulting in a total of £20k with tax relief being invested in 2018/2019. I then claimed back the 25% tax relief through my SA for the 2018/19 tax year and will do the same for 2019/20.

My plan is still to live off BTL income, savings returns and cash post retirement until I reach 55. At this point, I will review my LTA position and decide whether to take my DB pension early. I've also been monitoring our spending to evaluate my retirement income estimate of £48k net pa. Over the last 18 months, we've actually averaged ~£4k per month. This doesn't include a big holiday we took this year to celebrate my wife's 50th birthday and our 30th wedding anniversary but this was a one off event (i hope). There is defintely opportunity to reduce this as we go into retirement but I'm going to stick with my original goal for planning purposes.

I decided to work until the end of 2020 for a few reasons. Firstly, I wanted to get some hard data on our expenditure although that's a bit of an excuse as I already had quite good data. Secondly, I was given the best retention award I'd been given in my career in 2019. Although this is split over three years in the form of RSU's, I decided that by working out until the end of 2020 I could add a little extra to our savings and replace the money we have committed to house deposits for our sons. We figured they needed the help now and not in the future. Finally, I just wasn't able to take the step away from full-time employment, I needed time to convince myself. I think I'm there now and my wife and I are starting to make plans.

So, assuming nothing changes, I'm working towards retirement at the end of 2020.

Thanks for all comments following my original post, they were really helpful to me. I still haven't paid a visit to an IFA....I would really like to get some of the our cash invested for income over the next 12 months. My default approach is to keep topping up our Stock/Shares ISA's each tax year. These are currently invested in a low cost (0.22%) Globally Diversified 60% Equity Tracker Fund.

DairyQueen

Always interesting to see an update. Mr DQ is also planning the big escape for December this year.

Wishing you the best of luck for what should be a very long retirement.

jamesd

WirelessWizard wrote: »

I could add a little extra to our savings and replace the money we have committed to house deposits for our sons. We figured they needed the help now and not in the future. Finally, I just wasn't able to take the step away from full-time employment, I needed time to convince myself. I think I'm there now and my wife and I are starting to make plans.

Agree about the deposits. Good to read about the acceptance but some more work on spending might be useful.

If you wanted to, in some rooms, an around the world cruise every year is doable, assumed cost around £13k per person. Or living on a cruise ship for a few years in the less expensive accommodation.

happyandcontented

jamesd wrote: »

Agree about the deposits. Good to read about the acceptance but some more work on spending might be useful.

If you wanted to, in some rooms, an around the world cruise every year is doable, assumed cost around £13k per person. Or living on a cruise ship for a few years in the less expensive accommodation.

jamesd, your analysis on here of peoples pensions is always so understandable...far more than our current IFA (who we are just about to change!) if I put our figures up would you do the figures for me?

Our figure is min 3k net a month. Both aged 60 this year.

Mortgage free property worth c300k
DC SIPPs C400K currently with HL fully managed.
DB CETV value 0f 800k (still considering transfer for inheritance and spousal issue mentioned below and also possible reduced life expectancy due to hereditary issue)
DB pays 22k at 60 commuted and 27k at 65 if no TFLS taken
No spousal benefit till the pension is in payment, just the return of premiums personally paid.
50% spousal benefit thereafter.
Savings 90k
full SP for both at 67