Can I stop working yet?

randompenitent

57, married, wife working with no immediate plans to stop.

Full state pension when I reach 67.
Defined benefit pension of £6800 starts when I reach 65.
£770K in SIPPs
£170K in ISA.
About £60K in assorted savings accounts.
Wife has her own savings, but I'm ignoring it for now.

We own our own home, worth £800K+, no mortgage. We plan to move in a few years (5?) which should free up some capital (perhaps £200K). No kids, no dependents other than each other.

It seems to me that I could stop working now, or soon, and provide myself with a pension of £40K or so, with a reasonable chance of not running out of money before The End.

Does that sound reasonable? Am I being optimistic or unduly pessimistic?

Stubod

..yes...more than we had when we stopped...depends on your post retirement lifestyle / income expectations.

I would (I did), set up an excel and model your savings and income against your anticipated expenditure, assume eg 3.5% for inflation, and about 3% for "investment return" and you will still probably find you are OK....particularly with a "downsize" option available at some point...seems like a no brainer.

Or just stop at work for the hell of it and spend everything you earn on whatever you feel like?

Alexland

All looks reasonable to me assuming you remain invested on something like a 60/30/10 stocks/bonds/cash ratio especially if you can be flexible on the rate you draw the money to avoid drawing out too much when markets are low.

Might be worth getting some advice especially on the lifetime allowance.

Alex

michaels

you could plug the numbers into cfiresim and see what it says.

cns06

You could easily draw £30k from the SIPP pretty much forever and never run out of money.
This would leave the ISA to grow. So long as you budget for tax can you live on £30k? If the answer is yes then you can stop work tomorrow so long as you keep the SIPP invested in markets as above.

Audaxer

randompenitent wrote: »

Does that sound reasonable? Am I being optimistic or unduly pessimistic?

Let me think now, a £1m in savings and investments with no mortgage - I would think yes, you could definitely stop work now if you wish. It is a heck of a lot of investments to DIY unless you are very confident in what you are doing. On the other if it is managed by an IFA, charges could be very high so £40k or 4% drawdown per year might not be sustainable for a long retirement, but you have a DB pension and SP in 10 years time, so from then you might only need around £30k per year from your investments.

Once you stop working and start enjoying retirement, your wife may well change her mind about continuing to work.

Triumph13

Quick calc using 4% withdrawal rate on long term portfolio and assuming funds backfilling for DB and SP just yield inflation shows you would be just about bang on for £40k pa post tax (about £10k to spare!). Add in a working wife with her own pensions to come and you're laughing.

MEM62

OP, I am 56 and would stop working if I had half your assets.

randompenitent

Thanks to everyone who replied. Good to get a sanity check.

SIPP and ISA are with Alliance Trust Savings, mostly in pretty conservative investment trusts, funds and ETFs, so low cost. I've been managing these for the last 20-odd years and have learned some humility along the way. I don't consider myself any kind of expert, but my limited exposure to financial advice didn't impress me. I suspect I should consult a good IFA before pulling the trigger though.

I suspect I'm at least a year from stopping work - new kitchen, bathroom and some other big expenses which I'd rather fund from income than capital - but it's great to have found this forum and to hear from people that are at various points along a similar journey.

Audaxer

randompenitent wrote: »

SIPP and ISA are with Alliance Trust Savings, mostly in pretty conservative investment trusts, funds and ETFs, so low cost. I've been managing these for the last 20-odd years and have learned some humility along the way. I don't consider myself any kind of expert, but my limited exposure to financial advice didn't impress me. I suspect I should consult a good IFA before pulling the trigger though.

As you've been managing your investments successfully for 20 odd years and easily have enough to retire on, I wonder if you really need to consult an IFA now? I suspect it will be a significant cost for an IFA to give you advice on a portfolio that size.

If it was me, I wouldn't have such a significant amount of investments just with the one platform/broker as you would only be covered up to £50k (going up to £85k in April 2019) by the Financial Services Compensation Scheme if the worst happened and your funds were not properly ring-fenced and were subjected to a major fraud. I know the risk is minimal with a mainstream platform, but the impact would be high in your case if something did happen.

ermine

randompenitent wrote: »

I suspect I'm at least a year from stopping work - new kitchen, bathroom and some other big expenses which I'd rather fund from income than capital

You're 57, dude. You're running out of something else, and it ain't money. Every year you spend at work is 365 days less off the rest of your life, and that year comes off the healthier end of that remaining life.


There's more to life than work, and it looks like you have the opportunity to examine that. Life is not a dress rehearsal. Don't just load the gun, pull the trigger.