63 in a few months

redmalc

I am 63 in a few months and the wife is 62 and we are thinking if I can make the big decision to retire.
Personal pension is currently 330k,S&S isa,s 210k and Cash isa 70k with individual shares of approx 60k
My wife does not have a personal pension but as 70K cash isa and shares of approx 6K.
We are mortgage free with no debts and I am still working earning 130k per annum.
It’s a very difficult decision whilst I sit in Tenerife listening to all of the retired couples telling me they are here for two months and I am due to fly home on Tuesday and back to work on Wednesday.
Any help or advice would be appreciated

Dazed_and_confused

You seem to have, in comparison to a lot of posters on here, very little to rely on if you retire, particularly with such a high salary.

Or is there something you're not telling us such as you have a DB pension paying £50k at age 65??

Have you checked your State Pension forecast? If not you can do it online from Tenerife on gov.uk.

drumtochty

If we assume the cash will be used to an extent to bridge the gap until you get your state pension at circa 66 and for treats in the years ahead but you may take some income from it in later life.


Between you on a pension and share basis you have £600k in that income pot. If we say at 3.5% overal return, people will argue anywhere between 3% and 4% safe income per annum from the pot, it could provide say £20k a year, add on state pensions of I guess £15k between you, maybe a bit more, have you got state pension forecasts yet, if not get them for both of you.


Total income of £35k ish give or take some tax. You may want to look at moving some shares to you wife but not a big issue and you may want to move some personal allowance to you from your wife. Possibly move any unprotected shares to your ISA's.


With all due repect if you are used to living of say £6k a month net and you go down to £35k ish so nearer £3k a month, then you will feel a large bump.


How much net are you both living off after pension, savings and investments top ups are taken off your incomes.


I would like to see you with an other £200k to £300k in the pot if you live up to your income less if you do not live up to that income.

crv1963

You need a plan! Don't retire on a whim and hope that it will all work out okay. Have a look at the "what's your number thread" for some ideas. How much do you need to live on annually? What do you want to do when you retire? Look at all your savings/ pension/ shares- will that provide the income on a sustainable basis? Do the maths, if you have to work a bit longer then I'd suggest piling some of your income into a pension for your wife- even if she doesn't earn then 2880 pa into a pension, if she does earn and you can afford it then up to her full salary pa- to even out the rate of tax when you both retire.


Have a plan for the time you'll have to, of course you may already have that but going from 130k pa to no pay check is a big step if you are going to drift without something to do.

kidmugsy

redmalc wrote: »

... individual shares of approx 60k
My wife does not have a personal pension but ... shares of approx 6K.

How doubly extravagant of you. The League of Straitened Taxpayers offers its thanks.

OldMusicGuy

Do you have any DB pensions as well? Without knowing much about you, If not, I would say you probably don't have enough to support a retired lifestyle that involves a lot of foreign holidays. I retired 6 months ago at 60 with more than you both have and although I am comfortable that we can support our lifestyle, it won't involve a lot of foreign travel. We will also be downsizing to release equity from our house to add in to the pension funds.

What you need to do is a detailed expenditure plan to see how much you will spend in retirement and then work backwards to see if and how you will finance that from a combination of your DC pots and your SPs (and maybe downsizing), if those are the only sources of income you will have in retirement.

xylophone

Why no personal pension for your wife?

Albermarle

The normal rule of thumb is that to retire without a significant change in lifestyle, you need two thirds of pre- retirement income. As another posted has calculated you are way off that .
On the other hand your current income is high , so probably you would be OK with a bit less than two thirds of it , but it looks like you need to work a bit longer yet and save as much as possible into pensions etc in the meantime.

Spreadsheetman

Retirement isn't un-doable provided you have engineered your life to live on 2 x SP and whatever can be safely drawn from the £600k-ish investments. That's £27k-ish assuming full new SP @ £8k5 and 3% drawdown. (I'm more pessimistic re future equity returns).

You'd also need to fill in the shortfall until SP can be drawn (3 years for you, 4 years for your wife) so that's maybe another £60k to find.

There's a reasonable amount of cash at £140k to cover lumpy expenses and stock market crashes.

So the question is - can you live happily under £30k pa? What are your current essential expenses?

Brynsam

If you're earning £130K a year, why not get some proper financial advice - the sort you pay for, based on a full fact find for both you and your wife? It could be the best thing you ever spend money on.

Spreadsheetman

Brynsam wrote: »

If you're earning £130K a year, why not get some proper financial advice - the sort you pay for, based on a full fact find for both you and your wife? It could be the best thing you ever spend money on.

I would agree with that, but part of the process with an IFA will involve outing yearly expenses and hoped-for spending level, so a good bit of homework first would be sensible.