Can I throw in the towel now?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
28 replies 4.1K views
SallyforthSallyforth Forumite
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I have worked full time all my life in a fairly dull role to pay the bills and exist. At 57 with little retirement planning I am in the fortunate position of inheriting c. £450,000. No mortgage and husband retired on state pension only. Low maintenance property we intend to stay in making a few home improvements costing around £20k. I have so far maxed out premium bonds for us and invested in ISAs leaving around £300k when ch I need to consider. It is currently sitting in NS&I account. The question is really can I safely hand in my notice and survive?
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  • cfw1994cfw1994 Forumite
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    Sure!

    Or maybe not!

    The mysterious folk on the internet cannot tell you that when you don't really give any information about what your income needs are!

    So your OH already has the state pension.
    To that you have this £450K to live on.

    There are various 'rules of thumb'. The simplest is known as the 4% rule: once you can live on 4% of your savings, you should be able to last a comfortable 30 years. Some folk suggest that in these days of lower interest, that should be 3.5%.
    3.5-4% of £450K is around £15-18K.
    Is that enough to live on?

    (& fwiw, I am NOT a financial advisor!)
    Plan for tomorrow, enjoy today!
  • Sallyforth wrote: »
    The question is really can I safely hand in my notice and survive?
    It must be a lovely position to be in, potentially being able to retire earlier than expected. It is really difficult for anyone to advise you without having a better understanding of your finances and plans for retirement. Minimally the following need to be considered;

    Current income and expenditure
    Any debts or savings (other than the £450K)
    Your pension provision including both work pensions and state pension entitlement
    What your both plan to do in retirement? E.g. Holidays or any expensive hobbies.

    If you can give us a better idea of what you hope to achieve, I am sure there will be many posters who are happy to share their knowledge and experiences :)
    "Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness.
    Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

    Charles Dickens
  • kidmugsykidmugsy Forumite
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    When is your own state pension due and what will it be worth?
    Free the dunston one next time too.
  • Keep_pedallingKeep_pedalling Forumite
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    What is you situation with company pensions?

    When you say you have invested in iSAs are you talking about Cash ISAs or S&Ss ISAs?
  • Keep_pedallingKeep_pedalling Forumite
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    Back in August you said you were going to consult an IFA, have you not done that yet?
  • bostonerimusbostonerimus Forumite
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    Without knowing how much you spend there's no way to answer your question. A church mouse might easily live on the income and principal from 450k, a city mouse, who spends a lot on expensive foreign cheese, might not.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • ApodemusApodemus Forumite
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    cfw1994 wrote: »
    The simplest is known as the 4% rule: once you can live on 4% of your savings, you should be able to last a comfortable 30 years. Some folk suggest that in these days of lower interest, that should be 3.5%.
    3.5-4% of £450K is around £15-18K.
    Is that enough to live on?

    Whoa there! Scary to see this written in this way without giving the OP the vital information that the “4% rule” presumes that the total sum is invested in the (US) stock market and that market returns are similar in the future to what they have been in the past.

    It looks like the the OP has got 2x£50k in Premium Bonds, £50k in (cash?) ISAs and £300k in an NS&I account. That is very different from them working towards the 4% rule at this stage!

    If they are happy to simply run their savings down to nothing, then yes, they can take 4% per year for the next 25 years, but it would not keep pace with inflation or leave anything left if they live longer.
  • SallyforthSallyforth Forumite
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    Thank you so much for taking time to reply. It is a very fortunate position to be in but also a very sudden one and quite scary. We have had our ups and downs financially over the past 25 years of marriage and have successful dealt with some horrific (self-inflicted) debt during that time. This is all in the past and we have been and will continue to be completely debt free for the past 3 years. We paid our mortgage off 2 years ago.

    Unfortunately I made a stupid mistake drawing on a pension at 55 (to finally repay the mortgage) so my annual allowance dropped from £40k to £4K. Entirely my fault and can’t blame anyone else! So I have a “frozen” Money Purchase account with Standard Life worth c. £20k and have been paying 10% of my £29k gross salary into my works pension to benefit from their 18% contribution. Due to now being debt and mortgage free I can easily afford this but realise there is no point contributing more as I would be taxed on taxed income and know I will still have to declare this for tax next year. This pension is currently worth around £6k but increasing by c. £680 a month.

    So, after that I take home about £1,700 (interest free travel loan and dental insurance deducted at source monthly). With my husbands state pensions we currently have c. £2,580 a month coming in. I have been saving at least £1,300 a month in easy access savings for the past two years and have various pots for annual bills, clothing, vet bills etc etc and £5k “emergency” fund.

    So, I have become reasonably financially savvy but did not expect this inheritance now. To be honest I thought it would get eaten up by care fees over the coming years and little would remain.

    So, we can live comfortably on say £15k net. I checked my state pension and I am 36p a week short of the maximum I can receive in 10 years when I turn 67. I guess that is sound?

    We don’t have expensive tastes or hobbies any more but I would need to think about what to do with the time. I am almost thinking a little part time office role with a smaller firm locally that offers a bit of income (holidays/treats) but without the 9-5 full time grind.

    Oh yes the ISAs - one of £20k cash (husband) and I’ve risked a stocks and shares one using Nutmeg. Very scary but felt I had to make a start!

    So, on that basis - and please ask if further info helps - any further thoughts? I totally understand this is not advice but need learn and am very grateful.

    I did say I was going to see an IFA but need more knowledge myself first. Again, a bit scared!
  • k6chrisk6chris Forumite
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    The first and arguably the most important thing to do, is to work out how much money (net of taxes) you will need to fund the retirement you want. It helped us to trawl through EVERYTHING we had spent over the last year. Sources for this infomation include all bank, credit card statements etc. You also need to think about non-regular expenses, such as house repairs, car replacement etc. Add to that the likely cost of holidays or 'trips of a lifetime' you might want to do. The important part of this is to be as honest as possible and not try and 'tilt the spreadsheet' to meet the answer you want. Once you know this, you can see how much will be catered for by state pensions and so how much 'other savings' you will need to fund the gap. Have a look at the "Numbers" thread on this forum.


    Good luck with your quest.
    "For every complicated problem, there is always a simple, wrong answer"
  • doingitanywaydoingitanyway Forumite
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    It sounds doable. None of us know the future or how long we have. Your husband has already retired and you have valuable presumably healthy years now. It doesn't sound as if you both lead an extravagant lifestyle and you have a full pension coming in future. I would go.

    It sounds as if you have a good employer. Could you negotiate part time hours where you are?

    There is a saying: 'jump and the net will appear' but you have the best part of half a million as a net and longer term pension provision too.

    What would the person you inherited want you to do?

    Nice problem to have. Good luck with it all.
    If you have built castles in the air, your work should not be lost; that is where they should be. Now put the foundations under them.
    £500/2,500 Legal and moving costs
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