Potential Retirement at 51 Unplanned

mbee123

Looks highly likely I'll be getting made redundant at the end of March with a payout of around £46k (£30k of which is tax free) at the ripe old age of 51 3/4, so I'm looking at the option of retiring early.

My wife has a monthly income of around £1060 + £600 a month from rental properties.

I have an elderly parent who needs daily care so will be claiming carers allowance - £280 a month

Monthly outgoings are around £1200 plus another £600 for holidays and helping kids out at uni, most of which will hopefully end within the year.

I've got £40k left on my mortgage, due to be paid off in 5 years. No other debt.

Pensions
BT DB pension worth £16k a year at 60 (will rise with rpi) which I've had a recent cetv offer of £440k
Another DB pension worth £3k a year at 65
DC pension worth £15k
My wife has a DB pension and no plans to retire in the next 10 years or more

Rough plan
Live off redundancy payment up to 55 supplemented by carers allowance
55 take BT pension early either drawing DB scheme or cash from cashing in CETV. Also have the option of using the DC pension amount
At 65 (or earlier if I take a hit) draw the £3k a year from other DB scheme.
67 state pension cut in.

I may get casual work here and there as I am quite handy with DIY etc but looking at worst scenario and some assurances as to whether the above plan sounds feasible or other suggestions of making my money work for me, cutting down on tax payments etc

molerat

What have you got in the bank, I see no slack for emergencies in there - new car, new roof, new boiler in both your own and rental ? How much of a reduction will there be on the BT pension at 55 ?

mbee123

I've got £40k available to me for emergencies.

Currently got two cars and will probably go down to one

£250k plus house with plans to downsize sometime in next 5-10 years which would release around £100k plus

kidmugsy

mbee123 wrote: »

55 take BT pension early either drawing DB scheme or cash from cashing in CETV. Also have the option of using the DC pension amount ....
At 65 (or earlier if I take a hit) draw the £3k a year from other DB scheme. 67 state pension cut in.

You are considering giving up a DB pension that will anyway start at 60 but keeping one that won't start until 65? Would the other way round make more sense? What is the CETV for the little one - or is it a government one that can't transfer?

mbee123

CETV for the little one is £70k (21.4 times annual pension)
CETV for the bigger one is £440k (almost 28 times annual pension so a tempting offer)

drumtochty

You are healthy I assume, you have good pension provision between you and your partner including State Pension, do you have a forecast for both of you.


You have said you are handy, therefore I would get yourself a job that means you spend no pension or savings money unless your parent 100% needs help. If they do then needs must, if and when they are no longer with us, I would get out there if possible and protect those pensions to give you a better retirement at 66 or so.


People I know who are living on a tightish budget tend to overspend and as others have said what about emergencies. You never know with rented property.


I think you are just a bit to tight for a nice retirement unless you both as they say can live off the smell of an oily rag. I would want to keep the pensions and lump sums in hand and not spend them.


If on the other hand if your parent lives for say another 15 years that is a different matter and you have to cut your cloth to suit!

crv1963

I don't know your skills but would it be possible to combine carer role with part time working? That way continue building NI contributions to get full SP.

It will cost to get the required agreement to transfer out of the DB and it may be that you are advised against this, so it may be several thousand pounds spent and wasted.

mbee123

Thanks for the replies, my mam has dementia so while it is not a necessity it would be nice to be around for her more of the time, but yes I agree it is a bit tight.

I don't know your skills but would it be possible to combine carer role with part time working? That way continue building NI contributions to get full SP.

This would be the plan, although if I earn more than £120 a week I lose the carers allowance

crv1963

mbee123 wrote: »

This would be the plan, although if I earn more than £120 a week I lose the carers allowance

The carers allowance would get you your NI contributions, I don't think it counts as earnings so maybe earning 400 pm + 280 carers allowance, combined with wife income= 1680 pm so maybe only need to be disciplined to use any redundancy money at 120 pm to achieve current monthly spending?

That ignores your rental income, which may also depending on your plans for the rental property provide either money to stash through a pension (if keeping the property) or pay off home mortgage (if you sell this property).

tacpot12

Your plan will work if everything goes ok, but there is not much slack in it. The 40K for emergencies is a very good start though. This should protect you from problems with the boiler, kids, etc.

You are also assuming you will definitely receive carers allowance, and that this will last until you are 55, or longer. If anything happens to your parent, you will lose this source of income, but could more easily take part-time work if you need to. Claiming carers allowance will result in you being credited with NI contributions, so you wouldn't need to work to improve your State Pension entitlement.

Using the DC pension to delay the point at which you take one of your DB pensions will reduce the impact of taking the DB pension early.

I was in a very similar situation three years ago; made redundant at the age of 53. I too have elderly parents who I expect to need more support as they get old, but so far do not need much from me. With savings & redundancy I was able to get to the point where I was able to drawdown my DC pension to live on. I also had DB pensions that will come into payment when I'm over sixty. My wife retired at the same time as I did, and we have gone down to one car to save money. We have had just one time when not having access to a second car was a problem, but we coped because we had to!

Are you absolutely certain that your wife is happy to carry on working if you give up work to care for your parent?

mbee123

Thanks for confirming the NI situation re carers allowance.

Plan to keep the rental properties, have flirted with the idea of getting more but leaning towards going against that (too many eggs in one basket)

Using the DC pension to delay the point at which you take one of your DB pensions will reduce the impact of taking the DB pension early.

Yes thought about doing this to delay another year till I hit my DB schemes

Are you absolutely certain that your wife is happy to carry on working if you give up work to care for your parent?

Haha, she's all for it at the moment with the promise of meals cooked for her but time will tell!