Early retirement

Nigel_Williams

Hi, I am 62 years old, my wife is 61 and we ready to get out of the rat race and start doing things we want to.I hope to get a less stressful, part time job to contribute to our living costs.

We have no mortgage on a property valued around £230,000 and I have 2 pension pots - £350,000 and £100,000.
I want to keep the larger pot untouched for obvious reasons but am not sure what is the 'best' way to fund the next 21/2 years before my state pension kicks in.

I could leave both pensions alone and take an equity release payment (down sizing is not an option if we ant to stay in the south east) or take a cash advance and subsequent draw downs from the smaller pension pot.
That would leave the equity in the property if I need it later or we did decide to move somewhere cheaper in the next few years.

Any suggestions or advice would be appreciated,
Thank you

Bravepants

The first thing to do is work out how much you both need each year to live on comfortably and do "the things you want to".

xylophone

the 'best' way to fund the next 21/2 years before my state pension kicks in.

https://www.gov.uk/state-pension-age/y

If you are only 62 now, might it be closer to four years?

NoMore

I'm sorry what are the 'obvious reasons to keep the larger pot untouched' ?

Pensions are for your retirement, you want to retire, so use them ?

OldMusicGuy

Indeed, pensions are for retirement. If the two pots are both defined contribution pots, then there is no logic in leaving one untouched because it is bigger. You have 450K to use to fund retirement.

Generally equity release is viewed as a poor option, especially if you want to move again later. IMO it's better to think about downsizing now as part of your retirement plans. FWIW I retired early at 60 for the same reasons as you and we are downsizing and using my DC pension to fund us prior to SPs kicking in.

What you need to do is to build a financial plan for the length of your retirement. Find out how much you need and then look at how you will fund that by using a combination of your pension savings, state pensions and any other income you may have.

If you don't know what options you have for using your pensions (your post implies you may lack some knowledge), get an appointment with Pension Wise if you have not done so, and I would recommend reading "DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning" by John Edwards.

CookieMonster

I intend to downsize and move (from the South) to a cheaper area of the country, using the difference in house prices to fund >5 years pre-retirement.
Even if the house market cools, they'll cool to some extent in the destination.
It's simpler than equity release.

AnotherJoe

Equity release would be madness on account of your age, your potential wish to move and downsize soon, and the fact you've got lots of much cheaper money (your pension pots) accessible to you.
Don't underestimate the costs of downsizing, if your house is worth £230k you've got very limited scope unless its a real long distance move.
Were you thinking you'd retire aged 65? Oh dear. You'll be closer to 67.
Like everyone else, I'd like to know what is this "obvious" reason not to use the larger pot.

xylophone

Have you and your wife both obtained State Pension Forecasts?

https://www.gov.uk/check-state-pension

What other pension provision does your wife have?