Retirement Plans - have I missed anything?

MankyVegSoup

I'm 57 and OH is 51. Our current plan is that we will each retire at 60. I've been playing with spreadsheets and I think it's workable, but a bit complicated with still lots of question marks.

Me:
Self employed.
LGPS DB pension of ca £3,700 pa payable from age 60
DC pot currently ca £135,000
S&S ISA £16,000

OH:
University researcher
USS DB pension should be worth at least ca £12,000 payable at SP age (67)
Another small DB pension from an old employer - waiting to get a figure from this
DC pot of ca £85000
S&S ISA £10,000

We also have a buy to let property bringing in around £300 per month net. Plus around £40,000 cash in various accounts.

Our mortgage has about £100,000 outstanding on a house worth approx. £400,000.

No children, so the plan is to spend it before we go!

As long as OH continues to earn at his current rate we can maintain our current lifestyle fine if I retire at 60 with my LGPS pension plus drawdown from my DC pot. I want to stop my current line of work, but may well look for part time work. Or I might just put my feet up.

It gets trickier when OH reaches 60. We then have 7 years to fund before his pension kicks in - although I will start getting my state pension in the 2nd of those years. Current idea is to do this through an aggressive (15%) drawdown of his DC pot plus release some equity (should be at least £50,000) through downsizing our home and probably selling the BTL property.

Once he reaches SP age we should be good for a comfortable albeit not over extravagant lifestyle.

I realise this does depend on him continuing to work and earn a decent salary for the next 9/10 years, but have I missed anything else?

bolwin1

You've not included the most important figure - how much do you need / want to live on in retirement ? If it's £10K p.a. you're sorted, if it's £100K p.a. you have a problem.

Also suggest you look at what happens when one of passes away at various different dates to work out the impact to the survivor.

Have you checked that you will both get the full state pension ?

cloud_dog

OP, you mention downsizing but not selling the BTL, why?

MankyVegSoup

bolwin1 wrote: »

You've not included the most important figure - how much do you need / want to live on in retirement ? If it's £10K p.a. you're sorted, if it's £100K p.a. you have a problem.

Also suggest you look at what happens when one of passes away at various different dates to work out the impact to the survivor.

Have you checked that you will both get the full state pension ?

I reckon £37,000 will pay the bills, give us a couple of decent holidays a year and allow for plenty of fun stuff. Currently the "fun stuff" is triathlon - don't think I'll be doing that when I'm 80.

I know I need to look at the death scenarios, but I want to get the basic calculations right first.

We are both on track for full SP - I need 1 more year which will be done when I do last years tax return.

MankyVegSoup

cloud_dog wrote: »

OP, you mention downsizing but not selling the BTL, why?

Selling the BTL is included in the downsizing. Currently around £50k equity in the BTL but complicated by a leasehold issue (which should get sorted well before we need to sell).

bluenose1

Have you considered increasing USS contributions as even if you pay tax on 75% of it with Salary Sacrifice could still be advantageous. We are living off savings to fund this to the maximum allowed.
Can withdraw 25% tax free at 55 even if still working without affecting ability to save over £4k per annum.
Is it worth considering taking the actuary reduction for his USS pension if means he could retire sooner.

enthusiasticsaver

So presumably your plan is to live off your DHs salary and BTL and drawdown from DC pot in 3 years time for a further 6 years until your DH retires? What will the shortfall be each year?

Will the mortgage be paid off by downsizing when your DH retires? If not you have a mortgage to be paid off plus buy another property although if you sell your BTL that helps but of course there is no guarantee what the housing market will look like then. This is why I do not like property as any sort of provision for retirement. The housing market may be buoyant and you have no problem releasing equity or it may be in a crash and things will be harder

On balance though it looks like you will have options although a messy way of planning for retirement. Any particular reason why you chose a BTL rather than putting money into your pension as a way of providing for retirement?

MankyVegSoup

bluenose1 wrote: »

Have you considered increasing USS contributions as even if you pay tax on 75% of it with Salary Sacrifice could still be advantageous. We are living off savings to fund this to the maximum allowed.
Can withdraw 25% tax free at 55 even if still working without affecting ability to save over £4k per annum.
Is it worth considering taking the actuary reduction for his USS pension if means he could retire sooner.

I think he is already paying extra. It's quite likely he will leave the university in the next couple of years to set up a spin off company. At that point we'll have a clearer idea what his USS pension looks like. If the spin off works out, then we'll be laughing! Just not counting on it.....

MankyVegSoup

enthusiasticsaver wrote: »

So presumably your plan is to live off your DHs salary and BTL and drawdown from DC pot in 3 years time for a further 6 years until your DH retires? What will the shortfall be each year?

Will the mortgage be paid off by downsizing when your DH retires? If not you have a mortgage to be paid off plus buy another property although if you sell your BTL that helps but of course there is no guarantee what the housing market will look like then. This is why I do not like property as any sort of provision for retirement. The housing market may be buoyant and you have no problem releasing equity or it may be in a crash and things will be harder

On balance though it looks like you will have options although a messy way of planning for retirement. Any particular reason why you chose a BTL rather than putting money into your pension as a way of providing for retirement?

There shouldn't be a shortfall while OH is still working - I will have my LGPS pension as well and we will stop our current fairly aggressive savings.

The mortgage should be paid off by the time OH retires. I agree about not relying on property so I'm being conservative with this. The BTL property was bought as a place to stay for OH when he got his current job and I was still tied to our former location by my business. We then kept it as a BTL after we moved.

And I agree it's messy - not really planned at all. I was expecting to work until 70 but a health scare a few years ago meant I completely re-thought my approach to life.