Can I retire in a years time at 57??

dave_hendy

I am looking into retiring early as our company has been taken over and after 22 years there I am not enjoying going to work anymore! I have no financial background so I would like people a lot cleverer than me to see if I have made any major mistakes in my planning? Basically, I want to be reasonably sure we shouldn’t run out of money…….
I am 56 and my wife 50. The plan (if I can put up with work) is to work until next Christmas giving me another £10K in my work pension and my wife to go onto minimum March 2021 when she will be 52 and will have 36 years towards her SP (I will have 40 years).
We have no children or anyone we have to leave money to. We also have no mortgage and own our own home worth around £400K.
I have 2 Equitable Life pensions of about £25K and £30K which I intend to transfer to my work pension once the transfer to Utmost has gone through. This should give me a pension pot of £270K by next Christmas.
My wife has a total pension pot of about £45K and 2 small DB pensions that will pay about £2500 per year once she is 65.
We have savings and premium bonds totalling £650K. My budgeting spreadsheet has us spending between £25-30K per year when we retire.
My plan is to take my 25% tax free and live off this (£12K pa) and savings for the first 5.5 years, followed by cashing in my wife’s small pension pots (£10k pa) and savings for the next 4.5 years.
I would then start getting my SP of £10241.13 pa (confirmed this with them today) and start taking £7K pa from my work pension.
My calculations show that my pension drawdown (to be passed to my wife if I die first) should last until I am 96 or wife is 90 not increasing the amount, we take each year. Our savings should also last even though they won’t keep pace with inflation. I haven’t really taken inflation into account but with a hobby that I can’t see we will be able to continue with much passed 70-75 which covers £4.2K of our budget this money would be able to go to other things. I believe our savings etc will also allow for some extra if required plus we could always take some equity from our home?
I could be completely mad here or have missed something obvious which could affect things dramatically, which is why I am posting this and hope you can help me with? Not sure if you need any more details either?
We are just after a comfortable life style without having to worry all the time about money like both our parents did!

Andrew31

need more details really.

Just ask your advisor to do a cash flow forecast for you, they can tailor to your various plans. I just did a basic CF model based on 3% growth net of charges and the results were quite interesting.

Enjoy your retirement!

kev2009

Will be interested to follow and see the responses, i'm certainly no expert but with 650k plus the pension income, i'd have thought would be doable.

I'm much younger and pension predictions of approx 10k a year annuity + SP on top, seems low to me but its early days as i got 20+ years to go still so hoping it gets more realistic the nearer i get. If things remain as is, i'm hoping i can make up any shortfall in a few years time when i'm hoping mortgage is a lot lower than now.

Kev

dave_hendy

Hi, thanks for the quick reply. I do not have/have not seen a FA yet. Not sure if I will or not, my Mum had a very bad experience with one who almost cost her 50% of her money due to recommending a scam!

Audaxer

The £650k in premium bonds and savings is a huge amount that will be earning low levels of interest. If you have no immediate plans to for most of your savings, it would increase your potential income if at least some of it was invested. You and your wife could put £20k each tax year in an S&S ISA. If you do decide to invest in this way, the best place to start would be to research investing on this forum and sites like Monevator and also consider consulting an Independent Financial Adviser.

dave_hendy

Andrew31 wrote: »

need more details really.

Just ask your advisor to do a cash flow forecast for you, they can tailor to your various plans. I just did a basic CF model based on 3% growth net of charges and the results were quite interesting.

Enjoy your retirement!

What other details do I need to add?


Thanks

Linton

My initial thought was that your total assets of a bit under £1M, if properly managed, should be enough for you both to retire now. However let's check some things first before being too definite:

- When you say savings/PBs of £650K do you mean entirely cash savings or do you have significant investments in funds/shares?
- Is your spending budget based on a bottom-up calculation or what you are actually living on now?
- I am not clear how you live for the first few years. You mention income £12K/yr followed by £10K/yr. Where is the other £20K/yr or so coming from?
- will your wife have a full SP?

jonnygee2

With close to £1 million in savings, you are in the ballpark to be able to retire on £30k/year.

I would take advice from an IFA before taking any further action or making final decisions though, especially about how to structure your retirement fund.

Andrew31

How did your mum lose half of her money in a scam?

even if she did, this is no reason not to seek advisers, my friend got hit by a car, but I still cross the road, i am just careful.

there are many good advisors out there.

dave_hendy

Audaxer wrote: »

The £650k in premium bonds and savings is a huge amount that will be earning low levels of interest. If you have no immediate plans to for most of your savings, it would increase your potential income if at least some of it was invested. You and your wife could put £20k each tax year in an S&S ISA. If you do decide to invest in this way, the best place to start would be to research investing on this forum and sites like Monevator and also consider consulting an Independent Financial Adviser.

Approximately 50% of our savings is in ISA's although not S&S as I lost money in one when we were saving to payoff our mortgage.

Andrew31

Amen, OP could end paying a lot more tax than he should.