Can I retire in a years time at 57??

dave_hendy

SonOf wrote: »

You should not see an FA but an IFA.
At least your mum should have got most, if not all of her money back as recommendations from FAs or IFAs give consumer protection. Even if unregulated investments are used.


Equitable life has been gone for decades and had a fairly unique set up circumstances that led to new legislation to prevent it happening again. Plus, no-one lost out.
There were over 300,000 agents, FAs and IFAs in that period. Now there are just over 20,000 as the higher regulatory standards and higher qualifications pushed out the salesforces that did most of the damage in the past. it is a very different world today.

S&S ISAs invest in assets that go up and down on a daily basis. The only way you would have actually lost money is if you withdrew it in a negative period and didnt wait for the recovery.

You do realise that your pension will be invested in similar assets to those used in an S&S ISA and that the use of drawdown is considered higher risk compared to alternatives?

I lost the money in the ISA well over 10 years ago when I understood very little about anything to do with investments and hadn't even thought about loosing money in an isa, it was just one of the ways I was trying to payoff the mortgage, if I had known I would have waited to take the money out, I just wanted to pay off the mortgage that was my goal. Unfortunately it wasn't as easy to do research on everything as it is now.


I am trying to learn what I can these days. The whole point of forums like this.

dave_hendy

jaybeetoo wrote: »

If you don’t take more risk, your savings are unlikely to keep pace with inflation.

https://www.moneyobserver.com/news/over-50s-are-not-taking-enough-investment-risk

Thanks, I am starting to realise this and as such I contacted my pension company today and changed my proposed retirement age from 60 to 65 to stop them changing the funds to safer ones too early.


I will start doing research into s&s isa's before the next tax year.

Albermarle

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.

Lots of people are put off investing in shares due to drops in value soon after they invest . Then they panic/lose faith etc., and withdraw the money and never invest again . However it is the well known number one classic mistake made by inexperienced investors, to pull out when they are down, rather than realising that as investors it is a long term game . This is exactly what my in laws did, and the money then spent 25 years languishing in low return savings accounts and the decision probably cost them well over £100K in missed returns .
If you go to an IFA , I am sure they will recommend moving a lot of the cash into long term investments of one kind or another . At least to go from two thirds cash to one third maximum , if only to keep up with inflation .

dave_hendy

Albermarle wrote: »

Lots of people are put off investing in shares due to drops in value soon after they invest . Then they panic/lose faith etc., and withdraw the money and never invest again . However it is the well known number one classic mistake made by inexperienced investors, to pull out when they are down, rather than realising that as investors it is a long term game . This is exactly what my in laws did, and the money then spent 25 years languishing in low return savings accounts and the decision probably cost them well over £100K in missed returns .
If you go to an IFA , I am sure they will recommend moving a lot of the cash into long term investments of one kind or another . At least to go from two thirds cash to one third maximum , if only to keep up with inflation .

This is one of the things I need to learn!


I get being over cautious from my Mum, my wife is the opposite...…….

Andrew31

I think this forum is well suited for people who just have a simple question, but is certainly isnt designed for someone with £1m looking to find out when he can retire.

In the most basic sense taking 3% a year should last you 33 years (not taking into account SP). But it far more complex than that.

Almost everyone on here has told you to see an adviser. You seem quite set on doing it yourself, so i wish you luck. No doubt you will survive, but its likely to cost you a great deal of money.

Linton

dave_hendy wrote: »

The £12K & £10k would be the money from my 25% tax free lump sum (£67K) and the £45K from my wife's small pensions. ...

Yes but what about the £20K to bring you up to £30k annually?

Lets look at your overall position....

The key point is with £650K in cash you are probably losing £6K/year in spending power. But current inflation rates are pretty low. For example between 1975 and 1985 £650K in cash would have dropped to around £200K in real value. Share based funds would be expected to at least match inflation in the long term. So by staying in cash you could be taking on much more risk than if you were to invest in a moderately cautious portfolio of funds for both your savings and pension from which you could expect to be able to sustainably draw down say £30K/year, inflation adjusted.

To give you some idea of the effect I have put together a very rough spreadsheet which takes into account the 2 SPs and 1 DB pension coming in at the appropriate ages:

- Assuming you stay 100% in cash for the whole £900K-£1M and lose 1.5% to inflation each year (eg 2.5% inflation, 1% interest) then a steady £30K total income /year should just last you out to 100.
- Assuming your pot is invested with an average return of 3% above inflation, which is not ambitious, then a total income of £45K/year looks readily achievable.

dave_hendy

Andrew31 wrote: »

Almost everyone on here has told you to see an adviser. You seem quite set on doing it yourself, so i wish you luck. No doubt you will survive, but its likely to cost you a great deal of money.

Like s&s isa's it's obviously something I need to think seriously about.


Which is partly why I asked the question

AlanP_2

dave_hendy wrote: »

I have upped my contribution to 30% of my wages for possibly the last year at work. Not sure I can increase more plus I get 10% from work.

Given your savings pot I think you can increase it all the way up to your earned income, and possibly the same for your wife - subject to £40k Annual Allowance limitations which may, or may not, be an issue dependant on your incomes.

If either of you is a HR taxpayer the benefits are more than for a BR taxpayer but not to be ignored in either case.

I can understand your reluctance regarding using an IFA but as is said on here fairly regularly going DIY can save you money if done well but can cost you a lot if done badly the same as DIY electrics, car mechanics or building an extension.

Overall I agree with the consensus that leaving next year should not be a problem and you could afford to go now if you wanted to by the sounds of it.

Well done on getting to that stage.

dave_hendy

Linton wrote: »

Yes but what about the £20K to bring you up to £30k annually?

Lets look at your overall position....

The key point is with £650K in cash you are probably losing £6K/year in spending power. But current inflation rates are pretty low. For example between 1975 and 1985 £650K in cash would have dropped to around £200K in real value. Share based funds would be expected to at least match inflation in the long term. So by staying in cash you could be taking on much more risk than if you were to invest in a moderately cautious portfolio of funds for both your savings and pension from which you could expect to be able to sustainably draw down say £30K/year, inflation adjusted.

To give you some idea of the effect I have put together a very rough spreadsheet which takes into account the 2 SPs and 1 DB pension coming in at the appropriate ages:

- Assuming you stay 100% in cash for the whole £900K-£1M and lose 1.5% to inflation each year (eg 2.5% inflation, 1% interest) then a steady £30K total income /year should just last you out to 100.
- Assuming your pot is invested with an average return of 3% above inflation, which is not ambitious, then a total income of £45K/year looks readily achievable.

The other £20k would come out of savings, whether savings accounts which vary from 1.1% to 2.2% interest or cash isa's.


Your projection is very interesting, I didn't realise there could be so much difference! The good point being it should last, but obviously having an income over £40k would be great and would mean better longer holidays especially when we are 'young'.


This is the sort of information that will persuade me to see an IFA.


Thanks

dave_hendy

AlanP wrote: »

Given your savings pot I think you can increase it all the way up to your earned income, and possibly the same for your wife - subject to £40k Annual Allowance limitations which may, or may not, be an issue dependant on your incomes.

If either of you is a HR taxpayer the benefits are more than for a BR taxpayer but not to be ignored in either case.

I can understand your reluctance regarding using an IFA but as is said on here fairly regularly going DIY can save you money if done well but can cost you a lot if done badly the same as DIY electrics, car mechanics or building an extension.

Overall I agree with the consensus that leaving next year should not be a problem and you could afford to go now if you wanted to by the sounds of it.

Well done on getting to that stage.

We are both basic rate tax payers these days after my company stopped overtime 5 years ago.


I think I will need the next year to sort out everything including finding the right IFA, but if things get too bad I will have the option of just going. My wife says she wants to retire when I do, although getting her full SP is important so she needs to find out for sure if she has done enough years and stay a bit longer if required or at least drop her hours or days.