Getting from 55 to 67 with a SIPP

minimalising

AnotherJoe said: 

Speak for yourself. And consider why you need a job to give you a "purpose in life". That sounds desperate.

Yep, I'm not expecting to have a problem with this.  I've got hobbies and my 'purpose' will be to stay fit and healthy.  I live in a quiet village in the the North West and I like the pace of life up here.  

I mean I was in a punk band for over a decade, but I'm every bit of 45 now.  I'm past trying to 'live life to the max' or whatever.  I just want to chill and have fun. 

crv1963

minimalising said:

Thrugelmir said:

minimalising said:

I'd have two options.  1) Take the full state pension at 67 or 2) take a reduced pension at 55 (reduced by 45%).

Based on the current figures (just as an example), I'd be taking £9110.40 a year from 67 (opt 1) or £5010.72 from 55 (opt 2).

By the time you get to 67, I'd have taken 60129 from the reduced amount (opt 2).  At that point, option 1 would start paying out and here is what surprised me, the age at which opt 1's total payout overtakes option 2's is 81.  81?  I'm a bloke, I'll be amazed if I make it to 81 and when I do, what am I even going to spend money on? 

You need to factor in inflationary increases on both pensions. Compounding over the years has a material impact. 

I'm just doing a basic illustration of the numbers up there.  I'm sure compounding will have an impact but assuming that late 70s is where it might end up being level, that's still really old for a bloke.

crv1963 said:  You also have option 3- use money from the SIPP and ISAs from 55-60 as per your original idea and take NHS Pension at 60- if the 1995 scheme it will be unreduced survive 60-67 drawing from SIPP the same amount pa as you will get for your SP (if you haven't exhausted the pot by then). That way at 67 when SP starts no drop in income- level income from retiring at 55. 

I'm mostly in the 2015 scheme but yeah I could hold off for a while I guess.
I'm currently looking at switching my SIPP from Standard Life to Vanguard as the fees are a lot less. 

I would suggest hold off touching the NHS Pension until absolutely needed- at 45 you would expect to live until mid to late 80s, although of course no one knows the end date!

I had a heart attack and with the interventions at hospital and changes to lifestyle (mainly stopping smoking, eating regularly and changes to diet- usual less processed food/ crisps and more fruit and veg) I was told on my last- discharge visit to Cardiologist I now have a life expectancy of mid-80s. So you never know as you are happy where you live and intend keeping yourself fit why not expect to live past your 70s? 

Thrugelmir

Depends on how inflation pans out in the years to come. 

barnstar2077

My outgoings are only £5,500 a year.  My plan is also to retire at 55, but on £12,500 a year, and oddly I also plan on getting a dog.  To the people warning about not being able to live on twelve grand, Minimilising is probably, like me, putting a large proportion of their salary into his pensions and ISA, so they are already effectively living on a much reduced salary already.

With the caveat of having at least a few grand put aside as an emergency fund, I say go for it, you could always get a part time job to help pay the bills at a later date if you really needed to, but I don't see why you would need to with the advanced planning you are doing.  I lost my mum last year and sustained a minor injury after being hit by a car a few months later due to no fault of my own.  You may live to be a hundred, but you may not.  Time is the only true commodity, why spend it at work when you could be doing something else?

I used to work with people who put in forty five+ years at our company.  I think part of the reason they stayed in the job as long as they did though was because of their unpleasant personalities.  I think they realised that no one would give them the time of day, or laugh at their cringe worthy jokes, unless they had to due to workplace hierarchy.  A generalisation I know, I am sure there are plenty of people that just love their jobs and never want to leave.  I don't know any of those people though.

Freecall

barnstar2077 said:

My outgoings are only £5,500 a year.  

I know that this forum is famous for people boasting how they can live on a threepence a week but really?  £5.5k

That is about 1/3 of minimum wage.

My Council Tax alone is £2.5k,  

Surely you have something wrong.

JoeCrystal

Freecall said:

barnstar2077 said:

My outgoings are only £5,500 a year.  

I know that this forum is famous for people boasting how they can live on a threepence a week but really?  £5.5k

That is about 1/3 of minimum wage.

My Council Tax alone is £2.5k,  

Surely you have something wrong.

Thinking about my expenses, I reckon it may be possible to live on £458 per month, but I would have to be extraordinarily careful and frugal with no luxury/insurances/hols at all (if I am excluding the pension contribution/mortgage cost).

jimi_man

Yes I'm struggling to see how someone could live comfortably on £5500.I accept they might live in Central London where Council Tax is extremely low, however other things will be higher. £5500 is £460 a month, out of that has to come utilities (gas, electricity, water, phone if they have one), food, entertainment, TV, holidays, transport, maintenance.

I guess if you live on your own in a small flat in Westminster, and don't eat or do much then it might be possible. 

Barnstar2077, could you break it down for us please? There are probably some tips we can all pick up?

barnstar2077

To clarify, I meant my bills (including food) are £5.5k a year.  Hence £12.5k would give me a comfortable retirement.  My council tax is 1k (a 3 bed semi in Essex with single persons discount.)

barnstar2077

water	13
gas	30
elect	20
ctax	84
home ins	12
food	150
broadband	37.5
mobile	24.5
tv licence	12.43
netflix	5.99
mortgage	54

Total £443.32
Full disclosure, the above is from last years numbers, so I have upped a couple because I think they have gone up a bit since then.

savingholmes

Interesting thread. Even just using the categories Barnstar listed my costs would be double but then I am married and still have dependants. In practice I would allow for much wider spends than that. I estimate if I retired early we would need £22K net as a minimum and preferably closer to £30K p.a. We too would like to start drawing pension income at 55 and either work significantly reduced hours or part year and live somewhere else. We are looking at how to bridge the gap between 55 and 67 too so it all makes interesting reading. I think the Which guide on retirement income for singles and couples makes good reading too.