Semi retirement possible?

Albermarle

I am however trying to get my sipp up to 160 k at 60, and my wifes to 80k at 62.

As you will have more than you do now, then the investment strategy will remain important , post 60/62.

Dazza1902

At 67 i feel pretty nailed on to achieve a comfortable  retirement relative to expenditure. If we both semi retire before state retirement age i guess we would take her db pensions, put the sipps into drawdown at a non harmful rate andboth look for part time work until state is pension kicks in. Weve plenty of hobbies and interests which are low cost. Unfortunately at present we do not have the time to fully enioy them. 

Mutton_Geoff

Dazed_and_C0nfused said:

Two people with pensions of £12,500 each will pay no tax on them.
But if one has say £15,000 and the other £10,000 there will be tax to pay.

Not if some of the £15k is coming from drawdown of the SIPP. If the OP has £5k from a DB scheme then draws £10k from his SIPP, 25% of that would be tax free, ie £2,500 so the entire £15,000 would be tax free.

Dazza1902

Albermarle, you have eluded to drawdown /investment strategies being important at a later date. Could you elaborate , as i say i am relatively naive. What would be the advantage of not taking the whole 25%ls from a sipp ? 

chucknorris

Dazza1902 said:

I would like to go to 2/3 days per week at 60 doing something different and not too bothered about what it pays.
Married both 56 early in the new year. Current joint take home £4400, mortgage free(450pm) in 6 months, one child though uni, second through uni in 2.5 yrs
, no debts. Saving about £1400 per month into a sipp. 
My wife a teacher says she loves her job and does not want to retire, while i think this is admirable i want to make plans in case this changes.
Our Pension provision is poor, im trying to play catch up. 
Me, db 5k pa payable at 60, sipp 90k.
My wife db in the pension protection fund of 1.1k pa  payable at 60 no indexing, lgps 1.3 k pa at 62 (1.7 at 67),average salary teachers pension scheme 6k pa at 62 (15k at 67) . Plus 42k in a sipp. No major savings 10k in an isa, 15k for emergencies. 
I have checked our state pension, we both have full state pension 18k.
I think we could live on 3k take home per month very comfortably.
Any tips or thoughts? 

I have not read the whole thread (so apologies if someone has already mentioned this), have you considered buying additional pension in the TPS (Teachers Pension Scheme)? I think that it is very good value, I have purchased the max allowed in the pre 2015 scheme, and I currently use all my part time salary to buy more in the current TPS scheme, which I will continue to do so until I reach state pension age (you can't buy it beyond that, and that may trigger my retirement). The cost depends on your age, the last purchase I made at 62 years old (a few months ago) was £16,520 per £1,000 of pension purchased, which is approximately half the price of buying a similar index linked annuity. I am not a big fan of annuities, but I would be if they were half the price.

Dazed_and_C0nfused

Mutton_Geoff said:

Dazed_and_C0nfused said:

Two people with pensions of £12,500 each will pay no tax on them.
But if one has say £15,000 and the other £10,000 there will be tax to pay.

Not if some of the £15k is coming from drawdown of the SIPP. If the OP has £5k from a DB scheme then draws £10k from his SIPP, 25% of that would be tax free, ie £2,500 so the entire £15,000 would be tax free.

That isn't a pension of £15k though.  It is a TFLS of £2,500 and pension of £12,500.

chucknorris

Dazza1902 said:

At 67 i feel pretty nailed on to achieve a comfortable  retirement relative to expenditure. If we both semi retire before state retirement age i guess we would take her db pensions, put the sipps into drawdown at a non harmful rate andboth look for part time work until state is pension kicks in. Weve plenty of hobbies and interests which are low cost. Unfortunately at present we do not have the time to fully enioy them. 

I put my notice in to retire a few years ago at 59, but the university struggled to get a replacement to teach one particular module, so they asked me to stay on and work one day per week, which I did. That has now grown to 2 days per week (and possibly about to be increased to 2.5 days). It works really well for me, not enough workload to ever stress me, and plenty time to pursue my interests/hobbies. In fact, I sort of consider my job to be an interest rather than a job now.

Albermarle

Dazza1902 said:

Albermarle, you have eluded to drawdown /investment strategies being important at a later date. Could you elaborate , as i say i am relatively naive. What would be the advantage of not taking the whole 25%ls from a sipp ? 

If you did not need the money for any specific reason , then left in the SIPP,  it could continue to enjoy investment growth , until you did need it.
Or you could take it out in stages . After you have stopped working this can be tax efficient. One tactic is to withdraw £16666 per tax year . £12500 taxable( but below your personal allowance so no actual tax to pay ) + £4116 tax free.
In reality most people take out the 25% Tax free lump sum asap . Either because they are skint or see it as some end of work bonus to be blown on holidays, new cars etc . However from a financial planning point of view it is best not do this unless you really need it for something.

Dazza1902

Two times £16666 gets very close to the 3k per month  im looking for. I guess this approach is handy in the years before state pension kicks in. As part of that overall tax efficient 16666 could we both contribute the £2880 back into the sipps as per another thread thats running?? 

Dazed_and_C0nfused

Yes but you would be limited to the standard 6.25% gain as any additional withdrawal would mean the 75% taxable element was taxed at 20%.

So pay in £2,880 and, if withdrawn on same basis, get £3,060 back.