How much to live on

Organgrinder

Mae'n byd bach' on'd ydy! Ond falle, dylen ni newid yn ôl i Saesneg er mwyn osgoi heddlu y fforwm!

Albermarle

Organgrinder said

Mae'n byd bach' on'd ydy! Ond falle, dylen ni newid yn ôl i Saesneg er mwyn osgoi heddlu yr fforwm!

No bad language please  

Twigwidge

What a brilliant and inspiring read, I have spent 3 full evenings reading through the whole 261 pages and I would like really like to run my early retirement ideas past the forum for comment.

My situation is that I will be leaving work at the end of July aged 59 I currently have a net salary of 2,502 pounds per month and am hoping to maintain this level of income throughout retirement.

Fortunately I will have a defined benefit pension from USS of 1,400 pounds (net) per month on retirement (inclusive of early retirement penalties) plus I will get a Tax-free lump sum 151,000 pounds

My idea is to put this lump into a savings account which should yield 4% interest and to take 1,100 pounds per month (to top db pension up to 2,500) from this until I reach state pension age at 67. This means I need to bridge the gap to state pension which will be 7 years and 2 months

Rough calculations of use of lump sump

12x7+2=86 (months)   86x1,100=94,000 pounds which leaves 57,000 of lump at state pension age (probably a little more left due to interest)

At retirement I am hoping that my full state pension (assuming it won’t be abolished or means-tested by then) will make up the 1,100 pounds

My DB pension is linked to CPI and hopefully the state pension will stay triple locked so I am hoping my income will maintain most of its value

I am just wondering if this seems a sensible plan or if I should perhaps be doing something different with my lump sum?

I am mortgage-free and have total regular monthly outgoings (Including utilities, council tax, food, car, insurances) of 990 pounds

I would love some comments as I am on a very steep learning curve as early retirement was not on my radar until just before Christmas when I realised it might just work for me (after seeing colleagues of a similar age doing the same thing)

Any comments most appreciated

Albermarle

You will get more/better feedback if you repost the details on the Pensions Forum.
Pensions, annuities & retirement planning — MoneySavingExpert Forum

Also if you look through it you will see similar questions are asked on a regular basis, so you might find some of the answers useful.

Twigwidge

Many thanks Abermale, I will do just that

QrizB

Twigwidge said:

Many thanks Abermale, I will do just that

I don't want to preempt the discussion on the Pensions forum, but it looks like you've got several options to meet your £2500 net per month target. I think you're in a good place!

Twigwidge

QrizB said:

Twigwidge said:

Many thanks Abermale, I will do just that

I don't want to preempt the discussion on the Pensions forum, but it looks like you've got several options to meet your £2500 net per month target. I think you're in a good place!

Many thanks for this opinon OrizB, I am just reading through a few more posts on the main pensions forum before I jump in, but this thread has been a great help/read

Organgrinder

Don't forget to factor inflation in.

It may mean you will have to drawn down on your capital a little more.

But you can still reinvest £2880 pa into a pension. HMRC will top this up to £3600. It's not a huge benefit but it's worth £180 after tax.

Twigwidge

Thanks Organgrinder thats is a very handy bit of information and any tax benefit is worth it 

LL_USS

Twigwidge said:

Thanks Organgrinder thats is a very handy bit of information and any tax benefit is worth it 

@Twigwidge I would love to follow your story to see how you manage it, when you open a new thread. I still have a long way to go but plan to do the same/ similar: taking out TFLS just from the DC pot without commuting any part of the DB, calculating the shortfall till SPA, wondering what's the best way to use the TFLS. Good luck with your planning.