Analysis paralysis - do you think I could stop working soon?

tacpot12

You have been given some good advice on the financial side of your question, but I wanted to touch on a couple of points that have not been addressed already. 

The period between child maintenance ending and your children leaving home is a tough gap to bridge, but you shouldn't feel that it falls only to you to bridge it. Don't let the other parent off the hook just because the are retiring - if they have child maintenance commitments, they need they can still to meet their commitments if they want to retire.
 
Your children will need to be educated on how expensive it is to live, and that they cannot expect you or their other parent to keep funding them through their adult lives - they need to become productive adults so they can pay their own way in life. The sooner you start to expect this of them, the sooner they will get the message and start to consider their options. You should continue to support them emotionally to make those hard choices about whether to go to university or get a job after A levels, and what career they will chose.  Even if they have to claim benefits to live on, they should be giving you a substantial portion of their benefits to cover their rent and the impact on your council tax of having them at home. 

The JISAs are a fantastic legacy for them providing they don't squander it. When/if they want to buy a home with a partner, you should talk to them about the idea of a Deed of Trust to ensure that if the relationship breaks down, they don't end up having to give half of their deposit to their ex. 

I think you should retire as soon as you are reasonable able to. I retired at 53 from a stressful job, and have been much healthier as a result because I have the time to prioritise my own health. 

I would work the numbers carefully. I am operating my drawdown with a safe withdrawal rate of about 6.5% and this seems to be working out fine - I'm four years into my retirement. 

The thing that no-one seems to mention when trying to adjust the 4% US Safe Withdrawal Rate for the UK is that we have a State Pension. If we didn't have a state pension, the 4% US SWR would translate to 3.5% SWR for the UK (we can't achieve the same returns as the Americans for some reason), but we have a state pension, so if you have a full entitlement, you will find you can withdraw funds at the rate of a lot more than 4% in the UK.

Toucan13

Dox said:

Getting back into work after a break, especially in your 50s, is easier said than done if you find you can't manage financially, or at least not at the level of comfort you'd like. Do you enjoy what you do? If so, why are you thinking of stopping? If you don't enjoy it very much, could you cut back on the amount you do? If you really dislike it, could you do something else?

My work life balance is far better than it used to be.  I don't have the same enthusiasm I used to have for the work I do but am also aware that I can earn more for doing fewer hours and with much more freedom by continuing in this field than doing something new and perhaps earning less.  On reflection, maybe I'm thinking this way because I'm getting used to the fact I'm working now because I'm choosing to rather than having to do it.

Toucan13

Just to answer the other questions;

Mortgage - debated whether to pay this off but it's convenient to have the cash offset parked there in case of emergencies / markets go south and stay there and cash rates elsewhere don't look great.  Are there reasons I might be better paying this off instead?
Pension contributions - I'm still paying in as ER contributions via Ltd company.  If I stop working this way I'd still try to pay the £2880 as a minimum

tacpot12 said:

The period between child maintenance ending and your children leaving home is a tough gap to bridge, but you shouldn't feel that it falls only to you to bridge it. Don't let the other parent off the hook just because the are retiring - if they have child maintenance commitments, they need they can still to meet their commitments if they want to retire.
 
Your children will need to be educated on how expensive it is to live, and that they cannot expect you or their other parent to keep funding them through their adult lives - they need to become productive adults so they can pay their own way in life. The sooner you start to expect this of them, the sooner they will get the message and start to consider their options. You should continue to support them emotionally to make those hard choices about whether to go to university or get a job after A levels, and what career they will chose.  Even if they have to claim benefits to live on, they should be giving you a substantial portion of their benefits to cover their rent and the impact on your council tax of having them at home. 

The JISAs are a fantastic legacy for them providing they don't squander it. When/if they want to buy a home with a partner, you should talk to them about the idea of a Deed of Trust to ensure that if the relationship breaks down, they don't end up having to give half of their deposit to their ex. 

I think you should retire as soon as you are reasonable able to. I retired at 53 from a stressful job, and have been much healthier as a result because I have the time to prioritise my own health. 

I would work the numbers carefully. I am operating my drawdown with a safe withdrawal rate of about 6.5% and this seems to be working out fine - I'm four years into my retirement. 

The thing that no-one seems to mention when trying to adjust the 4% US Safe Withdrawal Rate for the UK is that we have a State Pension. If we didn't have a state pension, the 4% US SWR would translate to 3.5% SWR for the UK (we can't achieve the same returns as the Americans for some reason), but we have a state pension, so if you have a full entitlement, you will find you can withdraw funds at the rate of a lot more than 4% in the UK.

Lots of interesting points here thank you.  I've been working on the basis I'm on the hook ultimately for the children just in case their other parent doesn't continue later on. It's just a very difficult thing to plan accurately for while they're approaching  this transition stage and life in general is so uncertain at the moment.  They are very aware that they'll be expected to pay their way as they get older if they are living with me.  The point about prioritising my health is something I've been thinking a lot about lately as for years it's been near the bottom of my list and that may catch up with me one day if I don't address it!

I'm very glad you're enjoying your retirement and its health benefits.

BritishInvestor

cfw1994 said:

BritishInvestor said:

Cus said:

Much better advice will come after this comment 😁 but you want 29k a year, you have approx £780k available (you are not far from accessing the sipp) so at the often quoted safe withdrawal rate of 4% that's just about enough.  

The best advice is to ignore the often quoted 4% rule.

Do you have a better, simple “rule of thumb” rule?

I think it is a decent start. 3.5% to be cautious.....maybe 5-6% if you have some knowledge, flexibility and follow Guyton-Klinger.
What else would you offer?

"Do you have a better, simple “rule of thumb” rule?"
No such thing, unfortunately.

I think it is a decent start. 3.5% to be cautious.
You'd need to be very sure you understood the longevity assumptions, costs and asset allocation (amongst other things) to determine whether it was truly cautious.
So someone aged 55 in good health retiring today with a portfolio full of winning funds (read US tech stocks) that may well bail if/when the market unwinds is going to have a very different outcome to a 65-year-old following an approach more similar to the original research.

..maybe 5-6% if you have some knowledge, flexibility and follow Guyton-Klinger."
Same applies, with the additional comment that I'd question how many would choose a Guyton-Klinger approach if they fully appreciated the worst case historical outcomes.

BritishInvestor

Toucan13 said:

  

Linton said:

I think that it is a reasonable conclusion that giving up work entirely now is rather risky and that you should plan to work enough to cover your expenses for the next few years and see how your investments grow.  But you should be able to stop earning well before your SP age.

Thank you - I suspected it might be a bit tight.  It's so good to have others to look over the numbers (I just go around in circles).

michaels said:

Try plugging your numbers into the SWR spreadsheet. 
Also think about modelling by splitting your pot into two parts, one part might be 9.2k x 14 years (130k) to see you through to state pension age, invested conservatively to hopefully match inflation without too many swings and the second part being the remainder from which you can expect a 'safe withdrawal rate' of probably 4% less your average fees if left 'invested' payable both up to and post the state pension age (650k x 3.5% = 23k pa)

This give a total of about 32k pa pre tax.

I hadn't thought of splitting it that way - must admit I've used a combination of my own (far too simple) spreadsheet plus the Aviva calculator (because it takes SP into account). I'll give that some serious thought thanks.
Cus said:

Much better advice will come after this comment 😁 but you want 29k a year, you have approx £780k available (you are not far from accessing the sipp) so at the often quoted safe withdrawal rate of 4% that's just about enough.  

Thank you - this is sort of how I started number wise, then read a lot more and started to wonder if there was enough wriggle room.

I'm also realising that there's an awful lot more to retirement planning than I had initially thought......

"I'm also realising that there's an awful lot more to retirement planning than I had initially thought......"
Yep, hence why a rule of thumb is not a good starting point.
https://theirrelevantinvestor.com/2018/12/11/the-hardest-problem-in-finance/

BritishInvestor

tacpot12 said:

You have been given some good advice on the financial side of your question, but I wanted to touch on a couple of points that have not been addressed already. 

The period between child maintenance ending and your children leaving home is a tough gap to bridge, but you shouldn't feel that it falls only to you to bridge it. Don't let the other parent off the hook just because the are retiring - if they have child maintenance commitments, they need they can still to meet their commitments if they want to retire.
 
Your children will need to be educated on how expensive it is to live, and that they cannot expect you or their other parent to keep funding them through their adult lives - they need to become productive adults so they can pay their own way in life. The sooner you start to expect this of them, the sooner they will get the message and start to consider their options. You should continue to support them emotionally to make those hard choices about whether to go to university or get a job after A levels, and what career they will chose.  Even if they have to claim benefits to live on, they should be giving you a substantial portion of their benefits to cover their rent and the impact on your council tax of having them at home. 

The JISAs are a fantastic legacy for them providing they don't squander it. When/if they want to buy a home with a partner, you should talk to them about the idea of a Deed of Trust to ensure that if the relationship breaks down, they don't end up having to give half of their deposit to their ex. 

I think you should retire as soon as you are reasonable able to. I retired at 53 from a stressful job, and have been much healthier as a result because I have the time to prioritise my own health. 

I would work the numbers carefully. I am operating my drawdown with a safe withdrawal rate of about 6.5% and this seems to be working out fine - I'm four years into my retirement. 

The thing that no-one seems to mention when trying to adjust the 4% US Safe Withdrawal Rate for the UK is that we have a State Pension. If we didn't have a state pension, the 4% US SWR would translate to 3.5% SWR for the UK (we can't achieve the same returns as the Americans for some reason), but we have a state pension, so if you have a full entitlement, you will find you can withdraw funds at the rate of a lot more than 4% in the UK.

"The thing that no-one seems to mention when trying to adjust the 4% US Safe Withdrawal Rate for the UK is that we have a State Pension. If we didn't have a state pension, the 4% US SWR would translate to 3.5% SWR for the UK (we can't achieve the same returns as the Americans for some reason), but we have a state pension, so if you have a full entitlement, you will find you can withdraw funds at the rate of a lot more than 4% in the UK."

I'm not sure I see the logic. The SWR relates to a specific set of assets. Are you saying that your initial withdrawal rate from a given portfolio can be higher in the early years of retirement as it will drop once the state pension starts?
It would be interesting to see your research that says you can withdraw a lot more than 4% in all cases, thanks to the state pension.

NottinghamKnight

An observation is that the 0.5% difference between 4% and 3.5% that is often discussed is the typical adviser fee.

BritishInvestor

NottinghamKnight said:

An observation is that the 0.5% difference between 4% and 3.5% that is often discussed is the typical adviser fee.

Another observation is that the adviser fee doesn't have a 1:1 relationship with the SWR
https://finalytiq.co.uk/impact-of-adviser-fees-on-withdrawal-rates-in-retirement-portfolio/

Albermarle

Toucan13 said:

Dox said:

Getting back into work after a break, especially in your 50s, is easier said than done if you find you can't manage financially, or at least not at the level of comfort you'd like. Do you enjoy what you do? If so, why are you thinking of stopping? If you don't enjoy it very much, could you cut back on the amount you do? If you really dislike it, could you do something else?

My work life balance is far better than it used to be.  I don't have the same enthusiasm I used to have for the work I do but am also aware that I can earn more for doing fewer hours and with much more freedom by continuing in this field than doing something new and perhaps earning less.  On reflection, maybe I'm thinking this way because I'm getting used to the fact I'm working now because I'm choosing to rather than having to do it.

I think you have reached the correct conclusion . I have lost some enthusiasm for my job as I got older, but  the work /life balance is good, for what is quite a good salary and benefits . So I carried on rather than getting stressed about whether I had enough money to retire . Also family commitments meant an early  retirement of holidays and cruises would not be possible . Now I have reached a point where I have more than enough ( I think !) , so I do not have to worry about whether a SWR is 3 or 4% or whether taxes will go up etc and will go off calmly into the sunset in a few months.
If I  hated my job, or it took up 60 hours a week or too much travelling , and/or had less family commitments I would have packed it in earlier . 
So in the end you should do overall what suits your circumstances, and for sure do not rush into dumping a secure job without a lot of thought.
Regarding your comment about seeing colleagues, friends etc die in their 60's . We all know similar situations but the stats are that you will live on average to your mid Eighties . Which means a 50% chance of living longer than that .

[Deleted User]

BritishInvestor said:

tacpot12 said:

You have been given some good advice on the financial side of your question, but I wanted to touch on a couple of points that have not been addressed already. 

The period between child maintenance ending and your children leaving home is a tough gap to bridge, but you shouldn't feel that it falls only to you to bridge it. Don't let the other parent off the hook just because the are retiring - if they have child maintenance commitments, they need they can still to meet their commitments if they want to retire.
 
Your children will need to be educated on how expensive it is to live, and that they cannot expect you or their other parent to keep funding them through their adult lives - they need to become productive adults so they can pay their own way in life. The sooner you start to expect this of them, the sooner they will get the message and start to consider their options. You should continue to support them emotionally to make those hard choices about whether to go to university or get a job after A levels, and what career they will chose.  Even if they have to claim benefits to live on, they should be giving you a substantial portion of their benefits to cover their rent and the impact on your council tax of having them at home. 

The JISAs are a fantastic legacy for them providing they don't squander it. When/if they want to buy a home with a partner, you should talk to them about the idea of a Deed of Trust to ensure that if the relationship breaks down, they don't end up having to give half of their deposit to their ex. 

I think you should retire as soon as you are reasonable able to. I retired at 53 from a stressful job, and have been much healthier as a result because I have the time to prioritise my own health. 

I would work the numbers carefully. I am operating my drawdown with a safe withdrawal rate of about 6.5% and this seems to be working out fine - I'm four years into my retirement. 

The thing that no-one seems to mention when trying to adjust the 4% US Safe Withdrawal Rate for the UK is that we have a State Pension. If we didn't have a state pension, the 4% US SWR would translate to 3.5% SWR for the UK (we can't achieve the same returns as the Americans for some reason), but we have a state pension, so if you have a full entitlement, you will find you can withdraw funds at the rate of a lot more than 4% in the UK.

"The thing that no-one seems to mention when trying to adjust the 4% US Safe Withdrawal Rate for the UK is that we have a State Pension. If we didn't have a state pension, the 4% US SWR would translate to 3.5% SWR for the UK (we can't achieve the same returns as the Americans for some reason), but we have a state pension, so if you have a full entitlement, you will find you can withdraw funds at the rate of a lot more than 4% in the UK."

I'm not sure I see the logic. The SWR relates to a specific set of assets. Are you saying that your initial withdrawal rate from a given portfolio can be higher in the early years of retirement as it will drop once the state pension starts?
It would be interesting to see your research that says you can withdraw a lot more than 4% in all cases, thanks to the state pension.

Yes. State pension and any other DB income should be treated as part of your overall portfolio, the fixed income portion.  Its like an inflation linked bond with no expiry date.   Up to a certain age you withdraw from other portions of your portfolio.  So, if you set the withdrawal rate to 3.5%, you can divide state pension by 0.035 and add the result to your portfolio. And then you can withdraw 3.5% of the total. Which is wuite a bit more than 3.5% of your investments.  Delaying state pension means that you can actually afford to spend more.  This is a very rough approach but there are spreadsheets out there which do it for you.