Is it enough?

Mowzel

Hi all, been lurking in the shadows for some time trying to make sense of things, I'm 55 and considering retirement. 

I have a DB pension with a CETV of £447000  or 11k p.a. at 55
And a DC pension of 81000. 

Ideally I would like achieve 24k p.a after tax. 
Wife works part time and earns approx 19k, and is 4 years younger than me. 

We both have full state pension  (according to Gov.Uk)

When OH wants to retire (55) she will have a modest NHS pension, approx 5k p.a

We have no debts, no mortgage. 

My question is, would the above figures be anywhere near my/our retirement goal, or do we have a way to go yet. 

Any thoughts on the above will be greatly appreciated. 

sevenhills

Mowzel said:

Ideally I would like achieve 24k p.a after tax. 
Wife works part time and earns approx 19k, and is 4 years younger than me. 

When OH wants to retire (55) she will have a modest NHS pension, approx 5k p.a

It looks enough to get you £24K per year, but your wife was earning £19k and I assume you are earning the same or more, is £24k enough for you both?

By the time your wife retires, the £5k could have grown to £8k

Mowzel

Thanks for your reply Sevenhills, my thought process was 24k from my retirement fund, added to OHs 19k for next 4/5 years, then OH retires and we have a joint income in the region of 30k p.a.
Problem is the 11k from DB won't get us anywhere near those figures so it may be a case of asking/trying to take the CETV, however I'm not sure this is still possible, we have a pensions adviser looking at the figures as I type but obviously he starts from the point of staying in the DB 

michaels

So you have 11k index linked forever DB and 9.4k index linked forever from 67.

Splitting the problem into 2 parts, you need to fund the 9.4k for 12 years to state pension age and then top up from 20.4k to 24k from now to forever (3.6K).

Very simple
9.4 x 12 = 112.8k
3.6k forever at a 3.5% safe withdrawal rate costs £103k

So your would need a DB pot of 216k to achieve what you are looking for.

And that is for 24k pre tax....

Linton

On your figures assuming you keep your DB pension as I guess you will have to, I think you may be just OK.  Say you retired now

At current values (the years may be 1 out): 

2021-2025: Your DB pension+ wifes income: £30K
2026-2033: Your DB pension+wifes pension: £16K (no tax to pay)+£8K/year from DC pension:£24K
2034-2037: Your DB pension+SP+wife's pension: £25K, tax covered by DC pot
2038....: Both DB pensions and SPs:£34K-tax

However:
 -  it is tight
 - £24K after tax may be too low for a sustainable income, especially taking into account one-off expenses.
 - Are both DB pensions inflation matching with no cap?


And:
 -  are your expecting to get £24K/year inflation adjusted from a CETV+DC pot for the whole of your retirement?  If so that is too ambitious if returns over the past 100 years repeat themselves.  You may get it but you may well not even if the £24K is gross.
 - Have you the experience to manage £0.5M of investments?

So I suggest you consider staying in work for another couple of years maximising your pension contributions and re-assess your situation then.  This would decrease your costs, increase your DC pension and also increase your DB income.

Mowzel

Thanks for your replies, my initial thoughts on my pensions were to take the CETV and have a pensions/financial adviser invest them,   take a higher sum in the early years and deplete the capital, however I'm starting to believe that is unlikely to happen.
I haven't really any choice in leaving my current workplace as ill health ( non life threatening) has made the decision for me, a part time easier less manual job isn't out of the question.
I've been advised to apply for PIP which I haven't got round to yet, but will.
Thanks so much for sharing your knowledge with me, it's very much appreciated 

Albermarle

Mowzel said:

Thanks for your replies, my initial thoughts on my pensions were to take the CETV and have a pensions/financial adviser invest them,   take a higher sum in the early years and deplete the capital, however I'm starting to believe that is unlikely to happen.
I haven't really any choice in leaving my current workplace as ill health ( non life threatening) has made the decision for me, a part time easier less manual job isn't out of the question.
I've been advised to apply for PIP which I haven't got round to yet, but will.
Thanks so much for sharing your knowledge with me, it's very much appreciated 

The CETV offer looks quite good , so you might be in with a chance if you decide to try.
Wait to see what  your IFA says , are they just having an initial look ?
The problem nowadays is that if you go through the full transfer process ( costinga few grand) and get a negative recommendation . You can still transfer in theory but finding a pensions provider to accept the transfer has become very difficult. If you get a positive recommendation then no problem. 

Mowzel

IFA is having a look he's got all the details for both pensions, Capita are dragging there heels a bit, final meeting is at the start of August, so I've got my fingers crossed for a decent outcome. 

draiggoch

Is 55 your normal retirement age or are you taking it early with a reduction? Just wondering in case it's worth taking it at 60 and living off the current DC fund and maybe a part time job or the PIP.

Mowzel

Thanks draiggoch, yes I'm taking it early with a reduction, and you raise a very good point thats worth me looking at 

draiggoch

You need to look very carefully on how much of a reduction there will be in your and your wife's pensions due to early payment as these can be quite hefty. Could be in the region of 5% per year so 25% less pension for taking it 5 years early, even 50% for taking it 55 instead of 65. This can make living on savings or DC pensions for a period much more efficient than taking the DB pension so early.