I think it’s enough

Troxy

Hi I’m 50 and thinking about retiring in 2 or 3 years. I think we have enough but useful to check with the good people on this board. 

My wife is a similar age and we have a teenage daughter who we hope will go to university and we will support her.
To make it easier, I will list our assets and pensions together.

DC pension pot of £355k, contributing approx £3k per month
S & S ISAs £500k, contributing £20k per year
other equity £200k
cash or near cash £80k

Mortgage 200k
other debt 7k (interest rate is 0 %)

DB pensions 28k + lump sum (prob 50k) at 60 another 4K at 67 + state pensions at 67 (forecast to be full in 2 years) or whenever it will be.

we don’t have a lavish lifestyle, outgoings are approx 3 to 3.5k per month but this could increase if we choose to travel more ( more than likely) or support our daughter at uni.

I think we have enough to hang up our boots in a couple of years. Am I missing anything?
thanks you

Secret2ndAccount

Need = 3.5k x 12 = 42k/yr after tax. With 2 x annual allowance of 12570 you need about 46k/yr to get that.
At age 67 you have 2 x 9k (State Pension) +4k + 28k = 50k/yr - more than you said you need.
At age 60 you have 28k, so you need 7 yrs x 18k = 126k to make it from 60-67
Your pot today = 355 + 500 + 200 + 80 - 200 - 7 = 928k, subtract 126k and add maybe 50k and you get maybe 850k
850k / 46k = 18 yrs.       By my reckoning you should have retired years ago.
If you retire at 52, after adding another 112k to the pot, I reckon you have 950k - 8 x 46k = 580k of spare money. That's quite a safety margin. You could buy your daughter a house to live in at University. She could rent out rooms for extra income. You could still withstand a stock market crash and be just fine.
Biggest concern would be the unfortunate demise of one of you at a young age. You should do these calculations all over again based on your needs and earnings if there is only one of you.

Assumptions:
1. You will indeed receive full state pensions of 9k. If you retire early you might need to pay some voluntary NI to get there, but this is small change in terms of the numbers you have.
2. Your investments grow at least in line with inflation. You have DB and SP so you are well set for later in life. If the next few years saw high inflation and poor investment performance, that could put a dent in your position, but unlikely a big enough dent to do any damage.
3. You can get a house for <250k where your daughter wants to study.

QrizB

From those numbers, you think you'll need £40k per year and once you get to 67 you're covered (£28k DB+4k DB+2x9k SP).

• From 60 to 67 you'll only have £28k DB so you;'ll need an extra £12k pa - total £84k
• From 52 to 60 you''ll need to find the full £40k pa - total £320k

So you need £404k to cover you to SPA and you've got over £500k of savings today (after mortgage) plus another £400k of DC pension in 5 years? I think you're covered.

For that matter you could probably stop work tomorrow.

Secret2ndAccount

Have you done a quick check of your pensions against the lifetime allowance? I realise there are two of you, but if the pensions are mostly coming from one side, you could run up against the limit. Roughly speaking, if one of you thinks they might receive a total of 1 million in pension over their lifetime, then you need to take a closer look at the rules and your pension totals. Might be better to divert money into ISA's at this point, which can be drawn on before you hit 55. Or switch your pensions into low risk investments and take any risk in your ISA's. There's no point seeing big growth in your pensions, only to hit the LTA and end up paying extra tax on the gains.

Troxy

Secret2ndAccount said:

Have you done a quick check of your pensions against the lifetime allowance? I realise there are two of you, but if the pensions are mostly coming from one side, you could run up against the limit. Roughly speaking, if one of you thinks they might receive a total of 1 million in pension over their lifetime, then you need to take a closer look at the rules and your pension totals. Might be better to divert money into ISA's at this point, which can be drawn on before you hit 55. Or switch your pensions into low risk investments and take any risk in your ISA's. There's no point seeing big growth in your pensions, only to hit the LTA and end up paying extra tax on the gains.

Good point, they are roughly evenly split. Mine is around £550k, OH around £450k (all DB) so not near LTA just now. We have recently opened up a SIPP for her (nothing in it just now) to mop up some higher tax rate but should still be good for LTA.

Troxy

QrizB said:

For that matter you could probably stop work tomorrow.

The only 2 issues about retiring tomorrow are; not enough NI years so would need to buy a couple of years each - I’ll look up how much that is; and also a reduction in one of the DB pensions - I’ll need to work that out.

El_Torro

Troxy said:

QrizB said:

For that matter you could probably stop work tomorrow.

The only 2 issues about retiring tomorrow are; not enough NI years so would need to buy a couple of years each - I’ll look up how much that is; and also a reduction in one of the DB pensions - I’ll need to work that out.

Do you really need to take your DB pension early? This usually involves quite a big hit on your annual income from the pension. It might be better to leave it til 60 and live off your cash and ISAs until then. It might not be, just something worth assessing.

tacpot12

El_Torro said:

Troxy said:

QrizB said:

For that matter you could probably stop work tomorrow.

The only 2 issues about retiring tomorrow are; not enough NI years so would need to buy a couple of years each - I’ll look up how much that is; and also a reduction in one of the DB pensions - I’ll need to work that out.

Do you really need to take your DB pension early? This usually involves quite a big hit on your annual income from the pension. It might be better to leave it til 60 and live off your cash and ISAs until then. It might not be, just something worth assessing.

This is good advice. Try to avoid taking your DB pensions early if this is going to result in a reduction in the amount you receive. My partner and I retired at 53 and have been doing this for the last 4 years.  

kuratowski

Yes, it is frequently advised on here to take DB later where it will increase by doing so.  This gives you a higher guaranteed income later on when you are more advanced in years, and perhaps not so keen on managing an investment pot.  In effect, by delaying taking your DB and utilising more of your DC at younger ages, it reduces your overall longevity risk.

Likewise you may wish to defer SP by a few years, for the same reasons.

Troxy

This is good advice. Try to avoid taking your DB pensions early if this is going to result in a reduction in the amount you receive. My partner and I retired at 53 and have been doing this for the last 4 years.  

Sorry, I don’t think I explained it well. OH is still contributing to a DB pension, retiring earlier means less years in the pension so it will be reduced in that way. We don’t intend to take them early.

Thrugelmir

I'd plan on clearing the mortgage if early retirement is the objective. That's a hefty debt to be owing if interest rates were to rise. Be a double whammy if markets suffered a correction at the same time. Leverage is a double edged sword.