Can I afford retire next year at 55 ?

buyhighselllow

55 next year. Pension would be c20K. Savings would be 200K with minimum lump sum on retirement
I estimate we need 30-35K/year to give us the lifestyle we require, plus occasional one offs like a new car at some point
Will get close to full SP at 67, as will OH. 
May/may not inherit 70-200K , not relying on that in the figures, but £35k is sort of guaranteed.
Happy to do some low level PT work if I can find something agreeable as and when 2-3 days per week.
No debts.
Does this sound realistic ?

lisyloo

Maybe I’m not understanding,  but you say you will get £20k and you want £30-£35k?

I guess it’s realistic if you PT work is going to get you the missing £10-£15k for the next 12 years, otherwise I’m missing something.

What are you planning to use your savings for?
have you planned in holidays, leisure activities, healthcare (like dental), new vehicles, what about home repairs.

p00hsticks

buyhighselllow said:

55 next year. Pension would be c20K. Savings would be 200K with minimum lump sum on retirement
I estimate we need 30-35K/year to give us the lifestyle we require, plus occasional one offs like a new car at some point
Will get close to full SP at 67, as will OH. 
May/may not inherit 70-200K , not relying on that in the figures, but £35k is sort of guaranteed.
Happy to do some low level PT work if I can find something agreeable as and when 2-3 days per week.
No debts.
Does this sound realistic ?

On the figures you give, I'd say probably not, althouguh you might just scrape it if you're prepared to completely run down your savings (not something I'd personally like to do).   

You should be just about alright when both SP's kick in, but until then you're going to be £10-15k short a year for the next 12 years till  then. Add in money for a new car and the other 'occasional one offs (house maintentance ? holidays) and that's the whole of the £200k gone.

If you are only 'close to' full SP it would be worth spending a bit of those savings if you don;t carry on working to make it up to full SP. 

Does you OH not have any form of private pension ?

buyhighselllow

Based on actual and projected spending this year including holiday's, repairs etc we are heading for about £30K outgoings.
So I am thinking I can use the 200K pot to make up the other 10K per year until SP kicks in, plus any occasional other one offs. 
Obviously if I can make up an extra 5K or more a year from PT work some years then that's a bonus.

buyhighselllow

My OH will have a pension of about 3K from next year and will make about 6K from her small business, but I want her to keep a chunk of that for her personal spending, so she would potentially be contributing a little towards the annual living costs.

uss_tish

@buyhighselllow go for it! Life is short as I discovered at the age of 54 when my husband died. 

I then retired the following year aged 55 on a combined works pension and widows pension from husband pension scheme of £33k p.a. (both DB).  I am using my lump sums to supplement my additional living expenses (son through uni, holidays etc) until state pension age. I also have considerable equity in the house which can be released when I downsize. 

The hardest part, as so many retirees on here will tell you, is turning your mindset to spending in retirement, as all our working lives we are programmed to save.

I have not a single moments regret taking early retirement. It has given me precious time at home with my youngest before he heads to uni in September and time with wider family and friends.

Marcon

buyhighselllow said:

55 next year. Pension would be c20K. Savings would be 200K with minimum lump sum on retirement
I estimate we need 30-35K/year to give us the lifestyle we require, plus occasional one offs like a new car at some point
Will get close to full SP at 67, as will OH. 
May/may not inherit 70-200K , not relying on that in the figures, but £35k is sort of guaranteed.
Happy to do some low level PT work if I can find something agreeable as and when 2-3 days per week.
No debts.
Does this sound realistic ?

Is that 'pension c£20K' taking into account the significant reduction for early retirement, which (depending on the normal retirement age of your scheme and the %age reduction for each year before NRA) could be reduced by anything from 25% to 50%? Just checking! 

buyhighselllow

uss_tish said:

@buyhighselllow go for it! Life is short as I discovered at the age of 54 when my husband died. 

I then retired the following year aged 55 on a combined works pension and widows pension from husband pension scheme of £33k p.a. (both DB).  I am using my lump sums to supplement my additional living expenses (son through uni, holidays etc) until state pension age. I also have considerable equity in the house which can be released when I downsize. 

The hardest part, as so many retirees on here will tell you, is turning your mindset to spending in retirement, as all our working lives we are programmed to save.

I have not a single moments regret taking early retirement. It has given me precious time at home with my youngest before he heads to uni in September and time with wider family and friends.

Thanks. Yes I feel I'm nearly cooked in my main career, and TBF its not that much bigger a pension if I hold on another 5 years. We have no dependents so not really planning on leaving anything, plus there is the possibility of equity release either in moving somewhere cheaper or via a scheme later down the line ?

buyhighselllow

Marcon said:

buyhighselllow said:

55 next year. Pension would be c20K. Savings would be 200K with minimum lump sum on retirement
I estimate we need 30-35K/year to give us the lifestyle we require, plus occasional one offs like a new car at some point
Will get close to full SP at 67, as will OH. 
May/may not inherit 70-200K , not relying on that in the figures, but £35k is sort of guaranteed.
Happy to do some low level PT work if I can find something agreeable as and when 2-3 days per week.
No debts.
Does this sound realistic ?

Is that 'pension c£20K' taking into account the significant reduction for early retirement, which (depending on the normal retirement age of your scheme and the %age reduction for each year before NRA) could be reduced by anything from 25% to 50%? Just checking! 

Yes, that is with the reduction

Notepad_Phil

I wrote the following but got called away so never got around to posting. I see that there's been quite a few posts added since I wrote this but thought I'd still add it in its entirety rather than trying to edit it down.
-----------------

What inflationary protection does your pension have and is that £20k pension before or after tax?

What pension income will your spouse receive once you're no longer around and what expenditure are they likely to want?

If needed and things didn't go to plan (e.g. inflation continues at high rates for the next decade), could you be happy on less than £30k current day expenditure or is that an absolute minimum?

What part time work is available to you and is that recession proof?

Are you keeping your savings in cash or will at least some be in suitable investments?

Have you worked out how your finances look over the next 12 years - e.g. a spreadsheet with a row for every year detailing how your assets might look at the beginning or end of that year?

Suitable answers to the above might change my mind, but on the face of it, personally I wouldn't retire with the amounts you've posted though it might be possible in a few years if the pension has excellent inflationary protection.

buyhighselllow

Notepad_Phil said:

I wrote the following but got called away so never got around to posting. I see that there's been quite a few posts added since I wrote this but thought I'd still add it in its entirety rather than trying to edit it down.
-----------------

What inflationary protection does your pension have and is that £20k pension before or after tax?

What pension income will your spouse receive once you're no longer around and what expenditure are they likely to want?

If needed and things didn't go to plan (e.g. inflation continues at high rates for the next decade), could you be happy on less than £30k current day expenditure or is that an absolute minimum?

What part time work is available to you and is that recession proof?

Are you keeping your savings in cash or will at least some be in suitable investments?

Have you worked out how your finances look over the next 12 years - e.g. a spreadsheet with a row for every year detailing how your assets might look at the beginning or end of that year?

Suitable answers to the above might change my mind, but on the face of it, personally I wouldn't retire with the amounts you've posted though it might be possible in a few years if the pension has excellent inflationary protection.

Both Pensions are NHS so there is death benefits and linking to inflation.
There is obviously the option to take less pension and more lump sum, and possibly reduce the tax burden.
Savings are currently  equally in cash isas/ savings accounts, premium bonds and S&S isas