Retirement - October 23?

montventoux

Hi All

Long time lurker though the time has now arrived to establish whether retirement October 2023 is achievable based on the following numbers.

Our magic number in retirement is £25-27k p.a.  We lead a simple lifestyle but do like a European holiday once a year.

Current numbers as follows:-

Me - DB pension @ 60 currently  £16k  p.a. (CPI linked - no cap)

Lump sum £45k (£30k tax free)

O/H - small £3k DB pension at 65  (RPI  linked to 2030 then CPIH thereafter - no cap).

O/H DC Pension - £70k and currently SS  £1.2k pm so hopefully pot will be circa £85k in October 2023.

Not planning to take DB pensions early due to actuarial reduction so the 'plan' to bridge the cap for the years 58-60 is to drawdown from O/H DC/ S&S ISAs/Savings.

From 60 to 65 the 'plan' is to use a combination of my DB/DB lump sum (5k p.a.) O/H DB/ and S&S ISAs/ Savings

67 onwards - My DB/OH DB/ SP's.

Full State Pension Forecasts for both of us with requirement for one more year contributions.

Investment/Savings as follows:-

£63500 - two year fixed rate bond (maturing September 2022)

£27,000 - Chase Instant Access Savings Account

£140,000 - S&S ISA's 

Thanks for reading and comments/thoughts welcome.

draiggoch

Can you open a DC pension for yourself  and fill it until October 2023 so that you can use your personal tax allowance 58-60? Even if it isn't invested and stays in cash you would get the basic rate tax (or even higher rate if you're paying tax at that level) back on it. Obviously this is only if you have enough headroom in your salary / annual allowance.

montventoux

Thanks draiggoch - yes, this is certainly worth considering.

draiggoch

Can I ask why are you paying tax on £15,000 of the lump sum?

montventoux

 I'd just been reading some Voluntary Early Severance documentation hence I specified £30k being tax free!
The £45k lump sum is tax free.

draiggoch

If you are going to be using your OH's DC then if they have salary / allowance remaining it might be a good idea  to try and fill the pension so that they can take the full personal tax allowance and 25% tax free every year. Even if you cannot Salary sacrifice it due to minimum wage regs you could still put it in another personal pension. This would make the cash work harder.

Albermarle

Your DB and State pensions should give you approx the income you require at 65/67 and between 60 and between these ages you will have £16K a  coming in.

In very basic terms you have approx £350K in DC pensions/savings and investments. Lets put £50K away as cash buffer and it leaves you £300K to give an income of £27K pa for two years and approx £10K pa for 5 to 7 years .

Even with problems with inflation etc , you seem to have more than enough. You could probably increase your spending by 25% without losing a wink of sleep.

Of course if you manage it correctly, taking advantage of tax breaks/personal allowances etc. as mentioned by the previous poster, then can only be a good thing.