What made you 'pull the trigger'? 9 January at 11:00AM in Pensions, annuities & retirement planning 289 replies 71.1K views

GSP

Albermarle said:

enthusiasticsaver said:

sgx2000 said:

I really appreciate posts like this....

While all the pensions, tax and investment advice is invaluable....  (thank you everyone who helps)

The more personal help with the decisions and outcomes is also invaluable...

I am 62 and am at the point of wanting to go,  but really struggling to make the jump.....
My finances are a fraction of most of the posts on the forum... So making the decision a little harder....

I do laugh at the posters who say they have pots of £700k and dont know if they can afford to retire...lol

pots of £700k have further to fall at times of stock market dips.  A drop of 10-15%  (very common at the moment) can knock £100k easily off larger pots. We have DB pensions so luckily we have  a more secure drawdown plan but our S and S ISAs and SIPPs are about 15% down on 2021 valuations.  That is our supplementary pot to cover our early retirement years though until state pensions kick in to boost our DB pensions. 

A number of posters have mentioned that the recent drop in markets has made them nervous about retiring, or are now nervously newly retired.
This is fully understandable from a psychological/ emotional point of view, but from a more purely financial view it is not very logical. During a 30 year retirement markets will go up and down  many times, and for sure at least a couple of the drops, will be a lot more dramatic than the current one. Also if you take into account the very good years of the previous decade, then it still looks pretty good.
Basically it means if a drop of 15% or thereabouts scuppers your plans, you probably did not have enough in the pot to begin with.
Caveat is that the current inflation at the same time as a market drop, is particularly painful, but I think the logic still holds.

Think the ‘problem’ is while you mention ups and downs over periods as in growth, or not, there are further downs as with the withdrawals themselves which take the pots down further.
And when that pot drops to a certain amount and recovers less and less because there is less and less in it, boy will you have to make changes that income drying up.

drjohn67

EdSwippet said:

Hit the LTA ... or rather, the govt reduced the LTA so that it hit me. 2016. I had planned to work four more years, but calculated that I would lose around 25% in compensation over the period, either way: take fixed protection but lose my entire employer pension contributions and the added salary sacrifice NI uplift benefit on top; or, don't take fixed protection and lose 25% in eventual LTA penalty.

I have more self-respect than to work four years for effectively three years of salary. At the LTA, work becomes optional. I opted to stop. With close to a year of lifestyle planning already done, the transition was very easy to make. The pre-planning was crucial, though. Retire to something, not just from something.

Same here. LTA. 

I worked 100+hours a week as a junior dr then 25 years as a GP - extreme time poverty meant that I always spent less than I earned.

The retirement decision became much easier after COVID crisis. The economic hit / inflation would punish a 30 + year pot through huge LTA penalties. That alongside even more crushing workload within a crumbling health service decided things. 

NedS

GSP said:

Albermarle said:

enthusiasticsaver said:

sgx2000 said:

I really appreciate posts like this....

While all the pensions, tax and investment advice is invaluable....  (thank you everyone who helps)

The more personal help with the decisions and outcomes is also invaluable...

I am 62 and am at the point of wanting to go,  but really struggling to make the jump.....
My finances are a fraction of most of the posts on the forum... So making the decision a little harder....

I do laugh at the posters who say they have pots of £700k and dont know if they can afford to retire...lol

pots of £700k have further to fall at times of stock market dips.  A drop of 10-15%  (very common at the moment) can knock £100k easily off larger pots. We have DB pensions so luckily we have  a more secure drawdown plan but our S and S ISAs and SIPPs are about 15% down on 2021 valuations.  That is our supplementary pot to cover our early retirement years though until state pensions kick in to boost our DB pensions. 

A number of posters have mentioned that the recent drop in markets has made them nervous about retiring, or are now nervously newly retired.
This is fully understandable from a psychological/ emotional point of view, but from a more purely financial view it is not very logical. During a 30 year retirement markets will go up and down  many times, and for sure at least a couple of the drops, will be a lot more dramatic than the current one. Also if you take into account the very good years of the previous decade, then it still looks pretty good.
Basically it means if a drop of 15% or thereabouts scuppers your plans, you probably did not have enough in the pot to begin with.
Caveat is that the current inflation at the same time as a market drop, is particularly painful, but I think the logic still holds.

Think the ‘problem’ is while you mention ups and downs over periods as in growth, or not, there are further downs as with the withdrawals themselves which take the pots down further.
And when that pot drops to a certain amount and recovers less and less because there is less and less in it, boy will you have to make changes that income drying up.

Yep, SoR risks. If you have a robust plan, where market drops of 40-50% have been modelled, and your plan incorporates a cash buffer and allows some flexibility, you should be good to go. But I am so glad I'm not in that boat as I can imagine the choppy nature of the ride will not make retirement plain sailing for those of a financially nervous disposition. For such people, converting a proportion of the portfolio to fixed / guaranteed income may be beneficial.

Sea_Shell

In answer to the original question...

Not being able to book a week's leave, during a spot of nice weather, because others were already off.

That was the final straw, and the trigger to put the plan into action 😎

Albermarle

GSP said:

Albermarle said:

enthusiasticsaver said:

sgx2000 said:

I really appreciate posts like this....

While all the pensions, tax and investment advice is invaluable....  (thank you everyone who helps)

The more personal help with the decisions and outcomes is also invaluable...

I am 62 and am at the point of wanting to go,  but really struggling to make the jump.....
My finances are a fraction of most of the posts on the forum... So making the decision a little harder....

I do laugh at the posters who say they have pots of £700k and dont know if they can afford to retire...lol

pots of £700k have further to fall at times of stock market dips.  A drop of 10-15%  (very common at the moment) can knock £100k easily off larger pots. We have DB pensions so luckily we have  a more secure drawdown plan but our S and S ISAs and SIPPs are about 15% down on 2021 valuations.  That is our supplementary pot to cover our early retirement years though until state pensions kick in to boost our DB pensions. 

A number of posters have mentioned that the recent drop in markets has made them nervous about retiring, or are now nervously newly retired.
This is fully understandable from a psychological/ emotional point of view, but from a more purely financial view it is not very logical. During a 30 year retirement markets will go up and down  many times, and for sure at least a couple of the drops, will be a lot more dramatic than the current one. Also if you take into account the very good years of the previous decade, then it still looks pretty good.
Basically it means if a drop of 15% or thereabouts scuppers your plans, you probably did not have enough in the pot to begin with.
Caveat is that the current inflation at the same time as a market drop, is particularly painful, but I think the logic still holds.

Think the ‘problem’ is while you mention ups and downs over periods as in growth, or not, there are further downs as with the withdrawals themselves which take the pots down further.
And when that pot drops to a certain amount and recovers less and less because there is less and less in it, boy will you have to make changes that income drying up.

As long as the withdrawal rate is not set too high and you have the flexibility to vary it, then you should be OK. In fact you are more likely to end up with more than you started with than actually run out. According to ' Safe Withdrawal Rate' theory anyway.
I think a good cash buffer can help, even if it only helps you sleep at night.

SouthCoastBoy

Albermarle said:

GSP said:

Albermarle said:

enthusiasticsaver said:

sgx2000 said:

I really appreciate posts like this....

While all the pensions, tax and investment advice is invaluable....  (thank you everyone who helps)

The more personal help with the decisions and outcomes is also invaluable...

I am 62 and am at the point of wanting to go,  but really struggling to make the jump.....
My finances are a fraction of most of the posts on the forum... So making the decision a little harder....

I do laugh at the posters who say they have pots of £700k and dont know if they can afford to retire...lol

pots of £700k have further to fall at times of stock market dips.  A drop of 10-15%  (very common at the moment) can knock £100k easily off larger pots. We have DB pensions so luckily we have  a more secure drawdown plan but our S and S ISAs and SIPPs are about 15% down on 2021 valuations.  That is our supplementary pot to cover our early retirement years though until state pensions kick in to boost our DB pensions. 

A number of posters have mentioned that the recent drop in markets has made them nervous about retiring, or are now nervously newly retired.
This is fully understandable from a psychological/ emotional point of view, but from a more purely financial view it is not very logical. During a 30 year retirement markets will go up and down  many times, and for sure at least a couple of the drops, will be a lot more dramatic than the current one. Also if you take into account the very good years of the previous decade, then it still looks pretty good.
Basically it means if a drop of 15% or thereabouts scuppers your plans, you probably did not have enough in the pot to begin with.
Caveat is that the current inflation at the same time as a market drop, is particularly painful, but I think the logic still holds.

Think the ‘problem’ is while you mention ups and downs over periods as in growth, or not, there are further downs as with the withdrawals themselves which take the pots down further.
And when that pot drops to a certain amount and recovers less and less because there is less and less in it, boy will you have to make changes that income drying up.

As long as the withdrawal rate is not set too high and you have the flexibility to vary it, then you should be OK. In fact you are more likely to end up with more than you started with than actually run out. According to ' Safe Withdrawal Rate' theory anyway.
I think a good cash buffer can help, even if it only helps you sleep at night.

Inflation is the enemy with regards to cash. I wouldn't be surprised if inflation stays high (5% +) for quite a while. 

Historically I have quite a bit of cash, around 40%,but currently this is being eroded in real terms. I have bought more equities when the market was lower than it is now so most probably I have about 35%cash now, I want to get to a 80:20 equities:cash ratio before I reach retirement.

UrbanAchiever

I'm not retired yet, but have a firm plan to do so when I'm 53, which is 4 years, 6 months and 4 days away 

My drivers?
1) My mum died at 57.  Thankfully she and my dad retired about 7 years before, so at least she had a wonderful retirement while she was still well.  This taught me that the future is by no means guaranteed, so I need to retire as early as possible to make sure I can enjoy it.
2) both kids will have finished high school which will be the trigger for us to downsize, whilst knowing that we can afford to support them at Uni.
3) during covid my work went crazy busy.  I was working 12 hour days and weekends for about a year.  That was as close to burnout as I've ever been.  I may even have been there.  It was knife edge stuff.  I don’t think I've recovered from it even now, and have gone from loving my job, to hating it, even though my hours are more sensible and nothing else has changed. 
4) triggered by 3) I started looking seriously at my finances to see what retirement age was possible.  In doing so I discovered that even retiring at 53, I'm likely to exceed the LTA. Working later than this will see me breach it by some margin.

With 4.5 years to go, I hope that my financial position will allow it to happen (my very detailed forecast spreadsheet says it will) and that I live long enough to actually get there.

SMcGill

1. I’d always intended to retire early … for me that meant before 60, otherwise all those expensive holidays etc I didn’t take were a waste of time

2. The final lockdown ended and my employer started talking about returning to normal … I thought “not bloody likely, thank you very much”

3. A voluntary severance scheme opened up … I thought “that’s my bus!”

ex-pat_scot

SMcGill said:

3. A voluntary severance scheme opened up … I thought “that’s my bus!”

"Back to normal" is seriously not welcome here.

You wait ages for a bus, then three turn up at once (hopefully!)

chubsta

SMcGill said:

3. A voluntary severance scheme opened up … I thought “that’s my bus!”

That is the absolute dream for me - instead of retiring, take voluntary severance, and then claim my pension a month or so later - unfortunately, whilst such things are not unheard of in my line of work, apparently we are 'essential' so will never happen to us...