Can I retire in my 50’s?

Lifematters

I’m approaching 55 and would love to retire early. I am currently working part time and have additional rental income of 9k a year after taxes. 

I would like to retire on minimum income of 22k a year with capital of approx £50k for unforeseen spends.

I will have two DB pensions at 60 approx £10k+ £6k and at 67 I will also have full state pension.

Also, I have SIPP and savings over £100k.  If I sell rental property that would be a further £170k before tax but loss of rental income. 

I am mortgage free, no debts and no dependants. I don’t play with spreadsheets and wouldn’t know where to start to be honest. I was wondering, based on the above, what age could I reasonably retire at given my aim of at least £22k income a year in todays money with decent lump sum?

TIA. 

ewaste

How much DB income will you get at 60? that would determine how much you need to drawdown on the SIPP and savings between various ages. What level of inflation protection do the DB schemes have?

Marcon

Lifematters said:

II don’t play with spreadsheets and wouldn’t know where to start to be honest. I was wondering, based on the above, what age could I reasonably retire at given my aim of at least £22k income a year in todays money with decent lump sum?

TIA. 

How did you arrive at 'minimum £22K income a year' - and is that net or gross?

Getting a basic grasp of a spreadsheet would enable you to assess much more clearly how much you are spending now, which should give you some guidance on how much income you'll need to retire on. 

NedS

Is the £10k DB pension at age 60 inflation-linked, and is there a cap on the amount it can increase, or uncapped? If uncapped, then you have £20k of guaranteed inflation-linked income at 67 which puts you in a very strong position to achieve your £22k target income and a further £60k or so of capital remaining may be enough to provide the missing £2k income (plus whatever you feel appropriate for a cash emergency fund)

Knowing what you need at 67, work back from there. How much do you need to provide the missing £12k/year from 60-67 (this could be as simple as 7 x £12k = £84k in cash)

How much do you need to provide £22k/year from 55-60.

Do you have enough for the above?

Lifematters

 

In answer to questions:

2 DBs at 60 c £10k + £6k per year and index-linked, no cap.

The £22k income a year I am aiming for is gross. This is based on my spends for last two years.

Fixed spends being utility and other DD’s at £670pm / £8,040pa. Grocery and household at £450pm / £5,400pa, although this is absolutely the highest I spent one month, some months grocery and household could be around £300 but I want worse case scenario. The rest would be everything else such clothes, dental, optitions, xmas / birthday presents, eating / drinking out and holidays. 

Albermarle

Lifematters said:

 

In answer to questions:

My DB income at 60 is £10k per year and index-linked, no cap.

The £22k income a year I am aiming for is gross. This is based on my spends for last two years.

Fixed spends being utility and other DD’s at £670pm / £8,040pa. Grocery and household at £450pm / £5,400pa, although this is absolutely the highest I spent one month, some months grocery and household could be around £300 but I want worse case scenario. The rest would be everything else such clothes, dental, optitions, xmas / birthday presents, eating / drinking out and holidays. 

There are a lot of debates on this forum about size of bills, expenditure in retirement etc but I would say £22K pa for a single person, no dependents, no rent/mortgage, is around about average. Probably £8K for bills is higher than some ( but there some dedicated money savers on the forum ) but not excessive. Similar comment about the groceries bill.

Couple of things you do not mention. 
Projected expenditure on major household costs. New boiler, new washing machine, new carpets and if unlucky new roof/windows.
You do not mention a car, ( or a pet) both of which can be expensive to run.

Lifematters

I do have a car and include the running of that in my fixed expenditure.  I also have dogs but I foster them so very cheap as shelter covers all food and vet bills and I just buy the treats:) 

Lifematters

Also regarding major household expenditure, that’s the reason I want approx savings of 50k set aside. 

ChocolateWombat

Sounds okay to me to retire at 55.

Your ISAs and SIPPs will more than fund the 5 years to 60 (5x £22k) and then the  7 years to 67 7x £12k) 

I suppose a good question, is how much is needed on retirement to fund the big expenses from 55 to the end of life, if the yearly income is only enough to cover standard expenses and not the one-offs.  If you retire at 55 you’re probably looking at over 30 years of needing;
- car replacement several times
- white goods
- at least 1 kitchen and bathroom
- decorating
- at least a couple of boiler replacements
- other unforeseen big expenses

How much do people think should be put aside for this stuff if it’s a one-off lump sum, or if instead seeing it as monthly pension income, how much would you want per month to cover this stuff?

Actually, the flat income or the sale from it would cover this stuff.

I think you’re good to go.

Lifematters

As kitchen and bathroom are less than 5 years old I couldn’t imagine needing or wanting to replace them for another 10 - 15years and that would quite likely be the last time I do.  Not sure how much should be ‘set aside’ for that though. 

I’ve only had two cars in the last 20 years so likely will only buy one more..electric..after retirement, hoping that lasts the distance. 

Would be interested to know what other people feel comfortable putting aside for these big capital expenditures too. My £50k capital target would probably not be near enough for some.  But then some with more assets than me and lower target income would probably not take the plunge and retire for fear they haven’t enough. 

Grumpy_chap

Two questions, OP:

How does the retirement income of £22k compare with your current income?

Have you considered that your discretionary / leisure spending may increase when you are not working because of having more time available?