Retire in late 50’s

Justso65

Hi

I’m interested to hear other’s opinions on retiring in late 50’s or 60 at the latest.

I have a relatively good DB pension built up over around 20 years and I left that scheme about 17 years ago.  I frequently get benefits quotations based on different retirement dates and my plan for the DB scheme is to take it at 67 and add my state pension to that.  My DB pension contracted out of SERPS and although that aspect confuses me when I check on the gov website I have a full NI history and I am informed I will get max state pension of, at today’s rates, about just under £10k.  My wife will, by that time be taking a DB Civil service pension  and a few years later her full state pension.  So I am relatively comfortable with what pension me and my wife will have combined in our late 60’s.  Add to that we have zero debt. 

Since leaving my DB provider I have accumulated around £500k in a DC pension.  I think I’ve described my intended strategy in previous posts but the intention would be to bridge the gap between now and 67, just over 9 years, with the DC pot.  I like to work with what I have rather than projecting investment appreciations or even depreciations over a number of years.  So I work with £500k over 9 years.

Although I earn quite a bit more than £50k per year a large portion of that is taken up with my DC contributions which are very significant in relation to my salary. I worked out long ago how much I needed Per month/per year to live on and put the rest into my DC pension.  I have a good ISA buffer of just over £100k to use if needed.  Apart from a new car last year I have never needed to touch the ISA.  I know interest rates have been appalling but I do like a healthy cash buffer and rates are improving significantly.

So with my DC pot I can easily match my current take home pay until 67 and if those investments do even a pessimistic performance based on some online calculators I will still have some DC pot left at 67.  As I said, I work on what I have and don’t rely on projections.

Here is my dilemma.  My work stresses me often.  Every time I hear of people dying in their late 50’s or 60’s I think of my pension diligence and apart from the inconvenience of dying I would be annoyed to get a fatal diagnosis not having had the opportunity to take advantage of my pensions to retire early and enjoy more leisure time.  However, to be quite frank I think I’m scared to retire.  Stopping the regular income from my current employment and moving to reducing rather than building up my pension is a scary prospect.  If I was pushed into it through redundancy then the decision is made for me but actually taking the decision scares me.

So going back to the original point of this post, has anyone else out there been in a similar scenario in their late 50’s, what decision did you take, how did it work out and do you have any regrets?

Thank you for any input.  

JS.

Albermarle

It is a familiar and widely discussed subject on this forum. The most recent thread on this forum is here.
What made you 'pull the trigger'? — MoneySavingExpert Forum

Dazed_and_C0nfused

I have a relatively good DB pension built up over around 20 years and I left that scheme about 17 years ago. I frequently get benefits quotations based on different retirement dates and my plan for the DB scheme is to take it at 67 and add my state pension to that. 

If you left 17 years it seems unusual/unlikely that the NPA would be 67.  Why exactly do you plan on taking this pension at 67?

My DB pension contracted out of SERPS and although that aspect confuses me when I check on the gov website I have a full NI history and I am informed I will get max state pension of, at today’s rates, about just under £10k.  

Is the just under £10k what you have actually accrued at 5 April 2022 or what you will accrue if you contribute to add NI year(s)?

sgx2000

In your position i would have retired 5 years ago..

Time is your most important asset...
Dont waste it doing something you dont need to do......

green_man

sgx2000 said:

In your position i would have retired 5 years ago..

Time is your most important asset...
Dont waste it doing something you dont need to do......

Exactly.

I was in the OPs position(ish) and I did retire about 8 years ago…I’m currently 57.  Using combination of ISA and DC 
pot to support me.

If you have analysed your required spend carefully, which it sounds like you have.
If you have the resources to support this spend, with some contingency, which it’s sounds like you have.
if you don’t love you job, which it sounds like you don’t.  Then….
….what are you waiting for

You can procrastinate for ever and you can usually come up with some good reason to do so.  The longer you leave it the better off you will be ultimately, but that will always be the case.

You are in the fortunate position to have a choice here, most don’t. I managed to ‘manufacture’ a redundancy offer from my firm, if this is a possibility it’s worth pursuing and will give you the push you need.

mark55man

Albermarle's link to the other thread is very useful - its quite long and full of interesting perspectives.

I am absolutely convinced you can do it, the main decision you face is not whether to go but what is the best blend of cash / cautious / growth you need to ensure you get to 67 in whatever style you choose.  You don't mention dependents just a partner but if you have none just go - if you have dependents then make a plan for them and then go!!

As a caution you could use the ISA or tax free elements to fund yourselves so that you don't trigger MPAA (ie 4000 annual allowance not £40000.) That would make it easier to go back to work if you bounced from retirement - but many more than not regret staying the extra year than going too early

Just do it - or at the very least explore part time - or a less stressful job.  A little income goes a long way to preserve your pot but honestly you don't need it

Pat38493

 ^^ This.

I started looking into this a year or two back and I had always assumed I needed to work into my 60s before I could retire.  After I started investigating further and just a quick free introductory conversation with an IFA, I started to investigate the option of retiring at 55 or at least within a couple of years after.  At this point, I cannot possibly imagine working on into my 60s, at least not in the type of job I'm in now.

Justso65

Dazed_and_C0nfused said:

I have a relatively good DB pension built up over around 20 years and I left that scheme about 17 years ago. I frequently get benefits quotations based on different retirement dates and my plan for the DB scheme is to take it at 67 and add my state pension to that. 

If you left 17 years it seems unusual/unlikely that the NPA would be 67.  Why exactly do you plan on taking this pension at 67?

My DB pension contracted out of SERPS and although that aspect confuses me when I check on the gov website I have a full NI history and I am informed I will get max state pension of, at today’s rates, about just under £10k.  

Is the just under £10k what you have actually accrued at 5 April 2022 or what you will accrue if you contribute to add NI year(s)?

Dazed_and_C0nfused said:

I have a relatively good DB pension built up over around 20 years and I left that scheme about 17 years ago. I frequently get benefits quotations based on different retirement dates and my plan for the DB scheme is to take it at 67 and add my state pension to that. 

If you left 17 years it seems unusual/unlikely that the NPA would be 67.  Why exactly do you plan on taking this pension at 67?

My DB pension contracted out of SERPS and although that aspect confuses me when I check on the gov website I have a full NI history and I am informed I will get max state pension of, at today’s rates, about just under £10k.  

Is the just under £10k what you have actually accrued at 5 April 2022 or what you will accrue if you contribute to add NI year(s)?

The only reason I plan on taking my DB pension at 67 is because pension delayed is pension increased.  I hopefully can fill the gap between now and 67 with my DC pot and take my guaranteed DB and state pensions together at 67.  It’s just a plan, not set in stone.

Regarding the state pension it is NI contributions accrued to date, 40 years.  Not projected accrual.  Fortunately as I was messing around as a student in the early 80’s I seemingly accrued NI credits.  I have then worked continually since 1986.  So the state pension is at its max as of now and I can’t increase any further with more NI contributions.

Thank you for yours and all the other responses.  “Pulling the trigger” seems an apt description.  It feels like I am doing exactly that if I retire now.  My plan has always been to retire in spring and take advantage of the spring and summer weather as I become work idle but leisure busy.  Engineering redundancy sounds just what I would like to do.  It may be possible but needs careful planning to get there.

JS. 

Dazed_and_C0nfused

The only reason I plan on taking my DB pension at 67 is because pension delayed is pension increased. I hopefully can fill the gap between now and 67 with my DC pot and take my guaranteed DB and state pensions together at 67. It’s just a plan, not set in stone.

Have you checked this aspect in the scheme rules for your specific DB pension?

Not all DB schemes pay the pension between NPA and when it starts if you choose to claim it later than NPA.  So you could have typically lost out on 2-5 years of payments.

Pat38493

Justso65 said:

Dazed_and_C0nfused said:

I have a relatively good DB pension built up over around 20 years and I left that scheme about 17 years ago. I frequently get benefits quotations based on different retirement dates and my plan for the DB scheme is to take it at 67 and add my state pension to that. 

If you left 17 years it seems unusual/unlikely that the NPA would be 67.  Why exactly do you plan on taking this pension at 67?

My DB pension contracted out of SERPS and although that aspect confuses me when I check on the gov website I have a full NI history and I am informed I will get max state pension of, at today’s rates, about just under £10k.  

Is the just under £10k what you have actually accrued at 5 April 2022 or what you will accrue if you contribute to add NI year(s)?

Dazed_and_C0nfused said:

I have a relatively good DB pension built up over around 20 years and I left that scheme about 17 years ago. I frequently get benefits quotations based on different retirement dates and my plan for the DB scheme is to take it at 67 and add my state pension to that. 

If you left 17 years it seems unusual/unlikely that the NPA would be 67.  Why exactly do you plan on taking this pension at 67?

My DB pension contracted out of SERPS and although that aspect confuses me when I check on the gov website I have a full NI history and I am informed I will get max state pension of, at today’s rates, about just under £10k.  

Is the just under £10k what you have actually accrued at 5 April 2022 or what you will accrue if you contribute to add NI year(s)?

The only reason I plan on taking my DB pension at 67 is because pension delayed is pension increased.  I hopefully can fill the gap between now and 67 with my DC pot and take my guaranteed DB and state pensions together at 67.  It’s just a plan, not set in stone.

Regarding the state pension it is NI contributions accrued to date, 40 years.  Not projected accrual.  Fortunately as I was messing around as a student in the early 80’s I seemingly accrued NI credits.  I have then worked continually since 1986.  So the state pension is at its max as of now and I can’t increase any further with more NI contributions.

Thank you for yours and all the other responses.  “Pulling the trigger” seems an apt description.  It feels like I am doing exactly that if I retire now.  My plan has always been to retire in spring and take advantage of the spring and summer weather as I become work idle but leisure busy.  Engineering redundancy sounds just what I would like to do.  It may be possible but needs careful planning to get there.

JS. 

Just to be crystal clear on the state pension point, have you checked your state pension forecast on UK gov and made sure that it says that you cannot improve any further?  Usually there is a headline figure of 185.15, but then if you scroll down it might say something different like - you can get it to this value by contributing x more years.

If you were in a DB scheme for a long time you would have been contracted out so you would most likely need well over 35 years to get the full amount.

Justso65

Dazed_and_C0nfused said:

The only reason I plan on taking my DB pension at 67 is because pension delayed is pension increased. I hopefully can fill the gap between now and 67 with my DC pot and take my guaranteed DB and state pensions together at 67. It’s just a plan, not set in stone.

Have you checked this aspect in the scheme rules for your specific DB pension?

Not all DB schemes pay the pension between NPA and when it starts if you choose to claim it later than NPA.  So you could have typically lost out on 2-5 years of payments.

I have checked and I can delay my DB pension from when it was initially planned to start at 65 and I could if I wished start it earlier.  They recently sent me a quote for pension at 60.