Am I ok? 22 February at 3:58PM in Pensions, annuities & retirement planning 11 replies 1.1K views

Astronut5

Just turned 60 and have been out of work for 6 months due to redundancy but have really enjoyed having time to do things.
Now I am 60 I have taken my final salary pension which could not be deferred past 60 which is £12560 a year indexed at 5% per annum fixed, took the lump sum as well which means with the redundancy payment and savings gives me £300k in cash savings.
This is in various online savings accounts some variable but half fixed at close to 5% for 5 years.
Own my own house, no mortgage, no debt, nearly new car paid for.
Here is the question, after six months out of work I don't really want to work again so do I have enough to retire on?
My outgoings are modest at around £950 a month including putting money aside for annual bills such as car/bike/house insurance, servicing etc.
Have a state pension forecast of £182 a week with a max of £185 if i work another year.
Do you think I have enough to be ok?

Marcon

Astronut5 said:

Just turned 60 and have been out of work for 6 months due to redundancy but have really enjoyed having time to do things.
Now I am 60 I have taken my final salary pension which could not be deferred past 60 which is £12560 a year indexed at 5% per annum fixed, took the lump sum as well which means with the redundancy payment and savings gives me £300k in cash savings.
This is in various online savings accounts some variable but half fixed at close to 5% for 5 years.
Own my own house, no mortgage, no debt, nearly new car paid for.
Here is the question, after six months out of work I don't really want to work again so do I have enough to retire on?
My outgoings are modest at around £950 a month including putting money aside for annual bills such as car/bike/house insurance, servicing etc.
Have a state pension forecast of £182 a week with a max of £185 if i work another year.
Do you think I have enough to be ok?

You're the only one who can answer that. If you are happy with your current lifestyle (not least not having to work!), and are willing to cut back your spending if things go even more seriously awry with the economy, then on the numbers you've given that would seem a reasonable idea.

Why hold £300K in cash? Might be worth seeing if you can get some of it working a bit harder for you, while keeping enough in 'safe' investments to maintain what you are comfortable with as a cash cushion.

Two thoughts: the longer you don't work, the harder it is to get back into paid employment (which may not matter). You don't mention any family, so are you willing to accept that you may need to sell your property if you need to go into residential care in later life?

Pipthecat

I think you partly answered the question yourself. Your pension will cover your outgoings, the state pension will uplift that further and you have a large reserve of savings. 

Question could be flipped into "I've covered my basic needs, how can I use my savings to increase my standard of living and how much more could I afford to pay myself?"

Steve_666_

With the 300K in cash, I would suggest you use your 2022-23 ISA allowance before the financial year end, even if you think you might withdraw it next year

molerat

You are not going to be taking 3 world cruises a year but it looks perfectly doable

Astronut5

I guess I am just looking for some reassurance as I have pretty much made up my mind that I don't want to work again.
It's just going from that mind set of acquiring assets to the period of your life when you start spending it.
Always earned decent money and put money away and now my pension will only just cover my yearly outgoings.
I know I will be comfortable but it's just the change from saving to spending I guess.
Got my state pension to come in 7 years if the gov don't move it further away.

sheslookinhot

I would look at getting some of that 300k into a SIPP and some into an S&S ISA.

Bravepants

Why not pay £20k a year into a stocks and shares ISA in a typical balanced fund like HSBC Global Strategy Balanced. With the rest (or majority of it), stick it into a NS&I 1-year guaranteed income bond paying 3.9%, transferring the monthy interest each month to your current account. Say you popped £20k into the ISA, then £280k into the bond you would get 3.9% of £280k or £10,920 a year (taxable) and your £280k would be completely safe. After the bond expires in a year pop another £20k into your ISA, then if NS&I are still doing such bonds repeat with the remaining £260k!

In the UK, the typical and often touted safe withdrawal rate from a balanced fund like the HSBC one is between 3% and 3.5% each year, with the chances of not running out of money over something like 30 years.

You would also be getting 3.9% from your NS&I bond and after tax it would be about £9k in the first year as a basic rate taxpayer (you are allowed £1000 tax free interest per year in addition to your £12,570 annual allowance).

Of course don't put all the £280k into the bond if you need easy access cash, say for spending or an emergency fund.

Astronut5

Something to think about, already got about £135k fixed at close to 5% for five years.

Bravepants

Here's the info on Guaranteed Income Bonds: https://www.nsandi.com/products/guaranteed-income-bonds

bluenose1

I would be thinking have I got enough to bridge gap between 60 -67 before state pension starts. Sounds to me like you have plenty based on your  savings/ outgoings, I would not be working again if I were you.

As others say it’s now about getting your money to work smarter, ISAs etc. 
I would also be putting my salary income in tax year 22/23 in a SIPP as guaranteed at least 6.25%. We opened HL cash SIPPS and withdrew as soon as HMRC topped up. Just be careful if you think you may work again as affects future contributions. 
Then I would be putting the maximum for non earners of £2880 each year into a SIPP.