Retirement planning sense check!

Bluebell1000

I'm hoping to take early retirement in 12-14 years time, and wanted to ask if people think my planning is reasonable?

 I am expecting a DB pension of approx 5k per year at 65, and another £20k ish at 68, plus full state pension (may need to buy one extra NI year after early retirement). I can take the DB pension earlier with reductions.
My husband is due his full state pension when I'm 64, plus a small DB pension of maybe £1k per year.

That means I need to fill the gap from when I'm 55/57 to 64 in order to retire early.
We have a rental property with estimated net income £7k per year (we're currently saving up to pay off the mortgage ASAP).
I'm saving into a DC pension which is currently about £40k, planning for £100k minimum and assuming I can take £12-15k per year from this (if I can't take it until 57 I'd need to use cash savings or retire at 57). I am happy to empty this entirely by the time the DB pension starts.

I think we should be able to get to the point of also having about £100k in S&S ISA (£3k per year drawdown) and similar in a cash ISA (another £3k per year). 

That gives us in the region of £2k income per month / £24k per year in that gap before pensions start, which seems plenty based on our current outgoings.
I've also assumed my husband won't be working at all in that time, so that may change of course.

Is there anything that I've not thought of, or that we can look to be changing/ doing now?

MK62

Have you looked at opening a SIPP for your husband...........even if not working, he can pay £2880pa into a SIPP, and HMRC will add another £720 in tax relief.........and withdrawals will likely be tax free too if he's not working.

Also, have you looked at transferring 10% of your husband's personal allowance to you.....that will also save on your tax bill.

As for the cash ISA........if not working, your husband might be able to earn a substantial amount in interest and pay no tax at all on it.....so it might be worth looking at standard accounts - these typically pay better interest rates than cash ISAs.

Bluebell1000

My husband is partly employed at the moment (with the small DB pension) and partly self employed, but not full time overall. He does pay tax unfortunately, but we will look at increasing his pension as well, thanks. My husband is also 99% owner of the rental, so that counts as his income for tax purposes.

Albermarle

From the details supplied, I would be building up more in pension to take advantage of the tax relief. Especially if between age 57 and SP/DB's kicking in you can both take full advantage of your personal tax allowances.
You should consider using some of your cash and S&S ISA money to add more to your pension and a new one for your husband.
Taking into account though that a person can not add more gross to a pension than their gross income. Rental income does not count.

Doctor_Who

This is essentially what I did (I'm 12-14 years ahead of you and recently retired early). I have a good DB pension from 65 and will have a full SP from 67 (after I've filled a few gaps with class 3 NICs). I built up a sizeable sum in my SIPP with the aim to use it in the ~10 years before the DB pension starts. As Albermarle says, making full advantage of your personal allowance for the ~10 years between retirement and DB/SP pension is very beneficial from a tax point of view. I'll be withdrawing ~£20K per year from my SIPP with minimal income tax. I also have a S&SISA, but I'm not touching this. Living in Scotland, my issue will be higher rate income tax (42% at present) from 67 since the DB/SP will push me to the higher rate threshold, hence any SIPP withdrawal will be taxed at 42% (after the tax-free 25%). So it makes sense to withdraw as much as possible from my SIPP in the next ~10 years!   

Bluebell1000

That's really useful. I think we've got into the mindset of 'husbands pension is the rental ' without considering how we can make the savings work better for what we're hoping to do. It's occurred to me that if he can access a SIPP from 57, I'll be 54 - so it will help bridge the gap (if mine changes to 57) from that perspective too.

Doctor_Who

Bluebell1000 said:

That's really useful. I think we've got into the mindset of 'husbands pension is the rental ' without considering how we can make the savings work better for what we're hoping to do. It's occurred to me that if he can access a SIPP from 57, I'll be 54 - so it will help bridge the gap (if mine changes to 57) from that perspective too.

From what you have said (12-14 years to early retirement), I suspect your minimum pension age will be 57 (it's age 57 from 6 April 2028), but without knowing your actual age (and I would never ask that!) it might be 55. Once you know if it's 55 or 57 you can plan accordingly. Of course, minimum pension age might increase again, but you can't plan for the unknown!

Bluebell1000

Doctor_Who said:

Bluebell1000 said:

That's really useful. I think we've got into the mindset of 'husbands pension is the rental ' without considering how we can make the savings work better for what we're hoping to do. It's occurred to me that if he can access a SIPP from 57, I'll be 54 - so it will help bridge the gap (if mine changes to 57) from that perspective too.

From what you have said (12-14 years to early retirement), I suspect your minimum pension age will be 57 (it's age 57 from 6 April 2028), but without knowing your actual age (and I would never ask that!) it might be 55. Once you know if it's 55 or 57 you can plan accordingly. Of course, minimum pension age might increase again, but you can't plan for the unknown!

It is 57, though I'm not sure whether my current AVC pension provider will change the access date or not, we've not had any information about it!

barnstar2077

Bluebell1000 said:

Doctor_Who said:

Bluebell1000 said:

That's really useful. I think we've got into the mindset of 'husbands pension is the rental ' without considering how we can make the savings work better for what we're hoping to do. It's occurred to me that if he can access a SIPP from 57, I'll be 54 - so it will help bridge the gap (if mine changes to 57) from that perspective too.

From what you have said (12-14 years to early retirement), I suspect your minimum pension age will be 57 (it's age 57 from 6 April 2028), but without knowing your actual age (and I would never ask that!) it might be 55. Once you know if it's 55 or 57 you can plan accordingly. Of course, minimum pension age might increase again, but you can't plan for the unknown!

It is 57, though I'm not sure whether my current AVC pension provider will change the access date or not, we've not had any information about it!

I think a lot of people are in the same boat as far as the age they can access their pensions goes.  As someone who likes to plan, it is a bit annoying not knowing.  I am of course planning for a worse case scenario of 58 though! :  )