is now the time to consider retirement?

gele

Hello all.
Hubby and I have been contemplating a slow glide into retirement. He's 61 and I'm 59. He is self employed so can simply steadily reduce work taken. He has 2 smallish pensions of around £60k each, one an old workplace one and a private one. After reading other threads I'm thinking it might make sense going into retirement a little earlier than first thought particularly for hubby as he will have 2 lots of 25% tax free from each which would give him a small retirement wage of £15k for 2 years before drawdown of remainder, I'm thinking now, why carry on when it getting harder and harder to find you only pay more tax on your money if you wait longer to access it. I'm sure our financial situation would mean we can get to state pension age without paying much tax if any but I'm not savvy enough to quite know how to go about it. Any thoughts/advice welcome

jimi_man

I think before anyone can give any thoughts, you’ll need to give some more information. For example is £60k all you have to live on for the rest of your life? Any other pensions/savings? Have you done a state pension check? How much do you spend annually/need to live on? 

gele

Thanks for the reply. No I have a SIPP [only £30k] and a small works pension £295pm for life if I retired now. We also have savings in bonds and ISAs but less than £100k. We don't have extravagant tastes and live quite cheaply [ which is why we've been able to save a bit despite being lower earners.] I believe we could live happily enough on £25k a year at todays prices. [£35k would be nicer!] Id like to know really I suppose, after working hard all our lives how to manage things so that we keep more for ourselves when retirement does come and is it feasable sooner than we thought.

gele

also we are both due to receive full state pension as per gov gateway and the 'you cannot receive any more' statement.

Kim1965

So your pension is about 3.5k per year and you need an additional 21.5k per year for 6 years until state pension.
At state pension age plus your db pension your target income is covered. If something were to happen to either of you, would the survivor cope on one state pension?
Are you mortgage and debt free, do you wish to pass money to children? 

Albermarle

gele said:

Thanks for the reply. No I have a SIPP [only £30k] and a small works pension £295pm for life if I retired now. We also have savings in bonds and ISAs but less than £100k. We don't have extravagant tastes and live quite cheaply [ which is why we've been able to save a bit despite being lower earners.] I believe we could live happily enough on £25k a year at todays prices. [£35k would be nicer!] Id like to know really I suppose, after working hard all our lives how to manage things so that we keep more for ourselves when retirement does come and is it feasable sooner than we thought.

There have been lots of threads over time regarding 'how much to live on' or similar.
Of course it is different for different people, but at the lower end two state pensions + £5K pa seems to be a minimum for most for a reasonable life. If that £5Kpa was £15Kpa ( so £35Kpa like you say) it would give you a better cushion against unexpected expenses and/or being able to afford  a few nicer things.

Linton

From your figures it would seem that you currently have barely enough money to cover the 6 -8 years at £21k/year until you get your SP. And that would leave very little to supplement  your income for the rest of your retirement. Have I miscounted?

The question raised by @Kim1965 of whether the survivor would have sufficient income when one of you dies does deserve serious consideration,

Kim1965

I think in total you have 250k  and 3.5k a year db plus 2 x10. 6 pa in 8 yrs. 
  To safegaurd agsinst running out of money the most you could draw is 9/10 k pa. Most would consider this to be light to fund25k a year for 7 years.... Unless you are happy to deplete sipps savings until sp kicks in. Agressively depleting pensions at the start of retirement comes with a fair degree of risk. 
Have you both considered working part time? 

Brie

Check where your normal retirement date is for your DB pension as that's a nice one to maximise (aka not take too early).  It may be 60 or older so once you know which you have a good target date.  I messed up by leaving my DB longer than I should have and could have got a nice extra sum still at the lower tax rate at a time when we were trying to clear our mortgage.  

gele

 Lots of food for thought there. My intention is to continue working for another year full time and possibly a second part time. Husbands work is quite physical so he might reduce hours a little earlier than first hoped but the issue of being single again if anything should happen to the other is something to give more thought to. As for SIPPS, being so close to retirement and the way they are performing at the moment, it does make me wonder if we'd be any worse off with them if they were just in higher interest cash accounts. Thanks everyone for your thoughts

Albermarle

As for SIPPS, being so close to retirement and the way they are performing at the moment, it does make me wonder if we'd be any worse off with them if they were just in higher interest cash accounts

Of course the SIPP's themselves do not perform, it is the investments within them.
If you want to change from investments to cash, you have three options.
1) Withdraw the money and pay tax on it and put in savings accounts
2) Change to a more specialist SIPP where you can save in fixed interest savings accounts
3) Change your investments in the SIPP's to a Money Market Fund. These follow the Bank of England base rate.