Bold leap into retirement

HUSKYPAL

chuffinnora said:

It is odd Simon11, but I think it's just trepidation.  Seems most go through it on here.

With my wife going earylish, that will be the catalyst I'm sure. We have a lot of outgoings, which just need some work on them to eradicate the unnecessary. It's amazing when you start analysing these things what builds up over time. 

Totally agree about the family history, it's a very blunt sobering thought. And hammers home not to be afraid of retirement or spending to enjoy life at that time. 

We have some family members to support, so we have roughly put a mental note to allow about £150k for that. And like I mentioned, want to make sure we can manage comfortably in the event UK politics forces a means-tested SP which could result in us falling into that bracket. I know its political suicide for any party to do that, but you never know.

A friend had a financial advisor in to build them a plan of their sliding scale of spend to ensure the younger healthier years are better funded. We've come up with our own spreadsheet for that and its looking good for me to go in the near future. With my wife strutting about looking happier than ever, I can feel it coming.....

I think being stuck in a routine is ingrained in us, we work for so many years that the thought of breaking that routine is a bit troubling. But you can build new routines based on what you want to do rather than what you are paid to do. With your funds, I don't think you have any financial reasons to continue working. It was me that mentioned the FT annuity, it's a nice way to guarantee an income to bridge the period between retirement and state pension, and get cash back at the end (back into the DC pension). If you are able to lock in now, the rates are good, not sure they will still work for me in a few years, but will see. I would go for it now, don't be put off by fear. If you took your tax free LS and invest part of the balance in a FT annuity, you will have a nice pot remaining, plus a monthly "wage" from the annuity, plus guaranteed DB payments. Go and enjoy your life away from work, bit jelly that you have the opportunity now. Good luck, although I don't think you'll need it.

HUSKYPAL

chuffinnora said:

I know there are a number of financial experts on this thread, so I have a question.
I've been looking at 5-10 year old fixed annuity plans.

They look attractive, however when I for example look at a 5 year plan using £250k with a £100k lump sum at the end, looks like its approx about 15-20% additional over the 5 years incl £100k. If I left the £250k invested in a DC pot for the same period I guess its possible it could also earn a similar amount dependent on growth rates of course.

Am I looking at this the wrong way and missing something that needs consideration?

I see the advantage of a FT annuity is that it's guaranteed income. The providor is betting on being able to make more than they are paying you. If the market drops 20% in the meantime, you don't take the hit, conversely you don't get any upside if it rockets. It's about risk, I'm pretty risk averse, so would rather have a guarantee than the potential loss of any upside in market movements. If you are using only part of your pot, you have a partial guaranteed amount, plus part invested with the associated risks/returns. To me that's the best of both worlds.

chuffinnora

Thanks HUSKYPAL, yeah that makes a lot of sense. I like the idea of having some guaranteed income until SP kicks in, but still having half the DC fund to follow the market if it continues to rise.

As my wife is now in a handover/wind-down phase until she retires on 31st October, her excitement is washing off on me!

I've now set my target for end of March next year. This is for a few reasons such as clear some upcoming spend on the house, my work lease car breaks even at that time when I hand it back (the lease insurance policy covers 100% of remaining costs then), gives me an opportunity to try my VR luck (company has a habit of redundancies around this time of the year) and gives a bit of time for us to settle into the reduced income after October.

Funny though how the moment you set a retirement date, its like a massive relief flows through your body. Even though I am still working, I'm suddenly "care free" about anything going on at work. And the thought of dropping all that baggage and outstanding jobs that need doing for them, oh yeah.

MallyGirl

I finished in July and OH was not ready to join me. He is now definitely staying till end of March (decent bonus expected) but now talking about dropping to 3 or 4 days a week after that if they let him. We are planning a big holiday next year with our daughter to celebrate her graduation. This had led to a few comments like "if they won't approve the time off then I can just resign" but also "I need to keep working to pay for this!" I am not yet accessing my pension but could do if we need the money. He is getting there in terms of mindset - I think it has helped that he has seen how busy I am.

michaels

MallyGirl said:

I finished in July and OH was not ready to join me. He is now definitely staying till end of March (decent bonus expected) but now talking about dropping to 3 or 4 days a week after that if they let him. We are planning a big holiday next year with our daughter to celebrate her graduation. This had led to a few comments like "if they won't approve the time off then I can just resign" but also "I need to keep working to pay for this!" I am not yet accessing my pension but could do if we need the money. He is getting there in terms of mindset - I think it has helped that he has seen how busy I am.

Just checking that you are not wasting personal allowance or 20% tax band that will eventually end up being 40% or Inheritance tax?

MallyGirl

michaels said:

MallyGirl said:e

I finished in July and OH was not ready to join me. He is now definitely staying till end of March (decent bonus expected) but now talking about dropping to 3 or 4 days a week after that if they let him. We are planning a big holiday next year with our daughter to celebrate her graduation. This had led to a few comments like "if they won't approve the time off then I can just resign" but also "I need to keep working to pay for this!" I am not yet accessing my pension but could do if we need the money. He is getting there in terms of mindset - I think it has helped that he has seen how busy I am.

Just checking that you are not wasting personal allowance or 20% tax band that will eventually end up being 40% or Inheritance tax?

Thanks - I did earn £9k before redundancy (and after Sal sac) so I am planning to contribute that (gross) into a new pension with HL and then drawdown some as a small pot. This could incur a bit of 20% tax but wouldn't trigger MPAA to keep my options open.

MetaPhysical

It seems a big leap to me to start taking pension income from the pots I spent years building!!!   Anyone else felt the same?   I'm working my gardening leave until Christmas and then taking my first pension income from my DB scheme at the end of December.  I'm also sorting out a TFC lump sum from my 650k DC pot in advance of RR budget.  I can use that TFC money so I have thought this through.  It does seems scary though! 

michaels

MetaPhysical said:

It seems a big leap to me to start taking pension income from the pots I spent years building!!!   Anyone else felt the same?   I'm working my gardening leave until Christmas and then taking my first pension income from my DB scheme at the end of December.  I'm also sorting out a TFC lump sum from my 650k DC pot in advance of RR budget.  I can use that TFC money so I have thought this through.  It does seems scary though! 

Definitely have the same feelings and like you tfls feels safest as it doesn't really impact on future choices, then dB as it doesn't trigger MPAA and finally taxable dB drawdown.

Smudgeismydog

Oh yes!
It felt very bold actually drawing on the funds I worked so hard to build up.

@michaels has previously noted the effect of inflation on my pots a year on my from bold leap, and his point is valid, but my pots are still higher now than when I stopped working (point about inflation noted). 


I am now very much in the camp of ‘whilst I would like to leave something for my kids, I’m going to have a good job of spending it myself first’.
I have also asked myself - what did I save it for if I’m not prepared to spend it?

katejo

Smudgeismydog said:

Oh yes!
It felt very bold actually drawing on the funds I worked so hard to build up.

@michaels has previously noted the effect of inflation on my pots a year on my from bold leap, and his point is valid, but my pots are still higher now than when I stopped working (point about inflation noted). 


I am now very much in the camp of ‘whilst I would like to leave something for my kids, I’m going to have a good job of spending it myself first’.
I have also asked myself - what did I save it for if I’m not prepared to spend it?

Not retired yet but on a 3 day week. I am going to find it hard to spend. Part of me wants to but the other part is reluctant. It still wants to save. I transfer money to interest earning accounts but, once it is there, I am reluctant to break into it. Although on a reduced salary, I still want to cover all expenses from my monthly income.