Bold leap into retirement

MetaPhysical

Cobbler_tone said:

MetaPhysical said:

Smudgeismydog said:

HUSKYPAL said:

@Smudgeismydog - Have to say, this is the most helpful and useful forum I've found anywhere on the web for real world numbers and information. Very refreshing to have a community of like minded people with a simple objective to help each other navigate what can be a tricky decision, and to see what's likely on the other side. Thanks for starting it. I'd love to see some more updates from earlier posters as to how their plans/finances have panned out over time. My end date keeps creeping forward, now looking at June 27, but could be sooner, work motivation sinking below basement level...

Hello early posters;

@leosayer, @MetaPhysical, @savingmore, @Daffodil1234, @handful, @squashtraveller , @AliBee16, @cloud_dog

Do you fancy letting us know how you are getting on?

 I'm recovering from that but life without private medical cover is something I approach with trepidation, especially with my right hip.  I may explore options for buying my own cover (which I know won't cover that hip).

That is a good benefit but you might find the policies expensive, easily racking up £5k a year and then you'll have excesses and restrictions. Personal choice, but it may be a better option to self fund. You have a good income and cash in the bank, anything from a few grand to maybe £15k for a major op like a hip replacement could be money well spent, that fingers crossed you never have to. I have regular injections via BUPA which are around £1,500 a time. I will do a combination of self funding and NHS, as the consultant (the same either way) has told me it takes 18 months on the NHS to get one. 
If you have money, spending it on maintaining and improving your health is money well spent IMO. 

Yes, I completely agree.  I am going to start putting £250 a month into a "health" pot for these kinds of eventuality and invest it (80% MM fund + 20% equities). 

I have hip dysplasia where the femur ball isn't fully inserted into the pelvic socket and my hip will definitely need to be replaced eventually.  I have it in both hips but the right hip is where it is worse.  Many people have this but a lot of people can get through their life without it wearing out the cartilage. In my case consultant said it could be next year or it could be fifteen years, but it will need to be done eventually.

Pat38493

MallyGirl said:

To get around this I transferred £20k from my SIPP to HL. I have so far taken £10K out under the small pots rule and may well do another before April. This avoids triggering the MPAA till the next tax year

So HL will allow you to transfer 30K to them and then take 3 small pots withdrawals in consecutive years?

I didn't know that.  Do you have to call them to arrange this or is it an option on their automated processes?

I guess they must have to split the £20K into two separate accounts to do this.

Pat38493

Cobbler_tone said:

MetaPhysical said:

Smudgeismydog said:

HUSKYPAL said:

@Smudgeismydog - Have to say, this is the most helpful and useful forum I've found anywhere on the web for real world numbers and information. Very refreshing to have a community of like minded people with a simple objective to help each other navigate what can be a tricky decision, and to see what's likely on the other side. Thanks for starting it. I'd love to see some more updates from earlier posters as to how their plans/finances have panned out over time. My end date keeps creeping forward, now looking at June 27, but could be sooner, work motivation sinking below basement level...

Hello early posters;

@leosayer, @MetaPhysical, @savingmore, @Daffodil1234, @handful, @squashtraveller , @AliBee16, @cloud_dog

Do you fancy letting us know how you are getting on?

 I'm recovering from that but life without private medical cover is something I approach with trepidation, especially with my right hip.  I may explore options for buying my own cover (which I know won't cover that hip).

That is a good benefit but you might find the policies expensive, easily racking up £5k a year and then you'll have excesses and restrictions. Personal choice, but it may be a better option to self fund. You have a good income and cash in the bank, anything from a few grand to maybe £15k for a major op like a hip replacement could be money well spent, that fingers crossed you never have to. I have regular injections via BUPA which are around £1,500 a time. I will do a combination of self funding and NHS, as the consultant (the same either way) has told me it takes 18 months on the NHS to get one. 
If you have money, spending it on maintaining and improving your health is money well spent IMO. 

I recently got a quote from BUPA to continue my employer policy after I left for myself and wife.  Company was paying £1800 per year.  BUPA wanted about £15K per year from me for the same benefits!  I spoke to a broker and they could not get me a price that I considered reasonable without basically removing everything that I would be likely to claim for except for cancer, which the NHS isn't too bad at treating anyway.  Even then the price was still about £4K per year.

YellowCarBlueCar

HUSKYPAL said:

@Smudgeismydog - Have to say, this is the most helpful and useful forum I've found anywhere on the web for real world numbers and information. Very refreshing to have a community of like minded people with a simple objective to help each other navigate what can be a tricky decision, and to see what's likely on the other side. Thanks for starting it. I'd love to see some more updates from earlier posters as to how their plans/finances have panned out over time. My end date keeps creeping forward, now looking at June 27, but could be sooner, work motivation sinking below basement level...

Agreed - this is my only bookmarked thread on the MSE forum.
@HUSKYPAL - we're heading for pretty much the same date.  I had decided on the end of June, then justified buying some rather expensive binoculars by extending that by a week.  Beside having 4th July as my first day of retirement seems attractively poetic.  So 7 months from today...

ex-pat_scot

MallyGirl said:

To get around this I transferred £20k from my SIPP to HL. I have so far taken £10K out under the small pots rule and may well do another before April. This avoids triggering the MPAA till the next tax year

I'm currently requesting this.
the "3 small pots" is useful for extending (slightly) the LTA, which I've used up.
I've not yet triggered MPAA, and whilst I don't want to ever be needing to consider it again, ie not in significant employment with pension contributions over £10,000 pa, I nevertheless am slightly cautious of triggering right now.
  

ex-pat_scot

Pat38493 said:

MallyGirl said:

To get around this I transferred £20k from my SIPP to HL. I have so far taken £10K out under the small pots rule and may well do another before April. This avoids triggering the MPAA till the next tax year

So HL will allow you to transfer 30K to them and then take 3 small pots withdrawals in consecutive years?

I didn't know that.  Do you have to call them to arrange this or is it an option on their automated processes?

I guess they must have to split the £20K into two separate accounts to do this.

My understanding is that a small pot has to be less than £10,000. 
HL set up your SIPP in separate small pots, each less than £10,000 so that you can entirely extinguish that specific pot.
You can do this up to three times.
It doesn't have to be in consecutive years.
The requirement is that the pot value is a maximum of £10,000

This has two benefits:
1. for each small pot, £2,500 is tax free and the remaining £7,500 is taxable as income at your marginal rate.
Clearly it would be preferable to do this whilst a BR (20%) taxpayer, paying £1,500 income tax. The net value of the small pot would be £8,500.
If a HR (40%) taxpayer, then you'd pay £3,000 income tax, and hence the net value of the small pot would be £7,000.
2. No impact on LTA. If, like me, you have exhausted the LTA and taken your max 25% of £1,071,000 tax free, then this gives you an additional £7,500 tax free (3 x £2,500 from the small pots).
BUT
The remaining £7,500 of each small pot is immediately taxable as income - you cannot wait before drawing it as income, and therefore can't manage your efficient withdrawal perhaps, if you are currently HR but anticipate being BR payer in retirement.

MallyGirl

Pat38493 said:

MallyGirl said:

To get around this I transferred £20k from my SIPP to HL. I have so far taken £10K out under the small pots rule and may well do another before April. This avoids triggering the MPAA till the next tax year

So HL will allow you to transfer 30K to them and then take 3 small pots withdrawals in consecutive years?

I didn't know that.  Do you have to call them to arrange this or is it an option on their automated processes?

I guess they must have to split the £20K into two separate accounts to do this.

Yes you can just transfer £30k to them and get it out as 3 small pots - no requirement to spread it over multiple years. I did it all by post - there is a special small pot form you have to complete. Even in the midst of all the pre-budget panic I had the £8500 in my account in under 3 weeks from posting the form. They do all the splitting up into £10K accounts. I did £20k not £30k as i had actually earned £9k this year (after significant Sal sac of salary and redundancy payment above the £30k tax free) so I put the £7.5k ish net amount in and await the tax relief. This will also be where I put the £3600 in each year to keep things simple as my main SIPP is with II and they operate a notional split of crystallised/ not.

ex-pat_scot

handful said:

Smudgeismydog said:

HUSKYPAL said:

@Smudgeismydog - Have to say, this is the most helpful and useful forum I've found anywhere on the web for real world numbers and information. Very refreshing to have a community of like minded people with a simple objective to help each other navigate what can be a tricky decision, and to see what's likely on the other side. Thanks for starting it. I'd love to see some more updates from earlier posters as to how their plans/finances have panned out over time. My end date keeps creeping forward, now looking at June 27, but could be sooner, work motivation sinking below basement level...

Hello early posters;

@leosayer, @MetaPhysical, @savingmore, @Daffodil1234, @handful, @squashtraveller , @AliBee16, @cloud_dog

Do you fancy letting us know how you are getting on?

Hi Smudgeismydog!

I'm also a relatively early poster.

I hit my initial trigger Easter 2024 (age 55).
At that point, total pot value was c£1,170,000, fully invested in global equity tracker.

I was already in discussion with my firm about next steps / career path.
From my initial options of (1) carry on (2) same but at another consulting firm (3) take a 3-5 year director role at a client or (4) carry on as a consultant, as much direct with clients as possible.
The option (4) was the only clear one for me. Lowest stress, most flexibility, most financial control, greatest ability to scale back (or up!). 

I stayed to the end of 2024, to allow them the time to recruit and hand over properly. To no-one's surprise, that ended up being a quick handover in December to an unsuspecting colleague, unsuited to my tricky clients.

It was a bit of a financial leap of faith. A very healthy guaranteed salary, with lots of pressure and stress, now foregone.
Children on the cusp of adulthood, but not financially independent. Some school fees, and a lot of university support, still required.

20 months on:

- finances are fine
- children are fine
- I've been pretty busy. Probably overall 180 ish days billable out of the theoretical 220 in the year.
- one more year syndrome very much active at the moment.

The pot value Easter 2024 of £1.17m is now £1.44m
I've not contributed at all to my SIPP in 2025
I took on a part time director role in the summer, notionally 2 days a week alongside the consulting work, but hated being an employee again and forced into the office. I lasted 3 months and we have parted ways. 
I'm open to interesting consulting work, and have probably 50-75 days confirmed for next year. There will likely be another 100 days or so, if I want it and do a bit of chasing.
I have lots of good contacts with old colleagues and clients, who regularly need help, and reach out.

I'm acutely aware how fortunate I am, and there are still plenty of financial commitments ahead, in terms of financing students, elderly in laws, new cars, new kitchen, extension, long-overdue holidays.

Mrs XPS is not yet able to consider an option beyond work, which is frustrating, but she's very distrustful of any financial planning and spreadsheets. She will gradually come round to entertaining the idea, even if not the imminent possibility, when friends and family start to retire, which several of them are expecting to do over the next few months.



So.

Into 2026.
And the subject of this thread: "bold leap".
It feels like more of a deliberate stumble than a leap. 

Managed decline.

Probably becoming more selective about the type and quantity of work I take on.
The question is really one of the pace of decline.
100 days next year perhaps? 
That would give me £100,000 - more than enough, but yet I could be working more and stuffing Mrs XPS's SIPP. 
Certainly no more paid employment for me.
No more contributing to my SIPP. No point, as it's way over the LTA. Even now, I ought to be depleting it up to the HR threshold every year, which is still very much a sustainable level of withdrawal.
I feel that now, all the work I am doing is really to be hypothecated against specific expenditure, rather than providing an income.
 - need a new car? Therefore need to work 40 days.
- new kitchen? Take on a 25 day project.
- family summer holiday? Agree to a 10 day review.
etc.

I am aware that these are very much "wants", not "needs". I'm also alert to the risk of aspiring to a more luxurious lifestyle, which could throw these gentle meanderings. Holiday house perhaps? Pay for care home for elderly relatives? Those would necessitate a return to employment or full time hustling, and not on my agenda.