Bold leap into retirement

mrs_slapshot

michaels said:

mrs_slapshot said:

SmokeysTravels said:

For my wife we have gone for a different approach that doesn’t get mentioned on here very often - a fixed term annuity. This will give us the guaranteed income we need for five years until age 60. At 60 we both have DB pensions. I have a DC pension as well that has a link to my DB pension - this was put in place as part of the closure of the DB pension- that allows a transfer from the DC to pay the tax free cash from the DB.  And then full state pensions from 67.

Interesting that you mention a fixed term annuity as I’m seriously considering one at the moment! I’ve got a DC pot of £270k (once I take out the rest of my tax free cash to pay the mortgage off) and am considering using £80k for an 8 year FT annuity to take me to state pension age. The quote is £11.3k a year which would cover my fixed and regular expenses (I will then top up with the odd bit of work or maybe even take my two DB pensions early which is £5k a year). Can’t decide whether to do that or use flexible drawdown from my pot!!

How did you make your decision?

Is that index linked?  If not, a repeat of the cumulative 17% inflation seen in the last 2 years and our money would be well short of your bills....

I need to double check with my FA who has just sent me the top level info at the moment but I’m pretty sure it’s not index linked. I accept there’s a risk if it’s not but there are risks doing it by drawdown too. I just need to weigh it all up and decide whether I go for one of those options or keep working longer (which is NOT my favourite option!)

Smudgeismydog

Hello everyone,

Hope you are well and enjoying the run up to Christmas. As it’s nearly 6 months since I retired, I thought I’d provide an update on how it’s all panning out.

This time last year (when I started this post), my figures were;

Cash £40,000
ISA £137,000
SIPP £715,000
Total £892,000

In the last 6 months of work, I heavily salary sacrificed into my pension, to utilise the tax efficiency, but also to practise living off my planned budget.

Position when I left work at the end of June;
Cash £42,128
SS ISA £146,380
SIPP £813,056

Total £1,001,564


Since I left work I’ve spent @£60,000 on moving and renovations in the new house, and I pay £1,250 per month into the joint account to cover household bills, (additional £7,500), so a total spend of just under £70,000.

Over the last 6 months, we have completed a lot of work on the new house (new roof, new boiler etc). We have also participated in local volunteering, where we have learnt new skills such as dry stone walling, hedge planting and bog clearing, and made new friends locally. 

My son is thriving in his degree apprenticeship, and hugely benefitting from living independently (with us on hand), in the cottage at the end of the drive. Whilst we have spent a lot of time helping my daughter learn to drive (her test is at 1:15 today 🤞🏻), tour universities for her next step in September, and support her through the trials and tribulations of year 13.

I have also had the time to rekindle friendships, regular coffee shop catch ups, and walks in the woods with the dog. I’ve loved having days out with my partner and my mum, without feeling rushed, or anxious about what I’ll need to catch up on after being out. I also now go to the weekly Zumba and Yoga classes in the village hall.
Honestly, I have found plenty of interesting things to do.

Even withstanding the high level of expenditure, my pots are holding up.

Currently figures;
Cash £48,396
ISA £77,805
SIPP £875,915
Total £1,002,116

I do appreciate markets have been strong, and that I have guaranteed income from my dependents pension, but I’m pretty pleased with that.

Hope everyone who also took their bold leap is enjoying it so far, and for anyone yet to take their leap, I can only recommend it
x

cfw1994

Sounds fantastic!
Good luck to the driving testee 🤞

Was the plan always to fund those things from the ISA?    Can’t recall your age, but could you draw some of the SIPP money to at least take the zero tax band income and perhaps some basic rate?

pterri

Sounds great, I’m still aiming at July ‘25 but may bail early. Will make little difference in reality. Hanging on as there a perk for those who leave that may get a beneficial tweak in my favour. Will be sorted early in the new year I hope. I may go for April so I’ve got a ‘clean’ tax year to work with. 

Smudgeismydog

Hi @cfw1994, 

My dependents pension fully utilises my personal allowance (@£15,500 gross per annum), and I am aged 51, so won’t be able to access my SIPP until age 57.

Plan to use/deplete cash & ISA until I can access my SIPP, then in light of the recent budget changes, I will drawdown enough taxable income to take me to the top of the basic rate income tax bracket, reducing the drawdown amount at 67 when my state pension is payable to remain a 20% taxpayer.

My house is worth @£800,000, so with the DC pot now inside the estate I’m well over my £1m IHT threshold. I do intend to downside in mid 70s and possibly release money out to the kids at that stage.

Best of luck with your plans @pterri, not long now

pterri

Smudgeismydog said:

Hi @cfw1994, 

My dependents pension fully utilises my personal allowance (@£15,500 gross per annum), and I am aged 51, so won’t be able to access my SIPP until age 57.

Plan to use/deplete cash & ISA until I can access my SIPP, then in light of the recent budget changes, I will drawdown enough taxable income to take me to the top of the basic rate income tax bracket, reducing the drawdown amount at 67 when my state pension is payable to remain a 20% taxpayer.

My house is worth @£800,000, so with the DC pot now inside the estate I’m well over my £1m IHT threshold. I do intend to downside in mid 70s and possibly release money out to the kids at that stage.

Best of luck with your plans @pterri, not long now

Thanks. My numbers work for me but 57 seems insanely young. When I get a moment I’ll put the numbers on here so people can tell me to chill out! 

Sarahspangles

pterri said:

Thanks. My numbers work for me but 57 seems insanely young. When I get a moment I’ll put the numbers on here so people can tell me to chill out! 

57 is insanely young (now guess my age). I’m currently working from bed, with a sore throat. I used to bounce back much quicker from this stuff.

bjorn_toby_wilde

Not insanely young at all. I retired at 60 and with hindsight I could have gone earlier. If the numbers work you won’t regret it.

My plan was to bridge with savings until my main pension kicks in at 65. Like the OP my pension and ISAs have outpaced my spending this year so I have more in the pot now than when I retired. I don’t expect that to last forever though!

I don’t miss work one bit. There was plenty of travel in my job but it’s so much nicer to travel knowing you have no work to do when you get there 😂

SouthCoastBoy

pterri said:

Smudgeismydog said:

Hi @cfw1994, 

My dependents pension fully utilises my personal allowance (@£15,500 gross per annum), and I am aged 51, so won’t be able to access my SIPP until age 57.

Plan to use/deplete cash & ISA until I can access my SIPP, then in light of the recent budget changes, I will drawdown enough taxable income to take me to the top of the basic rate income tax bracket, reducing the drawdown amount at 67 when my state pension is payable to remain a 20% taxpayer.

My house is worth @£800,000, so with the DC pot now inside the estate I’m well over my £1m IHT threshold. I do intend to downside in mid 70s and possibly release money out to the kids at that stage.

Best of luck with your plans @pterri, not long now

Thanks. My numbers work for me but 57 seems insanely young. When I get a moment I’ll put the numbers on here so people can tell me to chill out! 

57 doesn't seem insanely young to me, I know plenty of people that retired in their late 50s.

I think for me insanely young would be under 45.

IamWood

Smudgeismydog said:

Hello everyone,

Hope you are well and enjoying the run up to Christmas. As it’s nearly 6 months since I retired, I thought I’d provide an update on how it’s all panning out.

This time last year (when I started this post), my figures were;

Cash £40,000
ISA £137,000
SIPP £715,000
Total £892,000

In the last 6 months of work, I heavily salary sacrificed into my pension, to utilise the tax efficiency, but also to practise living off my planned budget.

Position when I left work at the end of June;
Cash £42,128
SS ISA £146,380
SIPP £813,056

Total £1,001,564


Since I left work I’ve spent @£60,000 on moving and renovations in the new house, and I pay £1,250 per month into the joint account to cover household bills, (additional £7,500), so a total spend of just under £70,000.

Over the last 6 months, we have completed a lot of work on the new house (new roof, new boiler etc). We have also participated in local volunteering, where we have learnt new skills such as dry stone walling, hedge planting and bog clearing, and made new friends locally. 

My son is thriving in his degree apprenticeship, and hugely benefitting from living independently (with us on hand), in the cottage at the end of the drive. Whilst we have spent a lot of time helping my daughter learn to drive (her test is at 1:15 today 🤞🏻), tour universities for her next step in September, and support her through the trials and tribulations of year 13.

I have also had the time to rekindle friendships, regular coffee shop catch ups, and walks in the woods with the dog. I’ve loved having days out with my partner and my mum, without feeling rushed, or anxious about what I’ll need to catch up on after being out. I also now go to the weekly Zumba and Yoga classes in the village hall.
Honestly, I have found plenty of interesting things to do.

Even withstanding the high level of expenditure, my pots are holding up.

Currently figures;
Cash £48,396
ISA £77,805
SIPP £875,915
Total £1,002,116

I do appreciate markets have been strong, and that I have guaranteed income from my dependents pension, but I’m pretty pleased with that.

Hope everyone who also took their bold leap is enjoying it so far, and for anyone yet to take their leap, I can only recommend it
x

Thank you for the update.

We are the similar age and in a similar financial situation, although I don’t have a guaranteed pension but with a similar rental income from my first family house.

I recently reviewed my numbers:

• Cash: £50K
• ISA: £215K
• Pension: £950K
• Total: £1,215K

Additionally, I have rental income of £1.6K per month.

My plan has been to work for 3 more years until my children graduate. I’m expecting a substantial bonus in Feb. and I’m wondering if I can step away after that.