Advice with retirement decision and drawdown strategy please!

handful

Ok, my back story and apologies for a long initial post.

I am 61yo and was fortunate to inherit a decent sum unexpectedly last year. This allowed me to pay off the remainder of our mortgage and a loan for camper and has reduced the timescale that I had anticipated working until, to the point that my OH wants me to pull the trigger asap, maybe as soon as April. Having lost a number of friends of a similar age and heard of many more in recent months I’m inclined to agree although I do to a certain degree like (but not love) my job.

My financial situation is currently, salary of £60k

Assets

House, no mortgage and worth circa £650k

Motorhome currently worth circa £70k and hopefully fairly slow to depreciate.

Pensions

SIPP – current value circa £369k with the majority held in Vanguard Lifestyle 100 equity and HSBC GS Balanced but also some in HSBC GS Dynamic, Blackrock MyMap 6 and about £25k in Loyal London Short term Money Market – This years contributions maxed out to £60k.

Workplace pension -  circa £17k in Peoples Pension high risk option

A small DB pension paying around £3.5k pa from whenever I want, will obviously rise a bit if I leave it, but not much.

ISA

Currently circa £80k and invested in a range of globally diverse funds but also some shares in blue-chip companies and a couple of small “gambles” just to add a bit of spice. I bought most of these during covid so they have done generally very well. (BAE more than doubled for example)

Other investments

£20k in NSandI 6.2% bond -this is in OHs name to use interest savings allowance (I know that makes it her money)

£20k in Ford Finance fixed saver 6.05% -this is also in OHs name to use interest savings allowance (I know that makes it her money)

£50k in Premium bonds – will probably sell to fund ISAs for myself (for next year’s allowance and Ohs for this years and next years ISA allowances)

Circa £20k in cash in Marcus instant access 4.3%.

Full SP entitlement from 67

 

My OH’s position as follows :-

She has currently a salary of £12k but desperately wants to retire, will be 59 next month and entitled to full SP from 67.

Pensions

Circa £80k currently being transferred from SJP into Vanguard Lifestyle 80:20

Circa £20k already in Vanguard Lifestyle 60:40 – this years’ contributions maxed out to £12k

Circa £15 in Nest workplace pension.

So overall I think we are in an ok place to do what we want, I am working on our spending requirement being around £32k. I've used a couple of drawdown spreadsheetsand also ran my figures through Guiide and did so with just my finances and this showed that I should be ok drawing this income with an increase of 2.5%pa increase with the 4 scenarios plotted in that tool.

If anyone has a different view or wants to point out something I may be missing or in your opinion doing wrong then I would be really grateful for any guidance. I’m struggling to make the final call on my job and need some reassurances that I haven’t completely skewed my vision of the future if I do call time on it.  

One thing I am curious about is that Guiide drawdown recommendation obviously doesn’t include my OHs pensions so the best drawdown strategy would be quite different to the one suggested, unless I use that method and just keep the OHs investments as a “buffer”. Any comments of advice on that would be much appreciated. I’m thinking I should be trying to get her annual tax allowance out, maybe just the equivalent of her ISA allowance but doing so will leave her with very little pension by the time she gets to 67. But is that an issue if she then receives that with SP anyway?

I am aware of the MPAA and would pay the £2880 into both pensions each year, either with savings or by withdrawing enough to do so from my pension.

As a further buffer to my plan I also have the option of selling the campervan, downsizing or equity release with the house at some point in the future if everything in my planning goes to pot!

For info I am aware of the differences between drawdown options, Flexi and UFPLS. I have no interest in buying an annuity. Not worried about planning to leave an inheritance, we 2 independent and adult kids in decent jobs.If it's gone it's gone!

I will undoubtedly have more questions as I get responses (hopefully) so won’t ask too many at this stage but anything around investment options, drawdown strategy or just whether I’m ok to pull the trigger or not would be very welcome!

 

Dazed_and_C0nfused

A small DB pension paying around £3.5k pa from whenever I want, will obviously rise a bit if I leave it, but not much

Won't it rise by the same amount once in payment?  What is the schemes NPA?

handful

I believe it's up to 5% CPI increase, NPA is 65. It goes up by a few hundred if I leave it until then but when I got the figures it would take a lot of years to be worse off and I viewed it as probably better to take it sooner to help fund the gap to SPA.

Pendle_Gazza

I'm afraid I am nowhere near qualified to suggest anything meaningful, other than it seems you have a nice enough portfolio to allow the boss (OH) her big wish of retirement as your first action very soon. 😉

tacpot12

The sensible approach to the DB pension is to leave it until the NPA (especially if there is any Guaranteed Minium Pension associated with it), and draw on your savings and SIPPs until then. 

I'd suggest you repeat the Guiide process but include your wife's pensions and savings in as though they were your own. The tool doesn't need to know who the true owner is to make its recommendations.

Looking at your numbers, you can afford to retire if you are happy to use about half your savings to get you to your State Pension Age - this is a worst-case scenario, if the markets do well, you might not end up using half your savings, but it would be better to assume that you will.  You have a campervan and a partner that seems to want to spend more time with you, so I think you should be considering handing in your notice so you can leave in April.  

I retired aged 53 and lived off my savings for two years before starting to drawdown from my SIPP. I have to DB pensions with NRAs of 62 andd 65, and I get my state pension at 67. I spent the first year of retirement just doing all the jobs around the house that had been neglected while I was busy at work. I was happy to leave my job, so it was an easy decision for me. I can understand why you might be nervous, your earning power will never be as great as it is now, so making use of that would make sense if you needed to, but you don't really need more than you have already. 

Make sure you have taken exceptional precautions to protect your campervan from theives so you can enjoy it for as long as possible!

handful

tacpot12 said:

The sensible approach to the DB pension is to leave it until the NPA (especially if there is any Guaranteed Minium Pension associated with it), and draw on your savings and SIPPs until then.

I'd suggest you repeat the Guiide process but include your wife's pensions and savings in as though they were your own. The tool doesn't need to know who the true owner is to make its recommendations.

Looking at your numbers, you can afford to retire if you are happy to use about half your savings to get you to your State Pension Age - this is a worst-case scenario, if the markets do well, you might not end up using half your savings, but it would be better to assume that you will.  You have a campervan and a partner that seems to want to spend more time with you, so I think you should be considering handing in your notice so you can leave in April.  

I retired aged 53 and lived off my savings for two years before starting to drawdown from my SIPP. I have to DB pensions with NRAs of 62 andd 65, and I get my state pension at 67. I spent the first year of retirement just doing all the jobs around the house that had been neglected while I was busy at work. I was happy to leave my job, so it was an easy decision for me. I can understand why you might be nervous, your earning power will never be as great as it is now, so making use of that would make sense if you needed to, but you don't really need more than you have already. 

Make sure you have taken exceptional precautions to protect your campervan from theives so you can enjoy it for as long as possible!

Thank you for the advice and suggestions! I ran the figures in guiide again and that tells me I can up my expenditure to £38k without putting my plan at risk from the four scenarios so quite reassuring! you are right with the comment about worrying about my earning power. I know £60k is only a modest salary in this day and age but I work for a family business and I like my boss a lot and the job isn't too stressful these days although it is quite long hours.

My original plan was to cut back to a 4 day week initially and I have requested that with an answer expected on my boss's return from Christmas holiday! I now may be shocking him further by telling him I'm retiring! Well done on your own achievements, I wouldn't have been mentally prepared at 53 for sure.

jamesd

£60k puts you in the top ten percent so it's not so modest.

handful

jamesd said:

£60k puts you in the top ten percent so it's not so modest.

I'm always astounded by that statistic. I used to be on more in my last job which I hated and took a pay cut 5 years ago! Never regretted that decision for a second, it's not all about money!

handful

tacpot12 said:

The sensible approach to the DB pension is to leave it until the NPA (especially if there is any Guaranteed Minium Pension associated with it), and draw on your savings and SIPPs until then. 

I'd suggest you repeat the Guiide process but include your wife's pensions and savings in as though they were your own. The tool doesn't need to know who the true owner is to make its recommendations.

Looking at your numbers, you can afford to retire if you are happy to use about half your savings to get you to your State Pension Age - this is a worst-case scenario, if the markets do well, you might not end up using half your savings, but it would be better to assume that you will.  You have a campervan and a partner that seems to want to spend more time with you, so I think you should be considering handing in your notice so you can leave in April.  

Looking closer at my Guiide plan, they seem to suggest using mainly savings first to the extent that they are completely depleted by 2031, just before the OH SP kicks in. That seems odd to me. Presumably in the meantime I should be transferring investments into cash inside the pension wrapper to replace the 2-3 years emergency fund? I believe Guiide will be offering a couples solution sometime soon so maybe re-run again then.

One thing that I realised running both of our finances together is that it won't be taking into account the OHs personal allowance so the true picture will be better than what I see today.

Bostonerimus1

handful said:

jamesd said:

£60k puts you in the top ten percent so it's not so modest.

I'm always astounded by that statistic. I used to be on more in my last job which I hated and took a pay cut 5 years ago! Never regretted that decision for a second, it's not all about money!

For the comfortably off it's not necessarily about the money. If you are poor the money becomes more important.

Hoenir

handful said:

also ran my figures through Guiide and did so with just my finances and this showed that I should be ok drawing this income with an increase of 2.5%pa increase with the 4 scenarios plotted in that tool.

Inflation is currently someway off reaching this level. Better to be cautious and be prepared for the worst case scenario.