I'm fed up of work... get me out of here!

tell_it_how_it_is

As per title, I've had enough lol, and would retire tomorrow given the chance.

I don't have fancy sums like some on here, but have a loose plan as below, thinking of a "minimum" to "moderate" outcome as is often described. I've already done what I think are exaggerated expenditure costs of £1800pm, so have used that as intended income (but might manage less, and build up to that inflation wise).

Wondered if anyone would be interested in the idea, and be willing to point out anywhere (probably everywhere) I might be completely crazy! 😉

Mortgage is already paid off, and the better half will have SP in 2027 (though workings here are deliberately not taking that into account).

NOW
===

DOB : For ease say 1971/04/01
Age : 53 (2024/04/01)
Exit : 56 (2027/04/01)

Current levels:
SIPP 1 : £138k (can take from 55)
SIPP 2 : £74k (can take from 65, has a GAR and decent bonuses)
DB pen : £1.8pa, £5.4k lump
Cash : £25k

2027/04/01 exit projections:
SIPP 1 : £176k ?? (trying to pay in at least 700pm)
DB pen : £3.9pa, £11.7k lump ??
Cash : £30k ?? (increases when possible)

2036/04/01: Age 65 for SIPP 2
SIPP 2 : £120k ??

THEN
====

2027/04/01
Take lump sum from SIPP 1 £44k
Use £1800pm X 24, uses most of lump sum
But maybe have £36k or more cash left by ...

2029/04/01:
SIPP 1 hopefully £132k+ left
Withdraw £16000pa minimum from SIPP 1 for 7 years through to SIPP 2 at 65
So total £112k minimum from SIPP 1
Use £5600pa for 7 years from cash
So total £39.2k (pretty much exhaust cash and interest)

2036/04/01
Take lump sum from SIPP 2: £30K
Maybe call in DB pension here, 2yrs early
So additional lump sum, and small amount per month
Sort out GAR for SIPP 2
Bit of SIPP 1 possibly left

2038/04/01
State pension kicks in (probably)
Have small amount from DB
Plus GAR amount from SIPP 2
Bit of SIPP 1 possibly left

NoMore

Your not really using your tax free cash and personal allowances efficiently.

For example instead of taking the whole tax free cash from Sipp 1 to live on for two years, take UFPLS withdrawal (25% will be tax free and rest taxable) of £16760. This uses 4190 of your tax free cash and 12570 is your personal allowance, so that's the whole lot with no tax paid on it, and you've only used a fraction of your tax free cash, so available in your later years. You could then either use your cash reserves to top up, so no more tax to pay, or draw more from your pension.

On-the-coast

I agree with the post from @NoMore
Also... for planning purposes from today's perspective I avoid assuming growth in excess of inflation, especially in the short term.  I think it's valid to count your accruing savings (e.g. 700/month).
Think about your marginal rate of income tax, and if it's in the 40% bracket pack as much as you can into pension.  It would even be worth taking a short term loan if you were very disciplined to allow you to max out your pension.
Also think about what sort of temporary / part-time job you could do (preferably an enjoyable one!) to fill in any shortfall in the short-term.
Good luck...

af1963

The figures seem to assume no falls in the value of the SIPPs at any time. Even if, on average, they keep up with inflation, or even do better, there is still some risk involved, particularly if there is a sharp fall in value in the early years. Depends to some extent on how they are invested. But even 'safer' funds can fall, and cash can lose value to inflation. 

In terms of total amounts - I think these figures look pretty tight. You want to fund annual spending of about £21.6k and will maybe have some tax to pay on top depending how you withdraw it. For the 11 years from age 56 to 67 you'd need to fund everything from your investments -that's around £235k. 

At 56, you'd have investments worth around £300k. If you assume they just grow to match inflation, you'd spend most of that covering those 11 years, leaving only about £65k.

 At 67 you add a DB pension that would deliver about £4k a year, and a state pension ( if you qualify for full pension ?) of about £10600. So at that point, you'd still need to fund around £7k per year from pensions/savings - and it only covers about 10 years worth at that rate.

If you assumed a bit of above-inflation growth in the pension values, it would help - but its just an assumption and not a guarantee. If your estimated £1800/month is really, as you think, exaggerated, that would help too by reducing the amount you need to spend each year.

Another "big picture" way to look at it is that your DB pension when you stop work may be worth about £120k  (estimating 25x the annual pension plus a lump sum). Add that to your SIPPS/Cash, and you will have assets and pensions "worth" around £420k. Having a full state pension is the equivalent of ( roughly) another 250k.  You want to spend £21.6k per year (plus tax) from that, which is almost 4%. That's at the upper range of what many people would consider 'safe' to spend. It's not impossible, but there's no margin for error or the unexpected.

Linton

To avoid any misunderstandings…

It is difficult to see how a normal SIPP can have a GAR.  Do you mean an old Personal Pension or similar provided through your employer? 

I would expect a GAR not to be inflation linked.  Do your plans take this into account?

tell_it_how_it_is

Hi

Thank you very much for your replies, much appreciated.  Some more information ...

Last first, yes, my bad, "SIPP 2" is not a SIPP at all (just my lazy 'grouping' together, which doesn't help, sorry), and is a with profits pension from Refuge (now RL ofc) from the early 90s.  So it's their own 'projection' of £121k+ for 2036 that I have essentially used (I pay £160pm into that one, and intend to through to 65).

According to the gov website, I do have full state pension (37 years thus far), though I was contracted out (1989 to 2012 I think), and it says a COPE value of £40.  I have to admit, even trying to read up on that (including with links provided on here) I just don't get what that will actually mean in practice.  The extracted value from that SERPS (?), is essentially what I've built upon to get SIPP 1 where it is.

I have indeed not accounted for any fall, though neither have I accounted for any rise, so my own "play it safe" thinking was pretend that it is all going to stagnate across 9/11 years - surely I'd be desperately unlucky if even that actually happened (?), though we have of course been through challenging times.

I'll try and take everything on board there - including of course reducing tax as much as possible, I was trying to limit it as was, but appreciate there may be smarter ways to do things to even potentially eliminate it.  I am also not averse to considering a low paid part-time job for a period between 56 and 65.

Finally, I am a few K short of 40% tax bracket, so no immediate likelihood of hitting that.  I don't consider myself thick, but sometimes wonder when it comes to this area!! I will of course likely seek out appropriate advice when the time comes.

Thanks again

QrizB

tell_it_how_it_is said:

According to the gov website, I do have full state pension (37 years thus far), though I was contracted out (1989 to 2012 I think), and it says a COPE value of £40.  I have to admit, even trying to read up on that (including with links provided on here) I just don't get what that will actually mean in practice.

If your SP forecast says you can get £203.85 per week, you will be entitled to a full NSP.

If it says you have that much entitlement based on payments already made, and you can't improve your forecast, you've already earned itwith the years you've paid.

If it says you need to contribute xx more years before 20yy in order to get it, you need to continue contributing.

Marcon

QrizB said:

tell_it_how_it_is said:

According to the gov website, I do have full state pension (37 years thus far), though I was contracted out (1989 to 2012 I think), and it says a COPE value of £40.  I have to admit, even trying to read up on that (including with links provided on here) I just don't get what that will actually mean in practice.

If your SP forecast says you can get £203.85 per week, you will be entitled to a full NSP.

If it says you have that much entitlement based on payments already made, and you can't improve your forecast, you've already earned itwith the years you've paid.

If it says you need to contribute xx more years before 20yy in order to get it, you need to continue contributing.

....and you need to keep contributing if you're still working, whatever the forecast says.

Marcon

tell_it_how_it_is said:

Mortgage is already paid off, and the better half will have SP in 2027 (though workings here are deliberately not taking that into account).

I wonder why? If you're a 'unit' of two, it helps to plan accordingly.

With quite a large age gap between the two of you, have you checked how that impacts on any spousal pension, especially if your BH is in a DB scheme? Some pensions can be reduced where there is a 'younger spouse' - typically 10 years or more, but I've seen it as low as a 5 year age gap.

tell_it_how_it_is

The boss effectively will have full state pension, plus a very small other one, so around £1k per month, but think that's just lost should the worst happen (no DB).

I do appreciate the partner and other parameters may create a different dynamic in due course. I guess it's just the way I roll as in worst case scenario, would it be realistic to manage on my assets alone, or am I in cloud cuckoo land.

Kim1965

Its too tight in my opinion, I only need £1800pm too. Im 59 with a slightly higher mix of db and dc ( 9k db in payment, 290k sipps, no mortgage). I think, like me, you may need to embrace part time work into your plans.