Weighing up redundancy and the impact on pensions, early retirement, etc

theblueflash

How much do you currently spend a year in outgoings that you will still have in your “gap” years? Apologies if I missed it ? 

kempiejon

How much per year does it cost you to live? Just normal base costs not extravagances.
You can then work out how much you spend on treats and would like to spend on more. They're great starting points.
A decade ago I was made redundant in my 40s I itemised all my expenses as part of the process to work out how long the pay out wold last. 6 months in I got a part time job and had a great handle of my plan for early retirement.
We all have very different ways of how we use our resources.
Your house is bought and paid for now. So no rent nor mortgage. Which is a big part of many peoples expenditure.


Just using today's money numbers as a jumping off point.
At normal pension age state pension and works DB pensions should put you about £35k pa in today's money. Which is in the region of what you estimate you need, right? (you should check you real costs)
So you'll need to fill 20 years from your other assets.
20 x £30k = £600k
But you also have £200k DC which might offer around £7k annually at 3.5% from around 57. £7k x 10 years reduces that amount to £530k

There's just over half a mill in savings account. That would be enough for some. If your half mill is in deposit accounts getting that working hard for would be my route. That £550k could be on the market turning about 7% annually though that's a risk some people do not relish.

Are you employable or in a declining industry (hence redundancy) so need to retrain and start a lower level. Are  younger cheaper keener employees taking your types of roles so you'll have to re direct your potential jobs and reduced salary.

Any salary the pair of you can bring in over the next 20 years could add to tidy up your state pension, could add to a personal pension and reduce the need to draw on your existing funds. If you're dead set on retiring perhaps you could make it work.

20 years is a bloody long time with far too many variables to make any guess little more than a gamble, inflation, state pension, interest rates, taxes and any personal choices you make on expenditure and employment swing the odds about.

Now readers have I missed anything?


edit to Add I was first made redundant in the 80s so jacked it in and went round Ireland in a camper van. 2nd time again just 2 years later so I changed tack and went to university as a mature student, after graduating and a decade or so in work making a plan for early retirement I was thrown on the scrap heap again and that's when I did the planning mentioned in my first paragraph.

What_time_is_it

Thanks for the responses @theblueflash and @kempiejon.

Our current expenditure is about £1,000 a month for basics - insurance, tax, food, clothing. Essentials.
Maybe double that to allow for going out, holidays, running a car, and home maintenance. 
And maybe add on £500-£1,000 a month for "other" things. 
I think £2,500 a month would be sufficient for us both to live on and enjoy most of things we want to do.
Hence £30-£40k a year being our current estimate of what we'd need.

In terms of employability we are probably most at risk of AI. We both work in University administration. The sector will probably shrink a little in the next 10 years, but our skills are transferrable to other similar settings. I don't think there will be as many admin jobs in the future though. 

If we return to work (and we probably will) we would either look to do something similar for a few years, or do something totally different but less stressful. We would certainly want to tidy up our state pensions so that we are eligible for the maximum that will be available.

We would probably use our DC pension pot (of around £200k) as drawdown income, taking more in the pre state pension years. I would definitely want to be taking more than £7k a year from it. Maybe £15k a year for 13 years between 57 and 70, and then £5k a year from aged 70 onwards until it runs out? That's assuming a state pension starting age of 70. 

barnstar2077

With the caveat that you need to secure yourselves full state pensions, I say go for it! (Class 2 national insurance contributions are often mentioned on here, not sure if they are still relevant, but could be worth looking into.)

You can always get some part time work later if you feel like you need to.  Mean while you will be extracting the most amount of living that you can from your kinda still fit years.

The idea that you shouldn't retire just because you are young lacks imagination.  I think we can all say that if we had won the lottery at 21 we probably wouldn't have worked another day in our lives.  Not for a wage, or just for something to do at least (I might have opened a dog sanctuary though!)  Mainly because we would have been living the life of riley and seeing the world.  So, really it comes down to whether or not you will have sufficient funds to do what you want to do with your spare time if you take the redundancy.  Only you can decide that.

Why not apply for the redundancy, and if you get it then agree to give it a go for six months to a year and then see how you feel?  I think you will very quickly slip into a new, far more comfortable routine and wonder how you ever found time for work!

You have enough funds that you will be able to see financial trouble coming a long way off and adjust your plans accordingly.  Enjoy!

kempiejon

barnstar2077 said:

You have enough funds that you will be able to see financial trouble coming a long way off and adjust your plans accordingly.  Enjoy!

This is a neat statement well articulated.  And top advice.

Like the idea of FU money