Can I Retire and Would it be Pretty?

Euro_Skank

Hi, 

Can I retire and would it be pretty? 

I'm 53 years old, single with no kids. I have two paid-off flats. I live in one - and don't plan on moving. I collect £620 per month from the other. An old lady has been in it for ages. I could probably get more for it but I'm reluctant to raise the rent. 

I have no debt.
My investments are:
£55K in a SIPP;
£211K in index funds (in general accounts);
and £190K in ISAs.

 

I have Premium Bonds and some other shares totalling about £15K.  I know - I really ought to diversify into more bonds, but I don't know enough about them.    

I reckon my monthly expenditure needs to be about £2K. This includes average expenses for my rental property for the past five years. 

I'm extremely fortunate that I am currently able to contribute the max to my SIPP. 

So, would it be possible for me to retire anytime soon please? 

T.I.A.

Brie

What work pensions do you have and have you checked your state pension forecast??

And how old is your "old lady" tenant?  Assuming she's at least 20 years older than you will she be able to stay there much longer?  Of course once she moves out (in whatever sense) you can sell the flat if you like.

Euro_Skank

Thanks for your prompt reply. I have a small pension from a former employer of about £6K.

I'd say she's in her seventies. I reckon it should rent out no problem as I keep the rent very competitive. Selling will be a last option. 

Sorry, I should add, I have about £15K in the local credit union and my current acct. and my salary is currently about £65K after tax. 

Confusedlad

Really difficult to advise, but with 'similar' circs I took early retirement, conscious of my old man's advice that you're a long time dead! 
10 years or so on, no regrets but I wasn't enjoying my job anymore, was starting to suffer ill health (& have a younger wife who has continued to work on).

Phoenix72

Why is selling the other flat a 'last option'?

How much is it worth, what's the rental yield?

NoMore

Pensions, annuities & retirement planning — MoneySavingExpert Forum

Probably better in the above forum

GrumpyDil

And we don't really have all the details. 

OP, you say you currently earn 65k a year after tax so presumably you also have a pension related to that employment? If so what is the value of that pension? 

Have you checked your state pension forecast to see if you have already paid enough NI to get a full pension or will need to work or pay for additional years. 

You also said you have another pension worth around 6k. Is that pension defined benefit or defined contribution and is that 6k the projected payout at retirement per year or the current fund value if a DC pension or something else? 

Euro_Skank

Phoenix72 said:

Why is selling the other flat a 'last option'?

How much is it worth, what's the rental yield?

Thanks, rental yield is 4.2%. I may sell another larger property if I get left it in an inheritance. I'd move into it - redecorate then eventually sell it. 

jimjames

Euro_Skank said:

£55K in a SIPP;

I'm extremely fortunate that I am currently able to contribute the max to my SIPP. 

I don't think these statements tie up. If you contribute the max to your SIPP then it should have more than £55k in it as you'd be adding more than that per year? Or is there another pension somewhere?

dunstonh

jimjames said:

Euro_Skank said:

£55K in a SIPP;

I'm extremely fortunate that I am currently able to contribute the max to my SIPP. 

I don't think these statements tie up. If you contribute the max to your SIPP then it should have more than £55k in it as you'd be adding more than that per year? Or is there another pension somewhere?

You beat me to it.     Although the OP says they are able to contribute.   That could mean they are able but are not choosing to. 

£65k a year salary means £60k of pension contributions possible (ignoring carry forward).  A pension fund of £55k means it is not being maximised.

NoMore

People often confuse the max an employer will match with the max they themselves can contribute, so some people say they have maxed their pension contributions, when they mean they have maxed the amount the employer will match.