When can I retire?

qwertywerty

"As a previous poster said why more in ISA's than pension....."

Previous house sale proceeds and inheritance simply went from savings to ISAs rather than a pension. Getting 20% tax relief when you end up paying 20% income tax doesn't seem too much to be bothered about, is pension saving that much better than ISA?

NoMore

£100 into ISA is £100 on withdrawal

£100 into Pension is £125 after tax relief, on withdrawal 25% is tax free (£31.25) and the rest taxable at 20% (£75) gives you a total of £106.25 from a £100 contribution.

6.25% Better

qwertywerty

Hoenir said:

qwertywerty said:

I'd like an income of over £30k in retirement.

Is that net of tax i.e. take home pay? 

Yes, take home and as other posters have mentioned may not account for new car and one off purchases. I'd need another fund and to work out how much that might be...

qwertywerty

kempiejon said:

qwertywerty said:

Here is my situation - I'm currently 50, in good health, married, partner stays at home and has full NI for state pension but little private pension. I'm hoping to retire before 60. Mortgage already paid off, house is worth 400k, not in a rush to move/downsize. Current income is 45k, 600k ISAs invested in 80/20 vanguard type portfolio, 350k DC pension, 100k cash equivalent savings, mainly premium bonds.

.../
When can I afford to retire? And should I use an annuity for my DC fund rather than assuming drawdown was better?

If you do your sums you might well find you can retire now. If I had £1.05M and no rent/mortgage and I wanted to retire I'd do it.
But I really want to retire, I have better things to do with my time than go to work. Perhaps you love your job and it gives you purpose.
I'm hoping to retire sounds like you've not made an early retirement decision let alone a plan.
Run some numbers calculate your expenditure now and expected in retirement and start a plan.
How much does your invest wealth grow/yield annually and what's it been doing the past.

Like most people I have a vague idea but no real plan and just started to seriously think about when and how I afford it, hence the visit to this forum. I know I don't have a proper plan yet... working on it!

Roger175

NoMore said:

£100 into ISA is £100 on withdrawal

£100 into Pension is £125 after tax relief, on withdrawal 25% is tax free (£31.25) and the rest taxable at 20% (£75) gives you a total of £106.25 from a £100 contribution.

6.25% Better

But that's only the start. If you take early retirement you can draw up to £12,570 (currently) tax free using UFPLS. This is what I intend to do having just retired at 60, I have the next 7 years when I will be a non earner, until SP kicks in and mops up most/all of this allowance.

Edit - Obviously quertywerty won't be able to do this until age 57.

kempiejon

qwertywerty said:

Like most people I have a vague idea but no real plan and just started to seriously think about when and how I afford it, hence the visit to this forum. I know I don't have a proper plan yet... working on it!

Then it's a plan I suggest you need now if you want to retire before 60. Of course you don't have to and plans change.
So do you want to retire early? What will you do, partners plans? I think you could afford it. 
I made a detailed plan in my 40s to leave work in my 50s. So far so good and I've negotiated 2 redundancies, unemployment, career change and Covid investment hiccups.

kempiejon

Roger175 said:But that's only the start. If you take early retirement you can draw up to £12,570 (currently) tax free using UFPLS. This is what I intend to do having just retired at 60, I have the next 7 years when I will be a non earner, until SP kicks in and mops up most/all of this allowance.

Edit - Obviously quertywerty won't be able to do this until age 57.

I'm working on £16760 UFPLS, £12570 + 25% tax free. 

michaels

kempiejon said:

Roger175 said:But that's only the start. If you take early retirement you can draw up to £12,570 (currently) tax free using UFPLS. This is what I intend to do having just retired at 60, I have the next 7 years when I will be a non earner, until SP kicks in and mops up most/all of this allowance.

Edit - Obviously quertywerty won't be able to do this until age 57.

I'm working on £16760 UFPLS, £12570 + 25% tax free. 

The tax free you can take any time, the personal allowance, if otherwise unused, means a higher return from 'moving' money from ISA to pension on top of the 6.25%

qwertywerty

kempiejon said

I'm working on £16760 UFPLS, £12570 + 25% tax free. 

Ok thanks, this only works in drawdown, there is no tax free cash with an annuity, right? Unless one takes 25% lump sum?

kempiejon

qwertywerty said:

kempiejon said

I'm working on £16760 UFPLS, £12570 + 25% tax free. 

Ok thanks, this only works in drawdown, there is no tax free cash with an annuity, right? Unless one takes 25% lump sum?

I don't annuity so can't say. Lump sum, drawdown, UFPLC are all part of the mix with tax and income.