April 2025 Retirement

bonnyrigger

I'm aiming for next April as my last working month (63 at start of May).
Have £367k in RL GRIP5 (all taxable), £7.5k/yr LGPS (that's with the early payment reduction), £30k in AVC (tax free, linked to LGPS), £26K in cash ISA and a few k in cash/shares.
Full SP due from 2029.
I'd like to generate an income of £26k pre-tax indexed to CPI; LGPS and SP are, of course, fully indexed anyway.
My spreadsheet says it will be OK but just wondering if I'm being over optimistic.

Linton

bonnyrigger said:

I'm aiming for next April as my last working month (63 at start of May).
Have £367k in RL GRIP5 (all taxable), £7.5k/yr LGPS (that's with the early payment reduction), £30k in AVC (tax free, linked to LGPS), £26K in cash ISA and a few k in cash/shares.
Full SP due from 2029.
I'd like to generate an income of £26k pre-tax indexed to CPI; LGPS and SP are, of course, fully indexed anyway.
My spreadsheet says it will be OK but just wondering if I'm being over optimistic.

I am not clear whether SP and LGPS are included in the £26K or not?

Looking at the numbers very simply... 

If they are included you are wanting about £420K investments to generate about £7K (£26K-£11K-£8K) inflation-linked per year.  Also you need cover for the 4 years before you get your SP=£44K.  This leaves about £380K for the long term £8K ie about 2% of initial value.  There should be no problem doing this.

If you are looking for the £420K to generate the full £26K inflation-linked with SP and LGPS as extras that would imply 6% of initial value and would be wildly optimistic.

bonnyrigger

It's the first one, the 26k is my contribution to the household income, it includes SP and DB pension. The only worry is the 4 years from 63 to 67 where my sheet shows drawdown at 5 to 6% before dropping away when SP kicks in.

Triumph13

bonnyrigger said:

It's the first one, the 26k is my contribution to the household income, it includes SP and DB pension. The only worry is the 4 years from 63 to 67 where my sheet shows drawdown at 5 to 6% before dropping away when SP kicks in.

The simple answer to that is split it (notionally at least) into two pots.  One to cover the SP gap, the other for long term drawdown income.  Hold the first one in cash and / or a bond ladder and plan to spend it down completely over those four years.  The second should be invested for the long term with a goodly chunk of equities.

bonnyrigger

RL GRIP 5 is about 50% shares anyway, and I've no plan to move it. It's returned 5.89%/yr on average since 2017 which seems reasonable. I think it'll be OK, I'm taking the DB early to reduce strain on the DC pot, the DB and SP give me a base income even if markets go pear shaped.
Thanks for the input and roll on next April.