My plan - using the 4% rule - feel free to tell me if I have it wrong 😊

Mick70

Here goes, please be patient and excuse any ignorance 😊

 

Myself – age 54 – will be 55 mid this year

Spouse – age 57 -  to be 58 mid this year

 

Myself

DB Pension        £31k pa

S+S ISA               £85K

DC Pension       £299k     Total ISA and DC Pot =  £384k   using   4% = £15.4k pa income.

 

Wife

Bank Cash         £143k

S+S ISA               £91k

DC Pension       £101k       Total = £335k    using  4%     =  £13.4k pa  income.

Realise there is a lot as cash but it is what it is.

At this point in time , plan is for my wife to retire end of this calendar year 2025 ,  age 58.5   and drawdown/income of £13.4k pa ,  although we may also try price annuities (rising inflation) but doubt they would give this amount.  Likelihood is there will be no income tax.

 

Myself to retire either March 2026 (nrly 56) , or December 2026 , age 56.5.  and would take £15.4k pa  +  £31k DB

 Combined incomes  would be 13.4+15.4+31 =  £59.8k  (gross - unsure how work out Net yet).

And that amount would be increased with inflation each year.

Ideally we would want combined of about £62-65k gross, but it is likely I will work another 12-24 months yet,  so we will see. Work can be stressful at times, so see how pans out.

Unless circumstances were to change with our kids (both now early 20s) then we would not be taking any tax free lump sums, just using the 25% tax free each year as part of our drawdown.

 

Once SP age kicks in at 67/68 then the 4% would likely get reduced to 2%, we are both entitled to full SP (£11.4k pa each), so long as the government does not change any rulings on SP.

 If there are years when the markets go down drastically, we would try draw more from the cash element of the overall retirement “pot” and less from the S+S ISA funds. If that makes sense? Whilst on normal years it will be mixed from everything - unless I got advised to do differently regarding the cash ?

 

My DC pension is about 75% Equities,  at end of this calendar year I may reduce the risk exposure slightly and try get it down to say 65%. My wife's portfolio is about 65%.

How does that sound to you guys ?

Mick

RogerPensionGuy

Sounds like planning involved. 

1st though in my mind, would keeping ISAs on standby for now be an idea to increase possible flexibility options at any point down the road.

2nd thought, maybe vent out TFLS outa DC pensions to actually top up ISAs going back to 1st though above, this is 40K PA for a few years to top them ISAs up. 

It looks like your financial stuff is well under control. 

3rd thought, after probably so much effort getting in this position, don't be rushing these next few months or years.

Cheers Roger. 

Mick70

thanks for input Roger, appreciate your time

I should have added before anyone asks My DB pension is being paid now, I don't have to wait until 60 or whenever (its a long story). so currently i work full time and receive the DB pension.  DB pension increases by RPI each year (although scheme maybe changing that to the lower CPI).

Thanks again
Mick

Cus

The 4% rule I believe is based on a 30 year period and has other assumptions. As your plan has other variables etc then not sure why you use it?  It might be a very conservative percentage but it needs more analysis 

DRS1

Mick70 said:

thanks for input Roger, appreciate your time

I should have added before anyone asks My DB pension is being paid now, I don't have to wait until 60 or whenever (its a long story). so currently i work full time and receive the DB pension.  DB pension increases by RPI each year (although scheme maybe changing that to the lower CPI).

Thanks again
Mick

I was going to ask but now you have posted this I have another question.
Are the increases full RPI or are they capped (eg at 5% or 2.5%).
Also if the pension is already in payment I don't see how they can change the increases from RPI to CPI (unless/until RPI is abolished).  Are the increases discretionary?

MX5huggy

What happens when one of you dies first, particularly you and your DB pension? 

Albermarle

Normally a SWR for your wife's portfolio would be lower due to the high cash content. However if you look at you both overall, the high cash content is less significant.
Plus of course the arrival of 2 x SP's reducing the SWR to 2% makes it all a bit theoretical anyway,

Kynthia

Is the value of your DB pension based on taking it at normal pension age or reduced at your planned retirement date?

Albermarle

Kynthia said:

Is the value of your DB pension based on taking it at normal pension age or reduced at your planned retirement date?

The OP said 
I should have added before anyone asks My DB pension is being paid now, I don't have to wait until 60 or whenever (its a long story)

Mick70

DRS1 said:

Mick70 said:

thanks for input Roger, appreciate your time

I should have added before anyone asks My DB pension is being paid now, I don't have to wait until 60 or whenever (its a long story). so currently i work full time and receive the DB pension.  DB pension increases by RPI each year (although scheme maybe changing that to the lower CPI).

Thanks again
Mick

I was going to ask but now you have posted this I have another question.
Are the increases full RPI or are they capped (eg at 5% or 2.5%).
Also if the pension is already in payment I don't see how they can change the increases from RPI to CPI (unless/until RPI is abolished).  Are the increases discretionary?

It is capped 5% . I read on their newsletter they were proposing moving to cpi to determine annual rises 

Mick70

MX5huggy said:

What happens when one of you dies first, particularly you and your DB pension? 

Wife dies and it is all left 
I die and my DC pot is left and wife would get 57% of my DB pension