Is retiring at 55 doable with this plan?

hildosaver

Hi all,

Quick background - 48 years old NHS worker, married with 1 child (aged 3).

Salary currently £53755 which will be going up to £60504 in October.

Wife works part-time and earns around £8k.

Before we got married both my wife and myself owned a property each, once we got married we decided to keep both properties and buy a 'family home' for ourselves which we did. Wife then received a £40k inheritance after which we bought another house in auction for £29k and after renovation total cost was £35k. So overall properties as follows:

'Family Home' - bought for £165k and now valued £350k (bought near bottom of price crash here in NI)

Rental 1 - bought for £126k and now valued around £120k (bought prior to price crash) - rental income £572 pm

Rental 2 - bought for £55k and now valued at £75k - rental income £425 pm

Rental 3 - bought for £35k (including renovation) and now valued £100k - rental income £707 pm

Total rental income: £1704 pm (£1022 pm after tax)

Total income - Salary £3030 (after tax, NI and pension) + Rental £1022 = £4052 pm

Over the past 5 years we have aggressively overpaid the mortgages down from a total of £267k in Jan 2020 to a total of £120k in Jan 2025.

I am in the fortunate position of having bought some bitcoin back in 2014 - I spent £1000 in total.

I decided to sell almost half of my bitcoin last month and after tax I received £126900 from the sale.

I have now paid off the mortgages on 'Family Home', Rental 1 and Rental 3 and paid off over half the mortgage on Rental 2 leaving us with an outstanding mortgage total of £18k. I also bought my wife a new(ish) car to replace the one she has been driving for the past 10 years.

So here is what I plan to do for the next 10 years:

Every month put £1000 into savings and £1667 into investment ISA and overpay the last mortgage by £500 per month.

Do this for 4 years then sell Rental 1 and then use the proceeds to fill my ISA allocation and my wife's ISA allocation for around 3 years (£40k per year) and I'd up my savings over those 3 years from £10k per year to £20k per year - at this stage I will be 55 years old.

That would hopefully leave us in the following situation:

Savings - around £100k

Saving and investment ISA - £200k

At this point I would retire and then sell Rental 2 and then for the next two years use the proceeds from that sale to further increase our saving and investment ISA pot by (roughly) £40k for 2 years (using both our allowances) which would give us an overall ISA pot at aged 57 of £280k.

We would keep Rental 3 to help us keep ticking along and then hope to live off that plus the savings and ISA return until aged 68 at which point I can draw upon the State Pension.

Our outgoings are fairly minimal now with most of the mortgages gone - I estimate for us to pay all bills, maintain 2 cars, afford a holiday or two, we would need around £14k per year as a minimum just to get by - obviously we would be aiming for more than that - ideally £25-30k per year if possible to have a decent lifestyle.

That's my plan - by the way I still have a decent amount of bitcoin as well but I don't tend to use that in any calculations - it's just there as a bonus really (albeit a big one) and I'd hope to one day be able to buy us an apartment in Spain over the next 4/5 years with that all being well.

Feel free to roast the plan - need to know if this sounds doable to you guys and am open to all suggestions.

NoMore

You don’t mention pension

whats your current pension like? Also you are not using a pension for further savings which would be more tax efficient than isa. 

Roger175

Congratulations on achieving all that. Your plans sounds very doable and I think gradually selling the BTLs is an excellent idea (reduce the stress!)
A couple of other observations. You will have to factor in a fair chunk of capital gains tax on the BTL sales. Also, I would be minded to sell the remaining Bitcoin sooner rather than later to bag the gain and get the money into a more conventional investment or savings. Surely it is only a matter of time before this idiocy collapses? It's got to be the worlds biggest Ponzi scheme!! (in my humble opinion)

hildosaver

NoMore said:

You don’t mention pension

whats your current pension like? Also you are not using a pension for further savings which would be more tax efficient than isa. 

I am in the NHS Defined benefit pension scheme and I've been paying into it for 11 years now - I estimate if I retire at 55 it will have accrued around £21k per year annuity however I would hold off on accessing it till I'm 65 at the earliest (although I will assess this as time goes on) as you lose a % for every year you access it before state pensionable age (68 for me I think)

hildosaver

Roger175 said:

Congratulations on achieving all that. Your plans sounds very doable and I think gradually selling the BTLs is an excellent idea (reduce the stress!)
A couple of other observations. You will have to factor in a fair chunk of capital gains tax on the BTL sales. Also, I would be minded to sell the remaining Bitcoin sooner rather than later to bag the gain and get the money into a more conventional investment or savings. Surely it is only a matter of time before this idiocy collapses? It's got to be the worlds biggest Ponzi scheme!! (in my humble opinion)

Thanks. The way I see it with Bitcoin is that even if it goes to zero tomorrow at least I have been able to get a significant amount out of it so in a lot of ways all the pressue is off for me. I have never counted Bitcoin into my planning, as I said i've always just had it there as a bit of a bonus in case it really went mental and once it hit $100k I thought ok I really need to use some of this so I sold a significant %. I do plan on selling the rest at some point but I do think it will become a recognised world asset in the same way as gold and I believe it is likely to be worth considerably more in the future - of course I could be wrong but by selling a lot of it now I have basically hedged my bets on it and am very comfortable with the risk. It's not for everyone of course but I got lucky by buying it very early.

CGT I am factoring in alongside probable capital growth in the value of the properties. So my figures are a rough estimate but I could lower my savings a bit to make up to the full ISA allocations if I need to. My priority will be hitting my ISA limit every year and I'll save the rest.

JayRitchie

Why so much into ISAs rather than the NHS AVC scheme or a SIPP? Did you have any pensions before joining the NHS scheme?

hildosaver

JayRitchie said:

Why so much into ISAs rather than the NHS AVC scheme or a SIPP? Did you have any pensions before joining the NHS scheme?

I do have a pension prior to NHS scheme and it currently is estimating an annuity of around £4500 per year which I can access at 65. I am focusing now on building funds to enable me to bridge from retirement at 55 till I can access pension/state pension. Although I acknowledge that it may make sense to pay more into my pension or a SIPP, that won't help me in the years I'll need the income between 55 and 68 and that is what I'm trying to plan for. 

JayRitchie

hildosaver said:

JayRitchie said:

Why so much into ISAs rather than the NHS AVC scheme or a SIPP? Did you have any pensions before joining the NHS scheme?

I do have a pension prior to NHS scheme and it currently is estimating an annuity of around £4500 per year which I can access at 65. I am focusing now on building funds to enable me to bridge from retirement at 55 till I can access pension/state pension. Although I acknowledge that it may make sense to pay more into my pension or a SIPP, that won't help me in the years I'll need the income between 55 and 68 and that is what I'm trying to plan for. 

Is the £4,500 a year in a DB scheme or DC? It sounds like a DB scheme but its good to check.

I think you may have a slight misunderstanding about accessing private pension scheme money - at present you can draw from pensions at 57 (based on your age) - so could use that money between 57 and 68.

Dazed_and_C0nfused

hildosaver said:

JayRitchie said:

Why so much into ISAs rather than the NHS AVC scheme or a SIPP? Did you have any pensions before joining the NHS scheme?

I do have a pension prior to NHS scheme and it currently is estimating an annuity of around £4500 per year which I can access at 65. I am focusing now on building funds to enable me to bridge from retirement at 55 till I can access pension/state pension. Although I acknowledge that it may make sense to pay more into my pension or a SIPP, that won't help me in the years I'll need the income between 55 and 68 and that is what I'm trying to plan for. 

Why do you say that?  55-57 maybe but why not 57-68 🤔

JayRitchie

Dazed_and_C0nfused said:

hildosaver said:

JayRitchie said:

Why so much into ISAs rather than the NHS AVC scheme or a SIPP? Did you have any pensions before joining the NHS scheme?

I do have a pension prior to NHS scheme and it currently is estimating an annuity of around £4500 per year which I can access at 65. I am focusing now on building funds to enable me to bridge from retirement at 55 till I can access pension/state pension. Although I acknowledge that it may make sense to pay more into my pension or a SIPP, that won't help me in the years I'll need the income between 55 and 68 and that is what I'm trying to plan for. 

Why do you say that?  55-57 maybe but why not 57-68 🤔

I find its a really common misconception - and one of the unfortunate reasons people don't pay into pension schemes. Not helped by some youtube videos and lets assume TikTok also which push ISAs.

hildosaver

JayRitchie said:

hildosaver said:

JayRitchie said:

Why so much into ISAs rather than the NHS AVC scheme or a SIPP? Did you have any pensions before joining the NHS scheme?

I do have a pension prior to NHS scheme and it currently is estimating an annuity of around £4500 per year which I can access at 65. I am focusing now on building funds to enable me to bridge from retirement at 55 till I can access pension/state pension. Although I acknowledge that it may make sense to pay more into my pension or a SIPP, that won't help me in the years I'll need the income between 55 and 68 and that is what I'm trying to plan for. 

Is the £4,500 a year in a DB scheme or DC? It sounds like a DB scheme but its good to check.

I think you may have a slight misunderstanding about accessing private pension scheme money - at present you can draw from pensions at 57 (based on your age) - so could use that money between 57 and 68.

It's also in a DB scheme. No I know I can access the pensions at 57 but the annuity at that point would be reduced by around 60% - I'll do some sums and see about accessing it earlier but I would want to keep most of it - I think the earliest I'd be willing to access it would be 60-62 depending on the calculations - I'm going to have a 1:1 pension meeting next month so I should have a better idea of how much I would have at each age and can decide from there.