Retirement advice please

barnstar2077

pedro789 said:

ali_bear said:

pedro789 said:

My plan is to retire Feb/Mar next year. I've got option of doing some consultancy work, but really fancy having a year off completely. Feel completely burnt out.

It depends on what you mean by this. If I was really completely burnt out I would take time off for ill health immediately, with a view to making it more permanent if things didn't change and I didn't need to be earning. Then consider going back to work if I found something that I could get along with. 

What you do have is flexibility about when you stop working, if you can stand it. You also have flexibility because of your large-ish ISA savings and rental income. These are to your advantage. 

Do you need more years of NI contributions to get the full state pension? 

Thanks. All NI paid up, so ok on that front.

You have checked your state pension entitlement, and not just your NI record?

I know someone who did the former, thinking he had forty plus years of NI, and didn't realise he still needed one more year as he came under transitional rules (because he was working before 2016, so the often quoted 35 years did not apply.)

OldScientist

pedro789 said:

k6chris said:

pedro789 said:

Hi

I’m 56 and thinking of early about retirement. I've got local gov pension worth £20,000 a year (which I can take whenever), £10,000 a year from property rental and about £200,000 in a mix of cash & S&S ISAs.

No mortgages on my own house or rental and don’t need a lot to live on - couple of holidays a year etc.

My plan is to retire Feb/Mar next year. I've got option of doing some consultancy work, but really fancy having a year off completely. Feel completely burnt out.

I realise I have to pay tax on the above but really wanted advice on £200,000. 

It's 80% S&S (Vanguard LS 60/40), 20% cash ISA.

• Does it seem reasonably balanced?

• Can I drawdown annual interrest to supplement pension/rental?

• Am I missing anything obvious?

I do plan to get independent financial advice but always found this form very helpful in explaining options for a novice like myself 🙂

Appreciate any thoughts, thanks.

Have you worked out how much money you need to live the retirement you want?  It's by far the most important number!

Thanks. I've done retirement budget. I think £30,000 (before tax) plus some potential consultancy income would be ok. And still have back up of ISAs if needed.

After SP age, you will have income that exceeds your expected expenditure, so the critical period is probably the 11 years before SP age when you have a baseline pre-tax income of £30k (pension and rental) and you require (pre-tax) expenditure of £30k. Withdrawals from portfolio can then be on an ad-hoc basis, a regular inflation adjusted basis (a value of 3% to 3.5% was historically 'safe' over 30 years, i.e., about £6k to £7k), or a percentage of portfolio basis (e.g., each year take 5% of whatever remains in the portfolio).

Under those circumstances, a mix of 80% LS60 and 20% cash (particularly if you ensure you get a good interest rate on the cash) is probably good enough (overall that gives you about 50% equities and 50% fixed income). In a similar situation (already retired), we are slightly higher in equities (67%) but that is with an eye to long-term legacy.