Retirement in 11 months time - does my plan sound reasonable.

RichardS

I'm 59 and thinking (a lot!) about retiring at the end of March next year.  My wife (58) and I will both get the full state pension at 67, she also has a DB pension from 60 (around £14k per year + £39k lump sum) - she's not decided whether to retire then or not, she may well do.  On retirement my 'pot' will be approx £420k.  I've looked at our spending requirements and think that our basic needs are covered by £2k a month but would target £3k a month (at least in the early active years) as desirable.  No mortgage, no debt.

I've been looking at Cash Flow ladders, bucket strategies etc but am leaning towards something much much simpler as I fear that mistakes could easily be made if things are complex.  I'm coming round to the idea of maintaining 3 years worth of spending in cash / money market funds and putting all the rest in a single multi-asset fund (HSBC Global Strategy Dynamic) which would keep my investments at a 70/30 mix.  I would hope that maintaining three years in cash/mm would enable me to ride out most market downturns.  Does this sound sensible?

tacpot12

This thread on the lemonfool forum might help: (141) Taking Income - The Lemon Fool

SouthCoastBoy

RichardS said:

I'm 59 and thinking (a lot!) about retiring at the end of March next year.  My wife (58) and I will both get the full state pension at 67, she also has a DB pension from 60 (around £14k per year + £39k lump sum) - she's not decided whether to retire then or not, she may well do.  On retirement my 'pot' will be approx £420k.  I've looked at our spending requirements and think that our basic needs are covered by £2k a month but would target £3k a month (at least in the early active years) as desirable.  No mortgage, no debt.

I've been looking at Cash Flow ladders, bucket strategies etc but am leaning towards something much much simpler as I fear that mistakes could easily be made if things are complex.  I'm coming round to the idea of maintaining 3 years worth of spending in cash / money market funds and putting all the rest in a single multi-asset fund (HSBC Global Strategy Dynamic) which would keep my investments at a 70/30 mix.  I would hope that maintaining three years in cash/mm would enable me to ride out most market downturns.  Does this sound sensible?

For me I would want longer than 3 years cash, however everyone is different, depends what your risk appetite is and also how much the total pot vs total savings/investments. My strategy is to ensure I don't run out of money rather than maximise returns.

Triumph13

I would recommend dividing your funds into two separate pots. One to bridge the gap until all your pensions come on line, and the other to provide a drawdown income.

I make it about £180k needed in the first pot, which is nicely covered by the TFLS from your pension plus what you can draw within your personal allowance before your stat pension kicks in. As all this will be spent over an 8 year period, I would incline towards cash or a bond ladder.  Probably cash as you want something simple.

That basically gives you your £3k a month as requested.  The rest of you pension probably gives you an extra £500 a month or so after tax.

Mark_d

So you're looking at drawdown and your ongoing investments within your pension arrangements?  I've already set my strategy to use a portfolio of four moderate/cautious ETFs.  I believe the risks are adequately managed with the pension.

Have you investigate your options buying an annuity?  With a mortgage repaid, and my spouse catered for with own pension, I could buy a single life annuity with no guarantee period.  I'd recommend looking around at you options with annuities

UnsureAboutthis

I'd aim for 1k after tax for the first few years.
Enure all debts were paid off
if you have a big/sexpensive car, think about the cost of unexpted tyre replacements etc via punctures etc at 250/300 a tyre.
Everything especially food is rocketing in price
When you are both at home, utility bills are higher, eating out even at fast food more often, more day trips, more holidays, buying more clothing etc.
The last thing you want is to be worried about paying the bills and continuing to live a nice, not boring life once you leave or having to return to work.


We both left years before our retirement and never looked back and we too both will get the state pension at 67 if state pension is still available to people with decent savings and private pension income.

Cobbler_tone

With that much behind you, two state pensions to come and those required outgoings I struggle to see how you can fail. In fact, unless there is some catastrophic crash I don’t think you can.

cfw1994

SouthCoastBoy said:

RichardS said:

I'm 59 and thinking (a lot!) about retiring at the end of March next year.  My wife (58) and I will both get the full state pension at 67, she also has a DB pension from 60 (around £14k per year + £39k lump sum) - she's not decided whether to retire then or not, she may well do.  On retirement my 'pot' will be approx £420k.  I've looked at our spending requirements and think that our basic needs are covered by £2k a month but would target £3k a month (at least in the early active years) as desirable.  No mortgage, no debt.

I've been looking at Cash Flow ladders, bucket strategies etc but am leaning towards something much much simpler as I fear that mistakes could easily be made if things are complex.  I'm coming round to the idea of maintaining 3 years worth of spending in cash / money market funds and putting all the rest in a single multi-asset fund (HSBC Global Strategy Dynamic) which would keep my investments at a 70/30 mix.  I would hope that maintaining three years in cash/mm would enable me to ride out most market downturns.  Does this sound sensible?

For me I would want longer than 3 years cash, however everyone is different, depends what your risk appetite is and also how much the total pot vs total savings/investments. My strategy is to ensure I don't run out of money rather than maximise returns.

I would worry more about running out of time than money - the only thing we can all be sure of is that the more years we work, the fewer we have to play 😉

@RichardS - feels to me like you should be absolutely fine!
The more early years you can enjoy without the demands of work on your time, the better, IMHO!

OldScientist

RichardS said:

I'm 59 and thinking (a lot!) about retiring at the end of March next year.  My wife (58) and I will both get the full state pension at 67, she also has a DB pension from 60 (around £14k per year + £39k lump sum) - she's not decided whether to retire then or not, she may well do.  On retirement my 'pot' will be approx £420k.  I've looked at our spending requirements and think that our basic needs are covered by £2k a month but would target £3k a month (at least in the early active years) as desirable.  No mortgage, no debt.

I've been looking at Cash Flow ladders, bucket strategies etc but am leaning towards something much much simpler as I fear that mistakes could easily be made if things are complex.  I'm coming round to the idea of maintaining 3 years worth of spending in cash / money market funds and putting all the rest in a single multi-asset fund (HSBC Global Strategy Dynamic) which would keep my investments at a 70/30 mix.  I would hope that maintaining three years in cash/mm would enable me to ride out most market downturns.  Does this sound sensible?

In the long-term (i.e., post-67) your real income will be 2*12.5k+14k=£39k (assuming the DB pension is fully inflation protected), in other words, your portfolio is really only required to provide about £22k per year  (i.e., 36k minus 14k) for the next 7 years*, i.e., a total of about £154k assuming a 0% real growth rate. For simplicity (at least once set up) you could consider a fixed term annuity to cover those 7 years. You can get rough quotes for 5 or 10 years at https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/compare-annuities - the amount required would be between £100k (5 years) and £170k (10 years).

A cash flow ladder could be as simple as sticking a starting amount of £154k in a STMFF and taking 1/7th of the amount remaining each year or 1/84th of the amount remaining each month. If interest rates remain above inflation the amount will keep up with inflation but not otherwise.

* depending on when your wife takes her DB pension