Early retirement and filling the gap

MankyVegSoup

I (F, 63) have been retired for a couple of years. I currently have small LGPS DB pension and am drawing down from my DC pot at ca 7% (I plan to reduce this once I start getting state pension).

OH (M, 57) is currently working full time and paying into USS. As well as the DB element he has built a small amount in the DC part. He also has a DC pot from previous employment and a very small old DB pension which starts paying at age 60.

The plan was for OH to retire when he hit 60 at which point we would have sufficient income to fund a decent retirement even with the USS actuarial adjustment. 

OH's current contract ends in June next year and for various reasons he may not get another. If he doesn't then he will retire and we are looking at how to balance the books if that happens. 

As well as our pensions we have a buy to let property, stocks and shares ISAs and a small cash buffer. We have no children.

When he does retire we plan to sell our current home and the buy to let. This will pay off the remaining mortgage and allow us to purchase a new property outright. We should be able to realise ca £50k from this (about 1 year's spending) but it won't be immediate.

He will get a redundancy payment which will fill the gap for 6 months. I've done some sums and I think it can work but I'd appreciate some thoughts on the best way to approach this and which pots to raid first! 

If it helps, our assets are split 45% my DC pot, 35% OHs, 20% ISAs.

QrizB

Sounds like a plan. I hope it works out for you.

I'm unable to say more than this as you've omitted almost all the relevant numbers!

Brie

Check your state pension forecasts too to see that you've not missed any years or need to top up.  Also if OH will need to top up when he retires.  

Hard to advise about the rest.

Marcon

MankyVegSoup said:

I (F, 63) have been retired for a couple of years. I currently have small LGPS DB pension and am drawing down from my DC pot at ca 7% (I plan to reduce this once I start getting state pension).

OH (M, 57) is currently working full time and paying into USS. As well as the DB element he has built a small amount in the DC part. He also has a DC pot from previous employment and a very small old DB pension which starts paying at age 60.

The plan was for OH to retire when he hit 60 at which point we would have sufficient income to fund a decent retirement even with the USS actuarial adjustment. 

OH's current contract ends in June next year and for various reasons he may not get another. If he doesn't then he will retire and we are looking at how to balance the books if that happens. 

As well as our pensions we have a buy to let property, stocks and shares ISAs and a small cash buffer. We have no children.

When he does retire we plan to sell our current home and the buy to let. This will pay off the remaining mortgage and allow us to purchase a new property outright. We should be able to realise ca £50k from this (about 1 year's spending) but it won't be immediate.

He will get a redundancy payment which will fill the gap for 6 months. I've done some sums and I think it can work but I'd appreciate some thoughts on the best way to approach this and which pots to raid first! 

If it helps, our assets are split 45% my DC pot, 35% OHs, 20% ISAs.

Is your £50K net of tax? If so, you're going to need quite a substantial amount from your (non-state) pensions, both to bridge the gap until state pension age and afterwards.

Are you on target to get that sort of level of income? 

MankyVegSoup

Marcon said:

MankyVegSoup said:

I (F, 63) have been retired for a couple of years. I currently have small LGPS DB pension and am drawing down from my DC pot at ca 7% (I plan to reduce this once I start getting state pension).

OH (M, 57) is currently working full time and paying into USS. As well as the DB element he has built a small amount in the DC part. He also has a DC pot from previous employment and a very small old DB pension which starts paying at age 60.

The plan was for OH to retire when he hit 60 at which point we would have sufficient income to fund a decent retirement even with the USS actuarial adjustment. 

OH's current contract ends in June next year and for various reasons he may not get another. If he doesn't then he will retire and we are looking at how to balance the books if that happens. 

As well as our pensions we have a buy to let property, stocks and shares ISAs and a small cash buffer. We have no children.

When he does retire we plan to sell our current home and the buy to let. This will pay off the remaining mortgage and allow us to purchase a new property outright. We should be able to realise ca £50k from this (about 1 year's spending) but it won't be immediate.

He will get a redundancy payment which will fill the gap for 6 months. I've done some sums and I think it can work but I'd appreciate some thoughts on the best way to approach this and which pots to raid first! 

If it helps, our assets are split 45% my DC pot, 35% OHs, 20% ISAs.

Is your £50K net of tax? If so, you're going to need quite a substantial amount from your (non-state) pensions, both to bridge the gap until state pension age and afterwards.

Are you on target to get that sort of level of income? 

 Yes, that is net of tax.

We should manage that level of income for 20 odd years. But it does depend on us pretty much emptying the DC pots by the time I get to late 80s. So we would rely on state pension plus the DB pensions after that. Both of us have health conditions so I think we will be done gallivanting by then. There's always equity release at that point as we have no dependents.

We have about £400k across the DC pots and ISAs.

I suppose I have 2 key questions:

1. Whether to take the bridging income from ISAs, the DCs pots or spread across them.

2. When to take the USS pension - he could take it earlier than 60 with a bigger actuarial reduction or leave it as late as we can.

Couple of other things - I'm leaving the USS lump sum out and treating it as our contingency fund. I may be in line for a decent (£80k +) inheritance in the next few years, but no guarantee of course!

MankyVegSoup

Brie said:

Check your state pension forecasts too to see that you've not missed any years or need to top up.  Also if OH will need to top up when he retires.  

Hard to advise about the rest.

Mine is fine. We are keeping an eye on OHs.

Marcon

MankyVegSoup said:

Marcon said:

MankyVegSoup said:

I (F, 63) have been retired for a couple of years. I currently have small LGPS DB pension and am drawing down from my DC pot at ca 7% (I plan to reduce this once I start getting state pension).

OH (M, 57) is currently working full time and paying into USS. As well as the DB element he has built a small amount in the DC part. He also has a DC pot from previous employment and a very small old DB pension which starts paying at age 60.

The plan was for OH to retire when he hit 60 at which point we would have sufficient income to fund a decent retirement even with the USS actuarial adjustment. 

OH's current contract ends in June next year and for various reasons he may not get another. If he doesn't then he will retire and we are looking at how to balance the books if that happens. 

As well as our pensions we have a buy to let property, stocks and shares ISAs and a small cash buffer. We have no children.

When he does retire we plan to sell our current home and the buy to let. This will pay off the remaining mortgage and allow us to purchase a new property outright. We should be able to realise ca £50k from this (about 1 year's spending) but it won't be immediate.

He will get a redundancy payment which will fill the gap for 6 months. I've done some sums and I think it can work but I'd appreciate some thoughts on the best way to approach this and which pots to raid first! 

If it helps, our assets are split 45% my DC pot, 35% OHs, 20% ISAs.

Is your £50K net of tax? If so, you're going to need quite a substantial amount from your (non-state) pensions, both to bridge the gap until state pension age and afterwards.

Are you on target to get that sort of level of income? 

 Yes, that is net of tax.

We should manage that level of income for 20 odd years. But it does depend on us pretty much emptying the DC pots by the time I get to late 80s. So we would rely on state pension plus the DB pensions after that. Both of us have health conditions so I think we will be done gallivanting by then. There's always equity release at that point as we have no dependents.

We have about £400k across the DC pots and ISAs.

I suppose I have 2 key questions:

1. Whether to take the bridging income from ISAs, the DCs pots or spread across them.

2. When to take the USS pension - he could take it earlier than 60 with a bigger actuarial reduction or leave it as late as we can.

Couple of other things - I'm leaving the USS lump sum out and treating it as our contingency fund. I may be in line for a decent (£80k +) inheritance in the next few years, but no guarantee of course!

1. Impossible to answer without knowing the numbers. The tax treatment is of course entirely different, so you need to factor that in.
2. Impossible to answer without knowing the numbers. You've said above that you've done the sums, so factor in the differing amounts at differing ages.

Broad generalisations ignore the fact that the devil is always in the detail...and there isn't any detail.

I'm all for people not over-sharing information, but in the absence of pretty much all relevant facts, there's not much hope of anyone being able to answer in any truly useful fashion. Maybe get some professional advice?

MankyVegSoup

Fair enough. I didn't put figures in because there are so many of them I thought everyone's eyes would glaze over.

Was really only after people's general thoughts, not specific advice. I will be talking to my financial advisor.

QrizB

MankyVegSoup said:

Fair enough. I didn't put figures in because there are so many of them I thought everyone's eyes would glaze over. 

You gave some useful details in your 2019 thread. If you give the same again updated to now, we might be able to offer some better opinions

squirrelpie

MankyVegSoup said:

I will be talking to my financial advisor.

And as ever, make sure you talk to an INDEPENDENT financial advisor (IFA) rather than any other kind.

LHW99

Will you have to account for CGT on the buy to let, or is that reflected in the £50k?