Retire now, can I?

tony4147

Age nearly 63, no health issues, I’ve come to the point that I’ve had enough of working, very tired and stressed time to call it a day.

My SIPP is currently worth £650k and have the years required for a full SP @ 67. I have a mortgage of £55k (£1300/month, just under 4 years left), house approx. £850k, Cash ISA £70k. 

My OH has 2x DB pensions but I don’t want them to be included in anything here.

 

But for the mortgage I could manage quite comfortably on £2300 Nett / month, I’ve always intended in NOT using my TFLS to provide a pension, I was keeping that for holidays during retirement and not to fund day to day living.

 

Any thoughts on the best way forward to achieve what I’m looking for?

 

PS - I could if needed continue working another year and pay another £40k into my pension but in all honestly, I’ve had enough!

PS2 - My IFA has modeled my requirements and says that it is doable, and that was not keeping the TFLS in the pension (eg invested) but I would and only drip feed out when needed.

michaels

Lets use state pension as 12.5k
Then to replace that for the 4 years form 63 to 67 will cost £50k

That plus state pension gives about 1k per month out of your 2.3k target.

Then the ISA will more than pay off the outstanding mortgage.

Then you need a further 1300 net = 1600 gross per month or 19.5k pa

Now assume that the TFLS 25% of 600k (650k less the 50k needed to bridge the gap to state pension) of £150k is your holiday and other fund.  That leaves 450k in your crystallised pension pot.

19.5k pa from 450k = 4.3%.  This is slightly on the 'risky' side of safe if taken as drawdown (probably would ideally be between 3.25% and 3.5%).  One option would be to see what annuity you could get to get the certainty of not running out of money.

Otherwise you might have to think about whether the full 150k of tax fee money will be needed for your 'extras'.

OldScientist

From your £720k (650+70), over the next 4 years you need to set aside:
1) £62k for mortgage payments (assuming you don't pay it down faster)
2) £48k to cover an equivalent to the state pension for 4 years.

Ignoring tax, you then need £27.6k-£12k=£15.6k from your remaining portfolio (720-62-48=610k). 

The required income is roughly 2.6% of your portfolio which, if raised by inflation each year, will probably successfully survive a long retirement of 35 years.

Another potential solution is to purchase an RPI annuity to provide the £15.6k (for a single life RPI annuity at 63yo, this would require about £325k of your SIPP leaving you with £285k for ad-hoc spending).

In other words, it looks like you are set to go!

On-the-coast

As above 2 respondents indicate - you’re good to go.  They approach it in different ways but get to same conclusion. 

I think I’d be keen to derisk with an indexed annuity as long as there was some cash left over for unforeseen issues.  Only you know whether single or joint life annuities make sense. 

Albermarle

My OH has 2x DB pensions but I don’t want them to be included in anything here.

Normally it is advised to look at the family finances in the round, but of course you may have specific reasons for not wanting to do this.

 

german_keeper

Sorry but I am just wondering why you are paying an IFA and then coming onto an obscure internet forum. If you don't trust their advice stop paying them.

LHW99

and have the years required for a full SP @ 67

Just to say - you have actually checked? The much headlined 35 years doesn't apply to most of us yet, as we are in the transition phase from old to new.

It can be anything between ~28 and ~50 depending on work history (DB pensions seem to often have been contracted out which reduces the starting amount for NSP)

https://www.gov.uk/check-state-pension

tony4147

german_keeper said:

Sorry but I am just wondering why you are paying an IFA and then coming onto an obscure internet forum. If you don't trust their advice stop paying them.

It’s a big decision whether to retire what’s wrong in getting a second opinion?

LHW99 said:

and have the years required for a full SP @ 67

Just to say - you have actually checked? The much headlined 35 years doesn't apply to most of us yet, as we are in the transition phase from old to new.

It can be anything between ~28 and ~50 depending on work history (DB pensions seem to often have been contracted out which reduces the starting amount for NSP)

https://www.gov.uk/check-state-pension

Yes SP fully checks out, passed the point for full SP years ago.

 said:

My OH has 2x DB pensions but I don’t want them to be included in anything here.

Normally it is advised to look at the family finances in the round, but of course you may have specific reasons for not wanting to do this.

 

I know my OH pensions are fine and see it as an assist should mine not be adequate, but like to know that my own SIPP after all the years I’ve paid into it meets my goals.

MEM62

@tony4147 Based on what you have put in your post I think you are good to go.  Time to hand in your resignation :-)  

Veloflyer

I am in a similar frame of mind - 61 and still working, but no mortgage. Other folk have commented on the SIPP and I would concur. Some points perhaps.

If your SIPP is in equities I'd think about covering them in case of a market crash. The last thing you want to do is withdraw from an equity based SIPP in a crash. A cash buffer may be advisable - your ISA? else preserve some/most of it with index linked gilts perhaps.

Purchase of Annuity could be a way to go using some/all of the SIPP. Favourable rates at present. 

2.3K per month? Is that right? Inflation factored in? Check it, then check it again.

Money aside -  Do you have something to fill the time when you quit work? If not, then I'd continue working until you find something. Money coming in is still a great advantage.      



 

tony4147

Veloflyer said:

I am in a similar frame of mind - 61 and still working, but no mortgage. Other folk have commented on the SIPP and I would concur. Some points perhaps.

If your SIPP is in equities I'd think about covering them in case of a market crash. The last thing you want to do is withdraw from an equity based SIPP in a crash. A cash buffer may be advisable - your ISA? else preserve some/most of it with index linked gilts perhaps.

Purchase of Annuity could be a way to go using some/all of the SIPP. Favourable rates at present. 

2.3K per month? Is that right? Inflation factored in? Check it, then check it again.

Money aside -  Do you have something to fill the time when you quit work? If not, then I'd continue working until you find something. Money coming in is still a great advantage.      



 

The £2.3k / month is correct, I’ve worked based on what I clear now per month whilst working excluding the mortgage, I will need to clear the mortgage probably with savings. 

I have wondered about using some of my SIPP for an annuity and £200k will get me just under £13.5k level, or just under £9k increasing by RPI.

Not sure which way to go, I was intending to work another couple of years which would have put me in a much better position, larger SIPP and mortgage much less but the way I feel I can’t see that happening.