Retire now, can I?

Veloflyer

Albermarle said:

Veloflyer said:

ali_bear said:

With regard to the Fu money, I think once you decide on a date and start to plan around it you will start to feel a lot better about the jerks at work. You'll have an invisible layer of armour, a Ready Brek force-field of feeling good about yourself. But don't tell anyone at work, and keep it a secret until the time comes to hand in your notice. 

My view exactly. I haven't decided on a date, but having the knowledge that I can safely wave a tearful adieu does create a better mindset. Perversely, it may even ensure me working longer than necessary. 

It is not very easy to carry on if you are always thinking 'I don't care about this or that, as I can leave when I want' Certainly other colleagues etc will not appreciate you becoming a loose cannon/bad team player. ( not saying you would do that of course) 
So you have to keep a positive attitude even if you have one eye on the exit.

I intend to carry on as normal. The fact that I could safely stick two fingers up at them at any time does not affect my behaviour at work. Indeed, I have found those that are in a similar fortunate position are far better behaved, productive and efficient than many who are not.      

Triumph13

The key question is what do you want / need to leave after your eventual death?  That applies both in terms of how much of your pension income will be needed by your OH if you die first (drives the choice between single and joint life annuities) and how much, if anything, you want to leave to family, etc, after you both have popped your clogs (a key driver of the decision on whether to buy an annuity.)

If you have no kids and don't care about leaving anything to anyone, then the simple solution is definitely take the TFLS for future emergency fund / fun money and buy an annuity with the rest, with sufficient survivor benefits that your OH will have enough if you die first.  You can then forget about everything except having fun.

chalkybar

Sorry, I don’t have any advice to bring to the table….i posted similarly to you earlier this evening, and totally understand the “had enough, want to retire” rhetoric….
unfortunately I don’t have as much as you in the way of funds to play with, but 100% understand the need to stop the world and get off!
perhaps it’s the January blues kicking in….
whatever your choices I wish you the best….

tony4147

Thanks for all the comments. Can I have some thoughts on strategy should I decide to retire.

1. Would it be best to wait until the new tax year before going into drawdown? As I’m currently a higher rate taxpayer.

2. I have two pensions, my SIPP is £560k, and I have a paid up exec pension with Standard Life (£90k) which has an enhanced TFLS. In total £650k and the total TFLS from both is £180k, leaving £470 for annuity / drawdown. As original post I also have £70k in cash ISA. 

3. My biggest expense by far is the mortgage (£55k, £1300 / month), I think I need to clear this. As per my original post I always planned on my TFLS to be for the finer things in life such as holidays etc, not for my everyday needs. But to clear the mortgage I’m thinking of withdrawing £30k from the TFLS and using £25k from my cash ISA to kill the mortgage, any thoughts? as this will still leave a TFLS of £150k which I will leave invested in my pension and withdraw as and when needed…………unless labour bring change the rules in future.

4. Day to day I will require approx £2k to £2.3k / month, this will cover all my bills / expenses and also allow me to save £300 / £400 to replenish my ISA. As stated previously I’m entitled to a full SP in 4 years. I’m not that keen on handing over £470k for an annuity, but maybe some of it.

5. I may receive an inheritance of £300k within the next few years, but I don’t want to factor this in as it could easily disappear in care home fees, and should I receive it if I’m in a good financial position I may pass a good chunk of this to my kids via a deed of variation.

Any thoughts on the above most welcome, problem area is probably the £2k to £2.3k / month.

DT2001

tony4147 said:

DT2001 said:

tony4147 said:

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.

Slightly confused by your last paragraph. If, as Old Scientist, you are good to go using half your SIPP for an annuity which will provide enough with your SP to meet your target why do you need to work longer ? From the other half of your SIPP you can pay off the mortgage immediately or over the remaining term, put aside a generous holiday fund and still have money left.

I wasn’t planning on retiring now,  I always thought I would continue to work another 2 yrs, so wanted to see IF I could retire now. 

That extra 2 yrs would make a big difference, mortgage would be half what it is now, I would be able to take more pension if needed, and the two years additional contributions would help to derisk if there were market drops etc

How are you invested now?
If invested too heavily in equities would a market correction outweigh new pension contributions?
So if you want to invest in an annuity you could protect that position with correlated assets.

As Triumph13 says to annuitise would give you a known regular income but deplete your inheritable estate. It might however allow your residual funds to be invested more aggressively.

I am trying to second guess when OH will retire as she enjoys her work. I have set aside funds to cover SP gap (which I then invest in stages as she does another year), moved 20% from global funds to dividend focused investment trusts (reinvesting income until needed) and built up a cash and ultra short bonds fund. My aim is to balance a reasonable guaranteed income with growth (mostly for inheritance). A 25%+ fall in the markets will psychologically hurt but not affect our short term plans. I think you have the funds to put yourself in a position where you will be financially happy.

Good luck 

michaels

tony4147 said:

Thanks for all the comments. Can I have some thoughts on strategy should I decide to retire.

1. Would it be best to wait until the new tax year before going into drawdown? As I’m currently a higher rate taxpayer.

2. I have two pensions, my SIPP is £560k, and I have a paid up exec pension with Standard Life (£90k) which has an enhanced TFLS. In total £650k and the total TFLS from both is £180k, leaving £470 for annuity / drawdown. As original post I also have £70k in cash ISA. 

3. My biggest expense by far is the mortgage (£55k, £1300 / month), I think I need to clear this. As per my original post I always planned on my TFLS to be for the finer things in life such as holidays etc, not for my everyday needs. But to clear the mortgage I’m thinking of withdrawing £30k from the TFLS and using £25k from my cash ISA to kill the mortgage, any thoughts? as this will still leave a TFLS of £150k which I will leave invested in my pension and withdraw as and when needed…………unless labour bring change the rules in future.

4. Day to day I will require approx £2k to £2.3k / month, this will cover all my bills / expenses and also allow me to save £300 / £400 to replenish my ISA. As stated previously I’m entitled to a full SP in 4 years. I’m not that keen on handing over £470k for an annuity, but maybe some of it.

5. I may receive an inheritance of £300k within the next few years, but I don’t want to factor this in as it could easily disappear in care home fees, and should I receive it if I’m in a good financial position I may pass a good chunk of this to my kids via a deed of variation.

Any thoughts on the above most welcome, problem area is probably the £2k to £2.3k / month.

I would use savings to pay up to your annual income (using carry forward) into your pension this year, it will all get tax relief and then 25% TFLS / basic rate only on drawdown should make it a nice extra boost to your overall pot.

Albermarle

as this will still leave a TFLS of £150k which I will leave invested in my pension and withdraw as and when needed…………unless labour bring change the rules in future.

Just FYI, this forum was bombarded with threads about speculation on the TFLS, before the last budget and the one before that . Then later from posters who had regretted overeacting to the speculation.
It seemed then things were unlikely to change, and seems even more unlikely now.

Veloflyer

Albermarle said:

as this will still leave a TFLS of £150k which I will leave invested in my pension and withdraw as and when needed…………unless labour bring change the rules in future.

Just FYI, this forum was bombarded with threads about speculation on the TFLS, before the last budget and the one before that . Then later from posters who had regretted overeacting to the speculation.
It seemed then things were unlikely to change, and seems even more unlikely now.

I'd disagree to the latter. HMG needs as much revenue as feasibly possible to maintain its policies. Taxing pensions is a huge juicy target for them and will remain so just as long as HMG feel the need to continue spending. Anything such as tax relief/TFLS must be viewed as a luxury which may not be maintained.    

plumb1_2

I paid my mortgage off over10 yrs ago, getting that monkey off your back will be a major feel good factor.
You can pay the £55k out of the isa fund, and then carry on topping the isa back up with the £1300 p/ m.
Might not make total financial sense depending on interest rate you’re paying, but mentally great. And will allow you to concentrate on pension and savings 

Remember your just a number on a payroll, and not indispensable.

tony4147

Appreciate if we can keep my post on track etc, can I have some thoughts on strategy should I decide to retire.

1. Would it be best to wait until the new tax year before going into drawdown? As I’m currently a higher rate taxpayer.

2. I have two pensions, my SIPP is £560k, and I have a paid up exec pension with Standard Life (£90k) which has an enhanced TFLS. In total £650k and the total TFLS from both is £180k, leaving £470 for annuity / drawdown. As original post I also have £70k in cash ISA. 

3. My biggest expense by far is the mortgage (£55k, £1300 / month), I think I need to clear this. As per my original post I always planned on my TFLS to be for the finer things in life such as holidays etc, not for my everyday needs. But to clear the mortgage I’m thinking of withdrawing £30k from the TFLS and using £25k from my cash ISA to kill the mortgage, any thoughts? as this will still leave a TFLS of £150k which I will leave invested in my pension and withdraw as and when needed…………unless labour bring change the rules in future.

4. Day to day after the mortgage is cleared I will require approx £2k to £2.3k / month, this will cover all my bills / expenses and also allow me to save £300 / £400 to replenish my ISA. As stated previously I’m entitled to a full SP in 4 years. I’m not that keen on handing over £470k for an annuity, but maybe some of it.

5. I may receive an inheritance of £300k within the next few years, but I don’t want to factor this in as it could easily disappear in care home fees, and should I receive it if I’m in a good financial position I may pass a good chunk of this to my kids via a deed of variation.

Any thoughts on the above most welcome, problem area is probably the £2k to £2.3k / month.