Retire now, can I?

OldScientist

tony4147 said:

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

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.



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

One way to approach an annuity purchase is to consider how much of your £2.3k per month can be flexible ('discretionary' or 'adaptive') and how much is fixed ('essential' or 'core') and then buy enough guaranteed income (i.e., SP+annuity) to cover only the essential part and the residual portfolio then covers the flexible expenses.

For example, if you estimate that £1600 per month is essential (bills, food, clothing, hobbies you will not do without etc.) then you'd need a floor of £19.2k per year. This would then require about £7k in addition to the SP. A single life RPI annuity taken at 63yo* providing about £7k per year, currently needs a premium of roughly £145k (https://www.williamburrows.com/calculators/annuity-tables/ ). This would leave £325k in the portfolio to cover discretionary expenditure. A variable withdrawal method (e.g., constant percentage of portfolio, bogleheads VPW, Vanguard dynamic, etc.) will then provide variable income. In good years you'll have more to spend, in bad years less.

 Whether the purchase has an effect on legacy depends on how long you live. If you live a short time, then of course it will reduce the legacy available, but if you live a long time, then the outcome is uncertain (e.g., if your portfolio runs out of money, then there is no legacy!).

* Alternatively, an inflation linked gilt ladder (https://lategenxer.streamlit.app/Gilt_Ladder ) providing £7k per year for 35 years would currently require £190k. It would (probably) provide a much higher legacy in the event of early death, but it is possible to outlive the income. Of course, a ladder can be combined with an annuity.

artyboy

This thread keeps getting updated and popping to the top of the list, and every time I see it... well, apologies, but this always comes to mind...

Cobbler_tone

artyboy said:

This thread keeps getting updated and popping to the top of the list, and every time I see it... well, apologies, but this always comes to mind...

Alone, you are not.

HedgehogRulez

Relevant image:

Albermarle

artyboy said:

This thread keeps getting updated and popping to the top of the list, and every time I see it... well, apologies, but this always comes to mind...

Unfortunately I do not get the joke, as I Have Never Watched Star Wars ( maybe could make a Tv series out of that ?)