Can I retire?

sgc21

Hi, I have just turned 55 and had some health issues over the past 5 years, had 2 pacemaker procedures, heart failure and on meds, although I feel ok I still struggle most days with fatigue and just don't have the enthusiasm or energy like I used to. I have my own home worth ~ 260k which is middle of the road valuation in my area, I have 43k left on the mortgage, no other debt, I have 17k in savings and a company final salary pension.

In a position now where voluntary redundancy is now being offered, I have my figures of 69k gross should I chose to leave, I can also take my pension at 55 which would give me a lump sum of 60k and 9k annual pension, I also have a income from pip 410 per month to support my health as I'm unable to walk distances and struggle daily doing tasks due to the heart failure.

My employer has been really good putting in workplace adjustments and I'm able to work from home but I'm finding that even supporting work, finding the enthusiasm and having a work routine exhausting due to my health.

I have planned the numbers and I would have ~ 93k after I pay off my mortgage to draw down off.

I would receive £745 workplace pension per month and I would need to drawdown another £100 from my 93k pot per month to cover my bills, council tax, car, gas elec etc.

I would then need some back pocket cash, I get the £410 from pip which helps me maintain a reasonable normal lifestyle, I also get care support from family but my pip money is there for a specific reason to help me on days when I'm not good and have to pay for help and assistance so I don't really want to class it as income.

So i think I would probably need to drawdown another £400 from my pot for personal expenditure taking the monthly drawdown to £500 per month, if I do this I figure my pot will last 15 yrs (not including any interest made) 3 yrs past my state pension age of 67 (I have full NI contributions for state pension)

So I guess I'm just putting it out there for opinionss.

I can't see my health getting better and I'm finding it hard to support work, I just don't have the energy like I used to but if retirement isn't an option il just have to bash on working until possiblity 60.

Just like to have your thoughts.

sgc21

Sorry should have also said my final salary pension is being deferred in October 2026 and it looking like I will be moved onto a defined contribution scheme so should I work the extra 5 yrs to 60 a estimate is from that scheme is £100 extra per month and 9k lump sum.

Marcon

I can't see my health getting better and I'm finding it hard to support work, I just don't have the energy like I used to but if retirement isn't an option il just have to bash on working until possiblity 60.

Just like to have your thoughts.

Only you can do the detailed sums and decide if you can live on your projected income…but think hard about the alternative. You're not enjoying work and you're struggling physically (and mentally) from the strain - why?

Maybe you're asking the wrong question - or at least looking at things the wrong way round? Which matters more to you - stopping work now, or having a bit more money (and much poorer health) in five years from now?

Albermarle

It depends to some extent on your planned expenditure.

You are planning to live on £1250 per month from 55 to 67. That is not a lot in reality.

It has been said to live a normal (ish) life with a few treats, you need the state pension + £5K pa minimum. Which is about £1500 per month.

I have a friend who lives off the state pension + a small annuity + a small drawdown ( so somewhere around £1250 a month. His health is not great and he does not go out hardly at all, does not run a car and does not go on holiday. Still he has to budget every week/every day and some days spends nothing at all.

So you need to really sit down and do a detailed planned expenditure budget before making any decisions.

If you did go ahead, what do you plan to do with your pot? For a 15 year time scale it would make sense that some of it should be invested rather than all of it saved.

Also it might make sense not to pay off the mortgage straightaway, it depends on what sort of deal you have.

Brie

You don't mention any family at all. Is there a spouse/partner that needs to be taken into consideration? Or who might be working while you're retired?

My standard practice for financial questions is to put all the numbers into a spreadsheet and see how that works out. It's good to see you've taken paying off the mortgage into account - that really tidies up your expense side of your budget and will be a great relief as I well know. But as Albermarle suggests - look at your current deal.

gwynlas

Do you think you could earn any additional income either by renting a room or by working part time in some capacity?

Your figures are tight but you might also look at what benefits you might be entitled to. At worse you will be covered for NI credits leading to your SP

At the end of the day if you are feeling too unwell to work then you should definetly consider retiring

MarlowMallard

I'd say if your defined-benefit pension is index-linked, yes go now. The VR offer may not be on the table in future, and your 93k pot at 4% should bring in 310 pcm interest, which should be untaxed as your total income is under £17k. So pulling £500 pcm out, it's only depleting at 190pcm initially, and you should have c. £50k left at state pension age, then you are ok (note that the £50k then is only like £30k now, but that's not too bad ).

The danger is a period of high inflation and your DB pension isn't inflation-protected and you have to up the withdrawals to £800-1000pcm to keep going, but there is equity release on your home as a fallback if the pot runs out a couple of years short of state pension.

ewaste

If you are still covered by a Defined Benefit Pension Scheme have you investigated ill health retirement and the possibility of an enhanced pension. Is the voluntary redundancy specific to you i.e. ill health voluntary severance or a general scheme?

It's certainly doable but I'd agree things will be tight especially if your Defined Benefit pension isn't fully index linked. Deciding how you invest and drawdown on funds will also need careful consideration given inflation and other factors like sequence of returns risk.

You don't mention how much you earn, it's not important. However you could do a detailed budget and try living on what you think you'd have coming in. As others have asked do you have options to generate income other than employment e.g. hobbies, rent a room etc.

Smudgeismydog

Depending on the timescale you have for making a decision on the VR, like @ewaste, suggest, I would either try living off £1,260 pm for a few months, or if this is not possible, go back through your last 3-6 months bank statements, and see what you have actually spent per month.
You should ignore things like mortgage payments (if you plan to pay this off with the redundancy money), and any specific work related costs.

OldScientist

As others have said, the inflation adjustments on your DB pension are critical - fully index linked is best, followed by caps of 5% and 2.5% (with the latter being the worst).

An option free from market risk is to construct a collapsing inflation linked gilt ladder. Such a ladder starting in October 2026 and supplying an inflation protected £6000 per year for 12 years currently costs £70k (e.g., see https://lategenxer.streamlit.app/Gilt_Ladder). This would leave about £22k in your pot that you could invest for future spending.

Whether the overall budget in this 12 year period is enough for you to live on needs careful consideration. The retirement living standards (see https://www.retirementlivingstandards.org.uk ) suggest £13.4k per year minimum for a single retiree, but everyone's needs and wants are different.

sgc21

https://forums.moneysavingexpert.com/discussion/comment/81945851#Comment_81945851

Thanks albermarie, i have a pension quote which works out at 60k lump sum and a 9k annual pension (about 745 per month) I'd also have my pip money of 410 per month and drawdown £445 so about £1600 per month minus my monthly outgoings £800-£850 leaving ~£750 for back pocket cash which is what I've been living on for the last two years as I have been saving any extra cash in a Isa.

I have the figures in a spreadsheet and seems to work out for me, I know I have 12 years until state pension kicks in and the reality is I will probably look for part time work after April 2027 when my tax code drops as I'm a 40% tax payer but won't be earning after June 26.

My partner will still be working, she buys the food shopping I pay the bills, she has a small private pension and is planning on retiring in around 3-4 years so my plan over 12 years is split into two, first is over 5 years 55-60 then 7 years 60-67 when state pension kicks In.

Second stage of the plan will take my partner into account.

Thing is with my cps pension closing and being deferred and joining a db pension for 5 years im not going to get the benefits I expected if the cps pension was ongoing until I'm 60.

I have a qoute from the cps pension of 60k tax free lump sum and 9k yearly pension should I take then benefits at 55 (bear in mind this scheme is closing in October 2026)

Should I wait until 60 to take the cps pension I get 45 tax free lump sum and 14k per year monthly pension (extra 5k) I will have paid into a db pension from 55-60 and a estimate is £100 per month and 10k lump sum.

I know it would be beneficial working for that little extra but the opportunity to take 60k tax free lump sum and 9k pension plus 60k redundancy post tax seems like something I should give some serious thought.

With a little saving pot I have 17k I'd have 137k pay off my mortgage which is fixed at 4.5% after paying this off I'd have around 94k in a pot to drawdown on.

Can I make this work? My health is obviously a big factor but not as big as can I afford to finish even if I find a part time job.

The spreadsheet tells me it's all viable and tbh I'm ready for a change but it's a big change that I don't want to get wrong.

We don't live a lavish lifestyle, happy for a few nights away and a few nice meals out now and then.