Is retirement possible today?

AsifM068

CAN I RETIRE TODAY?

DOB: 9.10.68

AT 60, I WILL RECIEVE MY CLASSIC CIVIL SERVICE PENSION; IT PROVIDES A 40K LUMP SUM PAYMENT PLUS 13 K PER YEAR ANNUAL PENSION.

I HAVE 230K IN MY ISA (50K IN A MMF AND 180K IN THE FTSE GLOBAL ALL ACP (ACC))

I ALSO HAVE 21K IN PREMIUM BONDS.

I ALSO HAVE ABOUT 10K IN MY CURRENT ACCOUNT.

I NEED 28K A YEAR NET.

Many thanks

Caz3121

might be worth revisiting your thread from last year, think there were some useful calculations there

https://forums.moneysavingexpert.com/discussion/6627843/retirement-advice-de-risking-investment-portfolio/p1

Vitor

Yes, there will even be money to buy a working keyboard

hugheskevi

CAN I RETIRE TODAY?

DOB: 9.10.68

So 2.197 years to age 60.

I NEED 28K A YEAR NET.

2.197 x £28,000 = £61,516.

I HAVE 230K IN MY ISA (50K IN A MMF AND 180K IN THE FTSE GLOBAL ALL ACP (ACC))

I ALSO HAVE 21K IN PREMIUM BONDS.

I ALSO HAVE ABOUT 10K IN MY CURRENT ACCOUNT.

The £61,516 requirement will remove the current account and premium bonds, and reduce the MMF to £19,484.

AT 60, I WILL RECIEVE MY CLASSIC CIVIL SERVICE PENSION; IT PROVIDES A 40K LUMP SUM PAYMENT PLUS 13 K PER YEAR ANNUAL PENSION.

So £12,914 p/a after tax, so a requirement of an extra £15,086 p/a until you reach State Pension age of 67. £15,086 x 7 = £105,602. You have a lump sum of £40,000 to put toward that, as well as £19,484 remaining in the Money Market Fund. So that is a requirement of £46,118 from the FTSE Global fund.

At age 67 and assuming entitlement to a full new State Pension you get £12,548 of State Pension p/a. Added to your classic pension that is £25,548 and after tax that is £22,952. That needs a top-up of £5,048. You have £46,118 left in the FTSE global fund, so can sustain 9 years, taking you to age 76. (Note this part was incorrect, see post below). Your life expectancy is likely to be around 85. You will need a plan to deal with living until at least age 95.

The above ignores investment gains, inflation, and changing (or static!) tax thresholds/rates.

You rely on real growth to fund the almost 9-year gap of around £44,742. (also incorrect).

I would want more contingency than that to retire today.

MarlowMallard

As per above, I think at 67 he's got 180k - 46k = 134k left in FTSE global, not the 46k he took out, so he's potentially ok to 90ish.

Not much margin for a market crash though.

hugheskevi

https://forums.moneysavingexpert.com/discussion/comment/82086680#Comment_82086680

You are quite right, oops.

That makes it much more viable to retire today.

Fiscal drag and taxation in general is a major concern. There seems little prospect of tax reducing, so each year of fiscal drag reduces the real income from the Cpi linked Civil Service pension that requires funding. Triple lock offsets that, but for how long.

Sequence of returns risk is a significant concern when target income is quite low.

So I would say that retiring today is viable, but something like a home owned outright would give a lot of reassurance as to how bad outcomes can be mitigated. You don't want to retire early only to have constant money worries for years afterwards.

So the challenge is probably around downside risk management and knowing what steps would be taken in the event things go badly, whether that be investments, taxation, inflation, or a bit of everything.

It is also helpful to do calculations for how much 1 more year of work would change numbers - the effect is usually very powerful at young retirement ages and lower incomes.

GenX0212

https://forums.moneysavingexpert.com/discussion/6678113/is-retirement-possible-today

Put your figures into Guiide.co.uk and see what it says

ali_bear

Is it possible? Yes

Is it advisable? NO

At least consider working until your normal retirement age of 60. Plug your numbers into Guiide, which should be pretty useful, and see what it says.

barnstar2077

Another option is reducing your outgoings in retirement.

nottsphil

https://forums.moneysavingexpert.com/discussion/comment/82087279#Comment_82087279

Indeed. I'm wondering why the OP needs £28,000 NET. Can't have much debt to service with those savings! For a start, hundreds of pounds a year of interest is being lost if that level is maintained in a current account.

MK62

https://forums.moneysavingexpert.com/discussion/6678113/is-retirement-possible-today

Yes, but there's not much wiggle room……and you'd be vulnerable to sequence risk (though the MMF would help with that, as a buffer, it may not be quite big enough if things go south in the equity markets just after you retire).

I'd at least convert part of your ISA holding into IL gilts (a 9yr ladder perhaps - one paying 10k pa (index linked) would cost c£86k today) to guarantee (as far as possible) some of your income in the period up to state pension age……gilt returns are pretty reasonable at the moment.

Oh….and as the previous poster stated, you have too much in your current account - get some of that into a savings account….you can get 5% on some easy access accounts at the moment.