Assure me

scotslad

I am 57 years old and want to retire now due to hating my workplace. I have a pot of 640000 invested in a smoothed pru fund.

I need around 35k a year from now to state pension at 67 then drop it to 20k a year plus SP.

Mortgage free.

Is this viable to go NOW !!

Vitor

£35k is an initial withdrawal rate of about 5.5%. That is high if you need it to rise with inflation and continue regardless of market conditions. A smoothed fund reduces visible volatility, but it does not guarantee returns or protect against inflation, and you need to understand any market-value-reduction rules and charges.

FIREDreamer

https://forums.moneysavingexpert.com/discussion/6686251/assure-me

£20,000 pa, inflation linked, from 57 could cost £500,000 of your pension pot at 4% withdrawal rate.

The remaining £140,000 should cover £15,000 pa, inflation linked, for 10 years assuming it returns a little bit more than inflation.

Beware sequence of return risks though, as there is little margin for error.

QrizB

£20,000 pa, inflation linked, from 57 could cost £500,000 of your pension pot at 4% withdrawal rate.

Alternatively a £20k pa RPI-linked lifetime annuity could be had for under £450k, per the current rates at HL.

The remaining £140,000 should cover £15,000 pa, inflation linked, for 10 years assuming it returns a little bit more than inflation.

Or £142k would buy you an index-linked gilt ladder for ten years.

So OP could do this and still have ~£40k in the pot for contingencies.

On-the-coast

does your “need £35k / £20k” include the cut the tax man will be taking?
If you need those figures after tax things will be tight imo.
if you hate your job why not take a bit less from your pension and find a part time job doing something you enjoy for a while?

FIREDreamer

https://forums.moneysavingexpert.com/discussion/comment/82163966#Comment_82163966

Unlike me, not everyone likes the annuity route so I didn’t suggest it.

However, it’s actually what I did though.

I didn’t see the point in taking risks when the game was won.

scotslad

https://forums.moneysavingexpert.com/discussion/comment/82163985#Comment_82163985

35k gross. Not interested in annuity just drawdown

mrklaw

I think a hybrid could make sense. an annuity for the 20k that needs to last the rest of your retirement locked in - potentially covers all bills now, and all spending from state pension. Then the top up you could use drawdown or a gilt ladder

what do you actually want? do you want to really really do drawdown, or do you really really want to retire now?

as others have mentioned, you can afford to go now but little wiggle room if there are drops in the market - your plan works if you maintain some solid growth. An annuity or gilt ladder turns that from worrying about returns to waiting for your retirement salary every month knowing its guaranteed.

Albermarle

https://forums.moneysavingexpert.com/discussion/6686251/assure-me

There is no black and white answer. The quicker you take money from the pot, the chance of it running out before you die increases.

This chance depends on many variables, including how long you live, and how well your investments grow above inflation. The latter factor is often ignored but can have a big effect. For example you say that in 10 years time you will need £20K pa. However to have the spending power of £20K today, in ten years time you will need approx £25k to £30K, if that is after tax then > £30K before tax.

So I would say you could probably go now, but there is a small but not insignificant risk you would run out of money whilst you are still alive. Another couple of years at work, would reduce the risk of course.

jackieblack

How much do you hate your workplace?
Enough to find some flexibility in that £35k/£20k 'need'?

daveyjp

Need or want £35k a year? My first thoughts are it is doable, but £30k would probably make you sleep easier.