Have we got our sums right?? Appraise our plan.

Sea_Shell · 10 April 2017 at 2:25PM

Hi All

We've recently reduced our hours and will have a joint monthly income of approx £750 pm going forwards, which currently covers all our spending (excluding holidays)

We are late 40's (me) early 50's (Hubby) couple, and have saved hard and are Mortgage free and hoping we are in a position to have options on giving up work completely in the next 5 or so years.

Our current 'Pots' are as follows:
My Pension pots - £107,000 (plus potential widows pension from OH)
OH's pension pots - £130,000, plus 2 Final Salary pots expected to pay £12,000 p.a between them (or reduced Wid Pen)
Shares/Investments - £86,000
Cash (across various types of accounts) - £140,000

We are still making approx. £800 pm contributions into pensions from savings.

I've been keeping track of our spending for a few years, and think we'll need approx. £12-£15k p.a. in full Retirement.

So worst case scenario if we stopped work tomorrow, we'd have £226k available, which should last approx. 15 to 18 years, with our pensions available after that. i.e. defer as long as possible.

We could also, as a last resort, downsize or equity release (no kids!!)

Does this all look do-able, or have we made a complete Horlicks of it all.

*** Further updated figures in post #170, if you're interested ***

*** FINAL UPDATE ***

Right, while I get some respite from the heat today....I've updated our figures for end June 2019, and officially declared enough is enough. (only 3 weeks to go at work!)

As of today our total FIRE pot stands at....£536,129. This is made up of...

DC pension pots - £303,729
S&S ISAs - £133,648
Fixed term cash - £69,715
Easy access cash - £29,037 (net of stoozed CC balances)

For the 12 months to date we have spent £11,572, mainly due to not having an early Winter Sun holiday this year (c.£1500). So our plan to draw a starting amount of £15,000 pa is looking very generous and even upping this to £20,000 is not outside of our comfort zone. (still within the 4% "rule")

As advised up post, our FIRE pot is in addition to DH's DB and both our SP's, but they don't start kicking in for at least another 14 years.

I'm now going to start another thread for the next part of our adventure.....drawdown!!!

It's time to start digging up those squirrelled nuts!!!! (I'll post the links once its up). Hope to see you over there.
https://forums.moneysavingexpert.com/showthread.php?p=75981917#post75981917

sandsy · 10 April 2017 at 3:12PM

Re. your £800pm pension contributions: gross pension contributions (i.e. after tax relief has been added) can't exceed gross income for each of you which looks like it might be the case?

Sea_Shell · 10 April 2017 at 3:29PM

Sorry, yes that figure is what we're currently paying, and it'll reduce to reflect revised income.

Also, just thought, isn't everyone entitled to put in a contribution of £3600 Gross regardless of income?

Mnd · 10 April 2017 at 8:45PM

Looks fine to me, interesting that you would consider equity release, I will as well.

Sea_Shell · 13 April 2017 at 4:19PM

I'm hoping that as our plans haven't been picked apart, that they look about right.

Triumph13 · 13 April 2017 at 6:22PM

I'd say you're laughing on those numbers. If you do stop work then remember to allow for paying voluntary NICs until you both qualify for full state pension. That then would more than cover your budgeted needs on its one.
The key planning thing is probably to see if you need to address the inequality in survivor's position depending on who goes first. If you go he just loses your state pension. If he goes (likely as he's older) then you lose his state pension and half or more of his DB benefits. If that still eaves you with enough then fine, if not then it might be worth deferring your state pension for a few years.

kidmugsy · 13 April 2017 at 9:58PM

I recommend the American writer Wade Pfau on how to cope financially with retirement. His articles reflect the American tax and regulation systems, but they are still pretty handy. He's a fan of equity release in the right circs. (In the US they call them "reverse mortgages" even though they aren't 'reverse' at all.)

Dirk Cotton is good too.

http://www.theretirementcafe.com/search?q=reverse+mortgages

Thrugelmir · 13 April 2017 at 10:47PM

Sea_Shell wrote: »

I've been keeping track of our spending for a few years, and think we'll need approx. £12-£15k p.a. in full Retirement.

So worst case scenario if we stopped work tomorrow, we'd have £226k available, which should last approx. 15 to 18 years, with our pensions available after that. i.e. defer as long as possible.

That's a very low amount to cover all potential outgoings.

Inflation may erode away the buying power of that £226k. Central Banks flooding the system with cash is an untried policy. Bound to be a sting in the tail when the time comes to unwind.

kidmugsy · 14 April 2017 at 12:06AM

Sea_Shell wrote: »

We've recently reduced our hours and will have a joint monthly income of approx £750 pm going forwards, which currently covers all our spending (excluding holidays) ...

Does this all look do-able, or have we made a complete Horlicks of it all.

The big financial worry in retirement (I suggest) is the unexpected need for expenditures. When you've got your husband's DB pensions plus two State Retirement Pensions you'll be in clover. So the art is to bridge the gap until then. If you are worried that things might prove a bit neat the answer is probably to try to earn £11,500 p.a. each until you decide finally to jack it in when your husband's DC pension becomes accessible. That way you make maximum use of your personal allowances against income tax.

Whether there is any need to set out to earn that much depends on your crystal ball. I don't know whether, in your shoes, I'd want to earn a bit more now, or would prefer not to, confident that I was young enough to go back to work if it proved necessary.

Sea_Shell · 14 April 2017 at 7:10AM

Yeah, we have got the option of earning more. My work would bite my hand off if i said i wanted to go full time!!! But we have modest tastes and enjoy the unexpensive thing in life, and we know too many people who haven't made it past 70. (with a couple of exceptions at over 90!!)

Time is a limited and valuable commodity, so by reducing hours (albeit with the drop in pay) is, in a way, "buying time".

Sea_Shell · 14 April 2017 at 7:16AM

Triumph13 wrote: »

I'd say you're laughing on those numbers. If you do stop work then remember to allow for paying voluntary NICs until you both qualify for full state pension. That then would more than cover your budgeted needs on its one.
The key planning thing is probably to see if you need to address the inequality in survivor's position depending on who goes first. If you go he just loses your state pension. If he goes (likely as he's older) then you lose his state pension and half or more of his DB benefits. If that still eaves you with enough then fine, if not then it might be worth deferring your state pension for a few years.

I know, statistically, i might end up 10 years plus on my own!!

, so if that occurs, i would definately be looking at downsizing/equity release side of things IF i needed to.

Have we got our sums right?? Appraise our plan.

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