Can I retire at 55?

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https://forums.moneysavingexpert.com/showthread.php?t=5466114

hmm this thread definitely gives food for thought.... I've got 20+ years to go to my official retirement date and at present, although hard to predict, the pension website forecast tool they provide is predicting i'd have a pension post of around £440k and i think it said £15k a year or there about's income from that plus obviously state pension on top. The 15k is IF i choose to take 25% tax free, if i don't then this figure jumps to just over 20k a year + state pension. I am currently single so I've removed the 50% to partner and I've chosen 0% annual increase as from what i could see i'd have to live min. 10 years to see that money so i'm thinking best to have it up front and bank it if i don't use it. I'm hoping by then i'll be mortgage free and i'm hoping low costs so will be able to manage on the money. From rough calculations, i should be able to cover the bills but as to what will be left for any hobbies/hols etc will remain to be see as can't really tell what they will all cost so far ahead. However, people saying 20k isn't enough, i thought 20k is what the average person was aiming for in a pension. I'm also a bit of a worrier so i'm currently thinking i'd buy an annuity so i have a set amount each month for the remaining of life rather than worry oh the markets crashed, I've just lost thousands etc...

Kev

Hi,

That figure is if i retire at 68, so no early retirement. IF i was to retire at 58 which is what i thik there is rumour it will jump up to, i would only get 9k a year pension so definately not doable.

However, at 68, getting 15k + 25% tax free in my hand to save/spend on anything such as re-decorating etc whilst i had the cash to do it i was hoping woudl be enough plus ofcourse the state pension atwhatever figure that wil be by then. IF i chose nto to take the 25%, then i woudl get 20k a year pension + 8k bit worryign this is concidered not sufficient.

For me my household bills come to less than 1k a month, on top of this will be money aside for car maintenance, insurance, road tax. Obviously I wont be paying a mortgage, paying train fares for work so my expenses will go down in that regard but obviously some other expenses may go up i.e electricity, heating, hobbies/holidays etc.

My thinking is take the 25% tax free as i can bank most of that i think and save that and use the interest each year if needed.

I'm hoping this wouldn't mean living frugally for the remainder of my life, plus i'm also thinking if i retire at 68, probably after 10 years i may not be able to go on hols etc s i'd be pushing 80 by then

Kev

kev2009 wrote: »

...
I'm also a bit of a worrier so i'm currently thinking i'd buy an annuity so i have a set amount each month for the remaining of life rather than worry oh the markets crashed, I've just lost thousands etc...

Kev

Some observations - not that you should listen to a random bloke from the internet

firstly annuities have fallen in popularity at the moment as the low interest rates implies a lower return. However they do have their role. Also you don't have to buy one on day 1, there are expectations that they will become better value both as you get older, but also as the low interest changes (which will be slow but gradually upward if you believe the BoE)

secondly - managing a portfolio doesn't appeal to everyone, and it is easy to make big, expensive mistakes, however it is also possible to structure things so that you protect yourselves somewhat - eg

• 1-3 years living costs in cash to take the sting out of crashes,
• a portfolio of investments designed for capital preservation,
• a very very broad diversification so you protect yourself from individual stocks and shares, even from individual countries).
• long term deferment of state pension to counter the inflation risk
• recognition that spending tends to decrease as you get older

thirdly - But each to their own if you are happier with the certainty then you have to do that, just don't think an annuity is the only way to make that happen

Thanks mark88man, yes i believe the annuities will get better and I've got a long way to go before i'm 68 so i'm hoping they will be by then.

For me the thought of knowing right i'm getting x a month for ever the ideal scenario then i don't need to worry about shares dropping and thinking right how will i pay this bill as i can't really go back to work etc

But i see your point, i guess if portfolio is setup right and it can outweigh any market crashes or at least minimise the impact then that maybe an alternative, i think i'd have to see an adviser much closer to the time either independently or maybe my company provides this option nearer the time, not sure as never needed to use it yet.

When the company switched out pension to a different provider they company came in and gave a general speech to everyone with regards to the changes etc and it was highlighted by them that very few people were paying into the pension themselves as the company paid in a % and it was up to you if you wanted to pay in or not so not many people did. Hover for me after hearing that and that basically i'd end up no better off than anyone else who was paying in because whilst the rate was good, it is only what other companies combined employer/employee contributions are, if not better so at that point I took at look ant my finances and decided to start to contribute. I've now been tup'd to a different company and now i have to pay in so I've just continued to pay the same level of contributions.

So nearer the time i will take advise and decide what is best or there may even be some new way to take pensions by then.

I was just looking at Which? website, they have a rough calculator to predict what you will need and they seem to imply that 26k a year gives you a comfortable retirement and 39k a year gives you a luxurious retirement. The calculator seemed to be based on a couple so looking at that i'm thinking i'm not too far off the comfortable pension as if i get 15k + 8k state pension is £23k a year plus i could always take the 5k to of my 25% tax free to add on each year (as that's the difference between me taking 25% tax free or leaving it all in pension) which would take me up to £28k. Not to mention I suspect some of the figures they have estimated could be lower for single person.

Kev