Can I retire at 55?

bioboybill · 30 May 2018 at 9:21AM

IMHO you should retire asap. I certainly would in your situation. £520K should easily be enough, with your state pension kicking in 12 years from now.

Anonymous101 · 30 May 2018 at 9:36AM

bioboybill wrote: »

IMHO you should retire asap. I certainly would in your situation. £520K should easily be enough, with your state pension kicking in 12 years from now.

I agree. I'm late 30's and aiming to retire as early as possible. Hopefully 10-15 years... Just got to keep that savings rate up! :money:

vulcanrtb · 30 May 2018 at 11:06AM

I thought it unnecessary to start another thread when this one seems pretty close to my position, apologies to the OP :beer:

Would one of you folks here like to take a view on my situation, please?

I'm 52 and hoping to retire at 55 (2.5 years away).
Current pot is £438,000 and £39000 goes in each year (combination of my salary sacrifice and employer contributions). The pot seems to grow about 5% a year plus my contributions, so in total I hope (yup, markets can go down as well as up) there will be ITRO £600000 in there at age 55.

I also have a forces pension that will come in at age 60 of £8000 a year and my wife has a LGPS of around £5000 at 60 also (we get to 60 within a few months of each other). My state pension forecast is around £8900 a year (same as wife).

My plan is to take TFLS of 25% of the pot at 55 and spend around £2500 a month (I understand by doing this I don't pay tax until my TFLS runs out and I start drawing on the pension?).

Does this all seem doable?

I worked out that if I do the above, my pot will reduce in value until 60 but the reductions from there will be far lower and finally at age 67 the pot will reduce at an even slower rate, might even start to grow again.

Thanks all.

Anonymous101 · 30 May 2018 at 11:23AM

vulcanrtb wrote: »

I thought it unnecessary to start another thread when this one seems pretty close to my position, apologies to the OP :beer:

Would one of you folks here like to take a view on my situation, please?

I'm 52 and hoping to retire at 55 (2.5 years away).
Current pot is £438,000 and £39000 goes in each year (combination of my salary sacrifice and employer contributions). The pot seems to grow about 5% a year plus my contributions, so in total I hope (yup, markets can go down as well as up) there will be ITRO £600000 in there at age 55.

I also have a forces pension that will come in at age 60 of £8000 a year and my wife has a LGPS of around £5000 at 60 also (we get to 60 within a few months of each other). My state pension forecast is around £8900 a year (same as wife).

My plan is to take TFLS of 25% of the pot at 55 and spend around £2500 a month (I understand by doing this I don't pay tax until my TFLS runs out and I start drawing on the pension?).

Does this all seem doable?

I worked out that if I do the above, my pot will reduce in value until 60 but the reductions from there will be far lower and finally at age 67 the pot will reduce at an even slower rate, might even start to grow again.

Thanks all.

The numbers look good to me.

There's an element of fine tuning you could do to make the drawdown of your pot more efficient. Continuing to pay into a pension after you take you TFLS for example. Additionally there's mileage in drawing down an amount up to your income tax threshold prior to "needing" to. You'll get £11k pa or there abouts out of your pension pot without paying tax so its worth drawing down and investing ahead of time.

atush · 30 May 2018 at 11:58AM

There are people bringing up families on this amount.

This is unfortunate and irrelevant. The OP want s to retire to be a pensioner, not raising a family.

Just because some are forced to live ont he poverty line doesnt mean others should join them voluntarily.

20K may be enough for you. But it is about 1/2-1/3 of what we need. And that is voluntary too.

kidmugsy · 30 May 2018 at 2:43PM

vulcanrtb wrote: »

I'm 52 and hoping to retire at 55 (2.5 years away). Current pot is £438,000 and £39000 goes in each year (combination of my salary sacrifice and employer contributions). ... I also have a forces pension that will come in at age 60 of £8000 a year and my wife has a LGPS of around £5000 at 60 also (we get to 60 within a few months of each other). My state pension forecast is around £8900 a year (same as wife).

My plan is to take TFLS of 25% of the pot at 55 and spend around £2500 a month (I understand by doing this I don't pay tax until my TFLS runs out and I start drawing on the pension?).

(i) As the previous commenter said, draw enough from the taxable part of your pension to use your Personal Allowance against income tax. That means you'll also need to draw the corresponding part of your TFLS. If you need a bit more of the TFLS, draw a bit more. You can leave surplus TFLS behind to grow, or take enough out to fill a couple of ISAs or use for some other tax-efficient investment. You'd be mad to draw only TFLS while leaving Personal Allowance unused.

(ii) As soon as you lose access to the good deal on contributing to your pension through work, turn to filling your wife's pension to the max. That way she'll be able to use her Personal Allowance better. If you've any spare money sitting around, contribute it to a pension for your wife while she's still working - she'll get more into it that way. If needs be explore the use of 0% credit cards and extension of the mortgage if it means piling more into her pension.

andrewf75 · 30 May 2018 at 2:57PM

I definitely would in your situation, but we are all different and its just about weighing it up.

vulcanrtb · 30 May 2018 at 2:58PM

Glad I asked, thanks folks. Every time I learn a little more, I get a little closer to FIRE

enthusiasticsaver · 30 May 2018 at 3:36PM

In both the OPs and vulcanrtbs position I would say retire at 55. We retired at 58 and had intended to go at 60 but decided we could afford to go 2 years earlier and work was no longer enjoyable for either of us and granddaughter had just been born so wanted time with her.

A few things we did was to log spending so we had a realistic view of what we needed to live off each year.

We settled on £2500 net per month which was met partially by our DB pensions and investing 50% of our TFLS in income funds. The rest of the TFLS we saved to cover big holidays, new cars and home improvements and any shortfall in income but so far we haven't touched it.

My DB pension is less than the PA so I transferred 10% of my allowance to DH to reduce his tax by way of the marriage allowance.

bostonerimus · 30 May 2018 at 4:16PM

The OP is in a good situation to retire at 55. It takes some guts and a lot of forbearance to ignore the envious arguments of people that can't see how it's possible to retire at 55.

The OP is using conservative projection numbers.....well maybe inflation could spike above 2.5%.....and crucially seems to have a handle on spending. For a single person with no debt 20k sounds like a comfortable annual income to me. That's roughly my retirement budget and each year I've actually spent less so with market gains my pension pot is still increasing even though I've been retired for almost 5 years. So set a budget, try to spend less and be prepared for some down years with a cash and short term bond buffer.

Can I retire at 55?

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