Early-retirement wannabe
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If it were me I'd want a bit more in savings/investments then what you've mentioned above. There may just be enough if all goes well, but it could get tight if things go a bit astray.
My main concern is if there is a prolonged period of time when there is only one of you and there is only one state pension coming in (and being blunt here that is likely to be your wife's). Will there be enough other money available so she can live comfortably for possibly another 10 to 20 years.
You've not mentioned whether your wife currently works, but if she doesn't then have you thought about both of you taking on some part-time work, or even just you finding some more relaxed part-time or even full-time work. It doesn't have to be the same company, or the same line of work, just something that you might enjoy or at least something that doesn't have the negatives of your present role.
I agree, if it was me I'd be looking at an alterantive less stressful job for a couple of years, eg until OP is 50.0 -
You have a long gap to fund and are very reliant on investment return as your pension is DC but I guess if you are quite frugal it should be just about doable. If you are only 48 on retiring and plan on presumably drawing the cash free lump sum from the DC pot when 55 that is 7 years to fund on £200,000. I would be calculating inflation at 3% and investment growth at 3% which I know is conservative but worst scenario works best for me.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
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Thanks for the replies everyone:
- i do think frugality will become something of a hobby in itself but am happy there is room in the budget to flex as we need to.
- I know they don't have too much meanng but it's good to see the rates others are using. We are all in similar ballparks.
- i didn't say anything about earning income - leaving that as a buffer. We will be happy to look for seasonal work occasionally. To be honest we are in this position because of the career I have built up and I will have those qualifications to fall back on though that is definitely not Plan A. If the worst happens then I can consider the first few years of retirement as a career break. We may also explore options around a little property income.
- If my wife is left on her own? Good point and I have wondered about this without going into the calcs. Need to look at that thanks. TBH she is way out of my league and will probably find someone else to look after her after I'm gone
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Can I just check your thinkng on drawng the lump sum at 55? I was assuming I would leave it in there and drawdown income needs as I go to help minimise tax on income above the personal allowance.enthusiasticsaver wrote: »If you are only 48 on retiring and plan on presumably drawing the cash free lump sum from the DC pot when 55 that is 7 years to fund on £200,000.0 -
gadgetmind wrote: »I'm hoping my retirement plans survive tomorrow's budget. We're 99.5% DC pensions (sliver of DB for my wife) and these have been under regular attack for many years. :-(
Yes, I can cope with investment risk; it is political risk that worries me more.0 -
Me too.Teaandscones wrote: »Yes, I can cope with investment risk; it is political risk that worries me more.
The various political tinkering leaves me nervous, as I am rather concentrated on pensions as my savings vehicle.
My key concerns are:
- access to pension at 55. This is a biggie. It switched recently from 50, and there has been occasional messages around how 55 is far too early to withdraw from the labour market.
- restriction to tax relief. I "enjoy" a 62% marginal tax rate, so am equally blessed with that as my relief rate.
- reduction in LTA. The LTA is broadly my "cutoff" point, ie the level at which I aim to stop work. If this were to come down substantially, then I would struggle for alternative approach.
- reduction in AA. At present I contribute the max £40,000 pa as I get 62% effective relief. However I am close to the point at which the AA taper starts, and a possible change of job may throw me against this taper. I can quite see the taper being extended downwards
- reduction in the starting point for 45% band. Not such a biggie (yet), but will still cost.
Of these, the access age of 55 is the one I worry about.
Most of the measures above will not actually save tax for the chancellor: it will merely bring its collection forward. After all, pension is simply a mechanism for deferring tax on income until consumption, and the so-called "cost" of pension tax relief is the delay in collection.0 -
ex-pat_scot wrote: »My key concerns are:
- access to pension at 55. This is a biggie. It switched recently from 50, and there has been occasional messages around how 55 is far too early to withdraw from the labour market.
This is the last budget before I hit 55 and I'm really scared that I'll get screwed over.
I've been doing that for a few years, but ...- restriction to tax relief. I "enjoy" a 62% marginal tax rate, so am equally blessed with that as my relief rate.
I recently sailed past it due to sterling being hammered by the threat if Brexit.- reduction in LTA. The LTA is broadly my "cutoff" point, ie the level at which I aim to stop work. If this were to come down substantially, then I would struggle for alternative approach.
I (unexpectedly) hit full taper this year and have exceeded AA. So 45% tax on excess, doubt I can get scheme pays, then 25% tax for exceeding AA, and what's left is all mine, subject to income tax!- reduction in AA. At present I contribute the max £40,000 pa as I get 62% effective relief. However I am close to the point at which the AA taper starts, and a possible change of job may throw me against this taper. I can quite see the taper being extended downwards
Needless to say, retirement is being pretty much forced upon me. My position won't be replaced in the UK, so big loss of tax income for HMRC. Yes, this is what raising taxes and attacking pensions achieves!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »This is the last budget before I hit 55 and I'm really scared that I'll get screwed over.
.......
seems you got away with it :-) :beer:The questions that get the best answers are the questions that give most detail....0 -
And the LTA will get a small rise0
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good result in the budget and hopefully i will be well out of all this by the time we get the next budget.0
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