Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • ffacoffipawb
    • By ffacoffipawb 4th Feb 18, 8:18 PM
    • 2,467Posts
    • 1,623Thanks
    ffacoffipawb
    Could I retire next year at 55?
    • #1
    • 4th Feb 18, 8:18 PM
    Could I retire next year at 55? 4th Feb 18 at 8:18 PM
    I think this is possible. But could someone check that I am not missing something.

    Curent monthly requirement is £2,000 net.

    DC pension currently £800k. Still contributing.
    DB of £12,000 in todays money from age 60

    (I realise that I am over LTA with no protection, still contributing as markets may fall)

    Current Salary is £30,000 after pension contributions.

    Current cash
    £37,000 in NSI index linked certificates, both renewed last year
    £30,000 in Premium Bonds
    £10,000 in various savings accounts
    £200,000 in S&S Isa with HL, investment trusts yielding £6,000 which is currently being reinvested.

    Want to avoid LTA charge on DB pension so probably crystallise £500k next year for £125k PCLS.

    Aim to take balance of LTA from DC after taking DB at age 60. Balance over LTA will remain untouched until age 75 or LTA abolishment should the latter happen.

    How does it look? Am I missing something as it looks reasonably doable to me?

    Need to spend £50k from PCLS next year for a new kitchen and bathroom (former is rather dilapidated) and possibly a newish car.

    EDIT: No mortgage as was paid off a few years ago, house worth £250k.

    Also still have 3 children at home, 1 still in Primary School. Wife not in employment.

    Thanks
    Last edited by ffacoffipawb; 04-02-2018 at 8:20 PM. Reason: More info
Page 1
    • zagfles
    • By zagfles 4th Feb 18, 9:13 PM
    • 13,016 Posts
    • 11,056 Thanks
    zagfles
    • #2
    • 4th Feb 18, 9:13 PM
    • #2
    • 4th Feb 18, 9:13 PM
    Why not? Sounds easily enough without doing the maths. Have you considered taking the DB early to reduce the LTA charge?
    • ffacoffipawb
    • By ffacoffipawb 4th Feb 18, 9:41 PM
    • 2,467 Posts
    • 1,623 Thanks
    ffacoffipawb
    • #3
    • 4th Feb 18, 9:41 PM
    • #3
    • 4th Feb 18, 9:41 PM
    Why not? Sounds easily enough without doing the maths. Have you considered taking the DB early to reduce the LTA charge?
    Originally posted by zagfles
    The ER factors on both the DB are rather penal, would take a 30% hit on those for 5 years early (6% per annum simple) and I donít want to reduce my guaranteed benefits.

    I suspect I cant take one of them too early anyway as that one is about 70% GMP with 7.5% revaluation as at date of leaving (deferred in 1993). I can take it from 60 anyway due to the Barber v GRE judgement. Female NRA was 60, male was 65 (and I am male, for the avoidance of doubt).

    With kids still at school for a few more years I guess that limits what I can do with my retirement though, our youngest is 8.

    Dont intend to take any PCLS from the DB pensions.
    • ams25
    • By ams25 4th Feb 18, 10:01 PM
    • 159 Posts
    • 186 Thanks
    ams25
    • #4
    • 4th Feb 18, 10:01 PM
    • #4
    • 4th Feb 18, 10:01 PM
    Have to ask how you can live on £24k a year with 3 kids at home.... Presume not in the south east?

    Can't see any problem with retiring...now..with c.£1m and the 12k db at 60....and SP to come. I am in a not dissimilar position and stopped over 18 months ago at 52...and 2 kids in primary (and spend a fair bit more..albeit my db is higher) You should be able to comfortably drawdown 3%pa inflation adjusted from your dc/isa investments so exceeding your target before the db and sp kick in. You not only need to think about the lta but also income tax. Does your wife have a pension? If all the pension/taxable income is in your name you're going to pay more tax than is ideal. (I have this issue also...have gifted some money to my wife. Need to do more!)

    I'd ask why you're spending relatively so little given the numbers. You can leave a legacy to the kids/help them out, but best time to enjoy your hard earned savings is probably now.

    Good luck.
    • ffacoffipawb
    • By ffacoffipawb 4th Feb 18, 11:12 PM
    • 2,467 Posts
    • 1,623 Thanks
    ffacoffipawb
    • #5
    • 4th Feb 18, 11:12 PM
    • #5
    • 4th Feb 18, 11:12 PM
    Have to ask how you can live on £24k a year with 3 kids at home.... Presume not in the south east?

    Can't see any problem with retiring...now..with c.£1m and the 12k db at 60....and SP to come. I am in a not dissimilar position and stopped over 18 months ago at 52...and 2 kids in primary (and spend a fair bit more..albeit my db is higher) You should be able to comfortably drawdown 3%pa inflation adjusted from your dc/isa investments so exceeding your target before the db and sp kick in. You not only need to think about the lta but also income tax. Does your wife have a pension? If all the pension/taxable income is in your name you're going to pay more tax than is ideal. (I have this issue also...have gifted some money to my wife. Need to do more!)

    I'd ask why you're spending relatively so little given the numbers. You can leave a legacy to the kids/help them out, but best time to enjoy your hard earned savings is probably now.

    Good luck.
    Originally posted by ams25
    Thanks

    Mortgage free, live up North.

    We do get child benefit of about £200 per month and a similar amount of child tax credits on a £30k salary.

    Not much left over at the end of the month though.

    Can borrow on flex mortgage (currently nil) for this year and next year ISA repaying from the PCLS late next year.

    May just go part time for a couple of years 3 days just to test the water a# dont want to get bored with the kids at school, though having said that I dont enjoy my office job that much after 31 years.

    My wife will have a tiny DB of £200 pa, so may be worth considering a SIPP for her which I could manage I guess. Obviously contributions capped at £2880 net.
    Last edited by ffacoffipawb; 04-02-2018 at 11:16 PM.
    • enthusiasticsaver
    • By enthusiasticsaver 4th Feb 18, 11:51 PM
    • 6,400 Posts
    • 13,158 Thanks
    enthusiasticsaver
    • #6
    • 4th Feb 18, 11:51 PM
    • #6
    • 4th Feb 18, 11:51 PM
    Yes I think you can afford to retire next year. As you say you need to keep an eye on the LTA as you will be over it with 800k in the DC pot and the DB pension. You need to look at your wife!!!8217;s position if she has no decent pension.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • kidmugsy
    • By kidmugsy 5th Feb 18, 12:05 AM
    • 10,555 Posts
    • 7,230 Thanks
    kidmugsy
    • #7
    • 5th Feb 18, 12:05 AM
    • #7
    • 5th Feb 18, 12:05 AM
    a SIPP for her which I could manage I guess. Obviously contributions capped at £2880 net.
    Originally posted by ffacoffipawb
    Top priority: pay by removing money from Premium Bonds or ISAs or TFLS - anything but ILSCs.

    For LTA, probably wait for a market crash and then crystallise DC.
    Free the dunston one next time too.
    • ffacoffipawb
    • By ffacoffipawb 5th Feb 18, 5:01 AM
    • 2,467 Posts
    • 1,623 Thanks
    ffacoffipawb
    • #8
    • 5th Feb 18, 5:01 AM
    • #8
    • 5th Feb 18, 5:01 AM
    Top priority: pay by removing money from Premium Bonds or ISAs or TFLS - anything but ILSCs.

    For LTA, probably wait for a market crash and then crystallise DC.
    Originally posted by kidmugsy
    Thanks

    Regardless, I shall crystallise large proportion of DC at 55 because investment return likely to exceed CPI increases in LTA.

    Market crash, maybe one is starting now. If not, a Corbyn government will oblige on that score. My DC pensions are 100% equity invested.
    Last edited by ffacoffipawb; 05-02-2018 at 5:04 AM.
    • zagfles
    • By zagfles 5th Feb 18, 7:50 AM
    • 13,016 Posts
    • 11,056 Thanks
    zagfles
    • #9
    • 5th Feb 18, 7:50 AM
    • #9
    • 5th Feb 18, 7:50 AM
    Thanks

    Mortgage free, live up North.

    We do get child benefit of about £200 per month and a similar amount of child tax credits on a £30k salary.
    Originally posted by ffacoffipawb
    And of course your CTC will go up if you retire - you'll get over £8k a year if your taxable income is less than £16k. You'd even get free school meals!

    But could all stop with the transition to UC, as it has capital rules, but you might get transitional protection.
    • ams25
    • By ams25 5th Feb 18, 11:11 AM
    • 159 Posts
    • 186 Thanks
    ams25
    Thanks

    Regardless, I shall crystallise large proportion of DC at 55 because investment return likely to exceed CPI increases in LTA.

    Market crash, maybe one is starting now. If not, a Corbyn government will oblige on that score. My DC pensions are 100% equity invested.
    Originally posted by ffacoffipawb
    I was pretty much 100% equities before I stopped working. Have since glided down to about 55:20:10 (equity/bonds/cash) plus some Reit and absolute return funds. Although a crash will always be painful I know I don't need to touch equities in the short term which helps with sleep. Just before and just after you retire is when you are most at risk from sequence of returns risk (a crash and/or prolonged period of poor returns with less time to recover losses) so you don't want to be a forced seller of equities around that time. My plan, especially once the db kicks in, is a rising glide path of equities over time (maybe back to 70%) but right now (7 years until db) I want a safer asset allocation. Would suggest you consider this. You don't need to have such a high risk asset allocation given your funds/income requirement. Lots of reading on this but the benefit of 100% vs say 60% is probably not worth the volatility for an early retiree with 40years to fund. https://earlyretirementnow.com is a really great source of further reading on this topic.


    Ps you've done really well to accumulate that level of funds, especially if that salary level is not a big reduction from earlier roles. Any tips on how you've done that. Even if you won the lottery you've resisted spending it all which is great.
    • westv
    • By westv 5th Feb 18, 1:04 PM
    • 4,525 Posts
    • 2,122 Thanks
    westv

    Market crash, maybe one is starting now.
    Originally posted by ffacoffipawb
    If it is, can we just get on with it, get it out of the way and then forget about crashes for a few more years?
    • stoozie1
    • By stoozie1 5th Feb 18, 6:46 PM
    • 549 Posts
    • 485 Thanks
    stoozie1
    Looks a great position to be in.

    Pob lwc!
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- £560 April £2670
    • ffacoffipawb
    • By ffacoffipawb 5th Feb 18, 6:49 PM
    • 2,467 Posts
    • 1,623 Thanks
    ffacoffipawb
    Looks a great position to be in.

    Pob lwc!
    Originally posted by stoozie1
    Diolch stoozie
    • ffacoffipawb
    • By ffacoffipawb 5th Feb 18, 6:52 PM
    • 2,467 Posts
    • 1,623 Thanks
    ffacoffipawb
    Ps you've done really well to accumulate that level of funds, especially if that salary level is not a big reduction from earlier roles. Any tips on how you've done that. Even if you won the lottery you've resisted spending it all which is great.
    Originally posted by ams25
    I have been paying 50% pension contributions via salary sacrifice for over 10 years, when the mortgage was cleared.

    My gross salary is £60k but I sacrifice half that and we manage OK.
    • ams25
    • By ams25 5th Feb 18, 7:49 PM
    • 159 Posts
    • 186 Thanks
    ams25
    I have been paying 50% pension contributions via salary sacrifice for over 10 years, when the mortgage was cleared.

    My gross salary is £60k but I sacrifice half that and we manage OK.
    Originally posted by ffacoffipawb
    very impressive. you must have a very understanding family... (or you've managed them well!!)

    but sacrifices made, you might find you can now spend more in retirement than when working....(in terms of discretionary spend, I am)
    • dmelife
    • By dmelife 5th Feb 18, 8:14 PM
    • 38 Posts
    • 49 Thanks
    dmelife
    No offence or judgement intended (it!!!8217;s a loophole many of us would take advantage of) but you have to ask what kind of system allows someone to become a pension millionaire by sacrificing their salary to the extent that they are then topped up by tax credits? Hopefully UC will close the door on this!
    • ffacoffipawb
    • By ffacoffipawb 5th Feb 18, 8:56 PM
    • 2,467 Posts
    • 1,623 Thanks
    ffacoffipawb
    No offence or judgement intended (it!!!8217;s a loophole many of us would take advantage of) but you have to ask what kind of system allows someone to become a pension millionaire by sacrificing their salary to the extent that they are then topped up by tax credits? Hopefully UC will close the door on this!
    Originally posted by dmelife
    Could have got close without the tax credits, the latter means I can be retiring a couple of years earlier, so why not?
    • dmelife
    • By dmelife 5th Feb 18, 9:03 PM
    • 38 Posts
    • 49 Thanks
    dmelife
    Why not exactly, use the reliefs and loopholes available. This is just a loophole that I don!!!8217;t think should be available!
    • Triumph13
    • By Triumph13 5th Feb 18, 9:43 PM
    • 1,180 Posts
    • 1,463 Thanks
    Triumph13
    If you don't enjoy your job, why on earth are you going to work tomorrow?
    You say you 'need' £2k a month = £24k pa. Well when you're 67 your DBs and SPs and your current S&S ISAs will yield about £33k pa post tax which is nearly 50% more than you say you need. To have that £33k for the next 13 years (for 7 of which your DB will be in payment) will cost about £350k. What are you planning to do with the half a million quid you have spare?
    Hand in your notice and enjoy time with the kids while they're young.
    • ffacoffipawb
    • By ffacoffipawb 5th Feb 18, 11:04 PM
    • 2,467 Posts
    • 1,623 Thanks
    ffacoffipawb
    If you don't enjoy your job, why on earth are you going to work tomorrow?
    You say you 'need' £2k a month = £24k pa. Well when you're 67 your DBs and SPs and your current S&S ISAs will yield about £33k pa post tax which is nearly 50% more than you say you need. To have that £33k for the next 13 years (for 7 of which your DB will be in payment) will cost about £350k. What are you planning to do with the half a million quid you have spare?
    Hand in your notice and enjoy time with the kids while they're young.
    Originally posted by Triumph13
    You are probably right, but I am risk averse despite my 100% equity investments. Markets are a bit iffy at the moment so rather put in a bit of extra margin just in case.

    My SIPP is £700k wholly invested in investment trusts and my other pension is £100k in a multi asset fund.

    ISA is also investment trusts, pretty much the same ones as the SIPP.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

107Posts Today

1,705Users online

Martin's Twitter
  • It's the start of mini MSE's half term. In order to be the best daddy possible, Im stopping work and going off line? https://t.co/kwjvtd75YU

  • RT @shellsince1982: @MartinSLewis thanx to your email I have just saved myself £222 by taking a SIM only deal for £7.50 a month and keeping?

  • Today's Friday twitter poll: An important question, building on yesterday's important discussions: Which is the best bit of the pizza...

  • Follow Martin