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  • FIRST POST
    • scotty_does
    • By scotty_does 13th Apr 18, 5:16 PM
    • 12Posts
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    scotty_does
    Can I retire at 55?
    • #1
    • 13th Apr 18, 5:16 PM
    Can I retire at 55? 13th Apr 18 at 5:16 PM
    Hi,

    I have 3 pension pots that total roughly £520,000. I will be 55 in a few months. Its only recently dawned on me that I MIGHT be in a position to retire much sooner than I had always thought. I.E. at age 55. However...
    £350,000 of the pot is in a Fidelity pension that I can keep an eye on daily. Iíve been alarmed that in the last 12 months it has hardly grown (less than 1% growth). I know that things go up and down, but its making me depressed!

    I have no mortgage or any other debts and live a fairly frugal life. Iím a couple of years short of full state pension, but I can easily top that up.

    So my plan is to drawdown £20,000 a year (inflation adjusted) and then reduce that accordingly when my state pension kicks in, and probably reduce it gradually sometime after that as I get Ďproperí old. In my spreadsheets I'm putting in an inflation figure of 2.5% and a growth rate of 2%.

    Can I ask if this seems like a do-able plan, or am I just dreaming and need to keep on working for a few years yet. After working continually since I was a teenager I am REALLY REALLY wanting to be done!

    Thanks a lot in advance.
Page 1
    • Dox
    • By Dox 13th Apr 18, 5:19 PM
    • 1,026 Posts
    • 801 Thanks
    Dox
    • #2
    • 13th Apr 18, 5:19 PM
    • #2
    • 13th Apr 18, 5:19 PM
    Put it this way...if you run out of money in 20 years, getting a job to top up your bank account is likely to be much harder than continuing to work for another few years now and getting the loot safely stashed away.

    It must be very tempting to decide to pack it in, but things have a nasty habit of costing more than you ever thought they would. A few more years of work (?could you go part time) would give you a much greater safety margin.
    • scotty_does
    • By scotty_does 13th Apr 18, 5:25 PM
    • 12 Posts
    • 36 Thanks
    scotty_does
    • #3
    • 13th Apr 18, 5:25 PM
    • #3
    • 13th Apr 18, 5:25 PM
    Put it this way...if you run out of money in 20 years, getting a job to top up your bank account is likely to be much harder than continuing to work for another few years now and getting the loot safely stashed away.

    It must be very tempting to decide to pack it in, but things have a nasty habit of costing more than you ever thought they would. A few more years of work (?could you go part time) would give you a much greater safety margin.
    Originally posted by Dox
    Thanks for that (I think ). Not what I want to hear but I 100% see what you are saying. I was just hoping 520k would be enough.
    Thanks again.
    • westv
    • By westv 13th Apr 18, 5:38 PM
    • 4,649 Posts
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    westv
    • #4
    • 13th Apr 18, 5:38 PM
    • #4
    • 13th Apr 18, 5:38 PM
    I don't the plan is that far fetched. If you took the "a few more years" argument literally you would never retire.
    • scotty_does
    • By scotty_does 13th Apr 18, 5:41 PM
    • 12 Posts
    • 36 Thanks
    scotty_does
    • #5
    • 13th Apr 18, 5:41 PM
    • #5
    • 13th Apr 18, 5:41 PM
    I don't the plan is that far fetched. If you took the "a few more years" argument literally you would never retire.
    Originally posted by westv
    Now you I like!
    To be fair, I should have said that £20,000 is not what I spend now. I actually live on less (more like £16,000). The extra money is to allow for the unexpected.
    • Brynsam
    • By Brynsam 13th Apr 18, 5:42 PM
    • 1,740 Posts
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    Brynsam
    • #6
    • 13th Apr 18, 5:42 PM
    • #6
    • 13th Apr 18, 5:42 PM
    If you took the "a few more years" argument literally you would never retire.
    Originally posted by westv
    Not if the 'few more years' starts now and ends in a few years - and it would make a lot of sense to bank some more cash while OP's earnings capacity is still strong.
    • Alexland
    • By Alexland 13th Apr 18, 5:47 PM
    • 3,847 Posts
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    Alexland
    • #7
    • 13th Apr 18, 5:47 PM
    • #7
    • 13th Apr 18, 5:47 PM
    Have you factored in any capital expenditure that might occur during retirement such as new car, kitchen, bathrooms, etc?
    • scotty_does
    • By scotty_does 13th Apr 18, 5:55 PM
    • 12 Posts
    • 36 Thanks
    scotty_does
    • #8
    • 13th Apr 18, 5:55 PM
    • #8
    • 13th Apr 18, 5:55 PM
    Have you factored in any capital expenditure that might occur during retirement such as new car, kitchen, bathrooms, etc?
    Originally posted by Alexland
    If I can get a growth rate of 2% then I would say yes. There will be the money available to take extra lumpsums when needed (within reason of course).
    • Prism
    • By Prism 13th Apr 18, 6:09 PM
    • 570 Posts
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    Prism
    • #9
    • 13th Apr 18, 6:09 PM
    • #9
    • 13th Apr 18, 6:09 PM
    I would probably do it however try and be flexible. Don't do it straight after a stock market crash should there be one in the next few years. Be flexible about your yearly amount. If the markets are down then take out less, if the going is good then consider more.

    I am aiming for about that amount by 55 too
    • Alexland
    • By Alexland 13th Apr 18, 6:12 PM
    • 3,847 Posts
    • 3,151 Thanks
    Alexland
    So are you expecting 2% above inflation and fees so around 5% market return per year? To get that return going forward you might need a high proportion of equities exposure which might leave you exposed to pound cost ravaging if continuing to withdraw during crash years. Your plan looks a bit tight to me.
    • Thrugelmir
    • By Thrugelmir 13th Apr 18, 6:18 PM
    • 61,352 Posts
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    Thrugelmir
    In my spreadsheets I'm putting in an inflation figure of 2.5% and a growth rate of 2%.
    Originally posted by scotty_does
    Inflation is running at a higher rate than that currently.

    Iíve been alarmed that in the last 12 months it has hardly grown (less than 1% growth).
    Does that include reinvested income.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • scotty_does
    • By scotty_does 13th Apr 18, 6:25 PM
    • 12 Posts
    • 36 Thanks
    scotty_does
    So are you expecting 2% above inflation and fees so around 5% market return per year? To get that return going forward you might need a high proportion of equities exposure which might leave you exposed to pound cost ravaging if continuing to withdraw during crash years. Your plan looks a bit tight to me.
    Originally posted by Alexland
    No. I'm planning on the basis of net -0.5% growth.
    • John-K
    • By John-K 13th Apr 18, 6:27 PM
    • 654 Posts
    • 1,024 Thanks
    John-K
    One thing to consider is that you may well have higher costs when you stop working. You may want to travel more, you could heat the house all day, not just at night, may want to go out more etc.

    £20k per year sounds like a very small amount to live on.
    • westv
    • By westv 13th Apr 18, 6:33 PM
    • 4,649 Posts
    • 2,238 Thanks
    westv
    One thing to consider is that you may well have higher costs when you stop working. You may want to travel more, you could heat the house all day, not just at night, may want to go out more etc.

    £20k per year sounds like a very small amount to live on.
    Originally posted by John-K

    £ 1,530 net a month isn't a pittance.
    • scotty_does
    • By scotty_does 13th Apr 18, 6:41 PM
    • 12 Posts
    • 36 Thanks
    scotty_does
    £20k per year sounds like a very small amount to live on.
    Originally posted by John-K
    Probably an indication of my very sad life, but I genuinely live on £16,000 a year currently. Admittedly that's without any special one-offs that come along (new kitchen etc as mention by someone). But I think 20K is going to be fine. AND if I get growth 2% with inflation at 2.5% I could easily take some more without a problem.
    • westv
    • By westv 13th Apr 18, 6:41 PM
    • 4,649 Posts
    • 2,238 Thanks
    westv
    Cfiresim gives a figure 18,454 a year based on 40 years, full SP at 67, 100% success rate and 2% fees. More is available if using variable spending options.
    • scotty_does
    • By scotty_does 13th Apr 18, 6:42 PM
    • 12 Posts
    • 36 Thanks
    scotty_does
    I really appreciate people taking time to reply.

    1 other piece of info that I neglected to mention is that despite the decent amount of my pension pot, I actually am currently earning a poor salary. After years of working in IT and earning well, I was made redundant when 50. I found it impossible to get a well paid job after that. My current earning do pay the bills, but I have to say I don't enjoy it and can't wait to finish.

    I'm not expecting any sympathy by the way, I know that most people don't enjoy their jobs.
    • Terron
    • By Terron 13th Apr 18, 6:44 PM
    • 350 Posts
    • 295 Thanks
    Terron
    Hi,
    So my plan is to drawdown £20,000 a year (inflation adjusted) and then reduce that accordingly when my state pension kicks in, and probably reduce it gradually sometime after that as I get Ďproperí old. In my spreadsheets I'm putting in an inflation figure of 2.5% and a growth rate of 2%.
    Originally posted by scotty_does
    There is a rule of thumb originating from the USA that says you can do that if you take 4% of the pot initially and then adjust for inflation. This was based on some research showing that historically you would be unlikely to run out of money for 30 years if you did it that way, According to that youhave enough.

    However that rule has been challenged. It has been suggested that 3.5% might be better for the UK. Retiring early might mean you need the pension to last longer. Also some states of the stock market are bad. On the other hand the UK state pension makes you less vulnerable to running out.

    Have you checked your state pension?

    Do you have an emergency fund?

    There are a fair number of sites that discuss early retirement and argue with each other. I am not a real expert.

    There are a couple of long threads in here that might nelp. one about you NUMBER and onme abour early retirement. Reading them might help.
    • Techno
    • By Techno 13th Apr 18, 6:52 PM
    • 1,083 Posts
    • 697 Thanks
    Techno

    £20k per year sounds like a very small amount to live on.
    Originally posted by John-K
    There are people bringing up families on this amount.

    Scotty - I didn't spot whether you are on your own or have a partner as of course 2 incomes makes a difference.

    There has been a lot of discussion on this board about people keeping working and then (sorry to be morbid) either dropping down dead or suffering significant ill health - having good health is just as important as having money so if you feel ready to go then go.

    We intended to retire at 55 but have decided to work part time instead. It means we are keeping our state pension topped up but working less (and earning less but around what we plan to draw down), more time for hobbies but no time to get bored. Probably do this for another year and then look to stop completely or just dip in and out of work if we get fed up of all this time on our hands
    If you think you are too small to make a difference, try getting in bed with a mosquito!
    • scotty_does
    • By scotty_does 13th Apr 18, 7:00 PM
    • 12 Posts
    • 36 Thanks
    scotty_does
    There are people bringing up families on this amount.

    Scotty - I didn't spot whether you are on your own or have a partner as of course 2 incomes makes a difference.

    There has been a lot of discussion on this board about people keeping working and then (sorry to be morbid) either dropping down dead or suffering significant ill health - having good health is just as important as having money so if you feel ready to go then go.

    We intended to retire at 55 but have decided to work part time instead. It means we are keeping our state pension topped up but working less (and earning less but around what we plan to draw down), more time for hobbies but no time to get bored. Probably do this for another year and then look to stop completely or just dip in and out of work if we get fed up of all this time on our hands
    Originally posted by Techno
    Thanks a lot for that Techno. I'm on my own. My wife passed away the same year I got made redundant (great year that was!).
    A part-time job is something I've thought about. To be honest, with even a modest part-time income I've little doubt that I should be okay. The thought of quitting my job is scary though, but exciting at the same time!
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