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  • FIRST POST
    • scotty_does
    • By scotty_does 13th Apr 18, 5:16 PM
    • 12Posts
    • 36Thanks
    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 3
    • Terron
    • By Terron 13th Apr 18, 9:23 PM
    • 350 Posts
    • 296 Thanks
    Terron
    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.
    Originally posted by scotty_does
    You have my sympathy. I lost my job in IT when I was 54 and didn't fancy any of tje jobs available..
    • Joey Soap
    • By Joey Soap 14th Apr 18, 7:24 AM
    • 193 Posts
    • 70 Thanks
    Joey Soap
    I think you can do this. One thing I would say is that you need to keep three years income in cash or near cash that is accessible. The reason I suggest this is that if there is a big drop in the market (there will be) then you will need that pot of money to draw from otherwise you run the risk of permanently damaging your pension portfolio. I suggest three years because most bear markets in recent times have recovered their original value within that timescale. HTH.
    • marlot
    • By marlot 14th Apr 18, 7:31 AM
    • 3,724 Posts
    • 2,852 Thanks
    marlot
    ...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.....
    Originally posted by scotty_does
    Yes, IT is a brutal world for older people - especially if you've moved into management or consultancy positions, so may have neglected your technical skills.

    I was very fortunate that one of my public sector clients gave me a job straight away. Their maximum was only 50% of my previous package though the pension is good.
    Last edited by marlot; 14-04-2018 at 7:34 AM.
    • cobson
    • By cobson 14th Apr 18, 9:31 AM
    • 32 Posts
    • 20 Thanks
    cobson
    As you seem to have a frugal outlook have you looked at the mrmoneymustache.com website ? The ethos on there is to live as frugally as possible whilst building a stash of money in order to retire as early as possible - the folks on there would consider 55 a very late age to go. It is a US site but if you look in their forum there are a number of UK posters who hang about in the UK Tax Discussion subforum, including links to several who keep online journals. The latest post is from a couple who live in the SE on £12k a year. Might be useful for moral support.
    Last edited by cobson; 14-04-2018 at 9:53 AM.
    • jerrysimon
    • By jerrysimon 14th Apr 18, 10:29 AM
    • 296 Posts
    • 247 Thanks
    jerrysimon
    I retired last year (at 56) on 20K, no mortage, debt free and also have a small 40K pot. So far its going well. As I now pay no pension, NI and little tax this goes a lot further than when those bills came to over 10K/year!

    As such I think its better to look at your monthly income rather than annual salary.

    Although 20K is slightly less than half my pre retirement income the monthly figure is considerably more than half my monthly income when I was working.

    PS I live in the East of England and worked in IT management albeit Public Sector.
    Last edited by jerrysimon; 14-04-2018 at 10:38 AM.
    • ferox666
    • By ferox666 29th May 18, 8:00 PM
    • 170 Posts
    • 157 Thanks
    ferox666
    Hi Scotty

    Sorry to bump up this thread, but I am aiming to be in same position as you (pension pot size/age) in approx 20 years (but work on to 60). I am genuinely interested to hear how much was required to accumulate your pot - particularly if you presumably started pre-2000 before pensions were as "mainstream" and without the benefit of internet research etc. I'm curious the average monthly contribution made and over what period - Did you start "early" ie early 20s? I note you worked in IT, did your employer make large contributions? Did you reduce contributions when made redundant?

    Sorry for all the questions, it's the level I aspire too and I know past returns will have no relation to future returns but just curious if I can ever achieve it. Congratulations and I hope you enjoy retirement when you do decide to stop.
    • GSP
    • By GSP 29th May 18, 9:19 PM
    • 205 Posts
    • 54 Thanks
    GSP
    You hear a number say what are you going to do with yourself once you leave work.

    Remember, every day when you do is a holiday.
    • chiefie
    • By chiefie 29th May 18, 9:22 PM
    • 338 Posts
    • 344 Thanks
    chiefie
    I suspect working in the public sector helped to achieve this. Lower salary but better pension. Well done itís all about intelligent choices
    • jerrysimon
    • By jerrysimon 29th May 18, 9:31 PM
    • 296 Posts
    • 247 Thanks
    jerrysimon
    I suspect working in the public sector helped to achieve this. Lower salary but better pension. Well done it!!!8217;s all about intelligent choices
    Originally posted by chiefie
    EXACTLY the choice I made, always taking a lower salary than I could have got in IT in the private sector. My DB pension for started for me aged 16 and I left 40 years later. I did move around a lot, but stayed in the public sector and took my DB pension with me

    A year on I am still busy (two new grandchildren and voluntary work) plus DIY, gardening, cycling and other hobbies. I feel like I have 6 Saturdays and 1 Sunday often forgetting which day of the week it is. Another great thing I love and have discovered is when doing DIY projects and jobs if I get to early afternoon rather than cracking on to finish before work the next day, I know I can stop as tomorrow offers the same opportunity to complete the task without work getting in the way.

    If I really feel the need for more structure (I definately needed some which I found through the voluntary work I do) I could get a part time job, but currently have no intention to do so yet.

    I rarely get up before 8:30am as I was never a morning person.
    Last edited by jerrysimon; 30-05-2018 at 8:25 AM.
    • jamesperrett
    • By jamesperrett 29th May 18, 11:36 PM
    • 837 Posts
    • 472 Thanks
    jamesperrett
    Many of your posts resonate with me Jerry - I'm now 9 months into retirement and the only things that help me remember what day of the week it is are the activities that I take my son to.

    My fuel costs are less than half of what they were and I like the later mornings too.
    • AnotherJoe
    • By AnotherJoe 30th May 18, 9:21 AM
    • 11,864 Posts
    • 13,842 Thanks
    AnotherJoe
    Hi Scotty

    Sorry to bump up this thread, but I am aiming to be in same position as you (pension pot size/age) in approx 20 years (but work on to 60). I am genuinely interested to hear how much was required to accumulate your pot - particularly if you presumably started pre-2000 before pensions were as "mainstream" and without the benefit of internet research etc. I'm curious the average monthly contribution made and over what period - Did you start "early" ie early 20s? I note you worked in IT, did your employer make large contributions? Did you reduce contributions when made redundant?

    Sorry for all the questions, it's the level I aspire too and I know past returns will have no relation to future returns but just curious if I can ever achieve it. Congratulations and I hope you enjoy retirement when you do decide to stop.
    Originally posted by ferox666

    Use a pension calculator. Something like this one


    https://www.hl.co.uk/pensions/interactive-calculators/pension-calculator
    • bioboybill
    • By bioboybill 30th May 18, 9:21 AM
    • 3,031 Posts
    • 1,427 Thanks
    bioboybill
    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
    • By Anonymous101 30th May 18, 9:36 AM
    • 1,162 Posts
    • 591 Thanks
    Anonymous101
    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.
    Originally posted by bioboybill
    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!
    • vulcanrtb
    • By vulcanrtb 30th May 18, 11:06 AM
    • 13 Posts
    • 33 Thanks
    vulcanrtb
    I thought it unnecessary to start another thread when this one seems pretty close to my position, apologies to the OP

    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
    • By Anonymous101 30th May 18, 11:23 AM
    • 1,162 Posts
    • 591 Thanks
    Anonymous101
    I thought it unnecessary to start another thread when this one seems pretty close to my position, apologies to the OP

    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.
    Originally posted by vulcanrtb
    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
    • By atush 30th May 18, 11:58 AM
    • 17,319 Posts
    • 10,873 Thanks
    atush
    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
    • By kidmugsy 30th May 18, 2:43 PM
    • 12,203 Posts
    • 8,645 Thanks
    kidmugsy
    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?).
    Originally posted by vulcanrtb
    (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.
    Last edited by kidmugsy; 30-05-2018 at 2:47 PM.
    Free the dunston one next time too.
    • andrewf75
    • By andrewf75 30th May 18, 2:57 PM
    • 8,273 Posts
    • 14,117 Thanks
    andrewf75
    I definitely would in your situation, but we are all different and its just about weighing it up.
    • vulcanrtb
    • By vulcanrtb 30th May 18, 2:58 PM
    • 13 Posts
    • 33 Thanks
    vulcanrtb
    Glad I asked, thanks folks. Every time I learn a little more, I get a little closer to FIRE
    • enthusiasticsaver
    • By enthusiasticsaver 30th May 18, 3:36 PM
    • 7,404 Posts
    • 16,345 Thanks
    enthusiasticsaver
    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.
    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
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