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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 4
    • bostonerimus
    • By bostonerimus 30th May 18, 4:16 PM
    • 2,022 Posts
    • 1,343 Thanks
    bostonerimus
    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.
    Misanthrope in search of similar for mutual loathing
    • mark88man
    • By mark88man 30th May 18, 4:24 PM
    • 3,207 Posts
    • 6,674 Thanks
    mark88man
    When you have time on your hands, you should read this the most comprehensive set of resources on how to to drawdown a pot balancing risks of being too cautious vs too risky


    https://forums.moneysavingexpert.com/showthread.php?t=5466114
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight - Fluctuating - less than I was more than I should be
    1/18: CC:11.5K@0% - Car Loan:17K@2.8% - Mort:145K@2.9%
    Decrease in Total Debt 2016:£13.4K 2017:£8.3K 2018-1H:£11K
    • Thrugelmir
    • By Thrugelmir 30th May 18, 7:47 PM
    • 59,230 Posts
    • 52,612 Thanks
    Thrugelmir
    ..well maybe inflation could spike above 2.5%.....
    Originally posted by bostonerimus
    RPI in the UK is currently 3.4%.

    Has been consistently over 2.5% since January 2017.

    What really matters though is ones personal rate of inflation. Council tax and energy price rises aren't helpfull to those on fixed incomes currently.
    Last edited by Thrugelmir; 30-05-2018 at 7:49 PM.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • kev2009
    • By kev2009 30th May 18, 8:44 PM
    • 232 Posts
    • 315 Thanks
    kev2009
    hmm this thread definitely gives food for thought.... I've got 20+ years to go to my official retirement date and at present, although hard to predict, the pension website forecast tool they provide is predicting i'd have a pension post of around £440k and i think it said £15k a year or there about's income from that plus obviously state pension on top. The 15k is IF i choose to take 25% tax free, if i don't then this figure jumps to just over 20k a year + state pension. I am currently single so I've removed the 50% to partner and I've chosen 0% annual increase as from what i could see i'd have to live min. 10 years to see that money so i'm thinking best to have it up front and bank it if i don't use it. I'm hoping by then i'll be mortgage free and i'm hoping low costs so will be able to manage on the money. From rough calculations, i should be able to cover the bills but as to what will be left for any hobbies/hols etc will remain to be see as can't really tell what they will all cost so far ahead. However, people saying 20k isn't enough, i thought 20k is what the average person was aiming for in a pension. I'm also a bit of a worrier so i'm currently thinking i'd buy an annuity so i have a set amount each month for the remaining of life rather than worry oh the markets crashed, I've just lost thousands etc...

    Kev
    • Thrugelmir
    • By Thrugelmir 30th May 18, 8:50 PM
    • 59,230 Posts
    • 52,612 Thanks
    Thrugelmir
    However, people saying 20k isn't enough, i thought 20k is what the average person was aiming for in a pension.
    Originally posted by kev2009
    Draw up a budget. What do you plan to do in your earlier retirement years. As yes you can live frugually. Is that how you want to spend 25 years or more though.

    We've some ideas as to places we wish to visit. Some train journeys to undertake. Very quick and easy to spend money without a second thought. We've opted to continue to accumulate as a consequence , while still enjoying a comfortable lifestyle.
    Last edited by Thrugelmir; 30-05-2018 at 8:53 PM.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • kev2009
    • By kev2009 30th May 18, 8:57 PM
    • 232 Posts
    • 315 Thanks
    kev2009
    Hi,

    That figure is if i retire at 68, so no early retirement. IF i was to retire at 58 which is what i thik there is rumour it will jump up to, i would only get 9k a year pension so definately not doable.

    However, at 68, getting 15k + 25% tax free in my hand to save/spend on anything such as re-decorating etc whilst i had the cash to do it i was hoping woudl be enough plus ofcourse the state pension atwhatever figure that wil be by then. IF i chose nto to take the 25%, then i woudl get 20k a year pension + 8k bit worryign this is concidered not sufficient.

    For me my household bills come to less than 1k a month, on top of this will be money aside for car maintenance, insurance, road tax. Obviously I wont be paying a mortgage, paying train fares for work so my expenses will go down in that regard but obviously some other expenses may go up i.e electricity, heating, hobbies/holidays etc.

    My thinking is take the 25% tax free as i can bank most of that i think and save that and use the interest each year if needed.

    I'm hoping this wouldn't mean living frugally for the remainder of my life, plus i'm also thinking if i retire at 68, probably after 10 years i may not be able to go on hols etc s i'd be pushing 80 by then

    Kev
    • MallyGirl
    • By MallyGirl 30th May 18, 9:03 PM
    • 2,816 Posts
    • 7,822 Thanks
    MallyGirl
    I have a 'fixed costs' figure and then a 'nice retirement' figure on top of that. The fixed figure is quite high as we don't plan to downsize (smaller house and cheaper area) for at least 5 years, maybe 10 - it is more than £20k just to keep the house /cars running and us fed and watered. It is important to know what your personal figure is as everyone is very different.
    • mark88man
    • By mark88man 30th May 18, 9:19 PM
    • 3,207 Posts
    • 6,674 Thanks
    mark88man
    ...
    I'm also a bit of a worrier so i'm currently thinking i'd buy an annuity so i have a set amount each month for the remaining of life rather than worry oh the markets crashed, I've just lost thousands etc...

    Kev
    Originally posted by kev2009
    Some observations - not that you should listen to a random bloke from the internet

    firstly annuities have fallen in popularity at the moment as the low interest rates implies a lower return. However they do have their role. Also you don't have to buy one on day 1, there are expectations that they will become better value both as you get older, but also as the low interest changes (which will be slow but gradually upward if you believe the BoE)

    secondly - managing a portfolio doesn't appeal to everyone, and it is easy to make big, expensive mistakes, however it is also possible to structure things so that you protect yourselves somewhat - eg
    • 1-3 years living costs in cash to take the sting out of crashes,
    • a portfolio of investments designed for capital preservation,
    • a very very broad diversification so you protect yourself from individual stocks and shares, even from individual countries).
    • long term deferment of state pension to counter the inflation risk
    • recognition that spending tends to decrease as you get older
    thirdly - But each to their own if you are happier with the certainty then you have to do that, just don't think an annuity is the only way to make that happen
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight - Fluctuating - less than I was more than I should be
    1/18: CC:11.5K@0% - Car Loan:17K@2.8% - Mort:145K@2.9%
    Decrease in Total Debt 2016:£13.4K 2017:£8.3K 2018-1H:£11K
    • Thrugelmir
    • By Thrugelmir 30th May 18, 9:32 PM
    • 59,230 Posts
    • 52,612 Thanks
    Thrugelmir
    firstly annuities have fallen in popularity at the moment as the low interest rates implies a lower return.
    Originally posted by mark88man
    Likewise recent returns from investments such as equities have instilled a degree of complacency. As if it's easy to make money with minimal effort. Trading isn't against the market. It's actually against other investors.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • kev2009
    • By kev2009 30th May 18, 9:43 PM
    • 232 Posts
    • 315 Thanks
    kev2009
    Thanks mark88man, yes i believe the annuities will get better and I've got a long way to go before i'm 68 so i'm hoping they will be by then.

    For me the thought of knowing right i'm getting x a month for ever the ideal scenario then i don't need to worry about shares dropping and thinking right how will i pay this bill as i can't really go back to work etc

    But i see your point, i guess if portfolio is setup right and it can outweigh any market crashes or at least minimise the impact then that maybe an alternative, i think i'd have to see an adviser much closer to the time either independently or maybe my company provides this option nearer the time, not sure as never needed to use it yet.

    When the company switched out pension to a different provider they company came in and gave a general speech to everyone with regards to the changes etc and it was highlighted by them that very few people were paying into the pension themselves as the company paid in a % and it was up to you if you wanted to pay in or not so not many people did. Hover for me after hearing that and that basically i'd end up no better off than anyone else who was paying in because whilst the rate was good, it is only what other companies combined employer/employee contributions are, if not better so at that point I took at look ant my finances and decided to start to contribute. I've now been tup'd to a different company and now i have to pay in so I've just continued to pay the same level of contributions.

    So nearer the time i will take advise and decide what is best or there may even be some new way to take pensions by then.

    I was just looking at Which? website, they have a rough calculator to predict what you will need and they seem to imply that 26k a year gives you a comfortable retirement and 39k a year gives you a luxurious retirement. The calculator seemed to be based on a couple so looking at that i'm thinking i'm not too far off the comfortable pension as if i get 15k + 8k state pension is £23k a year plus i could always take the 5k to of my 25% tax free to add on each year (as that's the difference between me taking 25% tax free or leaving it all in pension) which would take me up to £28k. Not to mention I suspect some of the figures they have estimated could be lower for single person.

    Kev
    • JoeEngland
    • By JoeEngland 5th Jul 18, 9:37 PM
    • 71 Posts
    • 77 Thanks
    JoeEngland
    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.
    Originally posted by atush
    The OP lives a frugal life, and 20k is hardly on the poverty line for someone in his position. Not everyone wants to work longer to have more money when instead they could retire earlier and do things they want to do, and also not be stuck in a job they dislike.
    • Johnny Doe
    • By Johnny Doe 5th Jul 18, 11:17 PM
    • 242 Posts
    • 109 Thanks
    Johnny Doe
    I would say, with those numbers and what you can survive on, definitely go for it! Dependent on health of course, Enjoy a good 20 years between 55-75 and anything else is a bonus. I personally think some are being far too cautious with their projections and will end up the richest in the graveyard making all the hard saving rather pointless but each to their own!! (although a very decent inheritance if you have dependents!)
    • Bimbly
    • By Bimbly 6th Jul 18, 7:27 AM
    • 88 Posts
    • 68 Thanks
    Bimbly
    I could live on 20k a year once my mortgage is paid off with no problem. With the state pension on top, you have money for jam.

    As suggested above, work out your personal budget and see how much you personally spend and, therefore, what you need to live on.

    Unless you want to keep working or want to save up for expensive travel, then it looks totally do'able for you.
    • JoeEngland
    • By JoeEngland 6th Jul 18, 12:54 PM
    • 71 Posts
    • 77 Thanks
    JoeEngland
    I would say, with those numbers and what you can survive on, definitely go for it! Dependent on health of course, Enjoy a good 20 years between 55-75 and anything else is a bonus. I personally think some are being far too cautious with their projections and will end up the richest in the graveyard making all the hard saving rather pointless but each to their own!! (although a very decent inheritance if you have dependents!)
    Originally posted by Johnny Doe

    If I was to draw up a list of reasons to carry on working and a list of reasons to retire early, the first list would boil down to one entry: money. The other list would have lots of things on it!
    • jerrysimon
    • By jerrysimon 6th Jul 18, 12:59 PM
    • 289 Posts
    • 226 Thanks
    jerrysimon
    We are living off that approx (my 18K DB and my wife's p/t £200/month) comfortably (retired a year ago at 56) no mortgage to pay and 50K of savings. As yet we haven't done any expensive travel and currently have no desire to do so, though it may be an option see below.

    Always look at the monthly income as its much more than if you were working and paying NI and Pension.

    I worked out that to earn the £1600/month that we get now if I was working and paying NI and pension, I would actually need a salary of 23K!

    We also have a DB pension currently worth 2.3K/year that my wife has not taken yet. We may actually cash that in/move it to a SIPP as its worth 50K and we could use that to smooth the income out over the next 9 years, until our joint 17K of state pension kicks in.

    In the last year we have had a second grandchild, see them every/twice a week as we live close, I have done lots of DIY, bike building, gardening and voluntary work. We are increasing the number of short breaks we have in the UK usually in school term time often Sunday/Monday night as hotels are cheaper, especially in London
    Last edited by jerrysimon; 06-07-2018 at 1:19 PM.
    • bostonerimus
    • By bostonerimus 6th Jul 18, 3:28 PM
    • 2,022 Posts
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    bostonerimus
    We are living off that approx (my 18K DB and my wife's p/t £200/month) comfortably (retired a year ago at 56) no mortgage to pay and 50K of savings. As yet we haven't done any expensive travel and currently have no desire to do so, though it may be an option see below.

    Always look at the monthly income as its much more than if you were working and paying NI and Pension.
    Originally posted by jerrysimon
    Diverse income sources and a DC pension pot are important to a relatively worry free early retirement, but the other side of the equation is control of spending and if you have a frugal nature it helps a lot.

    I retired at 52 (I'm now 56) and my annual spending is $30k (I live in the USA). That includes substantial amounts in real estate taxes and medical insurance. I have no debt or mortgages. I get $20k/year from a DB pension and another 20k/year rent from a property I own so I have things covered. In 11 years I'll get SP from the US and the UK, I estimate the UK SP will be around $15k/year by then and my US social security pension will be $25k/year, so I'll have a total of $80k. I plan to invest anything that I don't spend. I also have a mid seven figure DC pension/regular investment pot that I don't intend to touch and plan to leave to a couple of charities and my heirs.
    Last edited by bostonerimus; 06-07-2018 at 5:27 PM.
    Misanthrope in search of similar for mutual loathing
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