Retirement calculations - Can I ever retire ?

[Landsurfer]

I have a 23 year Military Pension .... 9% of gross contribution.
Plus a works pension pot of just under 100k, thats mine and my wifes combined, plus both have 100% state pensions ....
We have some mortgage left, about 60K and are considering equity release for the property ....
I won't retire until 65 but the figures stack up to a reasonably supported retirement .....

 

[delb0y]

Edging into this territory myself, too. My current pounds-in-the-pocket on payday is actually already less than 50% of my actual gross pay, what with tax, NI, pension payments, and mortgage. All of those things, except tax, will go when I retire, so to actually stay where I am income wise I actually need less than 50% of current gross pay. Need to factor in the wife's pay, too, but she earns very little. With my work pension, and both our state pensions (both at 67 - but I'm two years older, so this will actually occur when I'm 69) we'll be fine. It's getting to 69 that's the issue. I've calculated my lump sum, cut into chunks and added to the pension, should make it work... Alas, not for a few more years.

 

[wonderloaf]

I was a bit worried before I retired, and stayed on for 3 months after my retirement age (65). But with less money coming in, you pay less tax, no NI and you have no travelling costs, no business suits and no expensive lunches, so it all works out in the end.

But be warned - you don't get any holidays when you are retired.

Mrs W's current favourite saying is 'now we're retired every day's a Saturday' but I've never been busier, I've managed to get a few months work back at my old company, really I'm only going back for a rest .... although the extra money will come in handy for maybe a holiday .. or bike stuff .. car .. bike stuff .. new garden shed .. bike stuff.. (you can see where this is going ). Downside is there'll be less time for the bike but there's always Sunday for that and that'll never change!

 

[Bazzer]

Mrs B went early as her job (teaching) had become almost all paperwork and not bringing on kids. Personally I went p/t three or so years ago. I am lucky in that I enjoy my work and have a manager who stops or deflects most of the crap coming from the bean counters and non jobs, so think I have found a happy balance. - Or at least one which works for the time being.

 

[DCLane]

I'm nowhere near retirement yet but am aiming to stop at 60 with 28 year's of contributions - the current Firefighter's court case against averaged pensions rather than final salary will affect me as well as I'm on the Teacher's Pension Scheme.

If they win it'll mean TPS has to apply the same and I'm already on a final salary scheme at 60 up to 2015. Either way it means I can (probably) stop at 60 by losing part of my averaged NRA67 accumulation.

My intention is to work 2-3 days a week at most still doing the job I enjoy for a few years. I've a few other plans to use my 'alternative' retirement accumulations for the past 25 years of antique books, vintage watches and paintings and will learn to restore those before selling them on to support income. Oh, and I intend to trade more bikes than I currently do; I've a plan for a big storage set-up and workshop

SWMBO has about 10 years to go as well with part-time work that has a pension contribution. Not sure about her numbers but I think we'll be OK.

 

[SpokeyDokey]

I know I should seek professional advice - but would like some general advice here from those who may have experience

I will be 60 in 4 years and would like to start thinking about retirement

My pension income at 60 - will be approximately 50% of what I earn now - plus a lump sum - close on 2 years salary

However my wife works part time and has next to nothing in a pension pot

Both get full state pension at 67

House is paid for - no mortgage - 2 live at home boys in early 20's - one at uni other in full time work

If retirement at 60 doesn't look feasible - I am wondering if to go part time now - any thoughts ?

Some real life figures for you:

Decent sized detached bungalow (paid for). We eat well, drink well, house is always toasty (oil/coal/logs) decent social life, run one small decent new car (I say new but we keep our cars for 8-10 years these days as we only do c2-2500 miles pa). We don't spend a lot on clothes as we are mainly in the great outdoors in our leisure time and neither of us likes dressing up much so we spend our lives in outdoor gear (as do most of the people in the village in which we live.

Basic costs ie everything to run the house (utilities/council tax/fuel/insurance), food/drink, car fuel/servicing/tax (£20!) etc = £13000

Contingency costs ie dentists/opticians, small household items, hairdressers (Lovely Wife not me), entertainment (going to the pub etc) and all those piddly bits and pieces that you need as your life scrolls by = £2500

New car purchases, holidays and capital expenditure needed on the house we take out of savings which amount to around £5000 pa across the years. We don't do big holidays much these days as we got that out of our system years ago. Ditto big fancy cars.

So a bit over £20000 pa is all we need to run our lives.

We fund this from a mixture of company pension and the investment income from a significant amount of savings which also spins off a decent positive cash-flow every year which balances off inflation plus adds a decent chunk to our invested capital. Our kids will be very lucky one day.

We have no mortgage, loans, credit cards etc and are 100% debt free.

We would be hard pressed to get through more than the c£20000 pa figure quoted unless we went daft on holidays, cars, fancy watches etc - we've done all that and it no longer floats our boat.

For some years now we have run a 20 year future cash-flow projection - it's quite a complicated spreadsheet these days as it's evolved over the years but is surprisingly accurate. All our income and expenditure projections are accounted for and we also use it (more so in the past) to model the impact of any major proposed expenditure.

When we first built this in around 2003/4 we were surprised at how little we would require to have a decent standard of living especially as we were preparing to quit the corporate rat race that was giving as a very high net income. It was a major sanity checking mechanism for us whilst preparing for a very different future - albeit a much better one.

I would suggest that it may be a good idea to model your finances yourself and you can then make the appropriate decisions regarding your future financial needs.

HTH.

Good advice... Kingrollo, if you have to rely on investing your lump sum for retirement income then don't take the lump sum and leave it in the pension as you'll get a better return drawing your pension then you ever could investing the lump sum unless you take a greater risk investing in higher return stuff which could collapse.

I took as much as I could out of my company pension and everything out of a couple of private pensions that I was contributing too. Pensions, especially with the low yields of today, can leave some very large amounts of your money in the accounts of the pension provider once you die.

I much preferred to invest those monies I could access into Tessas (back in the day) and then ISA's/Fixed Term Bonds/Managed Funds etc on the assumption that I could use this capital as and when required (not that we have had to so far and I doubt we ever will; although at the time I thought we would).

Using a calculator something like this (ignore the fact that it is in dollars) can give some surprising (positive) results as to how long a sum of money will last with 'x' amount of withdrawals pa at 'y' interest rate.

https://www.calcxml.com/calculators/how-long-will-my-money-last?skn=

At today's low risk investment rates of around 2% (we currently average 2.21% on our low risk investments) a relatively modest sum of £100k would allow someone to withdraw around £5000 pa for around 25 years. This may be better than that offered by your pension provider. Pension providers are like bookies, their terms are stacked in their favour of winning the gamble although they portray themselves as oh so helpful entities that you cannot possibly do without. Obviously you need to balance this off against how long you think you will live (optimistic finger in the air time and all you are doing here is what the provider does) etc. And you have to manage this against the backdrop of the term of your investment(s) and any possible penalties should you ever need to terminate an investment prematurely. Worth thinking about imo.

 

[Drago]

No mortgage, modest rental income, Mrs D's pension, Mrs D's salary, my pension, my injury award, plenty of savings. A couple of years I'll be selling the current house, freeing up another XYZ amount of cash, bit losing the rental income as we go down to 1 gaff.

The name of the game is to have more each month than the previous, even if it's only a fiver. That's inviolate - unless I need to buy an iron lung or organ transplant the savings don't get touched until Mrs D stops working.

The downside is that I have to do all the washing and ironing. As a consequence I haven't worn a garment that has been ironed since 2016.

 

[lane]

A couple of important things to factor in. First you pay no national insurance on pension and that makes a difference straight away. Second you won't be making any payments into your pension and that is also a saving. So straight away the difference is less than you think. Of course you will pay less tax as well. Work out your take home now versus take home on your pension - difference will be a good bit less than a 50% reduction. See what the actual difference is in £ and think about how you could economise to save the difference it's might be easier than you expect.

 

[wonderloaf]

I've been using various retirement drawdown calculators but this my favourite as allows you change the income withdrawal amounts at various future dates:
https://www.finalsalarytransfer.com/p/148/drawdown-calculator
We've assumed that as we get older we're going to get less active so our living costs will go down, so using this calculator you can factor in 3 income withdrawal changes in future years . We're both 60 y.o. at the moment but the plan is in a few years time we'll downsize the house, stick the money in the savings and use that to supplement our pensions, we're due to get our state pensions at 66 y.o. so our income requirement will drop quite significantly then and we've already factored this into our calculations.

 

[Gunk]

So did I when I was 55, but I found out that my lack of enjoyment accelerated exponentially with each each passing year.
By the time I was approaching 60, I had zero interest in it and started to resent having to do it.
God knows how I would have managed to do an extra 5 years up to 65.

I’m fortunate that I sold my business last year and took a much less stressful job which I quite like. If I’d been doing the same job for 25 years I might feel differently

 

[byegad]

Only you can decide.
However.
I retired at 55, 10 yrs before I was due my OAP, my wife retired at 58. Both of us have modest works pensions and some savings, but not huge amounts. We can't afford to go away every other weekend, nor take foreign holidays every year. When we got our OAPs we stopped using savings for the holidays we take. We can run a nice car (and ran 2 for 10 yrs or more after early retirement). We go out for the day, or evening several times a month and do what we want to do. Friends worked longer, have much more money and go away for multiple weekends and take 2 or 3 foreign holidays each year. They are better off than us, but no happier.

 

[screenman]

I am often interested in the split between public sector and private secfor when it comes to early retirement, amongst my close friends and family the public sector members got out far earlier than the private sector one's, the self employed often later in life. Now I wonder if that is because the self employed get more pleasure from work, or because generally many have earned less so have not had the opportunity of saving.

 

[lane]

Final salary schemes astoundingly good compared to anything else. Not the preserve of the public sector by any means but over represented for sure. There are a lot of things to think about re retirement money is just part of it.

 

[Drago]

If youd been spat upon, stabbed, and suffered broken bones as a result of an assault you wouldn't been keen to carry on any longer than necessary. I was shot at more times as a copper than I was as a soldier. As it happens I wanted to stay on despote my injuries, but some nodder called Tom Winsor was made it very difficult for me so I went on the medical when I'd rather have stayed. The choice was largely out of my hands.

I actually bumped into a youngish bobby I know today, who had half his ear bitten off - I rather think he'd retire yesterday if he could. As it is he now suffers terrible PTSD and is stuck behind a desk.

When you've walked in our footsteps then you'll understand. There's no pleasure to be had doing it, but someone still has to. Fortunately there are still a few daft noble enough to do it, but when they've done their time they usually don't want to do any more. Even if they wanted to they couldn't go beyond 60 anyway, unless they were scrambled egg rank.

I did actually apply for a job recently, you may recall. The sods didn't even bother to contact me to say "thanks, but no thanks."

 

[Beebo]

While we're on the subject, I'll be 67 in 2032. Will there still be a state pension then or will we just have the government-promoted workplace pensions that most people are now paying into?

I’m about 12 years behind you, but I expect there will still be a state pension, just not sure how much it will be or when I will receive it.
No government would have the balls to stop either the NHS or state pensions.