AIBU to think I'd like to retire at 55?

[Petals23]

I'm 45 now, been working in the same job as self employed since 19. I've been paying into pension since 25 and at the moment have about 120,000 pounds saved. Ideally I'd like to retire at 55. I'd appreciate anyone's view.

@jinglinghellsbells I agree that a £500k pot won't buy a £24k inflation proofed annuity.

However with a flexible drawdown it would be possible to take out a sum of that size. Of course there is the risk that it runs out - but the OP would have state pension kicking in at 67 so the option to then reduce the drawdown at that stage if needed. Don't forget that with drawdown the majority of the fund stays invested and still compounding returns.

There's a lot of "I couldn't possibly live on £1,600 a month" going on here. With no mortgage and no kids it would be entirely possible - no it won't be cruises and expensive theatre trips out. But that's the choice to make. Stay in work and have less leisure time but more money, or retire younger and have more leisure time but less money.

I'm the same age as you OP and thinking similarly. I am planning to take my pension (defined benefit currently worth about 6k a year, but will increase with inflation) not until 67 so that it, plus the state pension should be enough to live on, and that gives security that money isn't going to run out of I live to be really old. So they means the 12 years between age 55 and 67 needs to be funded from savings. I reckon I spend about £12k a year on me (excluding stuff for the soon-to-be-independent kids), but would like at least £15k to include another holiday or two. So that's £180k I would need. I'm currently wishing this away :) I've assumed that inflation and interest I get on the savings will roughly cancel out.

If your spending is similar I would have thought you could have a pot that's big enough with another ten years of working.

As to whether I'll want to go at 55 and what I'll do, I'm working on that one. DH is older than me so it would be nice to do stuff together whilst he's still young enough to be healthy (hopefully). I might well have grandchildren by then and help out with them. I might volunteer. It's nice to feel the option is there.

@Wobbly totally agree with you - at 80 I imagine my needs (if I am still around) will be for support and care.

I'd rather enjoy the time and money I've saved when I'm in my 60s and 70s and hopefully in reasonable health than save it all or work through those years just in case I live to 99.

Greendayz " I reckon I spend about £12k a year on me"

do you mind if I ask what's included in that please?

You need investments in any fund to give a return more than or equal the rate of inflation.

Looking ahead 35 years it's almost impossible to know what that will be but you need a heck of a lot more than £500K.

We had a pot of over £1M and a lot of savings too and it's index linked. Even so, we planned carefully with a FA for it to last at least 35 years (my parents are in their 90s.)

Jingling "Looking ahead 35 years it's almost impossible to know what that will be but you need a heck of a lot more than £500K."

no, you really don't. And the OP and I are childfree which opens up the possibility of equity release. The bank can have it all when I pop my clogs!

I wonder what the average pension pot is for people earning c£25k?

My parents both retired at 54 they both worked for the Gas Board

Lucky things,I know 3 people who did the same and are minted!

autumn No rent or mortgage. But everything else - so what I pay into our joint account to cover food and bills (will be about £400/month once kids costs excluded) , £1500 a year for holidays (averaged over the year, so about £120 a month), eating out, personal spending. I'm naturally careful with money but feel I live comfortably in that much.

Well the £150K was a fuck of a drip feed!
So given that you’re not actually presenting your financial situation with any accuracy, I’d say it’s impossible to judge.
Surely you can work it out for yourself? One person’s comfortable amount is another person’s scraping by.

Greendayz thanks.

so there are bills in there...further nosey question....does some of that remaining £800 go to savings even if for things like new boiler etc?

@Autumnrose - I imagine rather less than the Op's current £150k!

Heaven forfend someone has to live off £24k in retirement when so many do in their working lives (paying rent, commuting, for kids...)

autumn I earn more than £12k so £12k covers spending and the rest goes into pension and savings currently. No the £12k doesn't include a new boiler, I'd always want to have a few thousand in reserve for one off things like that, and wouldn't expect to fund that from monthly expenditure.

Mrs scadenfreude and Iamthewombat we are moving over to settle before the end if the withdrawal transition period December 2020. We will be able to get beige residency cards will take out private health insurance.....not expensive. We hope to have a minimum of 10/15 years ...although they do have lovely care home facilities half the price of the UK.....much better facilities and glorious locations. If we have to will return to the UK move back into our UK house.....cut her rent out or sell the house on Crete

How bigger pot one needs is personal. If you earn £100,000 and still want an expensive lifestyle in your retirement you need a big pot.

We worked our expenses out and don't need a lot compared to what we earn now, especially as a lot of our earnings are being saved for retirement itself.

This thread is already proving my point. Left right and centre you'll have people telling you "heavens no, you need at LEAST one million!" - you really don't. What you need is very much based on what you expect to spend/what lifestyle you want to lead when you retire.

Some people see retirement as the chance go on multiple cruises/see the world in which case yes you'd need more money. Some people, like me, anticipate retirement being much like my life right now, in that yes I'll go on holiday maybe once every few years, but other than that I'm happy to potter about and do homely things - don't need quite as much income for that. It's all about how you want to live. I currently live frugally, not to the extent that I dont enjoy myself, but I dont splurge cash, and I dont expect my retirement to be much different in that regard, so I'm not horrified by the fact that I dont have millions stored away.

As long as my mortgage is paid off and I dont have any other debt, I'll get by quite happily. And who knows how long they even have on this planet, retirement might be decades, it could be a year. I wouldn't want to drain more money than I have to right now for something that's not guaranteed.

DH retired on his 55th birthday with a pension pot in excess of £1.5m, the mortgage was cleared years ago.
So it is certainly doable if you invest wisely.

Just be aware that regardless how much money you may or may not have for your retirement, you may get really bored giving up work completely at such a young age. My friend is 53 and retired a couple of years ago. The first year was great as he had lots to do around the house etc then the boredom set in to the point he got quite depressed, he was money rich but with his wife and friends at work he was so bored and lonely. He now works part time which has really helped him.

I retired at 55 ( well carried on with a bit of supply for a few years) from a long career in teaching, part time, full time , temporary etc.
I was fortunate to be in the last few years of final salary and used my £60,000 to pay off my mortgage, took my reduced teachers pension early but as it was only £450 a month needed to carry on with some supply teaching.
To sum up, as my state pension is not payable until I’m 66, I could only do this because

1. No mortgage
2. Husband still working
3. No dependent children
4. No extra agent lifestyle, just normal holiday once a year, older car , etc.

I was never ever bored! Not even when I stopped supply teaching a couple of years ago. The only reason I was able to stop part time work at 61 is that my elderly parents passed away and my sister and I inherited about £100,000 each. My husband didn’t retire u TIL he was 65 last year as his work pension was very small. So, there are lots of things to consider, mainly money, but I can honestly say I don’t regret giving up the hard slog at 55. I also appreciate that I was in a position to do so financially. No way would I have retired early if I thought I was going to be continually worried about whether I had enough money to last.

We retired at 53, a couple of years ago. We did the Martin Lewis spreadsheet and worked out we needed £40k a year to live our lives, plus a bit of capital for changing cars, house repairs etc, so we worked toward achieving that.

We have three rental properties and a SIPP pot of £550k, which we should be able to take 3% out of forever. We also have a considerable sum in cash. And if the very worst comes to the worst we will downsize our mortgage free house.

Retirement is great.

Greendayz thank you.

Schoolchoicesucks yes, that's what I thought.

You could do something like buy a small holiday cottage / chalet and let it out, to make an income perhaps? The in time sell it perhaps.

@Petals23

What do you do?

Could you consider doing it part time at 55 & just seeing how it goes?

I really don’t understand people saying they’d be bored retiring early. There’s just so much to do out there apart from working!

I have enough hobbies, interests and family to keep me busy. I really can’t wait. If I do get bored, I can pick up some work, but I doubt it will be an issue.

@Petals23 You need to work out how much you spend now annually, doing a spread sheet and allowing for major purchases in the future like cars, a new boiler, major repairs to your home that may crop up.

Also it's not clear if you are single or expect any inheritance down the line.

We are almost at retirement stage- normal retirement age as we both actually enjoy working believe it or not- and we've spent the last year doing very careful calculations on what we need to live on in relative comfort. I can tell you it's far in excess of £16K pa and that's without new cars, or expensive holidays overseas etc.

What puzzles me is you say you are self-employed so surely this is the perfect opportunity for you to downsize your work? You could drop down to 4 days a week, then 3, then 2 and so on. That gives you a taste for retirement.

Many people dream about retirement but the thing that most people forget is that we all need some kind of intellectual stimulation. Or we ought to! Using your brain post-retirement is very good for mental and physical health.
There is also evidence that working longer maintains health.

I am almost mid 60s and although I now work p/t ( self employed) I intend to carry on doing a small amount of work as long as I can, so long as it gives me the time to do other things.

Furthermore, if you look after your health, and are lucky, you ought to still be fit at 80 and able to do stuff. Retiring at 55 is very young these days and you need to accept you will still have 25 years to fill having fun - but not necessarily the income to enjoy life if you retire too early. Nothing worse than penny pinching in old age.

Maybe you just don't enjoy your job?