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.

Just think though, by the time you get to 85 (having not worked for 30 years) and then needing a £1k per week for a care home or live in carers, possibly for a further 10 years, are you willing to save for that or do you expect the state to look after you?

There are many people that NEVER save for their retirement. They will still get state care for care homes etc if they get ill at 85 just like anyone who HAS saved to enable them to stop working a bit earlier. If you have savings over certain amounts or own a home then that will be used to pay for your care.

@Schoolchoicesucks The way the first post is written suggests that she has put £120K into her pension pot. I don't know why you think otherwise. She also says she is going to save for another ten years to make that £500K. So whether that is in her pension pot or under the mattress, it's an ambitious savings plan for anyone.

Interestingly she has not come back to make anything any clearer or engage with any comments.

No of course not everyone needs £1M for a pension BUT people here seem to forget inflation.

In my profession when I started 40 years ago, the basic starting salary was £3500.. It is now £26000. That is purely inflation over 40 years which is why anyone trying to work out how much their pension pot (unless it's index linked) would be worth in 35- 40 years hence needs professional help from an FA.

£500K now is not going to be worth much in 35 years time if it's not linked to inflation.

@jingles yesterday at 20.49 the OP clarified it was a £150k pension pot and £120k savings

£500K now is not going to be worth much in 35 years time if it's not linked to inflation.

Surely that depends on how it is taken. If they still have uncrystallised funds aren't they still investing and hopefully growing?

trouble is with real inflation at 4% or more, not the fabricated official figure, the £120k is not going to do well. There's nowhere to put it that pays much more than 1% so it needs to be invested - with obvious risk.

depending on the OPs earnings she may be able to put a lot more into the pension.

You've all inspired me to spend the afternoon reviewing my finances .

Okay thanks for clarifying @Schoolchoicesucks.

So...the basic point for the OP is can she live on £500K for 30 years (or at least till she is 70 which is possibly the age of the state pension by then.)

We estimated it was around £15K pa, till she's 70. But it would be less as inflation would eat away at that equity over the next 15 years.

So - @Petals23

Looking at what your outgoings are now, taking away your mortgage, could you live on just over £1K a month for everything....

Have you done a simple spread sheet on your outgoings?

I've nothing to add to your query but I still remember reading(years ago) that circus acrobats can retire at 35! No idea if this was/is true but I recall wondering what would they DO for the rest of their lives?
Any ex circus acrobats out there who can answer my decades long wondering?

willow I have no acrobat friends

I do know a former dancer who moved on to choreography and teaching so I imagine acrobats do similar.😂

Recommend you also open a self invested pension - SIPP- (lots of east set up options eg AJ Bell) you can save into it and get 20% tax relief - 40 % if you pay the higher rate. You can either store cash in the SIPP or invest within it without tax on gains. Partner and I have a range of funds delivering 6-10.5% in our SIPPS. You can take 25% tax free at 55% and after that manage it by removing annual amounts equal to your tax free allowance combined with savings .

I mean...yes. There are only so many times I can walk in the park, or go jogging or read. I dont want to do those things all day, every day

@11MimiLaRue

I think retired people managed to be happy before spas, Netflix, gyms, expensive holidays etc...?
Having to be constantly entertained (usually by things that cost money) is a bit of an obsession these days.

I’m taking a slightly different approach to this. I’m 40 and am in the process of cutting my hours down to my outgoings (plus a little to save each month).

I want to spend the rest of the week doing now what I was previously looking forward to doing in retirement (seeing friends, gardening, exercising, being creative, volunteering, side hustles etc).

Finances can be so different but rule of thumb (tho I'm not an advisor) is 500K invested well should give you enough due to interest to retire and not start using/dipping into that 500K for a good few years. Invested well that 500K should give you an income of at least 3.5K/month if you've got a good financial advisor. As long as you are mortgage free you should be able to live a nice life, and have holidays, on that income. Maybe not several trips a year to Borneo but a proper far flung holiday, a UK break and a couple city breaks. So much depends on expectation. I'd rather have a pretty simple retirement, a holiday every year, but some people want far more - holiday homes, etc. So much depends on lifestyle.

Safe withdrawal rate is often quoted at 4%. That’s nowhere near £3500 a month from £500K.

Invested well that 500K should give you an income of at least 3.5K/month if you've got a good financial advisor.

That assumes an 8.4% annual rate of return an no tax due on it. You would get that some years if a substantial portion was invested in stocks, but not other years. And the problem with having a big share of your portfolio in stocks in retirement is that if there is a big market correction you have to sell some of your investments when they're down, leaving less to rebound with when and if the market recovers.

Few financial advisors would recommend that risky a strategy for pensioners.

My DH is hoping to retire at 56, he’s 53 now and has approx 1 million in pension pots and he’s expecting to have 40k per year income from it plus a lump sum.

@Lippy1234 that’s nice for him. OP is 8 years younger than him and has just over a quarter of that though. What advice do you have for her?

Yes @lippy, also do you have your own pension or are you relying on DHs?

I’m not sure really, I’d probably say get a pension forecast so she can work out what her pension will be worth when she’s 55 percent if she continues to put in X amount per month. I think with the good amount of savings she has and a paid off mortgage it could be doable.

I have 180k and 80% of the state pension so far and I am mostly relying on my DH’s.

I’ve 3 million, should I retire, what does everyone think

God no! That's peanuts in MNworld

bugbhaer - working part time now rather than all our nothing would be my ideal plan too. The trouble is that as I've become more senior at work (and therefore earning a salary needed to think about such things) I've taken on a lot more people management and direct client contact and it's hard to see how I could do it part time. I already work only 4 days a week, and although I could afford to work less I don't think the job would be doable on less. I'd end up working for free on my days off, or finding everything collapsed when I wasn't there. So I come back to a plan to work another 5-10 years and then retire completely. Would be crap if I don't live that long though or am no longer in good health to enjoy retirement, so it's a risk.

Fifty five is very young to retire so unless you have a fantastic hobby, or several, that you can immerse yourself in then retiring at 55 is not going to be the dream you hope.

Also, unless you have the money to indulge yourself in those interests and keep you in reasonable comfort for the whole of the rest of your life you might find yourself facing a miserable old age in your latter years.

If you're just going to potter about though, it would be far better for your mental health to keep working.

I retired at 53. I love my pottering. Every day is like the weekend. What’s not to like?

The thing not to like would be being skint! That’s why the OP has been advised to consult an IFA if she can’t work out the financial consequences of early retirement for herself.