Would I be mad to retire now?

[Cheeseandtomatotoastie]

Long time poster but have name changed to get as neutral a view as possible.

I am mid fifties, divorced, new partner and living together, no mortgage in a house I love and work full time in a job that doesn't particularly get my juices flowing. Child finishing masters but has a graduate job lined up.

I don't know if it's the current situation or my employment but I am struggling to drag myself into work everyday and considering a life change, not immediately but when things ease up.

If I retired at the moment I would be able to draw down an income the same as my salary from my SIPP (4% draw down of total fund) I also have a small final salary pension that I can access in less than five years. My SIPP is going great guns despite the economy and I expect my retirement income to be a deal larger than my salary. I realise I am very, very fortunate in circumstances.

My job is okay but my boss is a micromanager, very frugal with salaries for employees and late 70s with little hope of retiring any time to let us just get on with running the company. There is very little in the way of benefits, no sick pay, minimum pension contributions etc. He can be very kind in some ways but I find his drive to make more and more money a bit off putting, especially as he is a multi-millionaire and his children are not interested in taking over the company.

I am tempted to make the leap and would like to spend the remainder of my life pursuing the hobbies and interests that I struggle to have time for. I would also like to invest more time in friendships and take up some voluntary work. I feel that I have spent my life in the service of others ie marriage, childcare, family and would like to make the most of the 'go-go' years.

Ideally I would like to do a couple of days a week in a coffee shop or restaurant. I have a passion for cooking and catering. The rest of the week on my hobbies and interests. My partner is also heading for retirement but probably will wind down gradually as he has a career with lots of benefits. We would be able to travel together but he wouldn't be around all the time during the week.

Should I make the leap? Am I too 'young'?

Yanbu - go for it.
Yabu - you're mad, you'll get bored,

@Cheeseandtomatotoastie

Can anyone think of any negatives for me to consider?

Nope! I'd do it in a flash

Do it. I retired 18 months ago at 58. Zero regrets.

ps, you mention the partner and his many pension benefits but I think you should make financial decisions based on being a single woman.

Does working 3 days a week in a coffee shop still have the same appeal if you split up with him?

I am single and 50 and I wouldn't mind it! Having somewhere you need to be half the week but plenty of time to yourself. It sounds ok to me but I'm used to being single.

Working in coffee shops and restaurants is really hard - do you think you're physically able to do that, when it seems to exhaust people who are 20-30 years younger? It sounds like a bit of a pipe dream, tbh.

I would be able to rehouse myself if my relationship failed. I was intending to downsize if I remained single as the house is too much on my own. No plans to get married at this stage as no need to. We are financially separate and at this stage have similar assets and pensions.

A SIPP is a self invested pension plan. You set it up and choose your investment funds, similar to investing in the stock market, although safest to diversify funds as much as possible.

My final salary pension, which is separate, allows me to take it before the normal retirement age of 67. It is the same amount at 60 as it would be at 67 so no penalties. It's not huge but has grown immensely since I first signed up in the 80s and it is a guaranteed income for life. I know how lucky I am. I tell my daughter all the time to start investing for pension. This generation are not so lucky.

If something went wrong in your relationship would your half of the equity be enough to buy yourself somewhere to live? If so I’d go for it

Can anyone think of any negatives for me to consider?

Yes, it’s one that you raised yourself upthread (sorry).

If your future plans are based on 5% growth in your investments, they are inherently risky. You may have got 16.5% last year (my SIPP also did very well, against the odds) but it would be very optimistic to assume that you’ll continue to see positive growth for the next 25 years.

You don’t say what your salary is or the size of your pension savings, and the only reason I mention this is, in your position I’d probably work for another couple of years to push the value of the pension savings further towards the £1.1m lifetime limit and provide a margin of safety. Giving you the confidence that the well won’t run dry in the future.

As other posters have noted, you can’t do much travelling or anything else at the moment, so why not carry on for a bit? It doesn’t sound as if you actively dislike your work, just that your MD is a bit irritating.

I have experience of catering and working in the restaurant industry so I know how physically tiring it can be to be on your feet all day. Hiking is one of my hobbies so it doesn't frighten me and to be honest my current job has led to weight gain from sitting down. I do believe you have to use it or lose it.

I’m retired, mainly through ill health, and I don’t have enough time to do everything I want to. I’m 55 and sold my business 3 years ago

Personally l would wait until we are out of the woods with the pandemic and then get a little coffee shop job or something.

Op , you say it is fear that stops you doing it. What is the fear ?
No one fails at retiring. You open up opportunities !

My dh has just informed his work of his retirement in April. I will be 60 in the summer, and being self-employed I can mostly retire but still do some work if the bloody pandemic ever ends

Like @Laska2Meryls we have a campervan on our driveway raring to go.

My ongoing self-employed work will keep me engaged socially and intellectually, but we are very conscious that dh doesn't have this option and his nature could see him becoming rather lonely and isolated. He has friends who have also retired and projects to become involved with but he will need something to get him out on a miserable, cold Wednesday morning in November.

In fact that mythical November morning is what we are actively planning for. It's lovely to dream about sunlit afternoons on the beach, or cosy coffees by a fire in a country pub at the end of an autumn walk but what's the motivation when the wind is howling, your friends are sailing in Antigua and you've cooked delicious meals every day for a month? Or maybe that is exactly the moment when you thank your lucky stars and appreciate your time..
Good luck with it all.

No one fails at retiring

With respect, some people do if they haven’t saved enough to make their retirement comfortable.

I completely recognise the struggling to work.

If you are not sure could you go part time? Dropping one or two days would allow you to have more time for hobbies etc. I did 4 days a week from my early 50s, 3 days a week from 55 and retired at 57. This helped to phase me into retirement and enabled me to be sure about retiring.

As pp have said life is short, so go for it.

The only other question I'd ask is whether there is anything which might require a large sum of money that you might regret not having in 10 years time? An apartment in a ski resort, a holiday cottage in the Highlands, a top-end luxury round the world trip, enough capital to set up a donkey sanctuary? Something that you might be able to save for during another year of work that might bring a purpose it working and allow you, next year, to have achieve that aim AND have a secure and comfortable retirement.

YABU. Can you change jobs? Or reduce your hours?

Congratulations on reaching this stage. I'm hoping to be in your position in 4 years (when I'm 55) and I can't wait! There's so much else I'd rather do with my life than work, although I might go part-time first.

The only concern I'd have when living off a SIPP initially is having a big cash pot both in case there is a big dip in the market, and in case you need unexpected work done on your property. My SIPP lost 30% of its value in a few months. It's bounced back but taking 4% drawdown when it's in the doldrums would be taking an unsustainable amount.

So, personally I want at least one year's living expenses in cash in the bank (but probably 2 would be safer).

Best of luck! Enjoy your retirement!

You mention that your SIPP is going great guns at the moment and you’d take 4% based on current value, values are crazy high and the moment considering all that is going on! I would plan on the basis that the markets will take a downturn eventually, historically downturns have lasted 6months - 2.8 years (ave. 14 months). If it were me, I would be looking to keep 2/3 years income in cash so if (when) the market drops you won’t need to eat into your capital by disinvesting to fund living costs. Also with the world how it is at the moment I wouldn’t want to spend the beginning of retirement stressing about the stock markets so would build in a buffer.
I’m not a financial adviser btw just what I would do

@Beenaboutabit snap!

@Iamthewombat, yes that is a consideration. I am not sure how to negate it though. SIPPs are investments, which are inherently risky. I have diversified my investments as much as possible and not invested in the really high risk funds. Even if I hit the LTA, unless I move the investments into 'safe' funds there is still a risk. There are predictions that the bond market, supposed to be the safest, is due for a fall. So what do you do to get rid of the risk completely?

I would take more financial advice before proceeding and would like to have a 'doomsday' scenario laid out - ie what if your SIPP stopped producing, what if you also split up with partner and needed to rehouse, what if he had to stop working through ill health and you had to support you both, etc etc.

And I would definitely wait till things ease up (as you suggested) - even wee jobs in coffee shops are going to be hard to come by for the next few months.

I would also explore part-time work in your current job. And I'd actually think about working P/T for a charity if that floats your boat (although again there's lots of competition for those roles).

And of course understand your NI position.

But if the doomsday scenario plan was good enough, then I'd do it without question.

You can’t get rid of the risk entirely but you can help things along a bit by increasing the size of your buffer. If you worked another 18 months, say, and put most of it away in your pension, you’d protect yourself. I agree that it’s difficult to predict what particular asset classes will do in the medium term, so the best answer is to save more. In my opinion anyway.

Sorry if it sounds like I’m raining on your parade.

you can't get rid of the risk - if it sits in cash (least risk) and inflation goes through the roof, then you're shot in the foot. Your advisor should be able to help talk you through how much risk you're willing to have in your portfolio and then decide on a stance by moving some of the funds around (if that's what you would like) but there will always be some risk

I would also make sure you have an emergency fund put aside for things like house repairs, expensive car repairs etc. so that you know the pension you're drawing is purely to live on

other than that, I'm about 8 years behind you and really hoping to be in the same position as you at the same time!

are you planning on buying an annuity with the remainder of theSIPP or is the money in funds that will generate an income?

The fact that you also have your final salary pension offers you some protection, but I’d investigate the ‘doomsday’ scenario as the PP suggests.

I'd try and secure a job in a cafe first then resign. Just imagine if you couldn't get a job in a cafe, might make you fee a bit flat.