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,

@BeastOfBODMAS, I have an ISA and money in a savings account (doing very little!) for instant access. I was considering taking the 25% tax free from the SIPP and moving it somewhere safer to protect it from the markets as well which would give me a lot more than a couple of years income.

To answer other questions, the house is completely renovated so no big bills I can think of. I have also factored in an amount for my daughter to buy when she's ready. I could invest in her first property but that's another story.

Sorry - taking 4% of the current value of the SIPP is unsustainable if the overall value drops. But my point remains- having a cash buffer to see you through the tough times is well worth while and help you sleep better, too.

Has the option of fewer days in your current job something you have considered or explored? I've gone from five to four days a week aged 55, like you with no mortgage anymore.

If you can afford not to work then definitely go for it.I retired at 57(NHS) and have not regretted it.
DH was made redundant at 54 and took the opportunity to take early retirement.We live a comfortable lifestyle with regular holidays(pre Covid)and are generally enjoying having the time to do what we never had time to do when we were working.I won't get my state pension for another 9 years,but in the meantime my NHS pension keeps the finances ticking over.

I’d want to change jobs in your position, but I’d want something more interesting and rewarding than working in a cafe/restaurant.

I’d wait to see which cafes and restaurants are still standing by the end of Covid - not many.

I'd think the only risk factor here is financial. If you've modelled your income and outgoings based on your pension and it all works out, it's got to be a strong proposition !

How about a compromise? Resign, but see it as taking a sabbatical.

Give yourself a year to see how it feels, and if you like it (and finances are still good), then consider yourself properly retired.

If you haven't, I'd definitely get yourself an IFA though, so you can work through various 'what if' scenarios with your finances. It sounds like you know what you're doing, but it doesn't do any harm to have an expert cast their eyes over your plans.

I retired (properly) in June, having worked as a freelancer for a couple of years, albeit a bit half-heartedly towards the end! I realised that although I loved what I did, I had lost any interest in doing it - and so was at risk of not doing a good enough job for my clients.

I can honestly say that I love not being at work. I love not having to set the alarm every morning. I love just being in my own house (which is very fortunate given current circumstances!). I love not being committed to anyone or anything beyond things I've chosen to commit to.

But - and it's a big but - you need to know what you're going to do with your time. At the beginning it's great just knowing you don't have to do anything. But all too soon, the empty days can start to stretch out too much. If you don't currently have any hobbies, this will be a danger for you. For me, it gave me the chance to spend more time on language learning (I've been learning Mandarin for a while now, but never really had the time to commit to it properly). And I've also begun to take up family history - picking up the files that my DF had created before he died.

Physical activity is also important. Covid hasn't made things easy - I used to see a PT twice a week, but with gyms closed that's obviously not possible. When I realised, one day, that apart from getting up to make coffee/lunch and go to the loo, all I'd done was sit on the sofa, I knew I had to do something about that.

Even with these caveats, though, I'd definitely go for it!

I will say that I had fears about retiring. That’s normal for any life changing decision. That I would feel lost after 38 years of continuous full time work, that I would miss the day to day social contact, that my marriage might suffer through being together more - but none of them actually materialised. It’s all good.

Do. It.

Life is too, too short. Give me a year and I'll let you know if I regret it (and I'm two decades from drawing a pension).

I did look into buying an annuity and I have to say you may as well give the money away for the rates offered. The safest pensions are final salary, which are a rarity nowadays, and even those are at risk if the funds aren't fully funded. I have already been advised on my funds in my SIPP and am happy to leave them alone at the moment for the return I am getting.

I am not intending to do anything until things settle down again as I don't expect to walk into any job in the current market. I don't want to go part time in my current job as I don't think it would negate the things that bother me about it.

Thank you everyone for your input. I will make the leap, just depends on when I feel safe enough to do so!

I

@contrmary

You can never be too young to retire, only too old.

Disagree with this 100%!

It's been shown time and time again that working is good for your mental and physical health and people who retire younger tend to have worse health. (unless you are doing a very tough manual job.)

Rather than retire at 55, I'd consider retraining or doing something part time (which I did :) )

I'd take half the step and go p/t in your current role or p/t in a role that protects your assets and pays your bills. Then retire late 50's/ 60 completely.

*It's been shown time and time again that working is good for your mental and physical health and people who retire younger tend to have worse health. (unless you are doing a very tough manual job.)

My mental health has improved vastly since I retired. I’m more comfortable in my own skin and realised that I thrive on peace and quiet.

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.

That's incredibly generous if that's the case!

Usually, it's roughly a 50% decrease if you take a final salary pension 10yrs early and it's not on the grounds of ill health, etc.

I wouldn't hesitate to retire in your circumstances.

My DH has a similar plan for summer 2022, on his 56th birthday. He has 2 SIPPs and until recently also a final salary pension. However he just cashed in the final salary pension of 13k a year at 60 for 635k. He’ll take 25% tax free from this and the other 2 pots and he’ll and draw down 4% a year as income.
It sounds like you are in a good position to retire. The biggest consideration of could you house yourself if your relationship ends you have already addressed.

I retired from my career at 52 and don't regret it for one second.

Whilst we as a society are (or were) living longer, the morbidity stats are depressing and I wanted to have time to do what I wanted to do before I was unable to do it. Just 5 years of active healthy life post state retirement was not long enough. There is no reason why I personally should not have longer than that but no guarantee

Go for it - I wish I could but sadly have no private pension - I am 52 just been made redundant so need to get a full time job but if I were in your position go for it - life too short!

If you are sure that all your ducks are in a row, go for it.

My DH retires in 19 months, we will have his final salary and state and will be on what we are on now, minus the ability to save every month, but then we will have a pot behind us in excess of £150k to invest and spend, plus the same again in inheritance if it doesn't go on nursing care for my mother.

I have not enjoyed good health in the last eight years, (understatement) and I am not confident of making 67, so I will be winding down my hours over the next two years, have already gone from twenty to fifteen and the next step is twelve, then please God eight and then out the door.

The house is also worth just shy of £700k so we could sell that and move if it all went Pete Tong.

Take the working part time in a coffee shop out of the equation, are your finances solid and sustainable ?

If so, go for it, but I personally would wait for it all to blow over.

Do it! You've clearly thought this through very well, you're in a great position to retire now with no negative repercussions for early retirement, your DC is sorted and stable and you can now enjoy the second half of your life knowing you've worked hard to be happy!

And there is always the option to start work again, or volunteer if you get bored. My MIL is retired and volunteers once a week in a garden centre where she's reimbursed for her time with tea and cake from the cafe. I'm a housewife and love the freedom, I've yet to get bored but know I've got the option to get a part time job doing something I love and can leave at any moment if I wish to.

If you still have doubts, perhaps look into a part time job that covers your bills and is still enjoyable, it's never too late for a career change.

Good luck with whatever you choose, OP. The future looks bright for you!

@JinglingHellsBells, that's kind of the plan, doing something a couple of days a week. The coffee shop idea is so that I keep the interaction and routine going. interaction in my current job is limited in that the company is very small and stressful in that I deal with clients problems.

@SofiaMichelle, the financial advisor's advice paid for itself. I didn't know I could take the final salary early at no penalty.

Overall I think it is the financial risk of the SIPP that is holding me back in this. On the minus side, it isn't risk free and markets could drop. They did in April last year but have fully recovered and more but there are no guarantees they won't drop again.

I think the advice given about a 2-3 buffer is worth considering, thanks you for those that advised.I am nearly there in ISA and savings and it would give the SIPP the time to recover medium term if it did hit the skids in the next couple of years.

@Cheeseandtomatotoastie does your SIPP offer phased drawdown e.g can you take your 25% lump sum in stages? Some don’t make you take it all at once. I would look at the tax side, if you live off tax free cash for a number of years, are you not using up your tax free income allowance each year? I wouldn’t have thought a couple of days a week in a cafe would touch the sides.

If you’re near the LTA limit already, why not? I would maximise your ISA allowance if you haven’t already and personally would utilise your ISA savings first before drawing down on your SIPP (assuming you’re not THAT near the LTA limit).

Is there an option to go PT and ease yourself into it? It’s not as if we have restriction free travel for awhile.

Slightly envious that you have possibly reached the LTA in your mid 50’s though.

Two points, OP.

You might want to think whether the 4% drawdown is sustainable beyond the now. Although QE favours asset price inflation, if interest rates are effectively zero, how sustainable is a 4% return? That said, I suppose if returns plumetted, you would return to work until your final salary pension starts?

You seem to somewhat be seeing a binary outcome of current unhappy workplace or retirement though you did mention working in a coffee shop. Perhaps think about where would the 'best' you would work.

Good luck.

I retired as early as my occupational pension scheme allowed. I was earning very good money but of course my income decreased as i was retiring so young. (55) I think i got about half of my final salary plus a chunky lump sum.
However i was spending tons of money just being at work (commuting, lunches, coffees, taxis, boredom spending in various expensive shops at lunchtime - cosmetics, clothes, accessories) so when that stopped I i found I could manage very well even on a reduced income, even before my state pension kicked in.
I had basically burned out and did not regret retirement for one second. But I made detailed plans on how i would spend my time, eg work on my foreign language skills, take painting classes and swimming 4-5 times a week.
All of which I kept up and will resume as soon as lockdown rules allow. Having a plan is key, I think.

If you can afford it go for it