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,

Contrary to PPs, I don't think using a 4% drawdown rate is particularly aggressive - this is the industry norm and you have a very long time horizon to consider. To maintain this level of growth though, you do need a balanced portfolio with a reasonable allocation to equities - you shouldn't be de-risking substantially and expecting the 4% to remain sustainable. A sensible allocation to cash outside the SIPP for short-term living expenses is prudent, but I also wouldn't hesitate to take the TFC out and/or start drawing your income - markets have had a strong run and no harm in starting to take some gains now to build up the cash balance (IMO).

I would be getting a second opinion on the DB scheme - I have never come across a scheme which allows early retirement for no reason without penalty. That's very unusual - why would the trustees be willing to pay out an additional 7 years' worth of income for nothing. It's possible that the scheme's normal retirement age (NRA) is 60 rather than 67, but that's not the same thing as taking early retirement under the scheme. I think you need to double check this and be sure you understand fully.

@Tartyflette is spot on - there's a huge cost associated with just going to work! Once you're not travelling, buying your lunch, buying coffee on the way in etc your outgoings do drop significantly.

There are no jobs in coffee shops just now so I’d suggest that you base your circs on not finding employment for at least a year. If you have enough money to survive until then fine.

However can you not go part time in your current post or take a different post with less stress within the company? That way you have an income throughout the madness of covid and have an income should you need to pay for something for dc like a deposit on a car or startup business or whatever dc need? And income should you split with the gf so you can get a small mortgage in the future if you split up and need to move.

It seems like your sipp is doing really well. Outperforming many others I think although I’m not an expert. So I’d not want to mess with it tbh!

Don’t get married.

I retired at 43 from a job I quite liked and where I really enjoyed my colleagues’ company. I was worried that I would miss the routine, the sense of purpose, and the company. Instead, I look back on my corporate days with fondness from my new life, which is interesting and fun in a completely different way. We moved far away out to a very rural home as part of this, so I don’t see my old work friends any more or go to the same places we used to. Honestly, it feels like being given a whole other life. I’m as busy as I want to be, though much less so than before. Very glad I did it.

Historically, investments in stock and bond markets rise over the long term.
Of course, past performance is no guarantee of future gains, as all the ads say. But you seem to have experience of investing , certainly enough to know to ride out future bumpy patches, if you take the long term view.

I took a years sabbatical when I was 57 to travel and indulge my passion for theatre. That went very well. I saw more of the world in 2019 than I had in the previous 30 years, and went to over 60 plays so when I was due to go back in February last year I decided to retire instead. Sadly the universe then intervened and my travel/theatre plans are now on hold! I still don't regret the decision though. I do get restless atm but I have time for hobbies and fitness and hopefully I'll be able to resume my travel and theatre again soon.

I retired a few years earlier than I'd initially planned (though not as early as you), and I don't have anywhere near the sort of pension that you will have. But I've not regretted it for a single minute.

The best thing for me is being able to be spontaneous (or it was before Covid!). I love not being tied down to anything. I love being able to get up when I want in the morning. I love being available to my family at last (because they are still at the point where it's really hard to deal with any unexpected problem because they're working full time in totally inflexible jobs similar to the one I had).

I'm probably lazier than you, but I found some volunteer work that brings me all the best of what I enjoyed of my paid work (while being different, so an interesting new field), but none of the commitment or stress.

This is our experience not necessarily a recommendation.
We had this opportunity a few years ago but it would have been tight and a bit of a struggle. We waited another two years, put as much into savings as we could.
Partner had promotion so those final 2 years made a real improvement to savings. We also sorted the house as we were going to move and we changed the car.

Then we retired and relaxed, much more comfortable.
May I suggest you delay until you are more sure of the repercussions of the pandemic.

We are sure that there will be changes to taxation rules in Spring.

[quote BIWI]@Tartyflette is spot on - there's a huge cost associated with just going to work! Once you're not travelling, buying your lunch, buying coffee on the way in etc your outgoings do drop significantly.[/quote]
Yes, as well as saving on petrol, parking and incidentals associated with working, I’m spending a lot less on cosmetics, clothes etc. It’s a joy no longer having to buy clothes and shoes especially for work.

All your comments are in favour of retiring now which is very telling.

If I were you, I might hang on until the pandemic is easing simply on the basis that the things I would like to do are not possible right now.

My final salary pension has an NRA of 60 btw, not 67. 60 was the female retirement age at the time the scheme was designed. The NRA was raised to 65 at a later date but it was possible to retain an NRA of 60 through increased contributions. 'Taking it early' means before 60, it can be taken at any time after 55 but it is reduced if taken between 55-60, pretty significantly.

Do it if you can manage, you could always look for part time as well if you want a change from you current job.
Good luck with whatever you decide .

Hi @sansou, have maximised ISA allowance for last year, waiting for 1st April to put more in. I will hit LTA in around 18 months if the SIPP continues at the current rate of growth. Yes, I know how lucky I am, which makes me feel slightly guilty for some reason as I know how tough it is for a lot of people out there, especially now.

@Zilla1, I am by no means an expert on economics but I don't think anyone can predict the economy with any certainty. It's the risk you take with SIPP investment, same as company pension investments. Regarding work, I feel that I have come to a place in my life where I would like to not have to work for a living. Two days a week doing something physical in a 'foodie' environment, speaking to people who are out enjoying themselves is very appealing to me. Something I can leave behind at the end of the day. I have done this sort of work before when I returned to the workplace and thoroughly enjoyed it. It was the poor salary that led me to seek more gainful employment. If I am retired, the money isn't really an issue.

Cheeseandtomatotoastie I read your post with much interest as I'm 64 and reluctantly feeling I can't soldier on in my social care management job which has been hell on earth during the Covid situation. I have a legal background so I'm thinking of being a self employed McKenzie friend, taking a fairl small case load. I'm not (by the sounds of it) nearly as well off as you, but between us DH and I would have plenty to live on as he has a public sector pension and a small income from a part time job and I have a good state pension (years of SERPS) and a small private one, plus a tiny bit from my current job.
I think fear of change puts us off, limiting our options and changing our lifestyles is difficult to countenance. I'm struggling thinking about yes or no to downsizing, and for me a big issue about whether I get a horse again.
As I'm older than you I have more experience of friends who have done this. My friends who have lots of other interests or a part time job have fared well retiring in their 50's. One has carried on agency nursing for 10 years , just a few weeks here and there, one is an expert on rare breed chickens and has a collection in her large garden that she breeds from. One has a car delivery job, one does a bit of part time van driving just for the company.
Have you looked at the retirement threads on Gransnet? They are quite a contrast to MN and generally very positive. People seem to be very happy on very small amounts of money as unlike the Financial Services advisors advice it is clear that a fulfilling lifestyle can be had on very little income once your mortgage and family commitments are paid off.
My New Year's resolution is to retire at the end of this year, I'll be 8 months shy of my state pension but I don't suppose it will make much difference to my private pot, i could pay the final few contributions out of my savings.
I think everyone should get some financial advice before they take this step, I've no idea about draw down etc. but there is supposed to be a huge resurgance in 2022 in the stockmarket. I moved my fund to a very low risk option a couple of years back and that has grown much better than I was expecting, but I suppose it is always a bit of a gamble. Be cautious but I'd say "Go for it" unless you get strong advice to the contrary.

I am pretty certain of the conditions of my final salary pension, had it looked at a few months ago by an IFA.

I will ride out the current situation as I do realise getting another job, any job may be tough. Unfortunately there isn't any room for movement in my current job as it is an exceedingly small company but I may, as a poster suggested, consider reducing my days until I do retire as an interim measure.

Can I just say a big thank you for the very encouraging and supportive advice I have received today? Also the financial advice. Since divorce I have done a lot of work on understanding finances, which I didn't pay attention to when married, and I think it is vital for anyone to be in charge of their finances. Mumsnet at its best!

I retired at 58 and never looked back. Within a couple of weeks of stopping my full time job, I was wondering how on earth I ever had time to do it in the first place. Given the pension situation, I'd go for it now while you're still young enough to enjoy some quality time in you life.

If you can afford to and you have a plan the question surely is why wouldn’t you!?

I'd do it! But with the caveat that I'd put a clear routine and plan in place for your time, which it sounds like you will.

My parents retired at 55-ish (DM, early retirement due to a health claim) and 65-ish. I think one of the big regrets I have for them is they didn't have a clear enough structure to their retirement years so wasted much of their remaining healthy years doing chores around the house, admin on the computer etc. And because they had endless time on their hands, these tasks took them all day rather than being efficient and boxing them into a few hours a week. Their only real hobby was bridge once a week. By contrast, my in-laws had loads of hobbies having retired around 60-65 - charity work out of the house, golf, cycling, sailing club committee etc. - that gave a real structure to their time and meant they felt they had 'permission' in their downtime to actually relax and do the things they enjoyed like hobbies, reading, etc. I felt they made use of these years so much more pleasurably despite being more 'productive' and busier.

If you can afford to live comfortably on your pension, do it. Enjoy life as much as you can today, for tomorrow is never promised.

[quote Cheeseandtomatotoastie]@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.[/quote]
Bear in mind you may well live to your 90s and need to consider what income you will have in your old age as well as the next 15-20 years.

My advice is you seek out a good independent financial advisor. I did this (with DH) and it was invaluable. Far better than advice on MN!

It sounds as if you are ok with money but my concern or advice is more around how you will spend your time.

It's easy to fill the days with chores, shopping, hobbies etc but maybe you need more than that?

I am still working p/t and am self employed. it gives me flexibility and means I can block out holidays and just not be available for clients.

Maybe if you like cooking, you could set up a business around that? Making special cakes, cookery classes, even running a coffee shop with someone else?

I think most of the replies here are from people who never actually enjoyed work :)

If someone loves their work, or can find other work they enjoy, that for them is as good as retirement. Many professional people can't bear the idea of being retired - look at Judi Dench and a lot of other actors, still going strong in their 80s and the work keeps their brains active.

Retiring is not necessarily a good goal, IMO, what IS a good goal is finding something to do you love and if you can find that and it pays you an income too, that's all to the good.

I think it’s a great plan if you afford it.

Consider if you have any big expenses coming up that you need to factor in (home improvements etc). Could you reduce your outgoings if needed? Have you considered the potential cost of long term care? Would your income drop if one of you died early? How important is it to you to leave some behind when you die?

Also do some research into ‘safe withdrawal rate’. I would say 4% is a little optimistic for such a long time span. It’s often quoted and based on research in the US, where for various reasons a higher net return is expected. To be cautious I’d go for 2.5, 3 or 3.5%. But it’s an individual choice and can always be changed later.

I’m a financial adviser but not knowing your circumstances I can’t give you advice. But do consider the above which might help you answer the question ‘can I afford it?’

ah good, was only asking about the annuity as they are such shocking value at the moment and was wondering what advice you had been given on this!

@Cheeseandtomatotoastie

Can anyone think of any negatives for me to consider?

Given the government has borrowed vast sums to cope with the Covid nightmare, one can only imagine that NI contribution requirement will be increased, retirement age will be delayed still further. I'd hang fire on leaving work till the Covid situation is well under control, to not leave without your part time post to go to, and consider working in the coffee shop situation for more hours such that you do pay NI on what you earn for whatever hours/years is needed. or alternatively, can you just reduce hours in the job you are in? Can you take a day off a week to start with?

If you plan to work I would use (some of) your savings before drawing down on your pension because as I understand it once you start drawing down you cannot pay more in. And if you are working you benefit from the employers contribution and tax contribution.

If you are confident that your pension provision, state pension when it kicks in and savings combined are enough to see you through until your 90s, then go for it, why not?

If you have done your cash flow for things like a new boiler, new car, allowed for a crash in investments at some stage, and are still OK, then do it.

Have you named your offspring as your beneficiary?

Thank you for starting this thread @Cheeseandtomatotoastie - been really helpful to read through.

DH and I have invested in a SSAS, and I always worry that there's not 'quite enough'. However Covid has absolutely decimated our business, so we're at the point of having to retire - particularly as we're in the group who have had no government support whatsoever.

For my peace of mind, we have worked on an annual budget, and run it forward until I'm 85! We should be OK and are ready to make the leap.

In a way Covid has helped, as we have had no option but to stay at home and do little. Really looking forward to things getting back to normal, so we can plan the early years of our retirement with some confidence, rather than having flights constantly cancelled.

Good luck with your decision!