Can I retire at 61 with 500k pension?

[haveienoughmoney]

There’s a bit of a back story involving the relocation of the company I work for meaning I’d have to commute for 3 hours a day 3 days a week - they will give an allowance to cover some costs for 2 years, after that you’re on your own. They have declined my request for a WFH contract, even though Occupational Health have recommended it, the team I’m in is all remote anyway so there’s little point in my commuting to sit with people who have nothing to do with my role.

So - do I suck it up for 2 years and then retire at 63 or do I go now? My pension pot (DC) is just under 500k which sounds like an awful lot of money, but it could have to last until I’m 90+!

My intention in retirement is to sell my house for about 370k - no mortgage - and move closer to my sons in North Yorkshire where I’d be looking to buy for about 300k. This would enable me to upsize! - I have a tiny but very pretty cottage in Hampshire, I’d be looking to buy a 3 bed town house up North.

I’d value some opinions as once I’ve made the decision there’s no turning back. For what it’s worth I don’t particularly enjoy the job now that we have new owners, both my sons are keen for me to move nearer to them. I really like the area where I’d be looking to buy so if my boys moved away (I don’t think they will, but who knows)? - I think I’d be happy there.

I’m not a big spender and am happy with a reasonably simple life, I need to maintain a decent 2nd hand car, I’d like a few European trips and some meals out.

All thoughts welcome and thank you!

You need to seek advice from a financial advisor and get some projections.

Save some of that £500k for a tin hat, the last OPs with similar pension conundrums needed one…

You should contact a financial advisor and/or the pensions advisory, it's a free government service. www.moneyhelper.org.uk/en/contact-us/pensions-guidance

Also you could pick up work in the new area potentially or find a new job?

I’m not an expert but it seems a lot to me. You will have the state pension alongside your private in a couple of years as well. You could also consider looking for some part time work to meet people 8n a new area as much as anything.

You don’t say how old your sons are or if they have families of their own. Do you want to upsize your house so you can have guests stay? You are already gaining £70k you could gain more by buying a cheaper house.

Life is short, I would retire as you have the option to do so and enjoy spending time with your sons. Many don’t have the option to retire, or only have state pension/a very little pension pot.

I know nothing, but 61 is still young, presumably you could retire, move then start working again part time in the new area if you wanted to?

I’m open to looking for a new job when I relocate - part time would be good and would allow me to wind down gradually. In reality, women over 60 are pretty invisible in the workforce - a good friend of mine with years of experience in her field has been trying for over a year to find a new job and doesn’t even make it to interview.

Not sure why you want to upsize if you are going to be on your own? Presumably you could get something smaller and the price differential could be added to your pension?

What kind of annuity would that buy you OP? If it’s enough to live on mortgage free then go for it. As pp say you’d maybe be able to pick up some hours work as well.

I wouldn't buy a town house, all those stairs in later life.

I think it's doable. Speak to an IFA to help give you a full picture of what your retirement will look like. You may have the option to move your pension etc.

Step one is to work out what you want/need to live on.
Then think about how much risk you’re happy with (you’ll generally get a higher income from drawdown than from an annuity but it’s not guaranteed and means staying invested).
I would have a look at a few drawdown calculators to get an idea, then probably speak to an FA. But yes, £500k pension pot plus another £70k plus state pension in a few years should certainly be doable.

Town houses have a LOT of stairs, don't they? It wouldn't be my ideal retirement home.

I agree about the town house, will you want to move again?

Re the house - ‘upsizing’ is the wrong word really. Just that the difference in house prices would mean I could buy a bigger house up north which would allow my sons to stay over with their families (no grandchildren yet but both boys are getting married next year and I know they both intend to start families sooner rather than later. Not always a given of course). I certainly don’t want (or need) a 4 bed detached, but my present house, although very pretty, is about 650 square feet and I would like something a little bigger.

Nobody can answer this for you, because there’s no magic formula that will include money + years + estimated investment / interest rates + your attitude to risk + your attitude to retiring vs money.

£500K.

Take 25% tax free lump sum = £125K
Easily enough to cover 61-67 until state pension. (reinvested after withdrawal into ISAs to hopefully increase it, but at least
No reason to assume you don’t have full state pension?
So then you’ve got £9K pa to be topped up by your £375K. Assuming a 3% safe withdrawal rate (so capital isn’t touch, you withdraw the investment growth) and that’s £11,250. So there’s £20K pa (though subject to tax)

As a back up you have:

• the possibility to downsize again (or downsize more to start with)
• think about buying somewhere AirBnB room friendly
• the £70K slush fund from your original sale

Now I’m not saying any of that is the BEST way to do it! But looking at that, personally if I liked my job - no. If I didn’t like my job - yes.

I’d also want to know what this interim payment is - if it’s really generous and I decide upon one more year of working to stuff my pension full - then maybe I’d stick out another year.

You easily have enough to retire now.
But only if you’re happy with the number.
And that’s the bit no-one else can tell you!

IFA will tell you the best way to do it… but they still can’t make the “jump” decision for you!

Agree, you need to know how much income you want for the lifestyle you want and then get some quotes. I don’t think you’ll get much of an annuity with that at your age and being female. Maybe £15-20k

I would go for it. You’re mortgage free with a decent pension amount & state pension to come. Life is short, you don’t know what’s around the corner.

There’s a really helpful pension forum on moneysavingexpert.com. They could probably help you more with your numbers.

What’s your current salary? Does that give you the lifestyle you want/do you save from that?

‘Town house’ wrong word, mean ‘in town’ so I could walk to shops, theatre etc - I’m rural at the moment and have to drive everywhere! No, certainly don’t want 3 flights of stairs, not ready for a bungalow or retirement flat yet but would want eventual new house to be a long term buy.

As you can 'upsize' would you think about buying a place with an Airbnb type of studio in the garden or similar? Or a separate annexe that you could rent out to a lodger? In your place I would give up my job and enjoy life.

Don’t retire. Try to find a job where you move - even it it’s low paid it will help you add to your savings (suggest putting any spare money into an ISA)

I'd get a part time job doing something completely different - keeps life active and interesting.

Sounds fab, go for it. Nobody knows how long we’ve got left 🤷🏼‍♀️

Sounds like you're in a really good position OP. 300k will buy an amazing house. Two more years of work will not add anything significant to your pension pot in any case, would it?

I'd go for it if I were you. The property market might be about to change dramatically so if you're wanting to get a good price for your current home now might be the time.