I’m of the view, that lots of people who don’t like work, work for longer than they need to, because of fear and a lack of knowledge about what they will need/will have in retirement.
You need to work out what you will need to live per year. This is your NUMBER. You have to look at your spending very carefully from the last normal years and see how much that is, factoring in essentials and the lifestyle you want. A recent study said a single person on average needed just under £20k for a decent retirement to include some holidays, assuming they had no mortgage or rent. It is different for everyone though, but often less than people think because huge chunks won’t be going on pension contributions, NI and far less on tax, as well as no mortgage payments, if you’re still paying but close to finishing.
Then the key is to work out what your pot will deliver. You can have an annuity which is using the pit to buy a guaranteed income for life. This is what people used to do but fewer do now. These can be index linked so inflation proofed. In my mind, £30k buys about £1k of annuity. So I don’t think you’d get a £30k annuity, which someone mentioned unthread, but more like £17k. But you will get the £9.5k state pension later. Remember, the earlier you buy an annuity, the more expensive it is, becaue it has to pay out for longer.
Or you can do draw down as mentioned. You can take a chunk out to bridge the gap to state retirement, giving you £20k per year, and then drawn down a smaller amount per year of what is left, because you’ll be getting the £9.5k.
With an extra £15k you could receive to go, and any savings you already have, I think it’s not beyond the realms of possibility for you at all, assuming you’re not looking for a grandiose retirement.
Yes to seeing an advisor to crunch the numbers, but definitely start working out how much you need to live.
If you can go, I would. No e if kniw how much time we have left and our older years are likely to be the less healthy ones. I’m seeing our parents in late 70s starting to get frail now. Fortunately they retired in their 50s, so managed 20 years of active and brilliant retirement. If they’d waited until 67, they would have been lucky to get 10 years of active retirement in. Yes, they’d have a bit more money, but to be honest, the years of being able to spend it would be behind them. Live for now, when you can and stop work if you can afford to.
We all hear if people who die in their later 60s, or who are incapacitated in their early 70s. We hope it’s not us, but if it is and we could have had an enjoyable retirement before that, but instead chose to keep working to boost the pot, when it was already big enough, I think we and our families looking on would be sorry about our choices. We can never know how much time there is, so unless you are loving your work and prefer it as an option to not working, if you’re over 60 and can afford to stop, I certainly would. For anyone else reading, I’d also be look g seriously at this too if I were over 55 and could afford it.
So many people have no choice as they can’t afford to stop work, well, that’s the situation they find themselves in. But also, lots have a good pension pot or a good defined benefit pension which will give a guaranteed pay out, and often there are ways to make an early retirement work. It’s often a case ofworking back from state retirement age when the extra £9.5k will pay out, and finding ways to plug the gap to then. If you’re looking at plugging a gap of 5 or 7 or 12 years, chunks of money can do that for lots of people, and then from 67 they can take significantly less per year. Those calculations can be very liberating.