How much is enough?

[tiredofthisshit21]

I'm 56 and feel like I'm done with work. Fairly high pressure job in financial services. I've completely lost all enthusiasm and finding it hard carrying on. Here's my financials:

£410k pension pot (DC)
£5k pa DB from age 60
£100k in ISAs
Tax free lump sum would pay off mortgage with some left over, house with about £500k.

Husband still working and will do for a couple more years. He earns well and could probably subsidise me a bit (we don't have combined finances). Our main expense is holidays but we would cut back a bit.

Would you retire now if your financial situation looked like this?

Sounds amazing.

Write down all your spending and keep a record. Add it up and times by 25. That’s the size of pot you need

You can’t buy time or health, go for it.

Thanks, 35 years working, I’ve earned it and benefitted from good financial advise and the rising markets / compounding

That takes no account of continued investment income though, or state pension.

I think I need a spreadsheet.

So combine finances now its of a benefit to the OP ?

Surely if you have separate finances now, then finances should be separate in future too, seems unfair on husband he now has to start thinking about subsidising her.

No one would be suggesting combing now if genders were flipped.

@tiredofthisshit21yes you need a spreadsheet

I didn't say because it's of benefit to the OP. I said because there is no point in retirement one having more than the other.

My pension is bigger than my DH's. If we went 50/50 on bills / meals out / holidays, I would have a lot left over as we would have to align with his (lower) income. I would much rather we chose a holiday based on our total income, not the lowest.

You can tip the balance of who spends what according to income without completely sharing finances though. We already do this to some extent as he earns more than me.

I wouldn't retire so early with that pension amount no. You will need 25 a year for the next 4 years out of your dc pension, the 20 after that. With your pot size, that seems unlikely to last if you live to an average age, let alone the possibility of living well into your 90's. Are you even sure it can definitely be accessed yet? It would normally be available 10 years before state pension age.

Have you considered dropping to part time in a much less stress job? I fully plan on doing 3 days a week in a garden centre once the mortgage is paid off, although that won't be for many years.

@HarryVanderspeigle yes I can definitely access, current rules are 55.

I've thought about PT low stress work but those types of jobs are more difficult to come by than you'd think.

Good job you’re not a pension advisor.

BTW moneyhelper is crap, I looked today. Doesn't allow you to draw from several pots and forecast impact of state pension like guiide does. Guiide reckons I'll never run out of money but I'm not sure if I believe it.

You need to go into this in more detail- look at what you'll need in each year (taking account of when your DB pension kicks in and when you will receive SP). You can fairly easily create a spreadsheet setting out what you'll need to take from your investments in each year and modelling different net rates of investment return.

You're right about staying invested but you also need to think about what you are invested in- the key thing in retirement is to have enough safe assets (such as short term gilts) that you're unlikely to have to sell shares when the market is down. So you might keep eg 3 years' income (at the very least- some would want much more) in short term gilts (or cash or similar) and the rest in equities. Also key is that your model includes realistic figures for inflation.

PP's suggestion of 25x income needs is right but obviously doesn't take account of the fact that your income needs will change over time (with DB and SP). It does however take account of investment growth- 4% is generally considered the safe withdrawal rate for a 30y retirement (ie you can take 4% of your pot in year 1, then each following year take the same amount in real terms- a higher amount each year in nominal terms). (People always think this is very low but that's because they ignore inflation and the fact we're currently in a very long-running bull market- at some point this will end- you take out less than your investments are growing in the good times to ensure that you're not screwed in the bad times.)

Guiide is pretty good. I find setting up your own spreadsheet is really helpful alongside though as it focuses the mind on the various assumptions you are making about inflation and investment performance.

How much is left on your mortgage. I wouldn’t leave until it’s paid off.

not read the whole thread...

But James Shack's video's on YouTube are good.

DH is in finance and thinks they're ok too.

A tax tip for the early years of draw down before state pension age. You can take some of it as taxable income to make sure you use up your nil rate band before taking tax free cash. Dont forget to include you DB annual payment after 60 as that will be taxable. I definitely feel a spreadsheet is needed for this.

Good tip, didn't think of that - thanks.

Guiide suggests you take the 12,750 tax free and top up with ISA money til that runs out.