You spend 30k a year and have a 30k DB pension.
1 - you're FI.
2 - you can say to your company: I can't do the commute any more, I would like to work from home (fully or x days a week or whatever). If they say no, you can say whatever you want - goto 1!
Presumably the OPs partner also has a pension of some description on top. 30k DB pension, 3-4k DC pension, partners pension call it 5k. That's close to 40k, two state pensions gets you to 60k. Along with the cash savings and lump sums, that's more that enough.
Agree that the OP is FI. OP - this means work is now on your terms. Go part time, stop commuting, get a different job at a slower pace or you find more fulfilling.
The number of doctors and dentists I see taking up teaching roles in their 50's is astounding - their old pensions make them FI, they don't really want to stop work, but the demands of the front line isn't worth the bother if you don't need the money. So they find something they can enjoy a few days a week.
Essentially, congratulations and go fuck yourself!
But the main question is impossible for anyone else to answer. You really need to be happy in yourself (slight tangent: I’m just reading about the 6 Factor Model of Psychological Well-being - might be worth having a look as a reference point to see what you need to make you happy etc). Would coast or semi RE be a viable/enjoyable option for you? For me the ultimate question is what will make me happy now and for the rest of my life.
My only words of caution would be that Uni ain’t cheap. I could probably consider winding down in the next couple if years were it not for probably 2x Uni kids (one med, the other possibly Law). Will probably delay my retirement by as much as 5years, but I’m very happy with that.
You might want to have a play around with compound interest calculators to see what you’d get with the pot in x years time and then work out whether it’s worth it for your situation.
If you let it drift the decision is always "one more year" ;-)
Possibly something shock value will help, "how many healthy years do I have left (on average)?"
Having DB coverage takes most or all of the risk away.
- Your average expenses are only up to 6K more than 30K
- Is your DB fully index linked or capped linked (e.g.5% growth cap)?
90+250+70 = ~£400k which gives you cover for another £30k a year until state pension kicks or £15K forever so that's at least £45K a year, before tax, index linked forever.
Stuff your SIPP with 100% of remaining taxable income while you think about it (80% of take home).
Impossible to know since we don’t know how much you spend now, how you are envisioning your lifestyle post RE, or what your intentions are to support your teenager through university.
Is the 30k DB inflation linked?
I would think it’s enough - you’ve got £30k annual income, take another £10-15 from your savings until your state pension kicks in. You’ve got enough savings to contribute to the teenagers uni livings costs.
RE looks quite different when you still have a child at home but if you’ve got plans that fit the income then go for it.
You have nailed it. Fire Away and FU!
I am toying with asking for a career break to practise retirement. Maybe worth considering if your employer allows it.
In that year ask yourself
1 can I afford this? Prob yes
2 do I like this new life? prob yes
3 do I want to go back to work? Prob no!!!
I assume if you take your DB pension now you are retiring before your plans normal retirement age and therefore getting an actuarial reduction if you take it at 55? If so, the only thing I’d have going on in my head is how much more that DB pension will pay me if I deferred taking it for a few
The question maybe more about in what order you access your assets to fund RE in the early years i.e. what’s the £ advantage in delaying accessing that DB pension.
I’m in a similar situation (slightly younger at 50) and my plan is not to take the DB pension until 65, so no actuarial reduction, and use DC pension from 55 to bridge the gap and top up where/if necessary via ISA pot. Basically I will totally exhaust that DC pension over that 10 year period (making sure I leave enough for the tax free allowance each year).
You can afford to RE now but only just and not much wiggle room. If you can get more guaranteed income from the DB pension either by working longer or deferring it, would be worth thinking about.
Yes my DB figure is after an actuarial reduction, and it would increase in value if taken later. I think I can use an modeller tool at the pension site to look into that.
In that case definitely look at deferring taking it, even if that means retiring now but using other pots first to bridge. If your NRA is 65 (or even 60) then deferring the DB pension will make a big difference.
>deferring the DB pension will make a big difference.
Not necessarily; the actuarial reduction reflects the pension been drawn for longer and should come to the same sum over the pensioner's expected life span.
i.e. a £29K pension at 57 and a £32.5K pension at 60 both give the same aggregate income up to age 85.
Yes this is my plan, I'm 42 now, Full DB at 68 (part DB at 60) and am now looking at a DC to plug the gap to make sure I can finish by 60. If it goes really well I might finish before. I should clear my mortgage by 52 so will have extra to chuck at it.
Early comments are asking about spending needs and current cost of living. Guess I'm going to have look more seriously at spending. Probably is somewhere around £2500-£3000 a month between the two of us.
It's looks like you're in a really good position, but you need to nail down your spending. And that's not just monthly expenditure for living costs, but annual things like birthday and Christmas and holidays, plus multi-annual things like new washing machine, replacement car, replacement roof, ever going to replace the kitchen or bathroom?
For example, a 10k car every 5 years, part exchanging your 5k car, adds 83 pounds to your monthly expenditure. Every month.
Do a proper budget, and track what you spend for a while. Perhaps analyse your spend through your bank and credit cards for the last year or two. Try to identify which costs would change when you retire. Some will go down, and some might go up.
Then make additional allowance for the one-off bigger costs, like new cars and home renovations / decorating. And maybe helping your teenager out.
Then sit down with your partner, and decide whether you have enough. You’re certainly close. And figure out if / when you both want to retire.
You are definitely in a great position
You should assume your expenses will be higher so let’s go with £40k a year.
With your pension of £30k and the £90k lump sum you are probably covered for the next 10 years.
Then the state pension comes into play and you also have your DC pension for any shortfalls.
Also your ISA / Cash balance is a great buffer to have.
You will never be this young again so ask your work to allow you to wfh more / full time.
You can afford to retire so it’s no loss to you.
Congrats man
You're financially independent and in the top 5% of retirees so go do something you WANT to do with life not what you've been obliged to do for the last few decades.
Looking through the comments, there's one area that doesn't appear to have been flagged up. Although it's very recently not become an issue, but I presume the full value of your DB pension is £50K+ per annum. Were you not close or exceeding your lifetime allowance until recently?
Iirc lifetime allowance contribution for a DB pension is 20x the per annum value, so £50K x 20 = £1M.
Im sure you'd kept this in mind when you were building up your pension previously anyway.
Yes I was roughly at the pension lifetime allowance - probably breaking it a few months ago, if it still existed. In fact, I'd held off adding to the pension because of that, and have increased contributions somewhat since the change.
I’m always here to give the psychological rather than financial advice. It sounds like it’s a big jump from full time work and child rearing to being retired and it’s not clear from you post that you’ve considered how you’ll be spending your time and how it will impact your finances.
It might be worth getting some therapy to consider this big life change and what it means for you, especially if you have a lot of self worth and social life wrapped around your career and work (would definitely recommend some existential therapy, given that it’s all about what gives life value, purpose and meaning). You can find people by the UKCP website or counselling directory website. I’m always happy to help with this sort of thing if you want to send me a message.
It sounds really smart to start scaling back gradually if you can and seeing how that feels, you might find going part time and working from home more gives you a better balance and you want to continue that for a bit whilst you explore other pastimes or you might think “nah I’m done!”. Does your line of work allow you to officially retire and then come back on a project basis as and when, so you’re in control and could take bigger breaks?
It sounds like short term you’ll also be fairly constrained by the children being at school and maybe wanting to hover close whilst they both settle in to university life. So I wonder how that fits into what you want from retirement. Are you going to be kicking about bored or do you have lots of local things you want to do more of?
I work at a university and only work with the kids that don’t thrive during their time, so worth considering whether your kids might stutter and stumble. Sounds like they are incredibly bright and it can be hard to go form being a big fish in a small pond to being around equally brilliant students. If you are a lawyer/dr and your kids have decided to follow in your footsteps I’ve found that can be a big reason for wanting to change course, especially if you are super proud and excited for them, it can feel like a lot of pressure/a lot to live up to your success).
My dad definitely didn’t think his early retirement through and has been extremely bored and got very depressed at points. They have also run out of money due to not wanting to curtail lifestyle (and massively underestimating his life span) and the huge change in interest rates and stock market fortunes from when they retired (2007/8 - ouch). They are unable to help us financially now which has been psychologically challenging for them as they are much more practical than emotionally supportive parents.
Lots to think about but I’m very excited for you and wish you all the best.
Thanks. You're certainly right that I've concentrated on the financial side of things and need to give more attention to the lifestyle (psychological) factors, including how that affects the rest of the family. All very good advice, I appreciate your comments.
(I also work in a University)
Impressed you’ve made it to 55 in the HE sector, haha. I left, came back, then quickly remembered why I left. Will be a lonnnnng time until I can retire but I’m here for inspiration!
>Any views on how to know what's enough, and when to stop work?
When you've got enough assets to provide the income you want during your retirement at an acceptable level of risk, and you value your time more than the additional money you'd get from continuing to work.
You've given plenty of information about your assets and expected income but nothing about your income needs so it's impossible to know whether it's realistic to expect those assets to support the income you need.
Might be worth speaking to a financial adviser that can do cash flow modelling with you. All questions answered - and give you piece of mind.
There might even be extra (depending on growth rates or market corrections) for you to retire sooner, but again, the cash flow modelling based on your expenses now, and in the future (due to inflation) will help you decide. All factors get taken into account, including wife’s salary and future uni fees.
Also, good to discuss with a professional as they would have helped dozens of people in your situation. It is important also, as others have said, that you actually know what you want to do if you stop work. What will keep you happy/busy etc… but there will be fees for that service - so it’s your call.
You definitely have an excellent foundation 👍🏼👍🏼
What position is your partner in here? If you die, will they be able to collect your DB pension? What is their position like without your contribution? Not clear if your teenager is also their child?
On paper you look to be in a great position to jack work in now or over the next 5 years assuming that's what you want. Probably a question of feathering the nest for your partner and child by working part time or remotely. Maybe sit down and talk it through with your partner before jumping the gun.
Many thanks. Child is both of ours. We are not married, which does affect some of the things that might happen automatically otherwise. My partner is also the kind who **hates** talking about money, wills and death. But of course I'll need to confront. She will have full state pension and a roughly £5k annual pension from age 60, and we mostly combine incomes (but not fully).
It's simple. Do you have a big enough income to sustain your spending is the financial bit, and the life bit is do you have enough planned to keep you happy and fulfilled if you're not working?
The second part is usually tough for high earners / long hour workers / stimulated and enjoy work people, and the first is a bastard for the rest of us.
You spend 30k a year and have a 30k DB pension. 1 - you're FI. 2 - you can say to your company: I can't do the commute any more, I would like to work from home (fully or x days a week or whatever). If they say no, you can say whatever you want - goto 1!
Presumably the OPs partner also has a pension of some description on top. 30k DB pension, 3-4k DC pension, partners pension call it 5k. That's close to 40k, two state pensions gets you to 60k. Along with the cash savings and lump sums, that's more that enough. Agree that the OP is FI. OP - this means work is now on your terms. Go part time, stop commuting, get a different job at a slower pace or you find more fulfilling. The number of doctors and dentists I see taking up teaching roles in their 50's is astounding - their old pensions make them FI, they don't really want to stop work, but the demands of the front line isn't worth the bother if you don't need the money. So they find something they can enjoy a few days a week.
Your comment reminds me that it’s those of us that have the balls to think and act like we’re already Fi, even when we’re not, that get the cream.
Essentially, congratulations and go fuck yourself! But the main question is impossible for anyone else to answer. You really need to be happy in yourself (slight tangent: I’m just reading about the 6 Factor Model of Psychological Well-being - might be worth having a look as a reference point to see what you need to make you happy etc). Would coast or semi RE be a viable/enjoyable option for you? For me the ultimate question is what will make me happy now and for the rest of my life. My only words of caution would be that Uni ain’t cheap. I could probably consider winding down in the next couple if years were it not for probably 2x Uni kids (one med, the other possibly Law). Will probably delay my retirement by as much as 5years, but I’m very happy with that.
Thanks. Yes I must admit it's hard to re-orient from "worker bee" to no job. Will look into ideas and cost/semi etc.
You might want to have a play around with compound interest calculators to see what you’d get with the pot in x years time and then work out whether it’s worth it for your situation.
If you let it drift the decision is always "one more year" ;-) Possibly something shock value will help, "how many healthy years do I have left (on average)?" Having DB coverage takes most or all of the risk away. - Your average expenses are only up to 6K more than 30K - Is your DB fully index linked or capped linked (e.g.5% growth cap)? 90+250+70 = ~£400k which gives you cover for another £30k a year until state pension kicks or £15K forever so that's at least £45K a year, before tax, index linked forever. Stuff your SIPP with 100% of remaining taxable income while you think about it (80% of take home).
>linked Thanks -- DB is 5% capped, but generally index linked. Didn't think that was an issue till this year's inflation.
All good points, I should have said.
Impossible to know since we don’t know how much you spend now, how you are envisioning your lifestyle post RE, or what your intentions are to support your teenager through university. Is the 30k DB inflation linked? I would think it’s enough - you’ve got £30k annual income, take another £10-15 from your savings until your state pension kicks in. You’ve got enough savings to contribute to the teenagers uni livings costs. RE looks quite different when you still have a child at home but if you’ve got plans that fit the income then go for it.
Thanks -- £30k is inflation linked (with an upper limit about 5% I think -- which seemed academic till this year).
Go part time for a year and see how your head copes.
You have nailed it. Fire Away and FU! I am toying with asking for a career break to practise retirement. Maybe worth considering if your employer allows it. In that year ask yourself 1 can I afford this? Prob yes 2 do I like this new life? prob yes 3 do I want to go back to work? Prob no!!!
I assume if you take your DB pension now you are retiring before your plans normal retirement age and therefore getting an actuarial reduction if you take it at 55? If so, the only thing I’d have going on in my head is how much more that DB pension will pay me if I deferred taking it for a few The question maybe more about in what order you access your assets to fund RE in the early years i.e. what’s the £ advantage in delaying accessing that DB pension. I’m in a similar situation (slightly younger at 50) and my plan is not to take the DB pension until 65, so no actuarial reduction, and use DC pension from 55 to bridge the gap and top up where/if necessary via ISA pot. Basically I will totally exhaust that DC pension over that 10 year period (making sure I leave enough for the tax free allowance each year). You can afford to RE now but only just and not much wiggle room. If you can get more guaranteed income from the DB pension either by working longer or deferring it, would be worth thinking about.
Yes my DB figure is after an actuarial reduction, and it would increase in value if taken later. I think I can use an modeller tool at the pension site to look into that.
In that case definitely look at deferring taking it, even if that means retiring now but using other pots first to bridge. If your NRA is 65 (or even 60) then deferring the DB pension will make a big difference.
>deferring the DB pension will make a big difference. Not necessarily; the actuarial reduction reflects the pension been drawn for longer and should come to the same sum over the pensioner's expected life span. i.e. a £29K pension at 57 and a £32.5K pension at 60 both give the same aggregate income up to age 85.
Yes this is my plan, I'm 42 now, Full DB at 68 (part DB at 60) and am now looking at a DC to plug the gap to make sure I can finish by 60. If it goes really well I might finish before. I should clear my mortgage by 52 so will have extra to chuck at it.
Good luck with your plan. Always thank the gods for DB pensions, we are now the fortunate few 🥳
Early comments are asking about spending needs and current cost of living. Guess I'm going to have look more seriously at spending. Probably is somewhere around £2500-£3000 a month between the two of us.
It's looks like you're in a really good position, but you need to nail down your spending. And that's not just monthly expenditure for living costs, but annual things like birthday and Christmas and holidays, plus multi-annual things like new washing machine, replacement car, replacement roof, ever going to replace the kitchen or bathroom? For example, a 10k car every 5 years, part exchanging your 5k car, adds 83 pounds to your monthly expenditure. Every month.
Do a proper budget, and track what you spend for a while. Perhaps analyse your spend through your bank and credit cards for the last year or two. Try to identify which costs would change when you retire. Some will go down, and some might go up. Then make additional allowance for the one-off bigger costs, like new cars and home renovations / decorating. And maybe helping your teenager out. Then sit down with your partner, and decide whether you have enough. You’re certainly close. And figure out if / when you both want to retire.
You are definitely in a great position You should assume your expenses will be higher so let’s go with £40k a year. With your pension of £30k and the £90k lump sum you are probably covered for the next 10 years. Then the state pension comes into play and you also have your DC pension for any shortfalls. Also your ISA / Cash balance is a great buffer to have. You will never be this young again so ask your work to allow you to wfh more / full time. You can afford to retire so it’s no loss to you. Congrats man
You're financially independent and in the top 5% of retirees so go do something you WANT to do with life not what you've been obliged to do for the last few decades.
congrats, manage your health well and be one of those insufferable retirees living life to the fullest in a golden autumn
Looking through the comments, there's one area that doesn't appear to have been flagged up. Although it's very recently not become an issue, but I presume the full value of your DB pension is £50K+ per annum. Were you not close or exceeding your lifetime allowance until recently? Iirc lifetime allowance contribution for a DB pension is 20x the per annum value, so £50K x 20 = £1M. Im sure you'd kept this in mind when you were building up your pension previously anyway.
Yes I was roughly at the pension lifetime allowance - probably breaking it a few months ago, if it still existed. In fact, I'd held off adding to the pension because of that, and have increased contributions somewhat since the change.
Ah good :) you've done amazing anyway. I hope to be where you are when it comes to retiring!
I’m always here to give the psychological rather than financial advice. It sounds like it’s a big jump from full time work and child rearing to being retired and it’s not clear from you post that you’ve considered how you’ll be spending your time and how it will impact your finances. It might be worth getting some therapy to consider this big life change and what it means for you, especially if you have a lot of self worth and social life wrapped around your career and work (would definitely recommend some existential therapy, given that it’s all about what gives life value, purpose and meaning). You can find people by the UKCP website or counselling directory website. I’m always happy to help with this sort of thing if you want to send me a message. It sounds really smart to start scaling back gradually if you can and seeing how that feels, you might find going part time and working from home more gives you a better balance and you want to continue that for a bit whilst you explore other pastimes or you might think “nah I’m done!”. Does your line of work allow you to officially retire and then come back on a project basis as and when, so you’re in control and could take bigger breaks? It sounds like short term you’ll also be fairly constrained by the children being at school and maybe wanting to hover close whilst they both settle in to university life. So I wonder how that fits into what you want from retirement. Are you going to be kicking about bored or do you have lots of local things you want to do more of? I work at a university and only work with the kids that don’t thrive during their time, so worth considering whether your kids might stutter and stumble. Sounds like they are incredibly bright and it can be hard to go form being a big fish in a small pond to being around equally brilliant students. If you are a lawyer/dr and your kids have decided to follow in your footsteps I’ve found that can be a big reason for wanting to change course, especially if you are super proud and excited for them, it can feel like a lot of pressure/a lot to live up to your success). My dad definitely didn’t think his early retirement through and has been extremely bored and got very depressed at points. They have also run out of money due to not wanting to curtail lifestyle (and massively underestimating his life span) and the huge change in interest rates and stock market fortunes from when they retired (2007/8 - ouch). They are unable to help us financially now which has been psychologically challenging for them as they are much more practical than emotionally supportive parents. Lots to think about but I’m very excited for you and wish you all the best.
Thanks. You're certainly right that I've concentrated on the financial side of things and need to give more attention to the lifestyle (psychological) factors, including how that affects the rest of the family. All very good advice, I appreciate your comments. (I also work in a University)
Impressed you’ve made it to 55 in the HE sector, haha. I left, came back, then quickly remembered why I left. Will be a lonnnnng time until I can retire but I’m here for inspiration!
Impossible to say without knowing your spending needs going forward.
Probably is somewhere around £2500-£3000 a month, though some of that is work-related (car + fuel etc).
Will the DB pension increase with inflation? I think you're good then Edit: Just noticed you've answered this elsewhere.
Enjoy FI, take up golf
At the very least, go part time.
>Any views on how to know what's enough, and when to stop work? When you've got enough assets to provide the income you want during your retirement at an acceptable level of risk, and you value your time more than the additional money you'd get from continuing to work. You've given plenty of information about your assets and expected income but nothing about your income needs so it's impossible to know whether it's realistic to expect those assets to support the income you need.
Might be worth speaking to a financial adviser that can do cash flow modelling with you. All questions answered - and give you piece of mind. There might even be extra (depending on growth rates or market corrections) for you to retire sooner, but again, the cash flow modelling based on your expenses now, and in the future (due to inflation) will help you decide. All factors get taken into account, including wife’s salary and future uni fees. Also, good to discuss with a professional as they would have helped dozens of people in your situation. It is important also, as others have said, that you actually know what you want to do if you stop work. What will keep you happy/busy etc… but there will be fees for that service - so it’s your call. You definitely have an excellent foundation 👍🏼👍🏼
What position is your partner in here? If you die, will they be able to collect your DB pension? What is their position like without your contribution? Not clear if your teenager is also their child? On paper you look to be in a great position to jack work in now or over the next 5 years assuming that's what you want. Probably a question of feathering the nest for your partner and child by working part time or remotely. Maybe sit down and talk it through with your partner before jumping the gun.
Many thanks. Child is both of ours. We are not married, which does affect some of the things that might happen automatically otherwise. My partner is also the kind who **hates** talking about money, wills and death. But of course I'll need to confront. She will have full state pension and a roughly £5k annual pension from age 60, and we mostly combine incomes (but not fully).
It's simple. Do you have a big enough income to sustain your spending is the financial bit, and the life bit is do you have enough planned to keep you happy and fulfilled if you're not working? The second part is usually tough for high earners / long hour workers / stimulated and enjoy work people, and the first is a bastard for the rest of us.
What is your current cost of living per year?
>Probably is somewhere around £2500-£3000 a month Though some of that will be work-related costs.
30k DB isnt 30k to spend, tax man still has a say.