Life Situation: wife 42, me 41. One cat, no children. Scotland UK,
Gross Salary/Wages: Wife $20-40k (highly variable, self employed). Me, $0.
Pre-tax deductions: None
Other Ordinary Income: None
Qualified Dividends & Long Term Capital Gains: None
Rental Income, Actual Expenses, and Depreciation: $1400 a year from a field, offset by mortgage interest until recently.
Adjusted Gross Income: None
Taxes: $2800 property taxes. Wife paid about $1500 in income tax for last year. I have about $27k income tax bill due to pay next year based on previous work.
Current expenses: $40k, might tighten to $30k.
Liabilities: None
Assets: $2m between pensions and property.
Notes:
1. None of the assets are liquid so I'm working on that. About $1.2-1.3m is in property, of which I'm awaiting the share from my previous business worth about $120k after tax. Spending this on the property we are in to build a smaller house for us to live (keeping the field and my wife's business premises on the same site) would release about $750k from the sale of the existing house.
2. The main pension worth about $31k with $93k lump sump can be taken in 19 years, or $20k with $70k lump sum in 9 years. The lump sums are not taxable, the annual payments for life are. Whenever I take the pension, the survivor pension would be $15.5k. We are on track for full state pensions in 26 years with value of $23k between us. My wife's pensions amount to about $5k a year to be taken in 18 years.
3. I can do freelance work at $100-200 per hour, and by the weirdness of how my pension works, making some contribution a year gives me an extra 1.5% uplift on top of CPI on my pot. This is worth about $11k a year, just for showing up, but to be allowed to show up needs a credible minimum work of about say 4-8 hours a week over the year (but it can be spread out months apart), and 60 hours a year of associated compliance/paperwork which is more pleasant than the job itself.
4. I have FIREd by default as I left my previous business due to burn out. The freelance work that is readily available is tolerable but not enjoyable. Total assets appear to support, but the $11k a year for minimal overhead suggests I should continue to do some work, even though I don't like the line of work I'm in. The minimum work plus my wife's income would mean we do not need to live off retirement savings. Defined benefit schemes are years away but they all combine by 26 years time to give an income of about $60k, inflation linked.
5. So I should be able to liquidate $750k in the next year or so and invest in lowest cost trackers available in the UK. Will move the maximum $45k a year into tax sheltered ISAs, and use dividend, capital gains and income tax allowances to pay little tax.
Summary: Due to the long time period before defined benefit schemes pay out, we can raise $750k from property to produce income in the meantime. My wife wants to continue working, but is supportive of me not working or doing what I want. I feel I should work because of the $11k a year boost and favourable rates at which I can work. It is golden to have future defined benefits, but seems odd to get my head around how much to work before they kick in.
Questions:
1. How to value minimal work I don't really like but which pays too well to refuse and comes with an $11k a year defined benefit boost from just turning up?
2. Taking my defined benefit at 50 will mean I pay little income tax compared to waiting until 60. The state benefits from 67 are also taxable. The break even point considering taxes is about 80. I figure, take it early at 50 which is when I always intended to retire. I don't need to decide yet, but thoughts?