Hi all, am i being daft or is this feasible?

[Dan cuppa]

Hello everyone, and thank you for taking time to read this.

I’m now 48 and have just quit my job.  I’m lucky to have the following in investments and pensions in place.
Current values:
S&S isa £270,000
Cash £70,000
DC pension £170,000(which I may be able to access at 55 or 57, due to government changes)

Future values:
DB pension @ 60 which is due to a pay predicted £21,500.
DB pension @ 62 which is due to a pay predicted £3,300
Db Pension of around £1,300 @ 65
The dbs are all due to rise inline with inflation.

My house is almost paid off.  My core cost with a reasonable standard of living. Just me and my Dog are around £1000 a month.  However,  I’d like to be comfortable spending £1500 a month,  but I’ve always been super cautious, and worry about things like my roof blowing off and silly things that may or may not happen.  So I good emergency fund is something I’d like to have in place.

So rather than carrying on waffling, do the numbers above look sensible enough to maybe do the RE the part of fire?  I’m certainly not against working again, but would like it to be part-time, as I have no appetite for going back to corporate finance again.

I also have a 23yr old daughter that I would like to help out.  But hopefully downsizing my house will be a way of helping her when the time is right.

Good luck to everyone on their journeys to FI

Cuppa

[SpreadsheetMan]

Well, you need a bit over £19k pa allowing for basic rate tax to give you the £1.5k pm. It looks like the numbers stack up given the large DB pension to come at 60 and the others plus state pension soon after. The cash would cover the emergency fund.

Obviously we don’t know what is owed on the house, the completeness of the £1k pm barebones budget and your general spendyness. E.g. do you drive <£10k cars that you keep for 10 years, or do you lease a new £50k merc every 3 years?

[never give up]

Hi Dan cuppa. Well done on getting yourself into such a strong position and on taking the decision to quit.

If the £18k annual spend is accurate then you look to be in a great place. It may be worth defining what helping your daughter out means financially. You’ll know how much outstanding mortgage you have and how much maintenance the place costs.

You certainly don’t need to work full time again. Work part time at something if that’s the best version of your life.

Congratulations again.

[Dan cuppa]

Hi spreadsheetman and ngu, thanks for your replies.

My mortgage is around £12k, which is about £64 a Month.  I’d guess that the house is worth around £370k which is the Zoopla middle value.  I drive a seat Ibiza 2014.  It has about 26k on the clock.  I keep the car for seeing family, my mum is in Worthing which is why I really have a car.

Like I said, I’ve quit my just job, and although i think I should be okay, I guess you never really know what’s around the corner (Covid being a good example).   I would definitely find a part time job, but I’d like it to be something I’d enjoy and wouldn’t want to be presumptuous thinking that would be easy to find.  So that’s why figuring if Re part of fire is doable with my current savings, and how comments help to formulate a plan.

Cheers

Cuppa

[never give up]

You sound as though you have the ability to reduce your expenses by a third if needed in times of market trouble and you have a backup option of downsizing the house. With such a small mortgage and limited car use I think I’d be comfortable with full RE in your position.

[vand]

More than fine with all those DB pensions coming online in a little over a decade. Have't even factored in the state pension..

You are likely to die with much more wealth than when you retired, so I say don't be afraid to loosen the belt a bit!

[Dan cuppa]

Many thanks for your input guys.  Hopefully all should be well, but seeing as I’ve already resigned, I did have a bit of a panic thinking that I may not have enough for full RE (although finding some kind of work is always an option)

It’s nice to get reassurance from like minded people.  Anyway, cheers for reading, and good luck to everyone one on their FI journey.

Cheers

Dan

[PhilB]

You seem to be in a really great position.  What I always like to do when looking at a set of numbers like this is start from the position when absolutely everything is in payment and work backwards from there.

Lets assume that you get your state pension at age 68 and pension access ten years before that.  From age 68 you will have your three DB pensions plus the SP (pay any voluntary NICs needed to get that in full.  That will give you just over £30k a year after tax.  That compares rather nicely with your desired £18k and bare bones £12k budgets.  I'm pretty sure you will be able to avoid afford a second dog.  Probably a few budgies too ;0)

Can you have that £30k budget immediately, or do you have to wait until 67?  There are twelve years until your first DB comes on line so that would mean £360k.  From that point on until your SP kicks in at 68 you would need another £70k to fill the gaps so a total needed of £430k.  You have £340k outside pensions and another £170k in DC pensions - call that £144k after tax so £488k.  That gives you £58k of headroom to pay off the mortgage, any voluntary NICs and a general emergency fund.

How about cashflow?  Assuming pension access at 58 you have 10 years to be funded from outside.  That's £300k and you have £340k available.  Looks pretty good to me!

The bottom line is you are laughing.  You can almost certainly afford to spend £30k a year from here on out with no need for a part time job.  Your daughter gets to inherit your house eventually and you will have guaranteed income so I you don't need to worry too much about spending your capital.  You have won the game.

[PropJoe]

How about cashflow?  Assuming pension access at 58 you have 10 years to be funded from outside.  That's £300k and you have £340k available.  Looks pretty good to me!

Would you switch to cash for this period or some other lower risk investment?
I don't think I would need to rely on returns in the years before taking my DC pension but obviously cash would suffer to inflation.
Although, my current portfolio of ~85% equities seems too risky to maintain over those pre-pension non-working years.

[PhilB]

How about cashflow?  Assuming pension access at 58 you have 10 years to be funded from outside.  That's £300k and you have £340k available.  Looks pretty good to me!

Would you switch to cash for this period or some other lower risk investment?
I don't think I would need to rely on returns in the years before taking my DC pension but obviously cash would suffer to inflation.
Although, my current portfolio of ~85% equities seems too risky to maintain over those pre-pension non-working years.

In OP's position I would probably look to hedge my bets.  I'd hold either the barebones £12k a year or the desired £18k a year in cash to cover the period until the first DB kicks in and then be a bit more adventurous with the rest.  But then I wouldn't be looking to spend all that  capital because Eeyore wouldn't let me!

£18k a year from 48 to 60 is £216k.  That leaves about £270k  with a hopefully sustainable drawdown of another £10k a year so £28k overall, rising from age 62 to eventually reach £40k from 68.  As they can afford to cut back or even stop withdrawals from the equity pot in bad years that would be pretty well bomb proof.

So if it was me I'd say £250k in something pretty high in equities (your 85% would be okay for me) to provide an income in perpetuity and eventually pass on to daughter.  The rest in cash or cash like.  Live on £18k of cash plus interest (accepting you might lose out a bit to inflation) plus say 4% fixed percentage withdrawal of actual portfolio value on the equity pot.

[PropJoe]

Thanks Phil, interesting insight as always. Lots to think about.

[Dan cuppa]

This is all excellent advice and exactly what i was after, so thank you very much PhilB.   Mr Money Moustache has built an brilliant community of like minded people , and i feel very fortunate to have stumbled  across it.

Thanks once again everyone, I feel a lot more reassured then I did a few days ago.

[shackleford]

Assuming pension access at 58 you have 10 years to be funded from outside.

On this, the government consultation paper on raising the pension access age was discussed briefly on here a couple of months ago.  Basically the age will be raised from 55 to 57 from 2028 and there will be protections to 55 put in place for some existing pensions.  The paper also said there's also no current plan to link the DC pension access age to state pension age minus 10.  I would be pretty confident that the OP will be able to access their DC pension(s) from age 57 at the latest (in fact he or she might be old enough that the increase in 2028 might not apply anyway?), and a decent chance at 55.  I absolutely understand the reason for conservative assumptions though!