Page 3 of 3

Re: Forced to Consider Retirement at 50

Posted: November 5th, 2020, 10:59 am
by tjh290633
AWOL wrote:Do I need to do some sort of present value adjustment though? It seams to me that money now has a value over future money as it can be put to work and regardless of what I do with it, getting it gives me optionality. This is where my thinking is a bit bogged down at the moment.

This is where you have to make some sort of adjustment for inflation. However, it affects both cases equally as far as I can see, so working on a level basis should give you the answer that you need (I am assuming that both pensions, paid or preserved, will be adjusted by the same factor each year).


Re: Forced to Consider Retirement at 50

Posted: November 5th, 2020, 1:42 pm
by Chrysalis
I’d say the biggest risk to your plans is the expense of the family. £5k for a holiday doesn’t seem very much if you have children to pay for, tied to peak season and once they are 12 or so they cost the same as adults. Also all the extra curriculars. Next most difficult issue, not unrelated, is deciding how much frontloading of withdrawals is possible - of course the more you withdraw early the more risk there is of running out. The less you withdraw the greater the risk of compromising yours and families lifestyle (spending less than you could) and ending up with surplus in your 80s.

Otherwise it looks good. Without doing any fancy modelling I’d say taking the DB early is probably a good plan. Preserving investments for the longer term is likely to help with inflation proofing.

Regarding pooled finances, I accept that’s something you are reluctant to change and I understand not wanting to feel dependent. However, from a purely financial point of view, it is far more efficient to plan as a single unit (even if accounts and assets are largely kept separately, that’s just a practical detail if you are planning together). It does require a shift in mindset to transcend feelings of dependence, and this is something that comes about gradually in my experience. I’m no longer earning enough to cover ‘my’ spending, for the first time under-earning my spouse, but I don’t feel ‘dependent’ because in my mind it is all one pot jointly owned (and I have certainly made a good contribution to it). If I had to label it ‘his and hers’ it would just be split down the middle.

I am also confident that you will find some paid work, if you want it, especially if you develop new interests and skills.

Re: Forced to Consider Retirement at 50

Posted: November 5th, 2020, 10:46 pm
My current thinking is that taking the DB pension at 55 seams surprisingly good value and provides some leveling of income without messing with the investments. Of course if I use it to increase my expenditure from 55-60 then I pay the price of a lower income later but given my profile of income I think that's okay.

There is also the possibility that I have a shorter than average life span, or a debilitating condition, and in that case at least I have lived while my health is good.

Curiously looking at my lump sum options I find that they have used a commutation factor of 24.6 at 55 and 21.7 at 60. Is this quite generous?

My AVCs are modest and will give me 15% tax free without commutation but I suspect even with the above CF I probably wont want to reduce my guaranteed income any further than it will be by taking it at 55.