51 would like to retire now...

[UkGP51]

Hi I live in the UK and am keen to retire as soon as possible. My husband is convinced we can't afford it.I am a G.P. (family Dr) and am able to take my pension from 50, I am now 51.
If I took my pension now it would be worth £28,000 per year with a lump sum of £90,000 in addition. If I paid no more in it would give me a pension of £41000 and a lump sum of £123000 at age 60. I went half time 20 months ago and as I currently pay in the pension will be worth £50000 at 60 with a lump sum of £150000 if I continue earning the same until 60 (it's actually likely my income will reduce a little).
As I am self employed my takings / monthly income is less than it should be. I have recently reduced monthly drawings from £3100 to £2100 ( perhaps in practice for retirement but also as a huge tax bill meant I was overdrawn re accounts). My husband is a deputy principle and his monthly income is around £3500. These figures are net of superann, national insurance and tax.
We have children aged 18, 16, and 13 and would intend to send all of them to University which will probably cost us £40 to £50000 for each child.
We currently owe £62,000 on our mortgage for a house worth around £500,000. We have decreased the mortgage by £90,000 over the last 10 years.Endowments x 2 are due in 2014 and should pay out around £100000. They should have been worth £135000.
We have 10 rental properties worth about £1,000,000 with mortgages of about £800,000. We currently get a net income of £24000 per year ( only for the last couple of years since rates went right down ) after mortgage payments and expenses and before tax. My husband wants to pay off the mortgages but the additional £800,000 would only give us an additional £28,000 or so income and we would no longer get tax relief on the mortgages / loans. There would be something to be said for reducing the loans a bit as interest rates will not be low forever. I rather thought we might sell one every other year to help fund retirement / university fees etc.
At present we have been ticking over with no debts on a monthly take home income of £6,600 which I have recently reduced to £5,600. I have reduced our mortgage payments from £1200 to £250 and have an ISA savings account I will stop paying in £850 a month for now.
I am also due to get around £100000 profit from surgery property when I retire.
We only have savings of £25000 including stocks / shares at extra money has been invested in property and paying down our mortgage.
Retirement calculators don't really work for UK information. I would be really grateful for any advice / input.

[REWahoo]

Quote:

Originally Posted by UkGP51 Retirement calculators don't really work for UK information.

I'm not sure why FIRECalc (link below) wouldn't work for a UK based retirement. The program allows for different investment and pension options, albeit in $ not £.

[Midpack]

Quote:

Originally Posted by UkGP51 Retirement calculators don't really work for UK information. I would be really grateful for any advice / input.

Welcome to ER.org.

I didn't see anything among your inputs that could not be entered in FIRECalc: A different kind of retirement calculator, though obviously you'd ignore the $ and read the numbers as £. I might have done a run through on your behalf except:

a) you mentioned your current spending, but not what you'd want to plan on in retirement. Assume same? And there are several current expenses that could be applied in several ways, only you can decide which path.
b) not knowing how you would/are investing, but I assume the US historical equity & bond returns might not be applicable, so you'd have to alter those variables to suit your realistic expectations. There are options for returns.
c) you'd have to try the different pension alternatives one at a time, but that would take minutes if not seconds.

Edit: Seems REW and I have cross posted again...

[UkGP51]

Thanks, I hadn't tried fire calc and enjoyed looking at it. I had found a few very complicated on line calculators with lots of different areas to fill and had been overwhelmed. Unfortunately I only have around £25000 in stocks and shares and every time we invest this way it appears to go wrong for us. Our pensions are not stocks and shares but will guarantee a type of index linked increase over time. Other lump sums due over the next 8-10 years are more likely to be used to pay down rental mortgages although these would probably be better invested. I think I'll need a year or two to prove to my husband and myself what we actually need to live on, I don't really have a clear budget as such. I perhaps also need to persuade my husband we don't need to own our rentals outright.

[obgyn65]

Welcome to the forum. Can you use Excel ?

Quote:

Originally Posted by UkGP51 Retirement calculators don't really work for UK information. I would be really grateful for any advice / input.

[pb4uski]

Quicken Lifetime Planner is a very intuitive, easy to use retirement planner and might fill your needs. You would input your pensions, living expense need, investments, rental property income and expenses, university costs, etc. and it would give you an idea as to whether you could make retirement work. It also allows you to look at different scenarios (called what-if).

While Intuit offers some international versions of Quicken, there is not a UK version but I think you could use a US version but simply do everything in GBP rather than USD.

You could do some analysis of your spending the last coupe years to get a notion as to what your living expenses would be, as well as tracking things prospectively.

[UkGP51]

Thanks. I haven't used excel but might be able to learn. I googled quicken retirement and would not be able to try that without paying 59$? By doing that search I found a fairly simple free msn retirement calculator which I filled with some guesstimates, it said if I retired now my funds would run out at age 76. My NHS pension would never run out but my top ups could - rentals / not much additional savings. My main problem really is how to persuade my husband! I would be getting UK retirement pension from about age 68 presuming that does not become income based. My plan would be to use some of lump sums due over the next 8 years to help income / University fees etc while our children are still dependant as I think my pension of £28,000 ($42,000) would be adequate post 60, once our youngest son is 22.

[obgyn65]

Well I would suggest you learn the Excel basics first and then download templates for retirement modeling for you to work with. Good luck.

Quote:

Originally Posted by UkGP51 Thanks. I haven't used excel but might be able to learn. I googled quicken retirement and would not be able to try that without paying 59$? By doing that search I found a fairly simple free msn retirement calculator which I filled with some guesstimates, it said if I retired now my funds would run out at age 76. My NHS pension would never run out but my top ups could - rentals / not much additional savings. My main problem really is how to persuade my husband! I would be getting UK retirement pension from about age 68 presuming that does not become income based. My plan would be to use some of lump sums due over the next 8 years to help income / University fees etc while our children are still dependant as I think my pension of £28,000 ($42,000) would be adequate post 60, once our youngest son is 22.

[bo_knows]

I was going to attempt to run some rough numbers based on what you gave us, but I didn't see a mention of one of the most important number: Expenses. How much do you spend on living expenses, per month/year?

[Midpack]

Quote:

Originally Posted by obgyn65 Well I would suggest you learn the Excel basics first and then download templates for retirement modeling for you to work with. Good luck.

Have you found good examples of retirement modeling templates? That might help the OP?

[UkGP51]

Quote:

Originally Posted by bo_knows I was going to attempt to run some rough numbers based on what you gave us, but I didn't see a mention of one of the most important number: Expenses. How much do you spend on living expenses, per month/year?

Hi and thank you. I am hoping my annual net expenses are around £70,000. I think we would need a gross income of at least £100,000 I think to get that amount. Whilst my husband still works its OK but if he retires at 57 / 58 I think his pension may only be about £20,000?. Last year we had a blowout summer holiday which probably cost around £12000 but we are cutting right back this year.

[obgyn65]

Yes. The Microsoft website has free retirement Excel templates.

Quote:

Originally Posted by Midpack Have you found good examples of retirement modeling templates? That might help the OP?

[nun]

I think you need to carefully write down all your income and then do a detailed budget. It would help if you could organize your post so that the incomes aren't sprinkled through the text.

I'm surprised sending the kids to uni will be as much as 50kGBP.

Max out the ISAs and to do a detailed budget.

[UkGP51]

Quote:

Originally Posted by nun I think you need to carefully write down all your income and then do a detailed budget. It would help if you could organize your post so that the incomes aren't sprinkled through the text. I'm surprised sending the kids to uni will be as much as 50kGBP. Max out the ISAs and to do a detailed budget.

Unfortunatley University fees are now generally £9000 per year, accommodation £100 per week 40 weeks and living costs £75-£100 per week -£17000 per year x 3 = £51000?

Sorry if my post was messy I didn't pre organise it just typed away. Planning to monitor income and budget closely now I have dropped income £1000 per month. Currently I dont have much spare cash to max out ISA's but hoping by October to be back in the black accounts wise and get a balancing uplift then.

[nun]

Quote:

Originally Posted by UkGP51 Unfortunatley University fees are now generally £9000 per year, accommodation £100 per week 40 weeks and living costs £75-£100 per week -£17000 per year x 3 = £51000? Sorry if my post was messy I didn't pre organise it just typed away. Planning to monitor income and budget closely now I have dropped income £1000 per month. Currently I dont have much spare cash to max out ISA's but hoping by October to be back in the black accounts wise and get a balancing uplift then.

Wow things have really changed wrt uni costs. I thought the 9000GBP covered most of the cost. But it highlights the aspect of your ER goal that you have not addressed........budget and LBYM. Do you have to spend the max on uni fees? are there other areas where you can economize. You have plenty of income and resources that you have described, now to ER you must control the outgoings. Given your income levels not to be maxing the ISA is criminal.
I would start by looking at your expenses and cut them enough so you could max out the ISAs. Then next year look at more economies. Also how do you manage the rental properties could you increase the income from those?

[UkGP51]

Quote:

Originally Posted by nun Wow things have really changed wrt uni costs. I thought the 9000GBP covered most of the cost. But it highlights the aspect of your ER goal that you have not addressed........budget and LBYM. Do you have to spend the max on uni fees? are there other areas where you can economize. You have plenty of income and resources that you have described, now to ER you must control the outgoings. Given your income levels not to be maxing the ISA is criminal. I would start by looking at your expenses and cut them enough so you could max out the ISAs. Then next year look at more economies. Also how do you manage the rental properties could you increase the income from those?

Uni costs can partially be covered with loans. £9000 plus £3500 is all we can get. I think we would then pay off as each son gets to an income where they need to start repay. I drive an 8 year old car, we shop mainly at Aldi, I only went to the hairdresser once in the last year. I am sure we can continue to find ways of saving but I don't think apart from the occasional holiday any of our spending is ridiculous. 12 years ago we got 2 £3000 pre isas. They halved in value immediately and have only just become worth £7000. We have put away maximum 1 person isa over the last 22 months but that is still worth less than we are putting in! Hoping to do maximum isas after October this year.
Over the last 10 years we have put about £150000 of our own money into property. £24,000 return on that is ok?

[nun]

Quote:

Originally Posted by UkGP51 Uni costs can partially be covered with loans. £9000 plus £3500 is all we can get. I think we would then pay off as each son gets to an income where they need to start repay. I drive an 8 year old car, we shop mainly at Aldi, I only went to the hairdresser once in the last year. I am sure we can continue to find ways of saving but I don't think apart from the occasional holiday any of our spending is ridiculous. 12 years ago we got 2 £3000 pre isas. They halved in value immediately and have only just become worth £7000. We have put away maximum 1 person isa over the last 22 months but that is still worth less than we are putting in! Hoping to do maximum isas after October this year. Over the last 10 years we have put about £150000 of our own money into property. £24,000 return on that is ok?

A good exercise is to record everything you spend, and I mean everything. There are apps on your phone that are great for that. You have plenty of sources of income and resources and to ER you need to match them to your spending. Also in the UK there are big benefits to be had from reducing your income given the 40% top rate of income tax.

You have a lot of money in pensions and real estate but not much in savings/investments that you can easily access. That you had difficulty paying a large tax bill is a red flag. You need to look at all your income and investments and work out a suitable asset allocation to fund your retirement. Right now I'd say you have the income side well covered with the pensions, but you have far too much locked up in real estate and should diversify into the stock market.

[UkGP51]

Quote:

Originally Posted by nun A good exercise is to record everything you spend, and I mean everything. There are apps on your phone that are great for that. You have plenty of sources of income and resources and to ER you need to match them to your spending. Also in the UK there are big benefits to be had from reducing your income given the 40% top rate of income tax. You have a lot of money in pensions and real estate but not much in savings/investments that you can easily access. That you had difficulty paying a large tax bill is a red flag. You need to look at all your income and investments and work out a suitable asset allocation to fund your retirement. Right now I'd say you have the income side well covered with the pensions, but you have far too much locked up in real estate and should diversify into the stock market.

Thank you all for input. I have been looking at my current expenses and have come up with a suggested retirement budget, my husband is still not convinced at all...
This is what I have told him....

I think I may have come up with a win win budget.
It would allow me to retire early and allow you £1500 - £2000 a month for "stuff" £18000 -£24000 a year.


I know that you would like to pay off the rental houses, I think we could gradually snowball this without needing my full income: Houses income should not be included in annual income. I would only transfer from the rental income account enough to cover expenses leaving a balance for tax and pay down of mortgages.

I am assuming my net income to be £2000 per month it wont be less than this and could be £2500. Your income is nearly £4000 per month net. Our monthly expenses can easily be covered by £4000 per month. Any of my income over £2000 and equivalent from yours can be used for treats / holidays etc. The remaining £1500 or more is fully yours to do whatever you like with.

My lump sum would be invested (100000 approx) in to "savings and investments" and interest could be used as additional income if needed in the short term?. Or It would be ok to use some of this - 4% per year ok drawdown if needed for holidays?.

The mortgage pays off next year. I am expecting £25-£50000 above what is needed to pay off mortgage from endowments and would suggest paying off some of rental house loans with that. Once the mortgage is paid off we save £600 month interest and endowment

Robert at university I am estimating that £100 per week for 40 weeks is generous to help with living expenses - £4000 per year. Our friend says her son gets £75 extra. Currently we give him £40 or so per week. Net cost £2000 per year. We will be saving the mortgage very quickly in to the year. He will take out loans and we will only help him with those once he needs to pay it back.

Once retired I save £100 per month ill health locum insurance and £470 per month practice insurance indemnity and £30 or so BMA.

Once I sell the surgery I will get about another £100000 equity which again can be invested.

The surgery endowment about £150 per month finishes 2018 and will pay out £70000 at that stage I have already paid off the surgery loan and this again could either be invested or used to pay down rental mortgages if snowballing not working well.

Budget currently

Utilities phones etc £800,
Cash for kids/activities £500
Cash for us /meals etc £500
ISA. £250
Mortgage / endow. £600 finishes 2014
Surgery endow. £150
Cars. £125-£250? Expenses no loans
Shopping could do. £450-£600 per month -have been managing this since Xmas

£ 3375-£3650 ( not including my work insurances which will finish if I am not working)

Currently my drawings from work are £2100 but my work expenses are £600 so my retirement income of £2000-£2500 is actually more than this. We have had this lower income for four months now, but have coped on £3100 per month for over eighteen months (again £600 expenses against that).


Hope this all makes sense, thank you for your help again.

[UkGP51]

Hi again,I have recently had a pension update and it was good news, if I retire now I would get £35000 per year and a lump sum of £120000. Fire calc and the financial mentor calculator both show success.


I have recently been diagnosed with cervical stenosis / cervical myopathy. When I went part time 2 years ago it was due to fatigue which I thought was caused by hypermobility syndrome (like fibromyalgia / ***) I hadn't considered medical retirement but in my scheme there are two tiers, unable to do any work and unable to do usual job. My usual job for 26 years was full time and I am now struggling with part time.


My husband still won't believe we have enough money already and is in denial about my diagnosis and thinks I've just got normal ageing / wear and tear, and normal fatigue.


He has given me permission to apply for medical retirement, could take a good few months unfortunately .......

[chris2008]

Sorry about the bad news about your health.

But I am also concerned about this part:

Quote:

Originally Posted by UkGP51 He has given me permission to apply for medical retirement,

Do you really feel that you need his "permission"?
Your numbers show clearly that you will not be under water or expect him to work longer so that you can work less.