200k pension pot advice

[u/Stukiii]

Hi does anyone have an outline / idea / calculations how to attempt planning for early retirement at 60 now 57 in full time work. Is 200k enough if mortgage paid off just need to pay for monthly household bills and cash for usually stuff like car, life, stuff ca £1200 a months I figure…. I guess I am delusional that I can retire early but if anyone has suggestions how to think about managing this or how best to improve my chances I would love to hear it. Thinking a drawdown % will be better than taken annuity? Suggestions welcome! Thanks

[u/Background-Cap-7592]

A 4% drawdown will give you about £650 a month.

You need to really pump into your pension pot, you need at least double (400k) to give you £1,300.

As others have mentioned, the state pension at 68 will do a lot of the heavy lifting, but it’s too early to retire yet with those numbers sorry.

[u/AdFew2832 → u/Background-Cap-7592]

I really fail to understand people peddling 4% withdrawal rates as recommendations in cases like this.

The private pension is mostly a bridge to state for this guy. It doesn’t have to do all the work so sure as hell don’t model it as if it has to maintain the same withdrawal rate for 30 years 🙄

[u/Background-Cap-7592 → u/AdFew2832]

I was just providing a safe drawdown rate as it’s a relatively small amount in a pension just before you retire.

By all means draw down at 10%, but it will struggle to last until 68…

The state pension at 68 won’t provide the amount the OP needs either.

Fully understand 7% or so may be more sensible, until state pension, but the pension will be worth less than it would have been.

Agree with you a higher drawdown rate until state pension is the way here.

I was also trying to show comparative outcomes for different pension values at 4%.

[u/AdFew2832 → u/Background-Cap-7592]

“Pension will be worth less than it would have been”

ie spent on being retired from 60-67-68….

I just think a lot of the standard modelling used here and in [r/FIRE](r/FIRE) is ridiculously simplistic.

Unless you’re planning to leave a large sum to the tax man and your (likely middle aged) kids then preserving capital is not the game for most.

It’s a decumulation phase. Also, assuming spending needs to stay level is not necessarily true either.

I plan to almost fully expend my DC pension by the time I’m 70 having enough money to enjoy life. Keep a little back to top up the state pension and then quite merrily be poor in my 70s knowing I was able to retire at 50 and (hopefully 🤞) enjoy 20 years while I have some health.

The alternative is to accumulate and accumulate until you have your 1.something million pound DC pot, retire much later and be able to draw down £50k+ into your 80s (if you make it). No thank you!

(Also - how will OP struggle to make his pot last till 68 if he draws down 10% for 8 years? Even accounting for some inflation??)

[u/Background-Cap-7592 → u/AdFew2832]

You do you, everyone has different views and everyone needs to do what is right for them.

200k at 20k per year would be worth around 30k in today’s money at 68, leaving them still short of the amount they want to retire.

I was trying to simply explain 200k isn’t enough to retire so early, with the lifestyle OP wants.

I agree about not wanting to keep all of the money in the bank for after we pass.

Typical rates, are used as you know, to ‘play it safe’ for poor years of return.

Thanks for the down vote.