Early-retirement wannabe
Comments
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The 10k/yr part seems too low to me.
I lost my job when I was 53. I had plenty of savings, but tried to live on my income, which gradually increased as I bought properties to let. At £300 pm contributory JSA I was having to tap my savings fairly frequently and £400 pm from my first property wasn't ,uch better. With my second property I was getting £900pm - close to £10k per year. That was enough for all my day to day expenses living frugally, but there were still times I had to tap my savings such as getting my car fixed. My mortgage was nearly paid off, I was paying £17pm. It was only with my third property when my income jumped to £1500pm that I could cover everything from income. I could even afford small lucuries such as eating out in other than the cheapest places.
Have you looked at the What's my NUMBER thread?
£10k p/a might sound low, but it's about what I spend on average on top of mortgage and annual rail fare (as I'm living fairly frugally and trying to save for an earlier retirement) I'd hope to be able to comfortably spend a fair bit more than this in reality, but it'd be doable, I think - obviously when my pension(s) kick in, I'd have much more than this to spend (and hopefully still some investment cash) so there is room for flexiblity.0 -
I'm in agreement with "jamesd" concerning the mortgage. The rate is low for me currently (1.49%) so no reason to pay it off early when I could be earning a much better rate with the money elsewhere. If rates rise significantly, I'd consider putting more towards paying this off each month.
At the moment I am on a floating rate deal with Nationwide, simply because they allow you to re-mortgage every single month and get £100 cashback each time for clicking a few buttons - so I'm effectively barely paying any interest at all with this factored in. If they ever change this cashback offer then I'll probably fix for a long(er) term.
Thanks!0 -
Suffolk_lass wrote: »I have a couple of things for you to consider -
I presume you are considering additional pension contributions because your employer will add to them as well as you receiving tax relief on them? If your employer is not contributing I would invest in a SIPP (like your S&S ISA strategy) because you can draw that down without actuarial reduction a little earlier than your CSP, should you need to (for greater flexibility).
The CSP scheme is a DB scheme. An example of my additional contribution options are as follows:
1) For every £6.95 (gross) additional pension, if bought on 1/4/2018 (earliest option date) I would get £1 annual pension from 1/4/2048 (state pension age) onwards (actuarially reduced if taken early). The added pension is index linked from the date I make the payment.
2) If I wait until the year of retirement itself (2048) then every £1 annual pension would cost me £14.94 gross.
So I'm trying to work out how that would compare to either:
a) Putting that £6.95 in a SIPP for 30 years, then purchasing an index-linked annuity with the pot - however large that may be in 30 years time vs my guaranteed index-linked £1 per annum in 2048 from buying added pension.
b) Using the £14.94 in 2048 and purchasing an index-linked annuity.
On the face of it, it looks only a 'good deal' to buy the added pension as late as possible (option b), since it's only costing (just over) twice as much by purchasing it 30 years later and I'd hope to easily more than double my money investing elsewhere over a 30 year time horizon?
Option (b) is basically an index-linked annuity at a rate of 6.7% (1/14.94) which seems fairly decent? I'd be age 68 at this point...
Hopefully this makes some sense?0 -
Now this sounds interesting. Would it be open to anyone who went with a nationwide variable rate? Are there any issues with credit searches or similar?I'm in agreement with "jamesd" concerning the mortgage. The rate is low for me currently (1.49%) so no reason to pay it off early when I could be earning a much better rate with the money elsewhere. If rates rise significantly, I'd consider putting more towards paying this off each month.
At the moment I am on a floating rate deal with Nationwide, simply because they allow you to re-mortgage every single month and get £100 cashback each time for clicking a few buttons - so I'm effectively barely paying any interest at all with this factored in. If they ever change this cashback offer then I'll probably fix for a long(er) term.
Thanks!I think....0 -
£10k p/a might sound low, but it's about what I spend on average on top of mortgage and annual rail fare (as I'm living fairly frugally and trying to save for an earlier retirement) I'd hope to be able to comfortably spend a fair bit more than this in reality, but it'd be doable, I think - obviously when my pension(s) kick in, I'd have much more than this to spend (and hopefully still some investment cash) so there is room for flexiblity.
There are additional costs of not working, e.g. greater electricity/fuel/water costs at home. Not great but you should allow a little.0 -
The CSP scheme is a DB scheme. An example of my additional contribution options are as follows:
1) For every £6.95 (gross) additional pension, if bought on 1/4/2018 (earliest option date) I would get £1 annual pension from 1/4/2048 (state pension age) onwards (actuarially reduced if taken early). The added pension is index linked from the date I make the payment.
2) If I wait until the year of retirement itself (2048) then every £1 annual pension would cost me £14.94 gross.
So I'm trying to work out how that would compare to either:
a) Putting that £6.95 in a SIPP for 30 years, then purchasing an index-linked annuity with the pot - however large that may be in 30 years time vs my guaranteed index-linked £1 per annum in 2048 from buying added pension.
b) Using the £14.94 in 2048 and purchasing an index-linked annuity.
On the face of it, it looks only a 'good deal' to buy the added pension as late as possible (option b), since it's only costing (just over) twice as much by purchasing it 30 years later and I'd hope to easily more than double my money investing elsewhere over a 30 year time horizon?
Option (b) is basically an index-linked annuity at a rate of 6.7% (1/14.94) which seems fairly decent? I'd be age 68 at this point...
Hopefully this makes some sense?
Would it still be £14.94 per £1 by the time we get to 2048 though?
Irrespective of the cost being higher due to inflation, I would think that as public sector DB schemes evolve (to reduce cost to the public purse) the cost per £1 of guaranteed, index linked income will be pushed up.
Buying that £1 pa, and locking it in at today's rates may look like a bargain in 30 years time.0 -
Would it still be £14.94 per £1 by the time we get to 2048 though?
Irrespective of the cost being higher due to inflation, I would think that as public sector DB schemes evolve (to reduce cost to the public purse) the cost per £1 of guaranteed, index linked income will be pushed up.
Buying that £1 pa, and locking it in at today's rates may look like a bargain in 30 years time.
That's a good question and a fair point. That is what is quoted for the Civil Service Alpha pension scheme currently, however they may introduce a new scheme at some point and shift me onto that, at which point I'd presumably have any Alpha Scheme benefits ring-fenced (as has happened with other early CSP schemes, with different retirement ages etc). I don't know whether I'd still be able to purchase the additional pension scheme in Alpha. if I am switched at some point to another scheme (currently the maximum annual pension purchasable is £6,600).0 -
Now this sounds interesting. Would it be open to anyone who went with a nationwide variable rate? Are there any issues with credit searches or similar?
The £100 cashback offer is for when you 'switch' mortgage products (used to be £250!). Initially I got £250 for taking out a mortgage as a 'new customer offer', then I got £250 for switching from the end of my 2 yr fixed deal onto a floating rate deal, then I got another £250 for 'switching' my floating rate deal to the same deal again the following month - then they reduced the cashback to £100 - and I've been getting that each month for the last 6 months or so now...
There's no reference to credit checks that I can see when I log in online to re-mortgage. I did actually phone them up to ask whether there was anything to prevent me continuing to take advantage of this, but they said no. It is a loophole they are aware of (and don't advertise) and not enough people are taking advantage of it for them to finance making a change to the rules etc to stop it.0 -
There are additional costs of not working, e.g. greater electricity/fuel/water costs at home. Not great but you should allow a little.
Yeah, I can appreciate that. There'd also be savings in rail travel on the other hand I guess. Can't say for sure whether I'd be spending more or less, but realistically I'd like to have the opportunity to spend more.
Pretty confident at the moment that if I can get my savings up to £250k+ by age 50 I should be fine to live off that for 10-15 years before needing to start drawing on pensions. Fingers crossed anyway!0 -
Yeah, I can appreciate that. There'd also be savings in rail travel on the other hand I guess. Can't say for sure whether I'd be spending more or less, but realistically I'd like to have the opportunity to spend more.
Pretty confident at the moment that if I can get my savings up to £250k+ by age 50 I should be fine to live off that for 10-15 years before needing to start drawing on pensions. Fingers crossed anyway!
Go for it Ico199
Plans change over time but if you have a goal the details can be amended as you go to fit the circumstances.- My goal was clear retirement on my 55th birthday.
Divorce with pension sharing order then re-marriage and relocation has forced amendments, still retiring at 55, but will need to work until 60 in some capacity to ensure enough funds to tide us over until SP starts when I'm 67. At which point will be enough to live the lifestyle we want.
Still will be early retired at 60/62 if you define SRA as the start of normal retirement age.CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!0
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