Too late to retire early?

Sj62 · 17 July 2017 at 2:43PM

WARNING - VERY LONG POST. SORRY!
Thanks for looking this over. I'm 55 and work for a local authority. My works pension will be paid in full at 67 or a smaller amount at 60+ and I've recently had to drop to a four day week due to health reasons. I'm wondering if I can afford to retire at 60, or will I need to take "flexi retirement" - ie getting the smaller pension and working 17.5 hours? I'm not the best with numbers but I've put a basic SOA on so hopefully that will help.
My current salary (for 4 days) is just under £28,000). Checking the pension website my full pension at 67 would be around £17000 with £14,000 lump sum. At 60 it would be just under £10,000 with a lump sum of around £13000. I also have an old employer's pension maturing at 60 which should bring in around £1400 per year and which would continue to increase if I delay for a while.
SOA
Household Information
Number of adults in household........... 1
Number of children in household.........0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1516
Benefits................................ 190
Other income............................ 0
Total monthly income.................... 1706

Monthly Expense Details
Mortgage................................ 239
Secured/HP loan repayments.............. 0
Council tax............................. 74.16
Electricity............................. 70
Gas..................................... 75
Oil..................................... 0
Water rates............................. 0
Telephone (land line & internet)................... 25.4
Mobile phone............................ 18
TV Licence.............................. 12.12
Satellite/Cable TV...................... 7.99
Groceries etc. ......................... 100
Clothing................................ 20
Petrol/diesel........................... 120
Road tax................................ 0
Car Insurance........................... 86
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15.83
Pet insurance/vet bills................. 0
Buildings insurance..................... 81.17
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 75
Emergency fund.......................... 0
mortgage over payment................... 50
gas cover............................... 21
Total monthly expenses.................. 1145.67

Assets
Cash.................................... 600
House value (Gross)..................... 78000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 84600

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 11999....(229)......2.04
Total secured & HP debts...... 11999.....-.........-

Unsecured Debts
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 1,692
Expenses (including HP & secured debts). 1,040.67
Available for debt repayments........... 651.33
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 651.33

Personal Balance Sheet Summary
Total assets (things you own)........... 84,600
Total HP & Secured debt................. -11,999
Total Unsecured debt.................... -0
Net Assets.............................. 72,601

The figures are as close as I can get. I get DLA (low rate) so that might disappear when they reassess for PIP.
I also pay £75 four weekly before tax to an AVC (I had been paying £150 before I dropped a day at work)
So to maximise my chances of retiring at 60 am I best
a) increasing the AVC
b) increasing the mortgage overpayment
c) a bit of each?
Sorry to make this so long but didn't want to miss anything crucial

Sj62 · 17 July 2017 at 2:44PM

I should add that I'm a long time poster on the board under another name - I just don't want a particular person I know to be able to see my financial information.
And, if you've read through it all, MANY thanks for being so patient!

GunJack · 17 July 2017 at 2:58PM

Some things jump out there:-

1. buildings ins £80-odd a month??
2.gas & elec £140-odd
3. car ins £80-odd
4. mobile £18

I'm sure you could shave a lot off these, making your task easier...I know insurance varies a lot, but those and your utility bills are massive...

Sj62 · 17 July 2017 at 3:12PM

Thanks Gun Jack

The insurance is actually for buildings and contents. I had flood damage last October involving a huge amount of work, lasting months (ceilings, walls and floors downstairs plus furniture, etc) and a big payout so they've increased the payments. It's due to renew in February and I'll shop around then.

Gas & electricity - for the same reason I had no central heating during the winter and had to use electric heaters which built up a deficit. That's increased the monthly cost which I intend to reduce as much as possible and keeping sending them meter readings! Also it's a big house (on a low mortgage and Council Tax band thanks to it being ex-Council) Swings and roundabouts I suppose!

The car insurance is steep as it's an automatic/hybrid but I'm intending to shop around at renewal next month. The petrol cost is quite high but mostly at work so I get mileage back for that.

The mobile cost is actually for two phones. I cover my partner's mobile bills as he isn't working just now.It's SIM only and gives unlimited calls, texts and 8 GB so we never go over the limit. He pays me back when he can. He recently had a heart attack. This way I can make sure he's okay when I'm at work. He doesn't live with me so I haven't included him in the calculations. He contributes to food and does a lot of the repair jobs around the house which is priceless!

Silvertabby · 17 July 2017 at 3:15PM

You say that you have reduced your hours for health reasons. Is it possible that your health could deteriorate further, meaning that you would be eligible for ill health retirement? There are 3 levels - but if you were to be awarded Level 1 (meaning that you have been assessed as unfit for ANY work) then your LGPS pension would be enhanced with notional service up to NRA.

justme111 · 17 July 2017 at 3:26PM

Not sure I am missing something - I do not see an issue with you retiring at 60. Your yearly expense is £13800. Your pension would be £11500. Lives a shortfall of £2300. You will have £14000 of a lump sum - this would cover the shortfall between 60 and SP age. That is without accounting for you continuing to receive more than 2k yearly in DLA, mortgage being paid off ( you have about 12 k left on it which should be paid in a couple of years so your yearly expense would go down) and whatever is/will be in your AVC.

atush · 17 July 2017 at 4:39PM

i would split available cash between pension (AVC or other) and cash savings (600 isnt enough to keep the wolf from your door). Dont overpay the mtg at this time.

Then, once you have 3-6 months outgoings saved in caSH, look at S&S isas alongside the pension or just pension.

You say no one lives with you but then mention a partner. So you dont live together?

Sj62 · 17 July 2017 at 5:11PM

Silvertabby wrote: »

You say that you have reduced your hours for health reasons. Is it possible that your health could deteriorate further, meaning that you would be eligible for ill health retirement? There are 3 levels - but if you were to be awarded Level 1 (meaning that you have been assessed as unfit for ANY work) then your LGPS pension would be enhanced with notional service up to NRA.

Thanks Silvertabby. I hadn't thought of that - I don't really know a lot about early retirement. I'm nervous of retiring before 60 as that's when my mortgage will be paid off. I'm not sure that my employers would offer me ill health retirement as I'm not that unwell (yet?) but it's definitely worth thinking about.
!

Thrugelmir · 17 July 2017 at 5:14PM

Monthly income after tax................ 1516

Looks low for a salary of £28k. Even allowing for pension contributions.

Sj62 · 17 July 2017 at 5:28PM

Silvertabby wrote: »

You say that you have reduced your hours for health reasons. Is it possible that your health could deteriorate further, meaning that you would be eligible for ill health retirement? There are 3 levels - but if you were to be awarded Level 1 (meaning that you have been assessed as unfit for ANY work) then your LGPS pension would be enhanced with notional service up to NRA.

Thanks Silvertabby
I thought I'd replied before but it's disappeared! I wasn't aware of this so I'll look into it. My health probably wouldn't justify retiring early just yet but there's no way of knowing how it will go!

Sj62 · 17 July 2017 at 5:29PM

justme111 wrote: »

Not sure I am missing something - I do not see an issue with you retiring at 60. Your yearly expense is £13800. Your pension would be £11500. Lives a shortfall of £2300. You will have £14000 of a lump sum - this would cover the shortfall between 60 and SP age. That is without accounting for you continuing to receive more than 2k yearly in DLA, mortgage being paid off ( you have about 12 k left on it which should be paid in a couple of years so your yearly expense would go down) and whatever is/will be in your AVC.

Thanks The pension isn't set in stone as I may need to drop some more hours for health reasons. The lump sum is nearer £13000 at 60 years but I hadn’t thought of it in terms of generating income – not up to speed with that yet so will check it out. It just seemed a horribly long way to the state pension at 67. Also the DLA – I’m on low rate mobility and care component which means that when they push me over to PIP I won’t get mobility at all and may not get the lower care component as I might not be deemed to be disabled enough. That’s why I don’t want to count on it. The bank have told me that the mortgage will be paid off at age 60 at the present rate – I was wondering if overpaying more would be the best thing or putting extra into the AVC would be better?

Too late to retire early?

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