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  • FIRST POST
    • Sj62
    • By Sj62 17th Jul 17, 2:43 PM
    • 54Posts
    • 458Thanks
    Sj62
    Too late to retire early?
    • #1
    • 17th Jul 17, 2:43 PM
    Too late to retire early? 17th Jul 17 at 2:43 PM
    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
    Last edited by Sj62; 17-07-2017 at 9:24 PM. Reason: Noticed mortgage interest rate was wrong - typo
Page 1
    • Sj62
    • By Sj62 17th Jul 17, 2:44 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    • #2
    • 17th Jul 17, 2:44 PM
    • #2
    • 17th Jul 17, 2:44 PM
    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
    • By GunJack 17th Jul 17, 2:58 PM
    • 9,883 Posts
    • 7,362 Thanks
    GunJack
    • #3
    • 17th Jul 17, 2:58 PM
    • #3
    • 17th Jul 17, 2:58 PM
    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...
    ......Gettin' There, Wherever There is......
    • Sj62
    • By Sj62 17th Jul 17, 3:12 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    • #4
    • 17th Jul 17, 3:12 PM
    • #4
    • 17th Jul 17, 3:12 PM
    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
    • By Silvertabby 17th Jul 17, 3:15 PM
    • 1,941 Posts
    • 2,466 Thanks
    Silvertabby
    • #5
    • 17th Jul 17, 3:15 PM
    • #5
    • 17th Jul 17, 3:15 PM
    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
    • By justme111 17th Jul 17, 3:26 PM
    • 2,878 Posts
    • 2,764 Thanks
    justme111
    • #6
    • 17th Jul 17, 3:26 PM
    • #6
    • 17th Jul 17, 3:26 PM
    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
    • By atush 17th Jul 17, 4:39 PM
    • 16,392 Posts
    • 10,143 Thanks
    atush
    • #7
    • 17th Jul 17, 4:39 PM
    • #7
    • 17th Jul 17, 4:39 PM
    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
    • By Sj62 17th Jul 17, 5:11 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    • #8
    • 17th Jul 17, 5:11 PM
    • #8
    • 17th Jul 17, 5:11 PM
    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.
    Originally posted by Silvertabby
    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
    • By Thrugelmir 17th Jul 17, 5:14 PM
    • 56,257 Posts
    • 49,626 Thanks
    Thrugelmir
    • #9
    • 17th Jul 17, 5:14 PM
    • #9
    • 17th Jul 17, 5:14 PM
    Monthly income after tax................ 1516
    Looks low for a salary of £28k. Even allowing for pension contributions.
    ďOpportunities come infrequently. When it rains gold, put out the bucket, not the thimbleĒ
    ― Warren Buffett
    • Sj62
    • By Sj62 17th Jul 17, 5:28 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    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.
    Originally posted by Silvertabby
    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
    • By Sj62 17th Jul 17, 5:29 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    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.
    Originally posted by justme111
    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?
    Last edited by Sj62; 17-07-2017 at 5:44 PM. Reason: Mis read other person's post
    • Sj62
    • By Sj62 17th Jul 17, 5:31 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    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?
    Originally posted by atush
    Thanks atush. My partner doesnít live with me and isnít working right now. While things might improve financially I donít want to count any chickens! Part of my nervousness over this is whole thing is having been hit with a new mortgage in my forties when my ex-husband left and I had to buy out his share of the house. Otherwise my mortgage would have been paid off last year.

    Iím not sure why you advise not to overpay the mortgage? Sorry if Iím being dim but I thought that itís better to get rid of debt before upping savings?

    plus huge apologies for the multiple replies - can't get multiple quotes working!
    • Sj62
    • By Sj62 17th Jul 17, 5:33 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    Looks low for a salary of £28k. Even allowing for pension contributions.
    Originally posted by Thrugelmir
    Thanks. I'll adjust the SOA. It asked for net salary. It includes the AVC, pension, £40 to a Xmas fund and £38 per month for the privilege of parking at work! Hope that makes more sense
    Last edited by Sj62; 17-07-2017 at 5:37 PM. Reason: typos
    • nearlyrich
    • By nearlyrich 17th Jul 17, 5:50 PM
    • 13,336 Posts
    • 16,542 Thanks
    nearlyrich
    What I did when planning to retire early was to attempt to live on the amount I think I will drawdown from savings and pensions I saved the rest into my ISA or my Pension and the last few months into a Santander 123 account which I have been living on since I finished just over a year ago. Some differences as I don't have any DB pensions just a pot that is still growing in spite of being in safe investments and a S & S Isa that has done well over several years.


    I am married so there is another difference and we haven't had a mortgage for around 16 years, but I have 2 now grown up children who I helped through Uni, weddings and cars etc


    I hope the numbers stack up for you I can recommend early retirement
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    • Sj62
    • By Sj62 17th Jul 17, 6:15 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    What I did when planning to retire early was to attempt to live on the amount I think I will drawdown from savings and pensions I saved the rest into my ISA or my Pension and the last few months into a Santander 123 account which I have been living on since I finished just over a year ago. Some differences as I don't have any DB pensions just a pot that is still growing in spite of being in safe investments and a S & S Isa that has done well over several years.


    I am married so there is another difference and we haven't had a mortgage for around 16 years, but I have 2 now grown up children who I helped through Uni, weddings and cars etc


    I hope the numbers stack up for you I can recommend early retirement
    Originally posted by nearlyrich
    Thanks for this. Sorry but don't know all the jargon yet. What is a DB pension? And "drawdown"? I realised that I need to get a better idea of what I'll actually have when I retire. For example, I don't know how much tax I'd have to pay on the pensions. The S & S ISA sounds like a good idea - can I start one at a lowish level until I cut my expenses back more? And am I tied into it for a set length of time?

    Sorry for all the questions!
    • nearlyrich
    • By nearlyrich 17th Jul 17, 7:21 PM
    • 13,336 Posts
    • 16,542 Thanks
    nearlyrich
    Thanks for this. Sorry but don't know all the jargon yet. What is a DB pension? Final salary pension or one where you get a regular payment without buying an annuity I am not an expert on these as I have never been in this type of scheme..And "drawdown"? My pension savings are a pot of money invested which I can take as much or as little as I need now I am 55+ I realised that I need to get a better idea of what I'll actually have when I retire. For example, I don't know how much tax I'd have to pay on the pensions. You should be able to get an idea of the tax payable there are some knowledgeable people on here who may be able to help The S & S ISA sounds like a good idea - can I start one at a lowish level until I cut my expenses back more? I think you can start with a low amount each provider will have their own terms And am I tied into it for a set length of time? Again depends on the terms of the provider

    Sorry for all the questions!
    Originally posted by Sj62
    Don't apologise that's what the board is here for
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    • p00hsticks
    • By p00hsticks 17th Jul 17, 7:25 PM
    • 5,791 Posts
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    p00hsticks
    . What is a DB pension? !
    Originally posted by Sj62
    DB = Defined Benefit - a pension where you receive a proportion of your salary, indexed linked (the other type is DC, defined contribution, where an empoyee and employers contributions are invested as a 'pot' of money that is then used to provide pension income)

    And "drawdown"?
    Originally posted by Sj62
    A means of gradually accessing money in a DC pension pot
    • ERICS MUM
    • By ERICS MUM 17th Jul 17, 7:36 PM
    • 3,435 Posts
    • 6,386 Thanks
    ERICS MUM
    Very basic question - apologies if I've missed it.

    1. Will you use the lump sum of £14,000 to pay off your mortgage £11,999 ?

    2. Have you totted up the costs that will stop when you retire, e.g. Xmas fund, reduction in petrol, parking at work, pension contributions.

    3. When does your AVC mature (if that's the right word).
    • Sj62
    • By Sj62 17th Jul 17, 9:00 PM
    • 54 Posts
    • 458 Thanks
    Sj62
    Thanks NearlyRich and P00hsticks
    Thanks for the definitions. I understand now. My main pension is DB – part final salary, part average as they changed the rules a couple of years ago. Don’t know about the little pension - they gave me an estimated figure so that looks like it’s probably DB – will check with the company.

    Eric's mum
    Thanks for the reply. As per your questions
    1) I’m not sure about using the lump sum to pay off the mortgage. If I can make it till 60 then the mortgage should be paid off – it’s a repayment loan so I’m chipping away at the capital
    2) I haven’t totted up the costs which will stop when I retire and must get onto that. But it reminded me that there are other costs I’d forgotten about like driving to and from work; my union fees and the fact that I often buy lunch when I know I should bring it with me!
    3) The AVC can’t be paid until I take out the main pension. All I can do to adjust it is increase, decrease or cease payments. I had forgotten to put this in the original post – but it’s saying it’ll generate £175 per annum so I think I’ll be taking it as a lump sum!

    So right now I need to work out a proper budget to see where I can trim the fat; add up the work related costs to remove them from the total; increase my AVC and emergency fund and then look into S & S ISAs as I have no idea about them.

    Lots to think about but this is starting to look more manageable
    Last edited by Sj62; 17-07-2017 at 9:09 PM. Reason: typos (arthritic fingers!)
    • AlanP
    • By AlanP 17th Jul 17, 10:01 PM
    • 999 Posts
    • 708 Thanks
    AlanP
    3) The AVC canít be paid until I take out the main pension. All I can do to adjust it is increase, decrease or cease payments. I had forgotten to put this in the original post Ė but itís saying itíll generate £175 per annum so I think Iíll be taking it as a lump sum!

    So right now I need to work out a proper budget to see where I can trim the fat; add up the work related costs to remove them from the total; increase my AVC and emergency fund and then look into S & S ISAs as I have no idea about them.

    Lots to think about but this is starting to look more manageable
    Originally posted by Sj62
    As the AVC is linked with your LGPS scheme you can take all of it tax free as part of your lump sum when the main pension starts to be paid so anything you put into that will add to your overall lump sum at retirement.

    If you could manage to then increasing the AVC contribution would be good as you save the income tax you would have paid on it and then get it out tax free so a simple 25% gain straightaway.

    You might want to check on what the AVC is invested in now that you are within sight of retiring as it makes sense to move to less volatile investments as the date gets closer.#

    You may have chosen one of the options that does this for you automatically - a lifestyling approach is what they generally call it.
    However if you selected "65/66/67" as your planned retirement age then it won't start to automatically "de-risk" for a couple of years yet so might be worth altering the planned age to 60 now.

    Overall your plan does not look unrealistic, it might be tight, but certainly possible.
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