Too late to retire early?

Sj62 · 17 July 2017 at 5:31PM

atush wrote: »

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?

Thanks atush. My partner doesn’t live with me and isn’t working right now. While things might improve financially I don’t 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.

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

plus huge apologies for the multiple replies - can't get multiple quotes working!

Sj62 · 17 July 2017 at 5:33PM

Thrugelmir wrote: »

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

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

nearlyrich · 17 July 2017 at 5:50PM

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

Sj62 · 17 July 2017 at 6:15PM

nearlyrich wrote: »

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

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 · 17 July 2017 at 7:21PM

Sj62 wrote: »

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!

Don't apologise that's what the board is here for

p00hsticks · 17 July 2017 at 7:25PM

Sj62 wrote: »

. What is a DB pension? !

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)

Sj62 wrote: »

And "drawdown"?

A means of gradually accessing money in a DC pension pot

ERICS_MUM · 17 July 2017 at 7:36PM

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 · 17 July 2017 at 9:00PM

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

AlanP_2 · 17 July 2017 at 10:01PM

Sj62 wrote: »

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

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.

Sj62 · 17 July 2017 at 10:15PM

Thanks AlanP

It's starting to make more sense now. Just before I checked your reply I had increased my AVC contribution online,from £75 to £140 and once I've cut back on some expenses I can put more in. It asked me my planned retirement age and I wasn't sure but ended up putting in 60 so that ties in with what you've said. I didn't start the AVC till 50 so had already chosen a low risk option. I ish I'd started earlier but hindsight being what it is ...

I'm so grateful to have all the advice on this forum. Was really worrying about it all.

Too late to retire early?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free