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  • FIRST POST
    • Sj62
    • By Sj62 17th Jul 17, 2:43 PM
    • 15Posts
    • 14Thanks
    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 2
    • Sj62
    • By Sj62 17th Jul 17, 10:15 PM
    • 15 Posts
    • 14 Thanks
    Sj62
    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.
    • justme111
    • By justme111 17th Jul 17, 11:05 PM
    • 2,678 Posts
    • 2,596 Thanks
    justme111
    Then why don't you remove mortgage from your future expenses - if you pay it at by 60 you will need a couple of k less a year in retirement so the numbers add up. I did not mean generating income from lump sum , I meant just spreading it over 8 years- it would be about 2 k a year. It would generate something of course but not enough to talk about when we roughly plan.
    • atush
    • By atush 17th Jul 17, 11:09 PM
    • 16,084 Posts
    • 9,793 Thanks
    atush
    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?
    Because unless you have an unusually high mtg (mine is 1%), you ca do better by investing over periods of near 10 years or more. The average return is inflation plus 4-5%.

    The quote function.

    At the top of the box you type in are a bunch of symbols incl B I U etc. The last one, that looks like writing in a text box is the one you click. There is a quote and end quote, post copied quote in between.
    Last edited by atush; 18-07-2017 at 12:14 PM.
  • jamesd
    You appear to be in a funded public sector scheme, meaning that you can transfer to a personal pension. Have you considered doing that and asked for a transfer value to help consider the option?

    See the examples linked from here and the rest of that thread for more on drawdown planning and how to pick a safe withdrawal rate.

    The old employer's pension might also be defined benefit and transferrable. You could perhaps investigate them both. For earliest retirement take the current one and use the old one to provide guaranteed income. For later but still early retirement keep the current one and transfer the old one.

    Whether you might get ill health retirement from the current one is a very major consideration.
    Last edited by jamesd; 17-07-2017 at 11:16 PM.
    • GibbsRule No3
    • By GibbsRule No3 18th Jul 17, 8:30 AM
    • 625 Posts
    • 360 Thanks
    GibbsRule No3
    Benefits £190
    Excuse me being nosy but can I ask what the £190 benefits are for? You put that you are single and don't mention a child, bit like my situation, so wondering if I am missing out on something that I could look into claiming, as you earn more than I do. I know when my SP kicks in I can live comfortably but would like to go earlier if possible rather than stay until 65yrs 9 mths.
    Paddle No 21
    • justme111
    • By justme111 18th Jul 17, 8:45 AM
    • 2,678 Posts
    • 2,596 Thanks
    justme111
    If you read her post she says it is due to health issues .
    • Sj62
    • By Sj62 18th Jul 17, 6:01 PM
    • 15 Posts
    • 14 Thanks
    Sj62
    - “JustMe and atush

    Thanks for clarifying - I'm not the best with numbers so this is really helpful. On different pieces of advice in here I've decided to stop overpaying my mortgage by £50 and put £65 (before tax) onto my AVC (that being roughly £50 after tax) and any other money I can get together will go into an emergency fund then an S&S ISA to build up my capital. That seems to make the most sense but, if not, then please someone put me right?

    JamesD – I thought the DB pension I have is a better option than a private pension because my employer will keep paying into it until I retire?
    GibbsRule – the benefit is DLA (Disability Living Allowance) which I get at the low rate for having several different medical conditions. It’s in the process of being phased out and replaced with PIP (Personal Independence Payment) which I’ll have to apply for and may not get. Neither benefit is means tested.
  • jamesd
    You will only get value added to your DB pension (extra years or higher pay base level) while you are still working there. That stops once you leave employment, as you would if you retired. You would continue to get inflation increases regardless.

    AVCs are often a good choice but sometimes you can't take money out of them unless you also take the main pension. If that applies to yours it would prevent you from taking the AVCs to bridge the gap between retiring and taking the defined benefit pension.

    What a transfer could do is let you retire now, or sooner than with the DB scheme. That's because you can take money from that sort of pension from age 55. The income would probably be lower, depends how high the transfer value is.
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