Early Retirement advice

tanith

:xmassign: Helloooo, this may be the first of a few questions that are keeping me from a decent nights sleep..

Its looking increasingly like I may have to retire early due to ill health after 19yrs at my job (we are at present looking into what job they can find that I can manage ) I have my fingers crossed that they will find something even if part-time.

I had a pension forecast and it looks like I will likely get below £70 per week , would I be able to claim anything like job seekers allowance etc as we will still have a mortgage and £70 per week just won't do it ... how much income would my lump sum of around £12,000 generate and would it be wise to pay this off the Mortgage or not.....

I also just realised that I will also be short the next 2yrs till State Pension age
I guess thats going to make a difference as I already expect a reduced pension due to being home with the kids for 18yrs I am 57 by the way.
I would be grateful for any advice

Cheers

tanith

CIS

For your state pension your record will be covered by Home Responsibilities Protection whilst you looked after your kids, this means you shouldn't loose out for that period.

To get an estimate of your state pension contact state pension forecasting on 0845 3000 168, or online at https://www.thepensionservice.gov.uk.

EdInvestor

Hi tanith

Your 12k lump sum would generate about 40 quid a month in income.

Can you tell us more about the mortgage?

Lender
How much still owed
Type of mortgage (repayment, endowment,other?)

Do get a state pension forecast update so you can see if you have enough o live on from when you are 60 with the two pensions plus lump sum .

If so,then it's a question of the best way of bridging the gap until then and paying off the mortgage.

tanith

Thanx for the quick replies. My Mortgage is a Repayment with Nationwide , still owing £35,000 with 10yrs left , I am at present looking to get a better deal as we have just reverted to base rate from a previous deal.. I did get a pension forecast 2yrs ago but need to do it again as won't u know it I cannot find the dang thing..

Would it be an idea to use the lump sum and pay that off the mortgage? at least get the monthly sum down a bit... of course my hubby would increase his share but we would struggle non the less on just his salary...

tanith

ReportInvestor

I'm grateful for your enquiry, tanith, as it showed me how little the Nationwide site currently reveals (usually bad news for the consumer ).

Is your current rate 5.89% ?

tanith

Report Investigator, 5.89% is the rate at the moment

sleepless_saver

Just a couple of thoughts.

If you are not well enough to work, it might be worth finding out about incapacity benefit.

If you take early retirement now will your employer pay the full pension that you would have got at 60 or would you get a higher pension if you didn't claim it till you reach 60?

If the £12000 would be your and your husband's only savings then there would be a case for keeping some of it for emergencies - otherwise it's just a matter of working out whether you save more in interest payments by paying off some of the mortgage with it than you would get by saving it. If it was me I'd pay some of it off but leave at least £25000 on the mortgage because some lenders don't do remortgages for less than that and it sounds like you'd want to remortgage to get a better rate.

Finally (sorry this is turning out to be a bit longwinded) if your state pension will fall a bit short even with the HRP, could you use some of the lump sum to make voluntary contributions to boost it?