Early retirement???

neelpeel

I'm only 31 so I've got a ways to go yet, but I'm 'hoping' to retire at about 55ish.

I'm just wondering how I would go about it?
I have a final salary pension from 3 years at my previous work and about 6 years of a final salary pension at my current work.
Assuming that I'm still in the same job and final salary scheme when I'm 55, do I just wave a flag in the air then and say 'that's me retiring now please give me my pensions from now on', or do I have to wait until retiring age til I can claim my two pensions or what?

Please excuse what may seem like a silly question, but I've searched the forum and can't find anything discussing the ins and out of actually retiring.

dunstonh

Assuming that I'm still in the same job and final salary scheme when I'm 55, do I just wave a flag in the air then and say 'that's me retiring now please give me my pensions from now on', or do I have to wait until retiring age til I can claim my two pensions or what?

There is no declaration to say that you are moving from employed to retired. Technically, a retired person is unemployed but with another source of income.

However, with a final salary pension scheme, you have to get trustees permission to retire early. Many will allow early retirement of up to 5 years with a significant penalty but any more than that and your chances become less likely. It wouldnt just be a reduced number of years of service but also a penalty against it.

In reality, you would need to be putting aside a significant amount to build up sufficient funds to retire at 55 and it would be worth assuming that your final salary scheme wouldnt kick into age 60 at the earliest (check your scheme booklet which will give some information on early retirement options and costs).

penrhyn

The above is good advise, I took early retirement at 55 but was only able to do it because of a particularly good redundancy scheme which payed off my mortgage.
The Final Salary scheme I was in allowed for retirement from 50, but at that stage only payed 50% of what it would be at 65.
The final salary scheme pension is often based on your best three salary years in the last 5 of your employment.
Also you may wish to make AVC's to top up the pension.

State benefits are presently payable for males at 65, but beware this may change.
You need 44 years of NI contributions to qualify for a full pension, but you get 4 automatic credits between 60 and 65.
To find out about your state pension entitlement and get a pension forecast ring the pensions office at Newcastle, or you can do it online.

http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp

EdInvestor

You really need to accumulate a separate pile of assets which can generate an income to cover the 10 year gap between your planned departure from work and state and company pensions kicking in at say 65, though it might be later.Say an income for 15 years to be safe.

These assets can be in the form of shares, property, cash, whatever. It's probably best to use the ISA tax wrapper for shares , as then you can withdraw all the money whenever you like tax free, unlike with a pension. An investment property might be worth considering, though if you haven't yet bought and paid off your own home, that would be the priority - most people would say owning your own home outright is a basic for early retirement.

al_yrpal

neelpeel wrote:

I'm only 31 so I've got a ways to go yet, but I'm 'hoping' to retire at about 55ish.

Please excuse what may seem like a silly question, but I've searched the forum and can't find anything discussing the ins and out of actually retiring.

If I were you I would keep my options open, and see how you feel when you get to 55. That means working on providing a decent retirement income, and to retire at 55 you will have to work very hard at it indeed. A lot of the early retirees you see today got there by working for soft employers like local authorities, privatised utilities and services, and some years ago, teachers. Its a whole lot harder now.
I suspect a lot of people who think about early retirement in their 30's are in rottern jobs, and they want to escape. Myself I retired at 62 after 15 years running my own business, which was wonderful, but it gradually changed and I got bored. If I had been a wage slave I suspect I would have got fed up much earlier, although I wouldn't have been able to retire financially, which is even worse.
My advice is, if you're in that rottern job, make a career change, get some further education if necessary - you are only 31! Even better, if you have the energy and motivation, get your own business and work for as long as you can. Getting up every morning looking forward to your working day is the way to live life to the full. The social side of work beats the social side of retirement any day.
For me, retirement isn't what I really wanted, I would like to still be in there moving and shaking and with a bit more pace to life. Being a greeter at Asda or B&Q doesnt have quite the same buzz.
Roll on summer.