Early-retirement wannabe

green_man

First post here so be gentle.

I read the first 13 pages of this thread and then skipped to the end and I have read the last page (good to see marine_life still posting). I'm very interested in this subject. Though Marine_life's (and others) situations bear no relation to my own (and I would say 99.9% of the population), and I wait with interest to see if he can actually go through with the plan.

My own situation is somewhat more modest (though again I suspect I am in a better position than most).

I am 48 fed up with my job and looking to retire as soon as I can be confident that I can afford it. My OH can draw her public sector pension in 18 months and I have calculated I need £1500 a month from my side for us to be comfortable.

I have a company DC pot currently around £400K which is having £2000 per month added (mine and employer contributions). This is invested in a 60:40 UK:World equity fund with very low charges. In addition I have Savings (part ISA part just standard saving accounts) of £208K.
In addition I have another DC pension pot of approx £85K that I don't think I can access until I am 63 (or maybe even State retirement age) - I will have to clarify this.

What I am hoping to do is retire when I am 50 ( or sooner if any voluntary redundancies going), which will align with us paying off the mortgage. I will use my saving to cover 50-55 then start drawing down my pension pot.
My plan would be to take £12.5K from the pot each year which should all be pretty much tax free and top that up with my savings.

Any comments/advice/concerns would be welcomed.

atush

If your wife is taking her DB pension early, reduced, open a DC pension for her.

She can whack as much in a possible in the next 18 months then Maybe- she could take the pension a year later and it would be worth more? Ie be reduced less?

Marine_life

kangoora wrote: »

I have to applaud some of these recent posts, it's where I am at the moment. I used to really enjoy my job, didn't mind putting in 50-70 hour weeks when the job needed it (without overtime), even occasionally for some fairly extended periods.

Now, performance management is total BS, your manager recommends you a grade, everybodies grades go to some senior team where they all get levelled. I get on well with my director and I know he has to fit a profile of "requires development", works ok and "is excellent" in his team. I have NEVER heard of anyone being levelled UP, so levelling should be termed the "downgrading process"

Getting corporate BS emails every quarter saying we are doing well but everyone needs to do better starts to get demoralising. Entire teams getting outsourced to India, there's some good people over there but there's also a huge amount of jobsworth working off a script who speak barely legible English. Everything I request needs to be chased or it doesn't get done because everybody is feeling overloaded and I'm tired of fighting my way through corporate treacle to get even the simplest things done.

Honestly I could have written that.

We have a system which rates everyone on a grade of 1-5 with 5 being the best. But the performance management system dictates that we also have to follow a bell curve i.e. that only a certain number of people in grade 4 or 5 etc. So you can exceed your goals but still not make the higher grade.

But actually its irrelevant anyway because there is very little connection between pay and achievement of goals. The firm has decided I am overpaid and despite hitting / exceeding my targets, being promoted and being graded above average my pay has only crept up over the last few years. This is actually an age thing but of course the firm would never admit that. They know they need to keep the younger guys happy (otherwise they will leave) so they stiff us old boys.

I have issued a formal complaint in each of the last two years but of course with no result.

So this year I refused to submit any goals or be subject to an annual review because I (and everyone else) knows the system is BS. We will see if I get marked down because of that - i suspect I will.

ermine

green_man wrote: »

[...] I have calculated I need £1500 a month from my side for us to be comfortable.

I have a company DC pot currently around £400K which is having £2000 per month added (mine and employer contributions). This is invested in a 60:40 UK:World equity fund with very low charges. In addition I have Savings (part ISA part just standard saving accounts) of £208K.
In addition I have another DC pension pot of approx £85K that I don't think I can access until I am 63 (or maybe even State retirement age) - I will have to clarify this.

What I am hoping to do is retire when I am 50 ( or sooner if any voluntary redundancies going), which will align with us paying off the mortgage. I will use my saving to cover 50-55 then start drawing down my pension pot.
My plan would be to take £12.5K from the pot each year which should all be pretty much tax free and top that up with my savings.

Any comments/advice/concerns would be welcomed.

So you have savings of 608k ignoring the 85k, at a 4% SWR (ie divide by 25) you would have £24k a year or 2k p.c.m. It's not clear how much your mortgage is, if it's 300k then that makes things very different. Obviously tax would take a bite of this, the maybe you need to get the non-pension stuff ISA sheltered ASAP between you and your wife. That way any income it throws off isn't taxable income, which is good for your pension income/maximising your drawdown capacity.

Although it's a finger in the air I'd say it looks very much like you have got your ticket to ride. May be worth a chat to your friendly IFA...

The one thing you must not must not must not do without a really good reason is pay down that mortgage before you are 55. Think of it as a low-cost loan. If nothing else permitting you to defer your wife's DB pension - why not save into a SIPP for her. she can then first draw on that and flatten it before drawing the DB pension, which all the time she defers it will increase by being actuarially reduced less. The SIPP can be cash only if you are only going to draw it in 18 months - you get a 20% tax bung, working out to a 18 month fixed rate cash savings at ~ 8% p.a..

There's nothing wrong with using the 25% pension commencement lump sum of your DC pensions to pay the mortgage down. If you do pay down the mortgage early then at least do the calculation and know why you are doing that and what the opportunity cost is.

How do I know about the mortgage? I got this wrong. I was the same age as you when I started my accelerated clear off plan. It took me three years, though I was building on a decent pension foundation. The first thing I did was pay off my mortgage because I was fearful of being run out of the company. As a result I have taken an income suckout until 55, after which I will have more income than I need. A mortgage can help you smooth that out.

Marine_life wrote:

So this year I refused to submit any goals or be subject to an annual review because I (and everyone else) knows the system is BS. We will see if I gret marked down because of that - i suspect I will and I will.

You've loaded the gun. You know what to do, at a time and place of your choosing May the power of The Escape Artist be with you. Life's too short to give more of it to The Man if you feel like that about him and you're holding a loaded financial independence gun. Yes, the recoil will hurt your shoulder a bit. Then a few months down the road you'll be drinking some beer in lovely Austria and you will ask yourself

Self, why didn't I do that earlier?

robin61

Marine_life wrote: »

Honestly I could have written that.

We have a system which rates evceryone on a grade of 1-5 with 5 being the best. But the performance management system dictates that we also have to follow a bell curve i.e. that only a certain number of people in grade 4 or 5 etc. So you can exceed your goals but still not make the higher grade.

But actually its irrelevant anyway because there is very little connection between pay and achievement of goals. The firm has decided I am overpaid and despite hitting / exceeding my targets, being promoted and being graded above average my pay has crept up over the last few years. This is actually an age thing but of course the firm would never admit that. They know they need to keep the younger guys happy (otherwise they will leave) so they stiff us oly boys.

I have issued a formal complaint in each of the last two years but of course with no result.

So this year I refused to submit any goals or be subject to an annual review because I (and everyone else) knows the system is BS. We will see if I gret marked down because of that - i suspect I will and I will.

It seems a lot of large organisations are the same. We were told recently that we will all start with a not quite good enough performance grading and it's then up to us to prove otherwise. That's as well as there being quotas for the better gradings. The nearer I get to retirement the more I feel like telling them I am not bothered what they think of me and the whole thing is utter bull**it. Every year they make cuts and then they wonder why things are going pear shaped.
I am nearly 54 and sticking as much as I can afford into my AVC and I am hoping I will be able to get voluntary redundancy/early retirement at 57. As long as the next Government don't decide to screw us all by reducing tax relief or taxing the lump sums the figures stack up and I should be able to do it. My Wife can see how stressed I am and is fully suportive. It really can't come quick enough for me.
It is a shame because I used to enjoy my job but gradually it has got worse every year.

coyrls

robin61 wrote: »

It seems a lot of large organisations are the same. We were told recently that we will all start with a not quite good enough performance grading and it's then up to us to prove otherwise. That's as well as there being quotas for the better gradings. The nearer I get to retirement the more I feel like telling them I am not bothered what they think of me and the whole thing is utter bull**it. Every year they make cuts and then they wonder why things are going pear shaped.
I am nearly 54 and sticking as much as I can afford into my AVC and I am hoping I will be able to get voluntary redundancy/early retirement at 57. As long as the next Government don't decide to screw us all by reducing tax relief or taxing the lump sums the figures stack up and I should be able to do it. My Wife can see how stressed I am and is fully suportive. It really can't come quick enough for me.
It is a shame because I used to enjoy my job but gradually it has got worse every year.

I didn't realise this was so widespread. Our system is much the same as the others described above. When you reach a certain age you can't be arsed with it and the company can't be arsed with you, age = expensive in their view. The lost productivity from the loss of engagement across multiple organisations must be colossal. I know I have lost the commitment I once had. I had put in place a plan to carry on until 60 (I’m 58 now), go part time (if possible) for a couple of years and then retire. Now that I am so close, I’m very, very tempted to go now, as I could probably afford it but I would prefer to be “managed out of the business” just for the additional money that would deliver.

ManofLeisure_2

Crikey, am I glad that I was self employed . Rather a gamble in the first instance, but worked out ok in the end. Reading through some of these posts... No wonder some of you wish to retire earlier..... Think some of you should do so pretty soon . Not sure that I would have survived more than a week in some of the settings described.

When I retired 3 years ago at 55, a close friend uttered these words..
'' retirement is an exclusive club, and has an exclusive address - home''.
He's right

BeatTheSystem

ermine wrote: »

The tragedy is that the serf level guys, never mind their underlings, haven't reached the minimum necessary level of $ that was mentioned by the by in that video.

ML (and I) reached that level for our different requirements, and we are both lucky in time and place. The dude that stiffed me had a new born child with his second wife at ~45, although I didn't know that at the time. He had no choice but to squeeze me - he wasn't a bad guy but he had a fist full of bad options in 2009. I still recall his pupils widen and his breathing rate rise as, two years after the initial hit I educated him that he couldn't make me do what he wanted me to do because a) I didn't need the job, and b) The Firm needed my specific skills at that specific time to discharge its commitments to LOCOG. He swiftly shunted me to another line manager who was going to quit when L2012 was done. It was the I didn't need the job that he didn't want to hear. How do you control somebody like that? You can't - you inspire them or you go home. Google can do that. Nobody doubts they get paid enough there I was paid enough, but I couldn't work for a !!!!!!.

That line manager is now in Miami working, because he was ejected from The Firm. He's talented, as long as you keep him away from human beings, that's one of the problems with engineers, good with hardware but lethal with meatspace. No doubt he has a lot more money than I do. Good luck to him - he's arranged his life so he needs it.

But I own my time - I have no alarm clock, and have to use a timer on a lamp if I need to get up for a flight or meet someone before 9am. I'd rather be me than him, but each to their own.



I'm not sure about that. I loved engineering, I still do, and I still do it, I love getting a whole heap of stuff together and making something work where before there was nothing or chaos. For 95% of the time for 30 years I liked what I did, but in the end the environment, the pen-pushers, the tick-boxery of the performance management BS did me in, particularly towards the end. I differentiate the two, but in the end the result fell by the weakest link. I'm not sure you can separate the variables, though obviously if you can go elsewhere and do the work without the BS then maybe.

In the end my last performance management interview was the way it should be done. The replacement LM said - we're behind, I don't understand this stuff, is it gonna work? I didn't bother to fill in the tickboxes because I already had my ticket out of the firm. But I was able to look him in the eye and say 'Yup, it'll work'. It did.

If the environment is crap, you gotta get out, just as much as if you hate what you do. If you're late 40's 50s then you aren't likely to have many options to get the same elsewhere.

Ermine, I absolutely relish reading your posts and the erudite musings in your blog.


You mention being stiffed but what was so badly done to you which precipitated the action you took to escape servitude?


For me I am in the chains of golden(ish) handcuffs, but nevertheless the cruelty inflicted on me means I am contemplating walking away from a sum that would allow me to retire - dare I give the man b0ll0cks or will I be a wimp and take it up the ar5s until I am freed from modern day slavery. I have stiffed myself by going for the bulls eye speedboat when a set of tankards made me happier.

jamesd

green_man wrote: »

I am 48 fed up with my job and looking to retire as soon as I can be confident that I can afford it. My OH can draw her public sector pension in 18 months and I have calculated I need £1500 a month from my side for us to be comfortable.

I have a company DC pot currently around £400K which is having £2000 per month added (mine and employer contributions). This is invested in a 60:40 UK:World equity fund with very low charges. In addition I have Savings (part ISA part just standard saving accounts) of £208K.
In addition I have another DC pension pot of approx £85K that I don't think I can access until I am 63 (or maybe even State retirement age) - I will have to clarify this.

What I am hoping to do is retire when I am 50 ( or sooner if any voluntary redundancies going), which will align with us paying off the mortgage. I will use my saving to cover 50-55 then start drawing down my pension pot.
My plan would be to take £12.5K from the pot each year which should all be pretty much tax free and top that up with my savings.

It appears that you can retire now, depending on mortgage value.

A fairly commonly used cautious income level for life in retirement is 4% of the investment pot value. You have at least £608k so at least £24.3k of income that you can reasonably expect to be for life. Since you'll have the state pension you can actually take more than that.

Defined benefit pensions do not normally have fixed earliest dates so you probably can take the other pot as well.

Like ermine I don't think that you should pay off the mortgage. There are two main reasons, low interest rates and inflation. Interest rates on mortgages are lower than normal investment returns, so you lose money by using investments to pay off a mortgage, usually (always subject to market variations, of course). Inflation lowers the real, inflation-adjusted value of the mortgage debt over time, so the longer you wait, the cheaper paying it becomes. Those two things mean that the best time to pay off a mortgage tends to be the latest possible time. Which means interest only on the last day or repayment as late as possible. or extending the mortgage until after you have state pension income and all other pension income to boost your income and make paying it as low a part of your income as possible. You can also do things like using a lifetime mortgage - equity release - that allows drawing on demand and repaying whenever you like if you can't get a normal mortgage. Just to give you that flexibility to do what is best, when it's best.

So I don't agree with ermine about using a pension lump sum to pay off a mortgage, unless you paid extra into the pension with that in mind. Even then I'd want to delay as long as possible. ermine is right about smoothing of income with the mortgage, I just take it a bit further than ermine does, looking longer term and at more options.

So far as your wife goes, it would probably be best to use your income rather than hers for living money until the normal retirement age of her defined benefit pension. That tends to produce better income levels than taking a pension before normal retirement age. Not always, but usually.

Marine_life

itm2 wrote: »

I agree with ermine on this - I'm not sure the two can effectively be separated when it comes to making the big decision. I job-hopped in the last 3 years before retiring, doing the same job for 3 very different employers in the final 3 years, and hated all of it. I suppose you may get REALLY lucky and find a dream employer with extremely progressive attitudes towards its staff and performance management, but the chances are you'll get the usual corporate BS that characterises 99% of working environments.

Look I pretty much know where your coming from and actually I was saying a similar thing i.e. I actually enjoy the work intrinsically but actually getting in front of clients is complicated by politics and self-interest. However, I may look for some freelance work in "retirement" and suspect I may enjoy it a lot more once the pressure is off....we'll see.