Early-retirement wannabe

ex-pat_scot

gadgetmind wrote: »

10% may not, but it would be significantly more than that.

By dropping down to a 4 day week, I have chopped £20k off what my tax bill would have been otherwise plus I'm putting more into my pension than I'd have been allowed to do.

If I can't put anything else into my pension without 55% tax, and if I draw it as income a load is taxed at over 60%, then I'm sorry but I'm not going to slog my guts out just to fund HMG's magic money tree.

Agree entirely - if you are in the magic £100,000 to £130,000 income band, then the punitive marginal tax rate of 62% makes it rather demotivating to work and get to keep 38p for every £1 you earn.
That's why pensions flexibility is so important. Of the few people I know with salary in that band, all use salary sacrifice to pop anything over the £100,000 into their pension.

Marine_life

ex-pat_scot wrote: »

Agree entirely - if you are in the magic £100,000 to £130,000 income band, then the punitive marginal tax rate of 62% makes it rather demotivating to work and get to keep 38p for every £1 you earn.
That's why pensions flexibility is so important. Of the few people I know with salary in that band, all use salary sacrifice to pop anything over the £100,000 into their pension.

Our ability to save tax through diverting funds into pension schemes are not that great here in Germany but we do have an income deferral scheme which allows you to defer 6% (8% after age 50) of your gross earnings into deferred income scheme (i.e. that you take later when your income is lower and taxed at lower marginal rates). The scheme also guarantees 5% return on your money which didn't look so good a few years ago but looks pretty decent now. Until a few years ago my employer allowed you to double your contribution (i.e. 12/16%) but that has now stopped....I wonder why?

Marine_life

I was tinkering with my spreadsheets this afternoon and making some minor adjustments to tax calculations from age 67 - which added about €3,000 per annum to income as like a number of other retirement assumptions I was being too cautious.

I was modelling sensitivities to see what it would take to "break" my retirement forecast and its pretty clear...the only thing that worries me (worry is maybe too strong a word) is my employer pension fund in some shape or form going bust. Of course there is a lot of scaremongering out there but I wonder what the chance is of that really happening?

I've run my projections our to age 90 using incredibly conservative assumptions (1% return on investment; 2% inflation, 35% cushion on projected expenditure) and we would still be cash positive so the question is .....if the chance of the pension not paying out are super low, why am I still working again?

Wednesday2000

Does anyone on here talk to friends and family about their plans? I went over the top at first and kept telling people (to huge disinterest) and I find there aren't any UK early retirement forums to share ideas or just to vent.

Marine_life wrote: »

I was tinkering with my spreadsheets this afternoon and making some minor adjustments to tax calculations from age 67 - which added about €3,000 per annum to income as like a number of other retirement assumptions I was being too cautious.

I was modelling sensitivities to see what it would take to "break" my retirement forecast and its pretty clear...the only thing that worries me (worry is maybe too strong a word) is my employer pension fund in some shape or form going bust. Of course there is a lot of scaremongering out there but I wonder what the chance is of that really happening?

I've run my projections our to age 90 using incredibly conservative assumptions (1% return on investment; 2% inflation, 35% cushion on projected expenditure) and we would still be cash positive so the question is .....if the chance of the pension not paying out are super low, why am I still working again?

I have no idea, I would have retired by now if I was in your position.:D

ex-pat_scot

Wednesday2000 wrote: »

Does anyone on here talk to friends and family about their plans? I went over the top at first and kept telling people (to huge disinterest) and I find there aren't any UK early retirement forums to share ideas or just to vent.

There's nowhere really to discuss, hence the number of gatecrashers here.


I've found that people are very disengaged (and I work with those people who should be the most engaged of all).


Most view pensions as the big scary beast - far more preoccupation with mortgages, student loans, school fees etc.
Most people seem to view the planning as just going for the standard company match, without looking forward to see where that takes them. they seem to think that the numbers are just too scary and abstract and huge to actually break down into any sort of actual plan. As a consequence, I'm the weird guy with the "financial / tax obsession" so I evangelise in general principles, and avoid giving too much personal info away.

nicknameless

Wednesday2000 wrote: »

Does anyone on here talk to friends and family about their plans? I went over the top at first and kept telling people (to huge disinterest) and I find there aren't any UK early retirement forums to share ideas or just to vent.



I have no idea, I would have retired by now if I was in your position.:D

Have told some family and they think we are just tight with money, not making choices!

Close friends are aware and ask occasionally about plans and progress but everyone on seemingly different trajectories, so going against the grain is not easy to talk about.

Have not talked to anyone at work about plans. Was in review meeting today discussing career plans and trajectory and wondering how much I could be bothered to go along with it, but got to be seen to be playing the treadmill game.

Wednesday2000

ex-pat_scot wrote: »

There's nowhere really to discuss, hence the number of gatecrashers here.


I've found that people are very disengaged (and I work with those people who should be the most engaged of all).


Most view pensions as the big scary beast - far more preoccupation with mortgages, student loans, school fees etc.
Most people seem to view the planning as just going for the standard company match, without looking forward to see where that takes them. they seem to think that the numbers are just too scary and abstract and huge to actually break down into any sort of actual plan. As a consequence, I'm the weird guy with the "financial / tax obsession" so I evangelise in general principles, and avoid giving too much personal info away.

nicknameless wrote: »

Have told some family and they think we are just tight with money, not making choices!

Close friends are aware and ask occasionally about plans and progress but everyone on seemingly different trajectories, so going against the grain is not easy to talk about.

Have not talked to anyone at work about plans. Was in review meeting today discussing career plans and trajectory and wondering how much I could be bothered to go along with it, but got to be seen to be playing the treadmill game.

Thanks for answering, I always feel ignored on MSE.:D

I'm really shocked by how people have their head in the sand about retiring. I had to bite my tongue the other day after I made a comment as someone was saying that she will look at her financial position closer to the time, she is about 63 now! I feel too patronising half the time to try and give any advice as I'm obviously younger.

nicknameless

Wednesday2000 wrote: »

Thanks for answering, I always feel ignored on MSE.:D

I'm really shocked by how people have their head in the sand about retiring. I had to bite my tongue the other day after I made a comment as someone was saying that she will look at her financial position closer to the time, she is about 63 now! I feel too patronising half the time to try and give any advice as I'm obviously younger.

I have a financially illiterate family. Parents were not very good and didn't have the proverbial pot to **** in to start with. My sister's husband has just taken the transfer value on his only DB scheme whilst still with nose to the grindstone, paying 40% tax on the lot at 55 to fund a holiday place. Have been trying to chip away at my niece who is a few years into the world of work encouraging her to realise the benefits of starting early on the road to financial security. She's just got a bargain £20k car (!!) financed through a dealer at god knows what cost when she and her hubby can't really afford it and he has no pension whatsoever as self employed. I'll keep on but she'll still see me as odd and stingy!

Of course if I could go back 20 years I'd also be in a different position to now as I am total hypocrite having been exactly the same a little earlier in life. Do as I say ............

westv

Wednesday2000 wrote: »

Does anyone on here talk to friends and family about their plans? I went over the top at first and kept telling people (to huge disinterest) and I find there aren't any UK early retirement forums to share ideas or just to vent.

I have mentioned pensions to my wife but maybe a bit too much as she has started to switch off slightly now when the topic comes up!

archie17

Originally posted by Wednesday2000

Does anyone on here talk to friends and family about their plans? I went over the top at first and kept telling people (to huge disinterest) and I find there aren't any UK early retirement forums to share ideas or just to vent.
Originally posted by Wednesday2000

I finished work in Jan. We have not been to interested in planning for retirement, I was intending to work as a contractor if needed. Fortunately the provisions we have made (default company pensions with lots of year gaps) is sufficient from our calculations. We think we are lucky, I have been reasonably well paid and now I am spending a lot to time trying to make us financially secure.
I intend to hold a family meeting, with our children and explain where we are financially. More importantly I am going to try and show them where we could have been if we had spent time 30 years ago planning better for our future.