Early-retirement wannabe

gadgetmind

TigerWoods2 wrote: »

What should I do with the 40k lump sum. Can I invest for income?

Yes, but only about £100 a month of income would be sustainable. You *may* be better reducing your mortgage *but* you need to understand the benefits situation first.

Am I entitled to any benefits?

You really need to ask on the benefits boards as they are a complex area and I suspect that few in this thread know much about them.

That £40k *may* affect benefits. Paying £40k off your mortgage *may* be seen as depriving yourself of capital. I say "may" as I simply don't know.

How large is the mortgage and what rate are you on? Any other debt? Any "emergency fund" other than the £40k? How likely is being able to find part time work?

No need to answer these here, but it's info others will ask when you get to benefits and money saving.

Good luck!

TigerWoods2

Thank you for the replies. I will post in the benefits section. Gadgetmind could you please explain what you mean by "Yes, but only about £100 a month of income would be sustainable"

Thank you.

gadgetmind

TigerWoods2 wrote: »

Gadgetmind could you please explain what you mean by "Yes, but only about £100 a month of income would be sustainable"

I'm assuming you'd invest the £40k at a fairly low risk (which really means the value doesn't bounce around too much and scare you) and this limits the return you can get. Rule of thumb is 4% pa, but you'll hopefully be drawing on this for 40 years, and going pretty cautious, so I used 3%.

£40k x 3% = £1200, so £100 a month.

The other big question (which I forgot to ask!) is how you both are regards state pension? If you're likely to get full SP then you can be more aggressive with the £40k as it won't have to last as long.

TigerWoods2

I did the state pension thing online and am 9yrs short so would have to pay voluntary contributions.
Thanks for your advice.

badmemory

You may not need to pay voluntary contributions is you claim a benefit which credits you with them.

geoffers4

Just finished reading through all of the (currently) 141 pages of this fascinating thread : sad, I know! Although in my defence I'm laid up at home recuperating from a hospital stay, so have some free time on my hands. Carried on reading to see if MarineLife did eventually retire...and I see not yet.

Anyway given the obvious expertise on this thread, I'd be interested in any thoughts on my options for early retirement, as it's something I'm seriously giving thought to these days.

I'm 54 and OH is 45 - our financial highlights are;
* my salary 56k, OH works part-time 7k
* Mortgage paid off on our 250k property. No debts.
* 70k in savings (all in cash), I'm adding 25k pa to this.
* 2 grown-up sons, now off the balance sheet, with a separate pot set-aside to help them get on the property ladder.
* 35 years NI contributions, so full state pension when I reach 67.
* 3 other public sector occupational pensions, currently worth 25k pa if taken at 65-67, or worth 20k pa taken at 60 with actuarial reduction. If I continued working until 60 they would then generate 26k pa. 1 also provides a lump sum of 50k at age 60, and also will continue to pay out to OH if I go first (as she has little pension provision of her own).
* Our pretty frugal lifestyle costs £1000-1500 pm, and this will easily be covered by the pensions taken at 60. This does include a couple of holidays each year, but we recently relocated to the Lake District so frankly every day is like a holiday here, or would be if I wasn't stuck in the office the whole time. The job is very demanding and leaves me with little time and not much energy to enjoy these surroundings. OH on the other hand enjoys her part-time work in a school and seems happy to continue for many years to come.

So : how much longer should I keep working/saving? And at this stage is it worth exploring other investment options?

Any thoughts?

mozza78

Excuse me if I've misread your situation geoffer but if you take the more conservative estimate of 1500 gbp per month expenditure then you're needing about 18k annually.. You wife has 7k per year from the part time which means you need to spend about 11k from other income.. Your 70k in cash would cover this till you're 60 which then you would be getting the 20k pa pension which would tide you over till state pension age? So could retire now and give up the stress no?

bigadaj

There seems to be a huge mismatch here, is it not possible to reduce hours?

You currently dislike your work apparently because of the stress and hours, so reducing them may well help, it's also a shock for many to go from 40+ hours per week to full retirement.

If your employer isn't keen then a practical discussion might point out that if they are so reliant on you now, then it'll be a huge problem if you leave in one go. Some sort of handover or succession planning might be wise.

Also from a financial perspective there appears to be plenty of leeway if you are currently saving £25k per year, five years of say three day weeks and reducing saving to £10k per year might be a reasonable compromise, and provide a slower transition from accumulation to decumumulation and retirement.

geoffers4

Thanks both for these thoughts, very useful. To add a few complications then; the boss has already ruled out reducing my hours - I'm part of a very small management team and frankly in his position I would probably feel the same way.
I would like OH to keep the vast majority of her income for personal spends, so wouldn't factor it into covering the 1000-1500 pm expenses. And I'm not keen on eating away all of the savings before I reach 60, as that could be needed for emergencies or care costs in later life etc. So I guess I'm seeking a balance between preserving capital and reducing work stress.
Of course I could just "suck it up" for 6 more years - but frankly not keen.

bigadaj

So what's your boss going to do when you leave?