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Early-retirement wannabe

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  • A couple of posters have made comments as to the reasons why they retired early and I would like to hear from others as to what drove them.

    From where I stand today the reasons are really not yet completely clear. I need to get those ideas straight over the next four years but they are not fully clear yet.

    Part of the planning is driven by fear. That fear comes from a) The fear of redundancy - I am in a relatively high paid job and you always feel vulnerable combined with the fact that I would never get into a similarly paid job b) Pressure, Stress - partially driven by a. but also the pressure has increased over the last few years. Therefore I have always wanted to be in a position where if I am to go into retirement I want it to be my choice and not something I am pushed into.

    The real blocker (if you can call it that) is I want to continue to support the children through school / university and my son will be in university in four years.

    So whether to go at 50 or not depends on a lot of factors - but I don't want finances to be one of them!
    Money won't buy you happiness....but I have never been in a situation where more money made things worse!
  • posted previously in the forum under - early retirement offer

    Fed up with the rat race we have the chance to retired early at 56 and 55 -in total both pensions give us £1500 net pm index linked yearly - 40k saving - full sp at 66 - mortgage and dept free.

    We think we will manage until the sp kicks in - wondered if anybody had similar experiences with a big cut in salary for the years until 66.


    Well decided to go for it I finish on the 1st dec oh in feb .

    Just do not want the stress any more and as we live a modest lifestyle and have done all the spreadsheets etc we are sure we can manage on the pensions we get until sp kicks in.
    I know the 40k could be larger ideally but with bumping the mortgage off in the last five years and both children through university restricted our saving potential.
  • edited 16 November 2010 at 7:05AM
    chris_mchris_m Forumite
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    edited 16 November 2010 at 7:05AM
    My decision to aim for retiring early was when, a couple of years ago, there were proposals to change our work pension scheme. They gave us so much information that I was able to build it into my forecasting spreadsheet, initially to just compare old vs new. The spreadsheet ran out at age 65 so I added another worksheet which ran to 85, then thought "how early could I retire and still have a positive bank balance at 85?" The answer came out at, flippin' 'eck, 55!!!! My lifestyle is simple and my pension (although it will be actuarily reduced for early payment) would only have to support one person, not two, so I decided that it would be a good idea to go early and be able to do what I enjoy - fellwalking and mountain photography - whilst I am (hopefully) still fit enough to do it.

    After a lot more rejigging to improve the accuracy the possibility came down to 53, 52 or even 51 if a couple of sharesave schemes really go ballistic. OK, I still have a lot of assumptions included which will need further checking/adjusting but the plan is to clear my mortgage early, then retire when the forecasts look feasable, buy a house near (not in, too expensive) the Lake District hopefully for cash using my savings, then sell my flat down south to recover the savings which can then be drawndown to top up the pension where needed.

    Even if I don't manage it at 53 (or 51/52) it should be very doable by 55 and keeping the forecast going is a great spur to "make it happen".
  • brewerdavebrewerdave Forumite
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    CAUTION!!!
    I started planning for early retirement in my early 40s ramping up my savings in equities/ISAs and cash (as far as possible with two young kids!);the Company I was then with, had an Early Retirement Facility that would have allowed me to retire at 55 on a "full" pension with the Company's permission.
    HOWEVER, things changed rapidly in the mid/late 90s with the result that I was made redundant at the age of 49. Got another job at a lower rate of pay and much less generous pension scheme,so revised target retirement to 60. Got made redundant again at 56, not able to retire and out of work for several months so took a job at a lower salary again.
    Got made redundant again after 2 years - couldn't get another job so was forced into taking original Company pension early.
    My finances are considerably worse now at 60 than my original plan - we will survive but many of the luxuries that we had originally planned for retirement "have gone up in smoke"!
    The point I'm trying to make is that any early retirement plan should include worse case scenarios especially a loss of a well paid job.
  • brewerdave wrote: »
    CAUTION!!!
    I started planning for early retirement in my early 40s ramping up my savings in equities/ISAs and cash (as far as possible with two young kids!);the Company I was then with, had an Early Retirement Facility that would have allowed me to retire at 55 on a "full" pension with the Company's permission.
    HOWEVER, things changed rapidly in the mid/late 90s with the result that I was made redundant at the age of 49. Got another job at a lower rate of pay and much less generous pension scheme,so revised target retirement to 60. Got made redundant again at 56, not able to retire and out of work for several months so took a job at a lower salary again.
    Got made redundant again after 2 years - couldn't get another job so was forced into taking original Company pension early.
    My finances are considerably worse now at 60 than my original plan - we will survive but many of the luxuries that we had originally planned for retirement "have gone up in smoke"!
    The point I'm trying to make is that any early retirement plan should include worse case scenarios especially a loss of a well paid job.

    Those are very wise comments indeed. You can spreadsheet away to your hearts content but at the end of the day life has a nasty habit of throwing curve balls in the general direction.

    The timing of my early retirement links to when my son goes to university which effectively then gives us the geographical freedom to move (which will be overseas where we already own a property). However, what we haven't really factored in yet is what the difference is between a frugal retirement and a retirement with a few luxuries.

    Some examples I can think of will be around what sort of car we will drive (I know, horribly materialistic but it's one thing that is important to us), we also would like to resume playing golf - not a cheap hobby).

    There are other more practical things which we haven't yet really worked out around health insurance etc.

    However, all told if we wanted to live a VERY frugally we could potentially retire now but to me what its all about is making a comfortable decision that has sufficient buffer in for the unexpected.

    Damn.......need to get working on those spreadsheets!
    Money won't buy you happiness....but I have never been in a situation where more money made things worse!
  • bendixbendix Forumite
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    brewerdave wrote: »
    CAUTION!!!
    I started planning for early retirement in my early 40s ramping up my savings in equities/ISAs and cash (as far as possible with two young kids!);the Company I was then with, had an Early Retirement Facility that would have allowed me to retire at 55 on a "full" pension with the Company's permission.
    HOWEVER, things changed rapidly in the mid/late 90s with the result that I was made redundant at the age of 49. Got another job at a lower rate of pay and much less generous pension scheme,so revised target retirement to 60. Got made redundant again at 56, not able to retire and out of work for several months so took a job at a lower salary again.
    Got made redundant again after 2 years - couldn't get another job so was forced into taking original Company pension early.
    My finances are considerably worse now at 60 than my original plan - we will survive but many of the luxuries that we had originally planned for retirement "have gone up in smoke"!
    The point I'm trying to make is that any early retirement plan should include worse case scenarios especially a loss of a well paid job.

    True, but at the same time it's possible to over-analyse and over-forecast and think of every possible contingency.

    Sometimes you just gotta live a little and take some chances
  • bendix wrote: »
    True, but at the same time it's possible to over-analyse and over-forecast and think of every possible contingency.

    Sometimes you just gotta live a little and take some chances

    Although I don't disagree, I still would advocate strongly two things to 'retirement planners'. The first it to keep very detailed accounts, not least so you know where every penny is coming from and where it's going.

    Secondly, a detailed spreadsheet or plan to age 85 or 90. OK, the later years become very simplistic, and 'guesswork'. But they should be 'ballpark' right. You learn, progressively, from updating projections with reality. There is a 'virtuous circle' in these two points. It 'forces' you to become far more 'savvy' with your pension scheme values and how they have changed. You can get a feel for how your Endowment policies are doing. Same with your house equity etc. The 'true' cost of motoring etc.

    But I agree it should not take over your life. My own model didn't, for example, plan for b*ggering off to Asia to work for 6 years, but I took the plunge and did it. Best thing I did, because it filled any gaps and allowed me to come back to UK and retire.
  • LintonLinton Forumite
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    bendix wrote: »
    True, but at the same time it's possible to over-analyse and over-forecast and think of every possible contingency.

    Sometimes you just gotta live a little and take some chances


    True, you cannot plan for every possible "event". But you can cover most by making pessimistic assumptions and ensuring a large amount of slack at least in the early years. You dont plan for the money to run out just as you pop your clogs.

    And of course, unless you have a plan and have done the basic analysis, you wont realise that you are taking chances.
  • lvaderlvader Forumite
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    One of my reasons to plan for early retirement is that I won't be reliant on a high salary post 55. If things go pair shaped before then I might have to work longer. Plan for the best , prepare for the worst.
  • GatserGatser Forumite
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    LGH29 wrote: »
    We think we will manage until the sp kicks in - wondered if anybody had similar experiences with a big cut in salary for the years until 66.



    I know the 40k could be larger ideally but with bumping the mortgage off in the last five years and both children through university restricted our saving potential.

    Good Luck to you LGH29!
    In principle, I have a similar situation in mind (although Uni fees increase probably makes that less realistic for our littluns!)

    Your comments made me look at what I am planning for the ages 50-69. My spreadsheet shows total Income split as:

    AGES...................50-54....... 55-59....... 60-64....... 65-69
    Employed income ...100% ........60% .........30%........... -
    Pension Income........ - ...........40% .........70% .........70%
    State Pension........... -............ -.............. -........... 30%

    Total Income (55-59) is the same as (50-54) as I plan to use pension income to subsidise semi retirement in my (55-59) period.

    I can further reduce working hours (60-64) as I drawdown a larger pension...

    Then (65-69) the State Pension should replace my part-time income entirely... time to get an allotment methinks! :T
    THE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is £26k pa)
    My Other NUMBER: ZERO Working Days to SEMI-retirement: Achieved! :beer: :j :T ;)
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