Early-retirement wannabe

westv

I will probably use the lump sum to reduce the amount of taxable income I draw between retirement and all the DB pensions starting.

jamesd

OldBeanz wrote: »

I thought recycling was not possible to your wife as long as it was not reciprocal.

Reciprocal also doesn't make a difference provided it's not just a short term loan sort of thing where one person takes it and gives it to the other who then takes theirs and gives it to the first within a short time. Do it in very different tax years and it'd probably be fine.

So far as spouses go, I specified the accounts because of this, to avoid the potential issue:

SippTechie wrote: »

...We queried a situation where an individual received their tax free cash, gifted some of this to their spouse, and the spouse made a significant contribution to their pension. We asked whether this would be caught under the recycling rules, indicating that we thought it would not because the contributions paid by the spouse were not paid into a registered pension scheme "in respect of the individual" who had received the tax free cash.

We were told in writing that we were interpreting the legislation correctly and that this would not be caught by the recycling rules.

Worth mentioning that it is potentially important that the tax free cash is paid to the original member first, and not directly to the spouse. We've recently received confirmation in writing that payment of tax free cash to someone other than the original member (for example directly into a bank account in the name of their spouse) is potentially going to lead to tax charges. It is possible this could be challenged successfully if a case ever arose, but perhaps best not to test that out!

A person who asked HMRC about spouses described the response:

srcandas wrote: »

It has been suggested here that I may get accused of recycling the lump sum (i.e.paying it into my wife's SIPP). ... We (HMRC) don't focus on recycling legislation. It was bought in by a government more to prevent the finance industry creating products to exploit a loop hole. It would be up to us (HMRC) to prove you had recycled based on you meeting all 6 conditions stated on the HMRC website. As your wife/partner works we would not question this within the limits allowed (£3600 or amount based on salary).

RoonilWazlib_2

I came across this thread about 4 weeks ago and have read through it all in that time. All 156 pages

I had done virtually no thinking about retirement until 4 weeks ago but now it dominates my thinking thanks to the inspiration if this thread. So thanks to ML and the main contributors.

Prior to starting I had no intention of retiring early because I never believed it was possible for anyone except the rich! This thread, while dominated by some high earners, has shown that actually it is the planning and calculating that determines if you can retire early rather than your income (in fact, if anything this thread has shown that the higher your income, potentially the harder the planning is!)

I'm 34, been working in ok salary jobs, but nothing spectacular and until this year virtually no savings to speak of having been a bit too reckless for the first years of my working life. This puts me well behind where I should be but I'm determined to come up with a plan that may allow retirement at say 60 rather than SP age.
26 years to make up the ground I've lost.

The main thought driver at the moment is that my partner is 10 years younger than me. I would not like a situation where I retire and she has to keep working for another ~10 years.

At the moment my pensions are nothing to write home about because I've never contributed a lot - more fool me.

I've got a SIPP (minimal balance though) and I've just recently (last week) been able to join employers pension so waiting for the paperwork for that.

I think a good starting point will be contributing as much as possible to employer pension and anything extra for time being into SIPP.

We are in the middle of buying our first house and once we have proper budgets in place will start making proper plans for us both.

Never knew pensions could feel so exciting

jamesd

Liberation planning can be exciting. Doesn't even have to be retirement. It feels good to know that you don't need to worry about losing a job because you've accumulated enough to get by, then do OK and on to well and ready to retire as you accumulate enough money.

Marine_life

RoonilWazlib wrote: »

I came across this thread about 4 weeks ago and have read through it all in that time. All 156 pages

I had done virtually no thinking about retirement until 4 weeks ago but now it dominates my thinking thanks to the inspiration if this thread. So thanks to ML and the main contributors.

Prior to starting I had no intention of retiring early because I never believed it was possible for anyone except the rich! This thread, while dominated by some high earners, has shown that actually it is the planning and calculating that determines if you can retire early rather than your income (in fact, if anything this thread has shown that the higher your income, potentially the harder the planning is!)

I'm 34, been working in ok salary jobs, but nothing spectacular and until this year virtually no savings to speak of having been a bit too reckless for the first years of my working life. This puts me well behind where I should be but I'm determined to come up with a plan that may allow retirement at say 60 rather than SP age.
26 years to make up the ground I've lost.

The main thought driver at the moment is that my partner is 10 years younger than me. I would not like a situation where I retire and she has to keep working for another ~10 years.

At the moment my pensions are nothing to write home about because I've never contributed a lot - more fool me.

I've got a SIPP (minimal balance though) and I've just recently (last week) been able to join employers pension so waiting for the paperwork for that.

I think a good starting point will be contributing as much as possible to employer pension and anything extra for time being into SIPP.

We are in the middle of buying our first house and once we have proper budgets in place will start making proper plans for us both.

Never knew pensions could feel so exciting

When I was 34 I also had nothing (blame a housing crash and negative equity).

My advice to you now would be:

1. Check what your employer offers (pension, salary sacrifice etc.) and maximize what you can put in.

2. Start getting any spare money working hard!

3. Check your spending and see where your spare cash leaks away...how much of that are you prepared to cut to get out of work early?

Check out a couple of my favorite sites:

ww.early-retirement.org
http://www.mrmoneymustache.com/

For inspiration!

RickyBoyRoy

Hi guys,

Currently got a SIPP with about 36K in it. 26K in cash, the other 10 invested in stocks and funds based on little to no research - bad I know!

Can anyone recommend any good resources (or your own knowledge) explaining what a good pension investment strategy should be? For example, I know I shouldn't just have all my eggs in one basket, so I'm hoping for some kind of rule that states I should have x% in UK funds, y% in global funds, z% in cash etc etc.

I've also got a NEST pension with work, but it's only just started so there's virtually nothing in there - work contribute a measly 1% but it's better than nothing I suppose!

Does it make sense to have other types of pensions, e.g. a stakeholder pension (if they still exist) or even pay a financial adviser to set up a pension for me?

As you can probably tell I'm pretty new to all this pension stuff but keen to get sorted out ASAP.

Thanks,

atush

I think a good starting point will be contributing as much as possible to employer pension and anything extra for time being into SIPP.

We are in the middle of buying our first house and once we have proper budgets in place will start making proper plans for us both.

Actually, a good start would be to put into your pension the amount that would get the max employers contribution.

Then A Sipp could be used, but given you are about to be new homeowners, you need to build up cash reserves for emegencies and any spending you need for the new home such as redecorating etc. then once you have cash reserves, you can consider S&S isas and your sipp for your spare cash.

RoonilWazlib_2

atush wrote: »

Actually, a good start would be to put into your pension the amount that would get the max employers contribution.

Then A Sipp could be used, but given you are about to be new homeowners, you need to build up cash reserves for emegencies and any spending you need for the new home such as redecorating etc. then once you have cash reserves, you can consider S&S isas and your sipp for your spare cash.

Yes, that makes more sense. Thanks.

We have an emergency fund for the house already which will be kept aside.

atush

you should have more in emergency cash than just for the house.

You should also have 3-6 months living expenses.

bones1958

Hi all. My first post, although have read and followed this thread for some 18 months.

Bit of personal background. 58 years young. Married 36 years. 4 grown up kids. Employed for 41 years at major high street bank. Now retired (early) for 3 months, partly inspired by some of you insightful comments and 'advice' on this thread.

I'll answer Marine Life's original questions:

Who is aiming for early retirement (or who has retired early already)?
When I first came across this thread, my aim was to retire at 60. This was my employer's original scheduled age for retirement and would pay out a final salary pension based on 40/60ths of final salary with the usual option of drawing down the 25% lump sum.

When did you begin planning and what drove the decision?
My planning was always very frugal and straightforward based on the above. Having joined the pension scheme at the age of 18, I had no more ambition other than to mould my life and financial status to reach retirement age with no debt, no mortgage, and to ensure my monthly income and outgoings made me relatively comfortable during retirement years.

What is the strategy for getting there?
See above.

How much of a relative decline in income are you prepared to take / did you take?
My expectancy was that I would always end up taking a drop in basic net monthly income of between 50-60% once retired. My annual pension is £14k.
For the past 10-20 years, I was employed on-call as part of my role and the additional income from that (allowances & overtime) paid for life's extras such as holidays, my Jaguar car and other bits and bobs. I also benefitted from Staff Sharesave Schemes which were always intended to fund special anniversary trips. Still have a few residual shares but value is only around £600.

What are your main concerns?
You can never be certain on how your health will hold out. I have thankfully been relatively illness free, although my main issue was not being as active as I could be. As a result I do admit to being overweight. However, do still play golf from time to time and promised myself I would increase visits to the golf club when I had the "free time" to do so.

For those already in early retirement - how is it progressing? What have been the good and bad surprises (financial and otherwise)?
As I've said, I did eventually decide to retire early. This was as a result of what I read here and was accelerated by a stress related anxiety episode I went through 2 or 3 years ago. After much soul searching, I decided that as far as work was concerned, enough was enough. This coupled with my employers increasing the normal retirement age to 65, left me with choice - stick it out for another 7 years with very little benefit as far as increased pension was concerned or take the plunge and go early to relax and enjoy life as best possible without the humdrum day to day work commitments. I opted for the latter.

Of course, there were a few bumps in the road over the years financially. As a result I could never set my sights on the heady financial statuses that some of you on here have achieved or aspire to. Whilst circumstance in a way dictated this for me, I have benefitted in recent years from inheritance now both my parents have passed. I own my property (jointly with my wife) - valued at approx. £170,000 (mortgage free) and also jointly own (with my sister) my parents property valued at £220,000 (so around £110,000 net worth to myself). The latter property is currently rented out netting me £325 per month. From my lump sum pension drawdown of £92000, I also have £65k set aside in a Notice Account which will generate monthly interest to cover ongoing golf club fees. £10000 in an easy access account with NS&I. The remainder was used to pay off mortgage (always was my plan) plus a few credit card debts and of course the obligatory 'post retirement' 3 week holiday abroad to visit son and grandson in Canada.

For me, life is good at the moment. Do what I want, when I want (wife occasionally influences this ) I put myself on a par with Marine Life's brother who seems to have taken a similar path as myself and is happy with his lot. There's a lot to be said for making life easier.

I'd welcome any replies - good or bad, advisory or derisory. Thanks for reading/listening.