Early-retirement wannabe

crv1963

Hi Marinelife


Interesting discussion that you've started.


I'm 53, can retire with my pension from work October next year at 55. Currently off sick- due to return next month following a heart attack. I have been sent by my employer on a Pre-Retirement Course. This was really good. You need to think of what you will do with the time off, currently most have 8 hours sleep, 8 hours work and 8 hours travel/ leisure per day. Retire and you have 8 hours sleep and 16 hours leisure.


My advice is plan what you would do to fill the 8 hours work time after you retire, find a hobby, volunteer work- loads of opportunities and this may lead to learning new skills, care for grandchildren, get a dog, family history- whatever floats your boat. For me this current extended forced period of time off work has been a godsend- I don't know how I fit work in! I love gardening and fortunately am able to do almost everything I did pre- heart attack, I also have time to train my border collie and we have started one morning a week training with sheep!


Look carefully at expenditure and other than mortgage don't expect it to drop indeed it may increase slightly. Work out if you need 2 cars, we will so have to budget accordingly.


My wife who is 3 years younger and no personal pension other than the recent workplace pension is also going to retire when I do. So we are currently looking at bridging the gap between my formal work retirement at 55 and state pension kicking in at 67.


So we've worked out expenditure currently and where (if at all) we can cut it, expected future expenditure including holidays. We have worked out we need 600 per month on top of my pension so wife will work part time and I will work agency until I'm 60, save most of my earnings tax efficiently- I'll invest into further pension for me, put the max allowed into pension for my wife anything left over into ISA.


At 57 wife will draw down the 600 pm from her pension so we think we have it covered. Our mortgage is due to finish when I hit 55 so we wont have that major payment and some freedom in terms of relief!


I'd watch your life time pension allowance carefully and if suitable to your circumstances put money into your wifes pension pot as we plan to do as the tax relief can't be matched with savings rates and I'm not competent to advise anyone else where to invest their money, but if she is also nearing her maximum allowance then put it into other investments or even premium bonds!


Work out what retirement is for- an interesting point we discussed on my course was "if you don't like work you'll dislike retirement". In the workplace you get social interaction- good and bad, routine and of course money. You need to create a degree of these when you retire. Currently most likely you'll have social interaction from work, family and childrens' friends parents- these disappear as you grow older and research shows social isolation increases rates of depression in the older population and reduces life expectancy.


For me I've got my garden, have taken a share in an allotment (which will hopefully provide a bit of social interaction as well as exercise, the veg is just a bonus!) and when I finally finish at 60 (or a bit sooner depending on the savings and availability of work) I may do a bit of voluntary work. And of course sheepdog trials!


Hope my thoughts help a little in your planning, my work is stressful and well paid but you need to identify what will replace it, my wife has decided we will get a camper van and travel a bit with our dogs so don't forget the other half has a big say -it's their life too!

bugslet

Hi crv

Good to hear that you are recovering well and looking forward to your retirement.

The original post was back in 2010, marine-life has managed to retire now. There's only 163 pages to read:D

Marine_life

crv1963 wrote: »

Currently off sick- due to return next month following a heart attack.

I hope your recovery is going well. Have you identified and changed the things that led to the heart attack in the first place?

crv1963 wrote: »

I have been sent by my employer on a Pre-Retirement Course. This was really good. You need to think of what you will do with the time off, currently most have 8 hours sleep, 8 hours work and 8 hours travel/ leisure per day. Retire and you have 8 hours sleep and 16 hours leisure.

I am quite fortunate in that I've been able to make a gradual transition, whereby I had one year working from home but still full time and this year I am now working one day a week. But to be honest the one day a week is becomign difficult to fit in! I already have an offer to go back full-time but its not going to happen.

crv1963 wrote: »

My advice is plan what you would do to fill the 8 hours work time after you retire, find a hobby, volunteer work- loads of opportunities and this may lead to learning new skills, care for grandchildren, get a dog, family history- whatever floats your boat. For me this current extended forced period of time off work has been a godsend- I don't know how I fit work in! I love gardening and fortunately am able to do almost everything I did pre- heart attack, I also have time to train my border collie and we have started one morning a week training with sheep!

I hate gardening and when I was working I was lucky if I managed to mow the lawn once a once. Now I am not working.....its still once a month....other things just seem more important.
At the moment I am filling my days with sports (biking and hiking) as well as multiple visitors over the summer. I'm also enjoying my blog ....but have had a lot less time to write than I thought! We intend to spend about three months a year travelling so that will also swallow up a big chink of time.


Anyway - thanks for taking the time to write!

jennyjj

westv wrote: »

I mentioned to my wife just in passing that, if I was made redundant, I'd probably retire full time and not actively seek paid employment.

The cat enjoyed my dinner. :D

LOL. Keep working on it. You may need to practise your script a bit and change the way you pitch the proposition.

If you have the money to do it, then I firmly recommend it.
You'll struggle to find any forum members here that regretted retiring early.

At the very least, consider requesting a shorter week.

crv1963

Hi Marine-life


Yes I'm recovering well as far as I know! Clear identifiable cause of heart attack- 1) smoking 20+ cigarettes per day for 30 years, 2) high salt intake, 3) stressful life- poor work/ life balance.


I should know next week when I can return to work and will b making changes to the balance, smoking- easier quitting than I thought and as a bonus, stopping smoking and reducing alcohol by 2 bottles of wine a week has released £250 per month to save towards retirement.


Time off sick has enable me to sort power suppliers- good deal at a fixed rate, telephone, internet and tv and sort out getting pension forecasts and planning what we actually need to do to move to proper early retirement!

lco199

Hi all,

I've enjoyed reading this thread (mostly whilst at work - wishing the hours away!) and it's been interesting reading the stories of how people have reached a position of financial independence. I'd appreciate any thoughts/feedback about my current plan - aiming for early retirement around 50 if possible! (earlier would be great, but probably unlikely).

DETAILS
Age: 37
Marital status: single
Kids: none and no plans
Mortgage - c£175k (due to be paid off at age 55)
Home - value c£320k
Private stakeholder pension - value c£25k
Civil service pension - projected value of c£23k p.a at age 50 (pot builds up at 2.32% of salary p/a)
Savings and investments - value c£25k (cash, P2P and S&S ISA)
Gross salary c£51k (take-home £35.5k p.a) + 8.5% bonus

SAVINGS v EXPENSES

Net pay (after bonus, pension, tax etc) - c£38k
Living expenses - c£23k p/a
Savings - c£15k p/a

FUTURE PLAN

The intention is to try to build up a pot of between £250k to £300k (in today's money) in savings (ISA etc) by age 50 - this I have modelled using annual savings of £13.5k a year and an real return of 3.5% (inflation + 3.5%) based on having the funds invested in global index tracking funds.

I would then use this pot to stop full-time work around age 50, draw down on this pot until mid-60s and then start drawing my actuarially reduced civil service pension. I'll need around £105k from age 50-55 (£21k p/a - living expenses will be a bit less than now due to not paying annual rail ticket costs and expensive work lunches!) then only £10k a year from 55 onwards (due to mortgage being paid off).

This all sounds pretty frugal? But will still allow a few hundred £ a month for leisure activities. If I keep the pot of £250k-£300k invested in the markets whilst drawing down then I should still have £100k-£150k left by mid-60s, (I will have also drawn down my stakeholder pension pot to zero) at which point I'll have a healthy pension income of around double my living expenses + some savings left for 'whatever'.

PENSION

I have an option to buy up to £6,600 p/a additional Civil Service pension, which I worked out will cost me £175 net (after tax) per month over the next 13 years. I think this is a pretty good investment - even if I decide to take the pension early (actuarially reduced).

For info - some of the actuarial rates:

At age 57 - 56%
At age 60 - 65%
At age 65 - 85%
At age 68 - 100% (my state retirement age)

So my pot would be worth £23k p/a currently (by age 50) and I could up that to nearly £30k p/a with the added pension - then even if I took this at say age 60 - it would net me c£20k p/a with the reduction (more than I should need). I haven't factored in state pension, but obviously that would add some additional income too (and I am aware of the benefit of delaying this too).

CONCLUSION

Does this generally sound 'reasonable'/realistic?

In short, I'll save up some cash, quit work around 50, live off my savings/minor stakeholder pension till 60-65ish then coast along on a decent DB pension scheme + rest of my savings till I die!

I don't really see any point working beyond 50 if at all possible? I mean it's a lot of time (inc travel) for little personal benefit (besides money) - I'd much rather be doing any number of other things.

Any fatal flaws in my plan?

Many thanks!,
Luke

atush

you are 37, which is still young. How certain can you be that you will never marry? If you do, your ideas about having kids could change?

buying added pension, then reducing it by taking an actuarial reduction may not be the wisest choice, do re work out your maths on this. Esp compared with putting the money into the DC pension which will be accessible by age 55-57. So you might want to skew a little of the ISA money into pension- but you could do this in the few years before you go anyway.

And age 50 is still young (well it is for me lol). Dont necessarily be wedded to that age/date.

I dont really see any fatal flaws, but you might want to work a year or 2 longer just to give yourself some wiggle room.

My OH is older than me, and insisted he would retire at 60, now he is saying 64. I say whatever you decide, but he is happy what he is doing now (wasnt when he had planned to go earlier).

But this is our 3rd/4th change, as he had planned to go in his 50s. but we had twins later in life (not what we were expecting lol) and that put us back as we had to wait until they had graduated University (which they now have).

So, just build in some flexibility to your plan.

lco199

Hi Atush,

Appreciate the reply.

The above is just a 'rough plan' at the moment i.e is this all possible. I'm wanting to have some plan/direction to build towards, although nothing is set in stone, certainly.

Marriage/kids - of course, you may be right, this could well be open to change, but it's not on the cards right now. Kids would likely mean no early retirement!

With regards the added pension - I have done some maths. To get an equivalent annuity would require me to have the money invested in a DC scheme over the same time-frame, getting 5% + inflation p/a, and then buying an inflation linked annuity offering 5% - no guarantees I could achieve this. The actuarial reduction is pretty neutral by my maths i.e if I took it at 57 I'd get a similar lifetime payout to waiting until 68 for the full benefit over a shorter time-frame (well, it's neutral with life expectancy around 85). So I figure its good value to pay into this, regardless of the age I decide to start drawing down?

Also - you're right, an extra couple of years working would make a huge difference. We'll see how the finances look nearer the time, but perhaps I may look to reduce to part-time instead. I may put some of the ISA money into my DC pension nearer the time, to get some of the tax benefit, dependent on how well the investments do!

Thanks,
Luke

madeinireland_2

lco199 wrote: »

Hi all,

I've enjoyed reading this thread (mostly whilst at work - wishing the hours away!) and it's been interesting reading the stories of how people have reached a position of financial independence. I'd appreciate any thoughts/feedback about my current plan - aiming for early retirement around 50 if possible! (earlier would be great, but probably unlikely).

DETAILS
Age: 37
Marital status: single
Kids: none and no plans
Mortgage - c£175k (due to be paid off at age 55)
Home - value c£320k
Private stakeholder pension - value c£25k
Civil service pension - projected value of c£23k p.a at age 50 (pot builds up at 2.32% of salary p/a)
Savings and investments - value c£25k (cash, P2P and S&S ISA)
Gross salary c£51k (take-home £35.5k p.a) + 8.5% bonus

SAVINGS v EXPENSES

Net pay (after bonus, pension, tax etc) - c£38k
Living expenses - c£23k p/a
Savings - c£15k p/a

FUTURE PLAN

The intention is to try to build up a pot of between £250k to £300k (in today's money) in savings (ISA etc) by age 50 - this I have modelled using annual savings of £13.5k a year and an real return of 3.5% (inflation + 3.5%) based on having the funds invested in global index tracking funds.

I would then use this pot to stop full-time work around age 50, draw down on this pot until mid-60s and then start drawing my actuarially reduced civil service pension. I'll need around £105k from age 50-55 (£21k p/a - living expenses will be a bit less than now due to not paying annual rail ticket costs and expensive work lunches!) then only £10k a year from 55 onwards (due to mortgage being paid off).

This all sounds pretty frugal? But will still allow a few hundred £ a month for leisure activities. If I keep the pot of £250k-£300k invested in the markets whilst drawing down then I should still have £100k-£150k left by mid-60s, (I will have also drawn down my stakeholder pension pot to zero) at which point I'll have a healthy pension income of around double my living expenses + some savings left for 'whatever'.

PENSION

I have an option to buy up to £6,600 p/a additional Civil Service pension, which I worked out will cost me £175 net (after tax) per month over the next 13 years. I think this is a pretty good investment - even if I decide to take the pension early (actuarially reduced).

For info - some of the actuarial rates:

At age 57 - 56%
At age 60 - 65%
At age 65 - 85%
At age 68 - 100% (my state retirement age)

So my pot would be worth £23k p/a currently (by age 50) and I could up that to nearly £30k p/a with the added pension - then even if I took this at say age 60 - it would net me c£20k p/a with the reduction (more than I should need). I haven't factored in state pension, but obviously that would add some additional income too (and I am aware of the benefit of delaying this too).

CONCLUSION

Does this generally sound 'reasonable'/realistic?

In short, I'll save up some cash, quit work around 50, live off my savings/minor stakeholder pension till 60-65ish then coast along on a decent DB pension scheme + rest of my savings till I die!

I don't really see any point working beyond 50 if at all possible? I mean it's a lot of time (inc travel) for little personal benefit (besides money) - I'd much rather be doing any number of other things.

Any fatal flaws in my plan?

Many thanks!,
Luke

It's probably fine. I retired last week and I would say I have more in terms of savings and pensions etc but I am married so it covers both of us and my wife is still working for a bit longer. I am also 56 which means I have to cover less time - but was still worried about taking the step.

I am however a bit bored already (not in a major way and I am sure that will change as I get settled) and would be concerned that 50 may be too young with a lot of potential changes before you get there.

Good luck!

crv1963

Hi Ico199


Great plan and hope it works out for you. I too have spent time working out our figures and although we could scrimp with an earlier retirement I've decided (as I do like my work) to work to 62 while my wife (who is fed up of her work) will retire at 57.


We've done the maths and with a concentrated effort with our savings and the information and knowledge available so freely here we think we can retire with a comfortable enough life style- not globe trotting but couple of holidays a year abroad.


I'd advise do make sure you pay up your NI contributions to ensure full state pension 8k a year is actually a decent income if added to SIPP/ PP/ Savings at least we have factored it in to our sums.


Best Wishes