Early-retirement wannabe

Triumph13

enthusiasticsaver wrote: »

Do I pay the NI contributions yearly if I decide to go ahead and purchase the extra years or is it best to wait until the year before my state pension kicks in and pay the 3 additional years in one hit? Does that £750 move at all - ie get more expensive the closer to spa I get?.

The rates don't change as you get closer to SPA, but they do generally increase with inflation each year. You have up to 6 years to pay, but I'm not sure how long you have to still be able to pay at the original rate rather than today's rate. I seem to recall it was something less than 6 years (3?) but it's all screwed up a bit at the moment by the extended leeway people were given around the changeover to the New SP. Per the website the current year costs £741 - or considerably less if your circumstances and/or morals allow you to pay the self-employed Class 2 instead.
Choosing when to pay obviously has an element of 'how much do I trust the govt not to change the rules?', but if you are either a) happy they won't change, or b) think they'll reduce the number of years needed (dream on), or c) worried about getting hit by a bus before SPA, then probably best to either stick the cash in a savings account and pay just before you lose the ability to pay at original price, or b) stick it in the stock market and pay at the very last minute banking on getting better than inflation returns.

gadgetmind

enthusiasticsaver wrote: »

That is a lot cheaper than paying £750 as only £2.85 per week but the gov.uk site says you have to be making profits of over £6,025. As I am not self employed and don't have any wish to be I am not sure how I would qualify for that.

With profits of that you *must* pay Class 2, but you can voluntarily pay it with close to zero profits. My wife is self employed as a free lance photographer, takes a few pictures and flogs a hand full of calendars per annum, and has been doing class 2 for many years with only around £100 of turnover and zero profits.

You have to do a tax return but that's no big deal.

It's ending soon.

enthusiasticsaver

Linton wrote: »

The £750 is a fixed amount independent of your age. You can pay the current year's contribution monthly via DD if you wish - it may simplify cash flow.

Thanks. I have been reading up and the gov.uk site says that it can be paid by direct debit monthly, quarterly or annually.

Triumph has said below that paying the 5th year would not be worth it but I am not sure how I find out how much additional pension I would get for the £750 voluntary contribution for each year. Is that £190 post tax the same for everyone?

gadgetmind

Class 2 is now paid annually via self assessment. There is a box on the self employment page that you tick to pay voluntarily.

Triumph13

enthusiasticsaver wrote: »

Thanks. I have been reading up and the gov.uk site says that it can be paid by direct debit monthly, quarterly or annually.

Triumph has said below that paying the 5th year would not be worth it but I am not sure how I find out how much additional pension I would get for the £750 voluntary contribution for each year. Is that £190 post tax the same for everyone?

Easy-Peasy. 35 years gets you £159.55 so each individual year gets you £159.55/35 = £4.55 as long as you are still no higher than £159.55 in total. £4.55 a week is £237 a year pre tax which in turn is £190 a year for a basic rate tax payer.
You only need collect your pension for 4 years to be quids in on years 2 to 4. For year 5 you'd need to live to well over 150 to make it worthwhile.
The max extra you can get benefit for is this year (£4.55 a week), three further voluntary years (£4.55 a week each) and then a fifth year would just give you the remaining 20p a week to get you to the maximum £159.55

gallygirl

Marine_life wrote: »

We've come to associate FI with RE, but we maybe think about FI as simply opening the door to the opportunity to take back control of what you do. To operate on your terms.

Well said ML :T.

Personally though in the last few years I found myself increasingly thinking 'I want my life back', ran out the door (with no pay-off) as soon as I could and have never looked back. I have no time to do all the things I want to do and love living in Spain with winter sun - today was spent outside with just a dress on, clear blue skies all day :T. Turns out the job I've been looking for all these years was retirement .

Mind you - no-one pointed out to me that all the 'life admin' stuff has to be done in your own time :eek::rotfl:.

True_Blue_64

Hi All, I thought I would add my plans to this excellent thread to gauge some views.

I will soon be 54 and would like to retire at some point over the next year. From a financial POV I have the following !!!8216;pots!!!8217; to provide an income:

1. DB pensions of £14,750 pa from age 54 (actuarially adjusted), of which £12k is index linked. The reduction between age 54 and 55 is 5% (thereafter 3% each year until age 60).
2. 2x DC pensions which currently total £190k, with £3k a month going in.
3. State pension of £8,300 pa from age 67 (no further NI contributions needed according to my forecast).
4. Savings and investments of £130k mostly held in ISAs

I have no mortgage or other debts, although I have 2 daughters who will live back at home for a time when they finish university, so the following monthly outgoings take account of that:

Grocery: 350
CT: 230
Gas/elec: 80
Water: 28
Bband/phone: 40
Sky: 60
Car ins: 25
House ins: 20
Pet ins: 55
Critical illness ins: 10
Charity: 10
Personal spend: 200
Season ticket: 50
Car/house maintenance: 150
Car tax: 10
Gifts: 100
TV licence: 12
Car/holiday fund: 250

Total: ~ 1,700

I would welcome any views, in particular:

- financially, is my idea of retirement in the next year a realistic one?
- the best way to structure my income needs from the available pots?
- the main risks you see with my plan?

Thanks

Silvertabby

True_Blue_64 wrote: »

Hi All, I thought I would add my plans to this excellent thread to gauge some views.

I will soon be 54 and would like to retire at some point over the next year. From a financial POV I have the following !!!8216;pots!!!8217; to provide an income:

1. DB pensions of £14,750 pa from age 54 (actuarially adjusted), of which £12k is index linked. The reduction between age 54 and 55 is 5% (thereafter 3% each year until age 60).
2. 2x DC pensions which currently total £190k, with £3k a month going in.
3. State pension of £8,300 pa from age 67 (no further NI contributions needed according to my forecast).
4. Savings and investments of £130k mostly held in ISAs

I have no mortgage or other debts, although I have 2 daughters who will live back at home for a time when they finish university, so the following monthly outgoings take account of that:

Grocery: 350
CT: 230
Gas/elec: 80
Water: 28
Bband/phone: 40
Sky: 60
Car ins: 25
House ins: 20
Pet ins: 55
Critical illness ins: 10
Charity: 10
Personal spend: 200
Season ticket: 50
Car/house maintenance: 150
Gifts: 100
TV licence: 12

Total: £1,420

I would welcome any views, in particular:

- financially, is my idea of retirement in the next year a realistic one?
- the best way to structure my income needs from the available pots?
- the main risks you see with my plan?

Thanks

1. Are you sure about your State pension forecast? With that level of DB pension you may have been contracted out for some time.

2. Will your daughters be contributing to the household income?

True_Blue_64

Hi Silvertabby,

I!!!8217;m as sure as I can be on the state pension forecast. I started a thread on that last year and ended up talking to the government helpline. They confirmed that I had reached the maximum although I!!!8217;m still a bit dubious.

I will expect my daughters to pay me a modest amount to cover groceries but haven!!!8217;t given this a lot of thought tbh.

One other thing to mention is that I expect I will want to use these funds for occasional bigger ticket expenses such as holidays, a new car at some point. On the other hand I will probably downsize in the next 5-10 years, although I haven!!!8217;t factored that in.

Thanks

MallyGirl

probably ought to be factoring in a contribution to a replacement car fund - what you have now is unlikely to last forever.
No car tax?
I would love to have fuel bills as low as yours - will they still be that low if you are home more?