Early-retirement wannabe

blisteringblue

Loving all the updates to my favourite thread on MSE

Personally for any who know me from earlier up the pages, have warmed to my new "old" role (played hard ball when I was full on getting demoted after stupidly announcing I was retiring on my 55th birthday which has now worked in my favour). So work is great, managing 2-3 days from home and a lot less M6.

Am actually deciding if I go on my 55th birthday now, or carry on until the end of the tax year? Can't decide if the extra 4 months are worth it? Will decide a bit closer to the day.

But hopefully 1654 days remaining :cool:

AnotherJoe

blisteringblue wrote: »

Am actually deciding if I go on my 55th birthday now, or carry on until the end of the tax year? Can't decide if the extra 4 months are worth it? Will decide a bit closer to the day.

But hopefully 1654 days remaining :cool:

Not that i wish to encourage the "one more year" syndrome, but here's something for you to ponder.

I was originally going to pack it in end of the tax year for simplicity. I didn't because it would have meant I'd lose out on a substantial bonus. So i worked for three months into the new tax year.

Which got me thinking, that even without the bonus,for those 3 months i'd have got NI credits and paid next to no tax compared to normal (I had to reclaim it) , which means something like an effective 30% payrise for those last 3 months.

And i dont know how your job is but in mine, with a lot of customer contact, once it was known i was going, there was a handover process to colleagues, had quite a few goodbye lunches with customers, and did next to nothing since there was no point anyone handing me new work.

So maybe for you, an extra month or two would be much more financially lucrative than you'd think, and those weeks might end up as if you'd retired anyway.

Bravepants

Anotherjoe raises an interesting point about retiring in the middle of the tax year. I too get a bonus (not huge) at the end of April every year. My birthday is at the end of May, so I would have to work until end of May of the year of my retirement.



That's two months into the new tax year. Anotherjoe, you said you had to reclaim the tax. What does that involve?



Ideally of course I would start drawdown from my SIPP from 1st April for tax reasons, BUT I wouldn't be allowed until my birthday AND I wouldn't want to miss out on my bonus.

AnotherJoe

Theres a form you fill in and send off or i think you can even just phone them.
I just ended up doing my self assessment first thing when the tax year ended and that sorted it out.

I waited because after a few months i put some more money in my pension (up to the max) then i had my wife xfer some of her tax allowance to me and by the time all that had happened there was only a couple months to go.

atush

ibizafan wrote: »

To think, I was against buying Korean cars for years until my OH persuaded me to. Now it’s Hyundai all the way for both of us.

I sold my hyundai recetnly and bought a Kia lol

atush

I should probably stop reading this thread. Thought the OH would retire early next year but has just put it off. 2 years now.

Was offered a wodge of cash if he didnt sell all his shares and stays in for 2 years.

AnotherJoe

atush wrote: »

I sold my hyundai recently and bought a Kia lol

Both the same company, effectively.

atush

kia has 2 years extra wrrnty though

Dont know if I am staying with Kia or will go back to hyundai. I have at least 7 years to decide lol.

Deneb

AnotherJoe wrote: »

Which got me thinking, that even without the bonus,for those 3 months i'd have got NI credits and paid next to no tax compared to normal (I had to reclaim it) , which means something like an effective 30% payrise for those last 3 months.

I chose my retirement date last June, on the basis that I would have earned just enough to bank a qualifying year for NI contributions towards the NSP. It means I only need to buy another 4 years instead of 5. Having been contracted out almost my entire working life I can't get the full amount, but it will only be a few pounds a week short.

Couldn't do anything about tax though. My salary was taxed at BR as my personal allowance was already completely allocated to one of my pensions.

Lungboy

I'm looking into retirement planning now, and have been running some numbers. In retirement, I estimate that £16k gross per year will be plenty (wife will be working for at least 6 years after i retire). If I get to state retirement age I'll get a full state pension plus an LGPS pension of £17.5k. That's way more than I need to live on, so it looks like retiring early is the way to go. The breakeven point seems to be at 59, where my LGPS is reduced to £8k, which combined with my state pension at 67 will put me at the £16k target. That means I need to fund the £8k gap between ages 59 and 67. I'm 39 now, so 20 years to accrue £64k to fund that retirement gap. That sounds....actually very doable. It's only £3.2k a year with no compounding allowed for, so put in a SIPP or similar with the aim to only last 8 years, retirement at 59 looks realistic. Factor in a 3% interest growth and my pot would let me retire at 58, 4% and I'd be well on my way to 57.

Do these numbers seem correct, or am I missing something blindingly obvious?