Early-retirement wannabe

Slinky

Well, that's me done and finished at a couple of weeks past 55. Did the final part of the handover of my business this morning. Just got to tidy up my accounts etc.


We're moving house in a few weeks so anticipate being very busy with that.



Feels a bit odd!

bugslett

It is odd slinky. As you know I finished end of Aoril, may I was in every day, accounts to sort, warehouse to strip out, disposing of assets, licenses to terminate etc, this week I estimate around 7-8 hours....but I am enjoying the free time. Its wonderful to wake up and not have to do the to-do list just to keep pace. I'm feeling happy and moving house is going to keep you so busy that you'll be glad not to have to go in! Enjoy:j

claire1a

Hi all, I’ve read the first few pages but i’m Off to work now so thought it would post. I’m 34, single, annual income of £23,000 (so basic tax payer). I pay I to my work pension (6%both sides) and have paid about 60% of my mortgage.

I’m forever stressing about money and retirement and whether I can last until 67 (probably 70 by the time I get there) so have been wondering how to go about growing my savings/pension pot so I could possibly retire earlier (I’ve got 60 in my head at the moment)

I wondered if anyone has any tips/pointers to think about first and also any advice on pension overpayments, investments etc?

Thank you so much,

Claire

lisyloo

My gut feeling is 6% is not sufficient for an early retirement (although it is personal as to what level of lifestyle you want in retirement).

Does your employer offer a salary sacrifice scheme?
If so this is excellent because as well as 20% income tax relief you also save 12% employees NI and if your employer is generous they may even pass on their 13.8% NI.
Pensions are very tax efficient as when you retire (subject to the rules at the time) you’ll be able to take 25% tax free and your personal allowance (currently £12.5k?) each year tax free as well.

However you have to balance that against enjoying yourself now.
About 20% of us won’t get to retirement so it’s very much about balancing your desire for early retirment with enjoying yourself now and also having enough money outside of a pension that you could access should your circumstances change (you won’t be able to access your pension until 55 and probably 57 even if you fell on hard times).

What I would do in your situation at every pay rise is re-consider the balance between

Spending
Pension
Other savings

And remember you don’t need to do anything 100%, so at your next pay rise for example you could decide to put 1/3rd into pension, 1/3rd into savings and 1/3rd to keep to spend.

I do strongly recommend doing some sort of review.
I’m not financially sophisticated but if you take action (like paying a mortgage and paying into a pension) then the effects over several decades can be enormous e.g. owing a house.
I do know people who’ve just put it off and end up with nothing 20 years later.

So my advice is review (payrises might be a good time) and balance.

Sometimes it’s fine to spend.
I’m doing a bucket list trip next year, scuba diving to Galapagos. It’s expensive, but we’re in our 50s and we don’t anticipate being able to do the diving in our 70s. So spending is fine in the context of review and balance.

justme111

claire1a wrote: »

Hi all, I’ve read the first few pages but i’m Off to work now so thought it would post. I’m 34, single, annual income of £23,000 (so basic tax payer). I pay I to my work pension (6%both sides) and have paid about 60% of my mortgage.

I’m forever stressing about money and retirement and whether I can last until 67 (probably 70 by the time I get there) so have been wondering how to go about growing my savings/pension pot so I could possibly retire earlier (I’ve got 60 in my head at the moment)

I wondered if anyone has any tips/pointers to think about first and also any advice on pension overpayments, investments etc?

Thank you so much,

Claire

Hi claire
On your side is that your income while working is not that high so requirements for funding your lifestyle in retirement are not going to be too onerous. Another big bonus is that you have paid most of your mortgage by the age at which many of us just start with it.
If I were you I would check how much I need to support the current lifestyle , deducted whatever expenses are not going to be there is retirement ( mortgage, NI) and so would have my Number. Then looked up your pension - what is it invested in , how much is accrued , what is likely to be accrued (check on here as official projection from your scheme may be meaningless as they may have to be forced to do pessimistic assumptions) and take it from there.
But most important is not to worry as really living a happy life is most important and money at the end is not an aim but a mean for that happy life and has no point if you are miserable.

crv1963

claire1a wrote: »

Hi all, I’ve read the first few pages but i’m Off to work now so thought it would post. I’m 34, single, annual income of £23,000 (so basic tax payer). I pay I to my work pension (6%both sides) and have paid about 60% of my mortgage.

I’m forever stressing about money and retirement and whether I can last until 67 (probably 70 by the time I get there) so have been wondering how to go about growing my savings/pension pot so I could possibly retire earlier (I’ve got 60 in my head at the moment)

I wondered if anyone has any tips/pointers to think about first and also any advice on pension overpayments, investments etc?

Thank you so much,

Claire

Hi Claire,

You have several things on your side so stressing about retirement shouldn't be needed! Relax and take stock of what you have achieved so far- you have an idea or aim of retiring at 60, you are saving into a pension and finally you have 60% of your mortgage paid off at a relatively young age. Time is on your side!

We first tried to get a rough idea of what kind of retirement we wanted, then rough idea of what kind of income level we need to fund it- a low "must have to live", a middle "would like to have" and a high "luxury retirement level", then we looked at how best to save for our "number" aiming for the luxury level figure but being content to if we land in the middle level figure.

Tips- so assuming you have an emergency fund in place, are happy with your current lifestyle and spending levels, look at, how much your pension pot is now and when it pays out. Will that fund your retirement income needs? (Bear in mind that you will have no mortgage, pension saving, work related costs but other costs may increase such as utilities and entertainment) If so great, if not then you need to do something else to meet your goal income. That's where the decision making comes in.

Can you save more? Divert mortgage overpayments into savings?

Savings choices for retirement- first pension for the tax break, first put the maximum into it to get the maximum employers contribution, then look to see if the fund is a match for your own risk level- I'd suggest at 34 you would look to be 100% equities but that is where my risk level sits yours may not.

Other savings- maybe it would be better to put more into your current pension, if not maybe save into another pension or a LISA for the tax breaks. Or you may wish to put funds into an ISA. There is nothing wrong with having several "pots of money" earmarked for different stages of life or spending targets.

Mrs CRV has a DC pot to generate a lifetime income of around 4k pa when she retires, has a SIPP which she will draw down age 55-67 when her SP starts and this will be drawn down to zero but is being built up solely to fund early retirement at 55, has 3 months outgoings saved in an EF (I have the same 3 month sum to save), plus a little put by for other purchases.

So to sum up- identify your number, see what you already have towards meeting it, then where you will find any additional savings towards meeting it, then where is best for you to put those savings- Pension, LISA, ISA, National Savings and cash. Work out your risk level and start. There is nothing wrong with doing a bit of everything- mortgage overpayment, retirement saving and living a life now- there are no pockets in a shroud.

Good luck and well done for looking at it now.

atush

Claire,

Are you overpaying your mtg? If so, i'd stop and either up pension or open a S&S isa if you dont have one. An emergency cash pot of at least 3 months outgoings should come first.

Will your employer pay in more than 6% if you pay in more?

Have you done a full MSE of your outgoings? Have you done a spending diary to see if you have any waste?

Marine_life

Time for a short update and it's (possibly) a surprise for some.

As you will have seen from the last few pages I had been offered and accepted a short term posting to the middle east. As a result I had quit my previous consulting gig at the end of May with a view to having a couple of months off before starting my new role.

The problem with taking time off work is that it becomes addictive and the more time I spent away the less I was looking forward to the new role.

At the same time, the increase in tensions in the middle east and an unplanned delay in the visa process made me wonder whether this was serendipity and actually I was really meant to retire. :A

The final contributing factor was the (rather generous) CETV offered on one of our DB pensions meaning we are in a better position financially that we expected.

.......So.....I've taken the plunge and declined the new role and am now officially retired.


I can't say this means I will never work again but for the time being at least I'm just going to take each day as it comes.

I always had a vision of retiring as one where I would have a retirement party where people would say a few nice things on the Friday evening (while casting surreptitious glances at my office) , after which I would arrive home, throw my suit in a wardrobe and immediately develop a predilection for tweed and the archers. But it seems I've really drifted into retirement accidentally. Maybe that's the easiest way?

I'll write some more in the coming days but I felt it right to update all those who've had patience with my journey and the various gyrations over the last (almost) 9 years.

Well.......we got there in the end. :j:j

vulcanrtb

Marine_life wrote: »

.......So.....I've taken the plunge and declined the new role and am now officially retired.


I can't say this means I will never work again

Karmacat

Marine_life wrote: »

Well.......we got there in the end. :j:j

Congratulations!


I know what you mean about Middle East tensions - my own First World problem is that I'm looking at long cruises towards the end of next year, and a lot of them go through the Straits of Hormuz. I think I'd rather avoid the area, especially on a dirty great ship!