Early-retirement wannabe

hugheskevi

Since this thread popped up, I may as well add in a quick update

I had expected to be finished with work by now, but as is so often the case a few minor - but welcome - delays crept in.

Both myself and my wife have been offered paid exits at work, at a very fortuitous moment given we were leaving anyway. What isn't clear is exactly when we will leave, although it will be early in 2026.

Upgrading our new house has been a very expensive undertaking, but it will all be finished at the end of this month. We have had the entire exterior landscaped, including a new drive. Inside everywhere has been decorated, and lots of new flooring. We replaced an ensuite to our guest room too, as well as a new roof on the main house and also the conservatory, and bought a new car along the way when our faithful 13 year old Nissan Micra's starter motor failed. Fortunately the exit payments will cover all of that. Taking into account spending more on the purchase price than we envisaged, the cost of moving has been a few hundred thousand higher than planned a couple of years ago.

Taking into account all of the remaining work to the house, along with the most pessimistic assumptions about exit payments, we will be aged 48 when we leave work and retire. Our post 55 income will be about £75,000 p/a after tax, coming from personal pension, occupational, and State Pensions.

For the period 48-55 we will have a minimum of £37,000 p/a available from cash and stocks and shares ISAs, possibly more depending on the timing of exit payments and if they fall into 2026/27. There will also be surplus funds in our DC pensions, although that is inaccessible until age 55. Hence as we get toward age 55 we will start to withdraw from our mortgage offset savings account (currently fully offset, and will remain that way for at least 3 more years), and then replenish that at age 55 from tax-free lump sums. Doing this will add about £25,000 p/a, leaving an annual expenditure amount of about £62,000 to age 55.

Depending on exit date and type of exit, we might work longer and so get more salary, get higher exit payments, and/or get exit payments paid in 2026/27 and so benefit from new tax allowances. That has consequences for both the amount we get, and the distribution between cash and pension, as we will put everything subject to higher rate into pensions. Hence the figures above should only improve as they are based on the worst case of prompt exits at the lowest amounts all paid in 25/26.

I am very much looking forward to having some peace and quiet come November as all house works finish, and then just a few more months of work before full retirement ahead of Spring 2026, which is the most likely outcome. 

Although we spent far more on the house than planned, we are now living in a great place, modernised exactly how we like it. A bonus of it being much bigger than we either wanted or needed is that at least it is great for guests, with plenty of space for friends and their children, and the guest facilities are now really good with a modern room and ensuite with balcony overlooking a lake. It has been a very rapid change from living in London, having lived in our last house for 15 years and not really improved it much due to knowing we would be going travelling the Americas for a long time and renting it out or selling it. So the quality of life in our new place is on a completely different level.

So things are all coming together well, not quite as envisaged, not without hiccups, not without a lot more effort than expected, but everything is in a very good place and the future looks great.

Yorkie1

Congratulations - both on the house renovations journey and the potential exit plans bonus!

MallyGirl

That is all great to hear @hugheskevi. I was also lucky enough to get paid to leave which brought retirement in a year early for me but does mean husband is still working atm. I am hoping he will get his bonus in March and then either retire or move to reduced days.  My preference would be the former as I am a little in limbo now, not wanting to do things that he would also want to do. Exercise and the garden are not his bag so I have plenty to occupy as much of my time as I want occupied.

chile_paul2

Great to see this post towards the top of the forums again and to read the updates from @hugheskevi .

Long-time lurker but first-time poster here. I’ve been reading through lots of the great discussions on early retirement over the years and thought it was time to share my own situation and ask for a bit of perspective from those further along the journey.

Using the questions from the opening post back on page 1 

Who is aiming for early retirement (or who has already done it)?
I’m 45, married with two daughters aged 14 and 10. My wife (43) retired from paid work when our girls were born and is now a stay-at-home mum, doing some voluntary work in the community and helping out our elderly parents whose support needs are increasing year on year. I’m working full-time in a well-paid but (currently) not overly demanding job. My goal is to either retire early before 50 or at least meaningfully ramp down within the next 2–3 years.

When did you begin planning and what drove the decision?
I started seriously planning around 5 or 6 years ago, when I realised I’d lost the motivation and passion I once had for work and the company I was working for made some changes in strategy that I was not particularly supportive of. The thought of continuing for another 20+ years just didn’t appeal, and it became clear that early retirement might actually be a realistic option if I planned carefully.

Current joint financial position:

S&S ISAs: £380k

Children’s ISAs: £57k (intended for them when they turn 18)

DC Pension: £275k

DB Pension: £16k p.a. from age 67

Cash ISA: £30k

Cash savings: £12k

Mortgage: £155k outstanding at 1.25% fixed until Sept 2026 (house value ~£470k)

Credit cards: £27k across 0% deals (aiming to clear before mortgage renewal next year)

The S&S ISA should grow to approx £530k by the time I'm 48 with the DC Pensions at ~£350k 

Strategy for getting there:
My plan has evolved over time. Initially, I was targeting complete retirement at 48, and my cash flow and drawdown spreadsheets suggested that was feasible, albeit not without risk. More recently, though, I’ve been leaning towards a phased slowdown:

• This year I’ve moved to a compressed fortnight (10 days into 9).

• Next year, I’m planning to take a month of statuatory unpaid parental leave to spend more time with the kids while they still want to hang out with us!

• Around age 47/48, I’m considering shifting to a 3-day working week – keeping the benefits of part-time employment (healthcare, sharesave, salary sacrifice car scheme, etc.) while easing into the lifestyle change and having the flexibility to increase hours again if needed.

This gradual transition also gives me time to work out what I’m “retiring to”, not just “retiring from”.

Upcoming financial decisions:
The big one on my mind at the moment is the mortgage renewal when my fix ends in Sept 2026. Paying it off is possible but doesn’t seem the most efficient option. I’ve been considering switching to interest-only and clearing it around age 57 using DC pension tax-free cash – but having read hugheskevi’s recent posts I’m also going to consider whether offset mortgages might be an option.

Decline in income and spending assumptions:
I’ve tracked our spending in detail for the last four years, so I’ve got a pretty accurate picture of what we actually need.

We currently spend around £46k per year on day-to-day living for our family of four, plus around £9k on mortgage repayments and £1.5k on major one-off purchases (cars, house projects, etc). My drawdown models assume maintaining this level of spending (inflation-adjusted), with step-change reductions when the kids reach adulthood and (hopefully!) become more financially independent at age 21.

We don't have any major desires for lengthy long-haul travel, but plan to spread our wings a little bit more in the next 12-18 months to test out that assertion.

Main concerns:

• Managing the transition – I’ve got plenty of hobbies outside of work (gardening, hill-walking) but do somewhat wonder what I will do to fill the time, especially in the long, dark, cold winters.

• Balancing the desire for more time now whilst we're healthy with the need for long-term financial security in what appears to be an increasingly uncertain world.

• In the short term, making the right call on the mortgage in 2026.

michaels

I went for flexible part time working in order to spend more time with my kids, accepting that this pushed back my retirement date overall. I looked at the 15 hours extra time per week as taking some of my retirement early by installments. 5 years at 3 days a week is actually better than 3 years at 5 days a week as you pay less tax.

With a current account offset mortgage you can actually get really cute on tax and even universal credit.....

Yorkie1

Without being able to comment on the details of your post, you don't mention whether you intend to support your children through university, if that is what they wish to do. Or whether their ISAs are intended for that?

FIREDreamer

michaels said:

I went for flexible part time working in order to spend more time with my kids, accepting that this pushed back my retirement date overall. I looked at the 15 hours extra time per week as taking some of my retirement early by installments. 5 years at 3 days a week is actually better than 3 years at 5 days a week as you pay less tax.

With a current account offset mortgage you can actually get really cute on tax and even universal credit.....

With a decent ISA it was possible to do very well on child tax credits.

On Universal Credit it would be marginal and would be for a max of one year with a large monthly deduction for capital of £16,000.

So I didn’t migrate. And retired a few months later instead. 😀

chile_paul2

Yorkie1 said:

Without being able to comment on the details of your post, you don't mention whether you intend to support your children through university, if that is what they wish to do. Or whether their ISAs are intended for that?

Yes, the intention would be that we support them through university should they choose to go. Whilst they will have access to their cash ISAs when they turn 18 we will be trying to instil the MSE saving and budgeting behaviours and encourage them to be saving most of it for a future house purchase or similar.

chile_paul2

michaels said:

With a current account offset mortgage you can actually get really cute on tax and even universal credit.....

Interesting, tell me more!

michaels

FIREDreamer said:

michaels said:

I went for flexible part time working in order to spend more time with my kids, accepting that this pushed back my retirement date overall. I looked at the 15 hours extra time per week as taking some of my retirement early by installments. 5 years at 3 days a week is actually better than 3 years at 5 days a week as you pay less tax.

With a current account offset mortgage you can actually get really cute on tax and even universal credit.....

With a decent ISA it was possible to do very well on child tax credits.

On Universal Credit it would be marginal and would be for a max of one year with a large monthly deduction for capital of £16,000.

So I didn’t migrate. And retired a few months later instead. 😀

Yeah - I waited as long as possible to migrate an then retired 12 months after being forced too.  But then I also had savings outside of pension, current account mortgage could have addressed that problem.