Must I stay or can I go

bigchipper

gadgetmind wrote: »

Not at present, but might be if/when the inheritance arrives.

You could put (say) £10k pa into a pension for your wife and HMRC would then add another £2.5kpa as tax relief. After 55 (or later) you get to take 25% of the pot tax free and the rest as income for your wife.

However, this is marginal for you as your wife will be paying 20% tax on it after SP age as SP+NHS will use her personal allowance. You will gain on the 25% tax free and on getting more pension income tax free before SP.

Anyway, I thought I'd float it so you can model it and see if it works.

There is also the option of using the inheritance to buy added pension in my own Classic civil service scheme. It all really depends if this yields a better return than investing

gadgetmind

bigchipper wrote: »

It all really depends if this yields a better return than investing

I'd have guessed it would but don't know the numbers.

Anything with an index-linked and risk-free return of around 5% is well into "bite their hands off" territory IMO.

calypso_rhapsody

I think you should give the part time employment idea serious consideration - the shortfall that you are talking about until state pension could probably be covered by working say 1 or 2 days a week (depending on the nature of the work). And maybe you can find something you enjoy doing? Then you would have the inheritance to cover the gap post SP.

Also think hard about your expenditure .. what will you save (or spend) as a result of your not working? could you reduce expenditure without hitting lifestyle to bridge that gap at least a bit?

bigchipper

calypso_rhapsody wrote: »

I think you should give the part time employment idea serious consideration - the shortfall that you are talking about until state pension could probably be covered by working say 1 or 2 days a week (depending on the nature of the work). And maybe you can find something you enjoy doing? Then you would have the inheritance to cover the gap post SP.

I am still 13 years from current expected State Pension age of 66 but if I continue working where I am I should be able to afford to comfortably retire in around 6 years time at 60 without working at all (unless i really wanted too). By then the mortgage will then be paid and kids will be through uni and my employer pension of £17k pa allied with even cautious returns on around £275k of inheritance, pension lump sum and endowment cash (supplemented by state pensions in due course) should be more than enough to see us through another 30 years or so even at current expenditure levels and allowing for some depletion of capital.

My real query is i suppose if I took the early retirement package could I get investment returns sufficient to allow me to get out even earlier.

calypso_rhapsody wrote: »

Also think hard about your expenditure .. what will you save (or spend) as a result of your not working? could you reduce expenditure without hitting lifestyle to bridge that gap at least a bit?

Agreed Ive based my calculations on the same level of net salary we get now (less mortgage related costs) but in reality I think our net spending would reduce.

calypso_rhapsody

Well i think that the replies posted by others suggest that it would be a struggle to get returns to bridge all of that gap. But if you can earn 4% gross on £200k (that's £8k a year) then after tax that's roughly £500 pm. With a haircut on expenditure it starts to look more possible..

Good luck with the spreadsheet!!

Bigmoney2

Also remember that if you take the pension option, it may look a lot less than your salary, but you will not pay NI on it and there will be no pension contributions going out. Commuting costs will be less, and you wont be buying coffees, sandwiches, putting into collections etc.

Totton

Have you considered the cost of going to work, for example fares, clothes, meals etc? If not then these expenses can make the look picture look a little healthier.

There was also a thread some time back on how much you actually needed to live on in retirement, the figures were quite low.

Good luck on getting out of the rat race, we are only here once :-)

Mickey

SliAbhaile

Totton wrote: »

Have you considered the cost of going to work, for example fares, clothes, meals etc? If not then these expenses can make the look picture look a little healthier.

There was also a thread some time back on how much you actually needed to live on in retirement, the figures were quite low.

Good luck on getting out of the rat race, we are only here once :-)

Mickey

I couldn't agree more. Not only will the costs associated with getting to work disappear but you will discover you don't need to 'reward' yourself with little gifts "Oh, it's been a hard day I'll treat myself to a new ....whatever". It's amazing how your expenditure falls when you are not in the rat race.

Life isn't a dress-rehersal, we are only here once, and if you are miserable in your job you are already rushing towards an early grave. Get out, take time to take stock and you might find you want to do other work later.

I left full time employment in my early forties, I was lucky enough to build up a good lump sum. At the time I swore I would never work in my industry again. I have nothing like your pensions to look forward to but by careful expenditure and careful investment my lump sum is sustaining my lifestyle. I find now, ten years later, I've started dabbling in my old career again on a free-lance basis. I only take the jobs I want and I'm enjoying it.

A lot more possibilities will present themselves once you are out of the grind.

bigchipper

Bigmoney2 wrote: »

Also remember that if you take the pension option, it may look a lot less than your salary, but you will not pay NI on it and there will be no pension contributions going out. Commuting costs will be less, and you wont be buying coffees, sandwiches, putting into collections etc.

My understanding was that you only stopped paying NI after SP age?

innovate

True for any income from employment; but if you draw a pension before SP age, you don't pay NI on it.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/NationalInsurance/IntroductiontoNationalInsurance/DG_190048