Can I afford to retire?

rockie4

Not sure if this is the right board so feel free to move if it’s not!
I’m 62, work full-time and have paid into a final salary pension scheme for 32 years, I would love to retire in the next 12 months if I can. I have a bit of my mortgage remaining but am doing my best to get rid of it but would probably pay off the last little bit from my lump sum.
All the retirement calculators tell me I need 2/3 of my final salary to live in retirement, my calculations show that I will have slightly less than that but I’m a frugal soul ;)and on paper it’s do-able…
Here’s my dilemma…. My husband (of 25 years) is only 50. He paid into the local government pension for 10 years so will get a tiny pension from that eventually. He’s had some mental health issues – he hasn’t worked in paid employment for 6 years and has gaps in his NI contributions which mean he can’t claim any benefits but he was told that he would get them credited from his last assessment which was in 2011 – he should have been sent for again but he never heard back from the DSS (or whatever it is now) so we have no idea where we stand! Yes, I know he needs to go and get it sorted but I can’t do it for him and I can’t force him to go.
He volunteers a couple of days at a local charity – they pay him ‘expenses’ so he has a little money in his pocket and I manage all the living expenses out of my salary (as I said I’m frugal:))
When he gets to retirement age will we be able to get a married couples allowance on my NI contributions? All the pension changes have got me really confused and I’m worried that we won’t be able to manage purely on my pension but won’t be eligible to claim any extra help.

The_Hurricane

I would need more figures to give you a proper answer, e.g:

1. How much is left on your mortgage?
2. What will your private pension be worth?
3. How much do you need to live on per week?
4. What is the value of your state pension?

Bigmoney2

rockie4 wrote: »

Not sure if this is the right board so feel free to move if it’s not!
I’m 62, work full-time and have paid into a final salary pension scheme for 32 years, I would love to retire in the next 12 months if I can. I have a bit of my mortgage remaining but am doing my best to get rid of it but would probably pay off the last little bit from my lump sum.
All the retirement calculators tell me I need 2/3 of my final salary to live in retirement, my calculations show that I will have slightly less than that but I’m a frugal soul ;)and on paper it’s do-able…
Here’s my dilemma…. My husband (of 25 years) is only 50. He paid into the local government pension for 10 years so will get a tiny pension from that eventually. He’s had some mental health issues – he hasn’t worked in paid employment for 6 years and has gaps in his NI contributions which mean he can’t claim any benefits but he was told that he would get them credited from his last assessment which was in 2011 – he should have been sent for again but he never heard back from the DSS (or whatever it is now) so we have no idea where we stand! Yes, I know he needs to go and get it sorted but I can’t do it for him and I can’t force him to go.
He volunteers a couple of days at a local charity – they pay him ‘expenses’ so he has a little money in his pocket and I manage all the living expenses out of my salary (as I said I’m frugal:))
When he gets to retirement age will we be able to get a married couples allowance on my NI contributions? All the pension changes have got me really confused and I’m worried that we won’t be able to manage purely on my pension but won’t be eligible to claim any extra help.

Not sure I've heard you need 2/3rds salary to live on in retirement, rather that 2/3rds is often the MAX you can get in a 60th scheme i.e. 40/60ths.

I took early retirement of half my salary and manage fine with a small mortgage.

Remember you will be taxed on the pension (if over the personal allowance) but will not pay NI or pension contributions.

Regarding your husband, he (and you) should get a pension forecast and a statement of NI contributions.

https://www.gov.uk/state-pension-statement

https://www.gov.uk/national-insurance/help-if-youre-not-working

http://www.hmrc.gov.uk/ni/intro/online-statement.htm

If you do the NI statemnet go from the April before your 16th birthday as the start date as you may have credots from this time.

You may also find that when your income reduces you could be entitled to means tested benefits, or may even be entitled now depending how much you earn, its worth a look.

.

xylophone

I’m 62

What is the situation with your state pension?
With regard to your husband's situation, you could try to get a pension statement on line.
https://www.gov.uk/state-pension-statement
I found this article - you would need to check accuracy with DWP.

http://en.wikipedia.org/wiki/UK_State_Pension

"Married couples
A wife or husband can claim extra Basic State Pension based on the National Insurance contributions paid by his or her husband or wife (this extra is called a Category B pension).
If one spouse has a Category A Basic State Pension of less than sixty percent of the full Basic State Pension, then when he or she reaches State Pension Age, he or she is able to have his or her Basic State Pension topped-up to 60 per cent of his or her spouse's Category A Basic State Pension without the other spouse losing anything from his or her record.
Men, born before 6. April 1945, are not able to claim a Category B pension based on their wives' contribution record. However husbands and civil partners who reach State Pension Age on or after 6 April 2010 are able to claim a Category B pension on the same basis as wives."

"Future flat-rate Pensions

The 2010 Coalition Government has proposed that the earnings-related Second State pension be replaced by a flat-rate pension which is not based on earnings. A Green Paper was issued in April 2011,[11] followed by a White Paper in January 2013.[12] The amount of the flat rate pension would depend on the number of years credits a person has. 35 years credits would be needed to get the maximum pension.
It was also proposed that various rules regarding marriage, divorce and bereavement be phased out. This would mean that Category B pensions (see above) would be replaced by Category A pensions for everyone although any rights to a Category B pension that existed at the implemention date would be preserved.[11]"

gterr

Could you persuade your husband to let your local CAB help him look into his benefit entitlement? It might be possible to make a fresh claim for ESA, even if his previous one was time-limited by the 1-year rule for contributions-based ESA. A phone call to Job Centre Plus (made by a CAB adviser if you/he felt you could not do this yourselves) might make things clearer. Even if it just got his N.I credits restarted it would be something.

sleepless_saver

gterr wrote: »

Could you persuade your husband to let your local CAB help him look into his benefit entitlement? It might be possible to make a fresh claim for ESA, even if his previous one was time-limited by the 1-year rule for contributions-based ESA. A phone call to Job Centre Plus (made by a CAB adviser if you/he felt you could not do this yourselves) might make things clearer. Even if it just got his N.I credits restarted it would be something.

In all likelihood his existing claim is still running even though his entitlement to contribution based ESA has run out. So he would be getting the NI credits, and there should be no need for a new claim (with all that involves). But it would be a good idea to check that this is the case.

rockie4

Thank you for the replies. Even though I still work full time I already claim the full state pension and pay no NI (trying to throw as much of it as I can to the mortgage) I got my free bus pass as well Shame about the amount of tax I pay though

Sleepless saver and gterr - I'm trying to persuade him to get a forecast, I might try the online route, if he doesn't have to see someone face to face he might be more co-operative.

I'll have a look at all the links you sent me later - Thank you for the help

I need to sort this out soon, I want to enjoy my old age not spend it worrying about money!

jackyann

I got my forecast using the on-line service - effectively you can do it if your husband gives you the necessary information.
I am sure it is worthwhile, as given the proposed changes & your husband's position, you may be able to pay some contributions in order to get him the the full pension in the future.

I wondered if you could consider part-time work, either reducing hours at your current job; or possibly, retiring, claiming your pension, then looking for a few hours' work.
I have some friends who do things like clerk to the parish council, to boards of trustees or governors & things like that. Just a few hours a month at minimum wage, but it pays for the odd treat.

It sounds as if you deserve a pleasant retirement and I hope you get it. I wouldn't worry too much about the 2/3 figure, do your own sums instead.

dlorde

Don't rely on any arbitrary fraction of your salary as a guide to what you'll need in retirement. Use bank statements to tot up your outgoings for a year, then divide by twelve to see what you're actually spending per month. Then you can look at work-related outgoings (travel costs, etc) that you won't spend so much on when retired, and estimate what you might spend more on (heating, etc). Allow something for long-term expenses like house repairs, car replacement, etc.

I retired early and have been really surprised at how little I'm spending while still having a good time. There are plenty of activities that cost little or nothing.

marathonic

As stated before, a sensible plan would be to work out your projected expenses and planned rate of drawdown of funds from your retirement pot.

I'm only 30 now so have a long way to go but I think a good rate of drawdown would be 4% if you retire at 65 with a reduction of 0.1% for every year before that you retire.

In other words, if I plan to retire at 55, I'd like to use a drawdown rate of 3% to ensure that the funds are not depleted before death.

I'd review this every 5 years so, if my pot is significantly above target at 60 or 65, I could increase my rate of drawdown.

Then I'd work out how much I think I'd need for a comfortable retirement and whether or not I want to include projected state pension value in that figure - for me, being so young, I'm assumming no state pension (which you might argue is overly pessimistic).

I work out that my expenses will be about £18,000 meaning that, if I want to retire at 55, I'd need a pot of (£18,000 / 3 * 100) £600,000.

By retiring later, I give myself a longer time to save AND a lower required pot due to the increased rate of drawdown.

At 60, I'd require (£18,000 / 3.5 * 100) £514,285.

At 65, I'd require (£18,000 / 4 * 100) £450,000.

Messing around with this calculator tells me that I need to contribute 16% of salary (including employer contribution) to achieve this.

http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

jennifernil

Rather than a proportion of salary, you should use an actual amount you need.

We retired 5 years back on about half our previous income, but we find we only actually NEED £15k per annum to live well and cover all the necessary costs.

We have no mortgage now, but with a fairly large house to keep going we have substantial fuel and Council tax bills.
We eat well, run a car and caravan, have several hobbies.

We could survive on much less if necessary.