Can O/h and I afford early retirement ?

Willman_Rodders

Hi balmaiden,

Thanks for your earlier feedback.

When I was an IFA advising teachers about retirement I came across an article explaining the true cost to their pension scheme when a teacher took early retirement. It pointed out that of those teachers who retired at 65 (normal retirement age is 60 by the way) many did not reach age 68. If they retired at 60 then 75 was the average age for death, but if they retired at 55 then (all things being equal) they often reached 80+. I did not have any supporting evidence to verify the figures quoted but the message is clear: the earlier you retire the longer you will live.

Returning to your first post. Knowing your £280 is inflation proofed, and that your husband has already worked sufficient to qualify for a full state pension (at age 65) (he needs to have worked 90% of his working career i.e. paid National Insurance for 44.1 years) I give the following statistics.

Your income now: £280 p.w. £1213 p.m., £14,560 p.a.

your state pension £139 p.w. £604 p.m. £7260 p.a. (projected)

Total income at age 65, disregarding inflation ...

£419 £1817 p.m. £21,820 p.a.

You will be taxed on this income .... but

I used to give advice to people who earned less than this, had a sizeable mortgage to pay, and children to bring up. They lived. You don't (or at least I presume you don't) have a mortgage to pay, and the children if any have flown the nest.) Today, retired couples live off the State Pension alone, (though they do tend to live somewhat restricted lives.)

Your difficult period will be between now, and the receipt of your State pension. If you are sure you can afford to live during that initial period, then I personally think you should go for it.

Best wishes,

willman rodders

[Deleted User]

Do it Balmaiden. It sounds as though you will have ample monthly income, just do the sums ie council tax etc

My dh retired two weeks ago and we are just back from a celebratory holiday abroad. My pension kicks in in 7 months and his in 2012.I prepared for this by saving. I estimate that I can make do on less than £1000 a month

Balmaiden it is LOVELY

Errata

Retired on a low income? Well - yes and no! When I was around your age the company I worked for went bankrupt and OH was made redundant. Unemployment was very high, so we looked at our needs and wants and found we could do without most of our wants and could meet our needs. I took the opportunity to embark on a second career doing something I loved which was, and is, incredibly badly paid but immensely worthwhile and I'm now working on average 10 hours a week, so semi-retired.
You might like to point out to your OH that life expectancy for men according to today's Guardian is 76.6 and for women 81 and until recently public service employees retired at 60.
Other than that, I agree with Margaret's post and would second WR's suggestion that you have a financial 'dummy run' which will give you the evidence you need to decide if retirement at this point for your OH is financially viable. Just remember, you married him for better or for worse but not necessarily for lunch every day!

seven-day-weekend

Willman_Rodders wrote: »

When I was an IFA advising teachers about retirement I came across an article explaining the true cost to their pension scheme when a teacher took early retirement. It pointed out that of those teachers who retired at 65 (normal retirement age is 60 by the way) many did not reach age 68. If they retired at 60 then 75 was the average age for death, but if they retired at 55 then (all things being equal) they often reached 80+. I did not have any supporting evidence to verify the figures quoted but the message is clear: the earlier you retire the longer you will live.


willman rodders

Hey, that's good , my husband retired at 55!

EdInvestor

Balmaiden

Re your state pension, you may need to keep paying voluntary contributions to receive the full amounht. From 2010, it looks like you'll only need 30 years to get the full BSP.

Get a forecast on how many years you have already here:

https://www.thepensionservice.gov uk

Good luck with the plan, sounds good to me

margaretclare

Hi Balmaiden

I've been looking at this again.

Our combined income, from all sources, is just short of £25K a year. We don't spend all of this, we're still saving. We each get state retirement pension in our own right, and the figures you quote do not take your future SRP into account.

Willman Rodders estimates that you'll both get approx £21K a year and he says 'you'll be taxed on this'. Well, yes, but don't forget that you EACH have a tax allowance. If the family income only comes to one person, usually the man, then there is a tax clawback on anything over £21K (I think). But this doesn't affect DH and me because, although we're married, we get our incomes individually, separately and therefore have an individual tax liability, which isn't much at all, so no worries there. You won't have to pay NI contributions, so that's a saving. Plus all the other work-related expenses that you won't have. And the freedom! I've sat here of a chilly, icy or wet morning checking my online accounts and thanking God for modern technology which means no need to go and queue up at a post office to get money in cash! Wonderful. The beauty of this is that even if you live on a Spanish hilltop like 7DWE you can do it all without having to go anywhere!

Best wishes

Margaret

balmaiden

Thanks Kittie, thats just what I need someone in the same sort of position saying go for it!!

EdInvestor, Thanks and yes I have had a pension forcast and have the required 30 years paid.

Margaret,

We have juggled our investments so that we will have roughly the same income and will pay the same tax bill eventually.

Thanks Guys

rotate

For a man you are automatically credited with NI contributions from 60-65 ,if you are not working even if you are not claiming unemployment benefit.
Not sure of situation for women.

Bogof_Babe

Just found this thread, and it almost mirrors my own situation. I took vol redundancy at the end of 2002, age 50, and spent the next four years looking after my parents. Dad sadly passed away last October, and mum has moved north to a care home near my sister, so since the end of January this year I have been a free agent for the first time in my adult life.

My husband (now nearly 61) took vol redundancy in Nov 2005, but spent 2006 caring for his widowed father, who also died at the end of last year.

Now that we are getting to the end of the house selling, sorting out Wills etc. stage, we are finally gathering our thoughts about the future.

We will have a monthly income of about £1,200 from our savings, which includes OH's small pension (mine is frozen until I reach 65) and our home is paid for. Neither of us draw the state pension yet so this will enhance our income in 4 and 7 years respectively.

Life is looking rosy, and we intend to make the most of it before we are too decrepit to manage it. I would advise anyone who has the means to get out of the rat race to do so. Trust me, you won't be bored. You can spend half your time doing spreadsheets to make sure your money lasts! (joke, but only half joking really ).

missile

If I may add my two-pence. It may be a mistake to focus too much on money.

You need to discuss with your husband, what are your aspirations and make a life plan. Even a bad plan is better than no plan at all. Retirement is not a really a plan, but a significant milestone.

Maybe an idea is for each of you to list 100 things you want to do before your time is up. Then compare and see where you agree and what compromises needed to achieve your joint plan. If your needs are for the simple things then a modest income is OK, but if hubby's aspirations include a world cruise then you may need to think again!

And if your circumstances change, you could review your plan and both consider part time work?