Early-Retirement Advice

Gregor888

Hi All,

I’m a some-timelurker but don’t have a great head for figures and I’m looking for some adviceand/or comments on early-retirement.
I’m taking early retirement in September (at age 56.5) and I’m lucky to have a final salary pension scheme.
There are two main options under consideration:-
1. Take pension in September of £8,128 with a lump sum of £24,385, and a compensation amount of £56,555 whilst buying out the early payment reduction from the compensation monies, at a cost of£28,830. So pension of £8,128 is paid at56.5 with a total of £52,560 as the lump sum
2. Leave pension of £8,128 until age 60 and only take£30,000 tax free compensation payment immediately on retirement in September,and buy additional pension (at age 60) of £1,244 with the remaining compensation money of £26,555
My mortgage is now down under £10k and I have 3 kids under 11 and a wife who’s 15 years younger than me and would receive half my pensionon my demise.
Given that we have another income stream, and also my family situation, I am inclined to go with the second option but any advice/commentswould be welcome from others

atush

Why retire early? With kids that young, I'd keep working.

YoungBusinessman

An extra few years will make a massive difference to your figures...

opinions4u

atush wrote: »

Why retire early? With kids that young, I'd keep working.

Looks like a redundancy situation.

Nick_C

To some extent, aren't you gambling against how long you expect to live? If you buy the right for the pension to start immediately, you get the £28,830 paid to you, taxed, within the next 3.5 years. If the pension plus other income would push you into the higher tax band, that would also be a consideration.

If you use the £26555 that would otherwise be taxable to buy an additional deferred pension payable at 60, you won't get that money fully until you are 81. You need to be confident of living well beyond 81.

Personally, I would opt for the pension now, as long as I stayed out of the 40% tax band, but its a personal choice. If you don't need the pension, you could still draw it and invest it.

atush

opinions4u wrote: »

Looks like a redundancy situation.

Doesn't matter, with kids that young, to give up valuable pension (that would be paid in full with yourngest still school age) menas they should get any job going. Or beneifts if none.

Why impoverish yourself for life if you are doing all you can? doing whatever you can even PT? The actuarial reudction means you should hold out and work.

FatherAbraham

Nick_C wrote: »

To some extent, aren't you gambling against how long you expect to live?

We all are, mate.

Warmest regards,
FA

Bazofts_Revenge

Even with an actuarial reduction it may be better in the long run to take the pension as soon as you can. work out each scenario on a spreadsheet with each lump sum giving you 2 or 3% return and total up you month by month income. For my deferred pension I can't remember the exact figures as I worked it out months ago but in 11 years I took my pension at 55 without any lump sums I would earn 'x' amount. If I waited until I was 65 and therefore would get my full pension with no reduction I worked out I would have to live until I was 85 to earn 'x' amount from the pension scheme. Therefore I'd only be losing out if I lived over 85. The only downside would be if I died between 55 and 65 having taken early retirement then my kids would miss out on a large repayment of contributions.

Bazofts_Revenge

atush wrote: »

Why retire early? With kids that young, I'd keep working.

To live a bit not work forever.

YoungBusinessman wrote:

An extra few years will make a massive difference to your figures...

A valuable quotation often spouted by an old bloke I worked with 'There's no pockets in shrouds' i.e. you can't take it with you' so once your sure you have enough retire enjoy life while you can.

Gregor888

Thanks for the advice and comments everyone.

FWIW,I have another fairly good pension from a previous employer currently in payment which means that I certainly won’t be impoverished.

I am still inclined to wait till I’m 60 as this increases my overall pension level, and chances are that the wife will get half this pension for an additional 20 years or so after I’m gone – and if I kick the bucket whilst the kids are still in full-time education, she’ll get the full pension.

atush

Bazofts_Revenge wrote: »

To live a bit not work forever.




A valuable quotation often spouted by an old bloke I worked with 'There's no pockets in shrouds' i.e. you can't take it with you' so once your sure you have enough retire enjoy life while you can.

To live with 3 kids that young? At a lower pension for all their most expensive years (from cars/DLs to house deposits to Universtity? Do you have kids? Do you know how much they cost? I am at the stage with 2x19 yr olds at Uni ad let me tell you, they are very expensive still.

No pockets in shrouds, true. But unless you are sure you will die young, better to think you will at least live til the average cohort date.