Time of year to retire

mazzy

I am thinking of taking early retirement next year. My husband retires in December and I was thinking of going around April 2015. I am in a final salary pension that pays out at 63, although I will only be 61 1/2 I know others who have gone early but that was at their state retirement age. My question is whether there is a better time of the year to retire for tax purposes.


My reason for choosing April is I would have completed 31years service. I don't want to ask to many questions at work as I am still hoping to be made redundant and would hate for them to wait me out.

Thrugelmir

Not 65 for a full pension?

mazzy

Do you mean my State Pension?

Fruit_and_Nut_Case

I was in a final salary scheme when I took early retirement. The best time for me was my birthday.

Ask for some projected figures for each of the dates you are considering but don't expect advice from your employer as they are unlikely to be authorised to give any.

mazzy

When I started working there FS pension was age 60 which would have tied in nicely with my State pension but first State pension was raised to 63 the FS pension was raised to 63. State pension was then raised to 64 and 8 months FS pension is still at 63.

bigadaj

It depends on your view really, April is a nice time to go as you're getting into the good weather.

In terms of tax then it can be better to go a few months into the tax year, depending on your work earnings and what your pension might be.

zygurat789

mazzy wrote: »

I am thinking of taking early retirement next year. My husband retires in December and I was thinking of going around April 2015. I am in a final salary pension that pays out at 63, although I will only be 61 1/2 I know others who have gone early but that was at their state retirement age. My question is whether there is a better time of the year to retire for tax purposes.


My reason for choosing April is I would have completed 31years service. I don't want to ask to many questions at work as I am still hoping to be made redundant and would hate for them to wait me out.

There may be is all that I can say because you have not given any figures.
The object of the exercise is to ensure the best usage of your personal allowance which means you should aim to pay tax in the year you retire, to not pay any tax would inply that you did not use all your allowance.
If your total taxable income, occupational pension and taxable savings income and any other income is less than your personal allowance then you should not retire in April. You should work until you can guarantee your income for the tax year will be over £10,000.

Seabee42

If it is a final salary pension scheme I would check the definition of final pensionable salary with the administrators. I have seen schemes that fix the salary once a year and others use more complicated definitions. Also how are pension increases worked out?

mazzy

Thanks for the replies, it seems I really need to make some enquiries at work then.

brewerdave

..ignoring the financial implications, DON'T retire late in the year ie Autumn /early Winter. It's hard enough not having the stimulation/motivation of a job after many years without having the effects of the dark and dreary weather!
I decided to retire early when I was made redundant for the 3rd time -fortunately it was May -so I had a Summer to get used to the idea-even then the first Winter was dreadful as my wife was/is still working.

Goldiegirl

brewerdave wrote: »

..ignoring the financial implications, DON'T retire late in the year ie Autumn /early Winter. It's hard enough not having the stimulation/motivation of a job after many years without having the effects of the dark and dreary weather!
I decided to retire early when I was made redundant for the 3rd time -fortunately it was May -so I had a Summer to get used to the idea-even then the first Winter was dreadful as my wife was/is still working.

As you can see from my signature I'm hoping to stop working next year, and my husband will retire too at the same time


We have been thinking about doing this in September 2015, mainly because it would just leave a about year to live on our current pension income, until my husbands other pensions kick in in Oct 2016.


However, we are now seriously considering bringing this forward to around April next year - The primary reason being HMRC related.


I'm in receipt of a pension from my previous employer and also work part time. This has been the situation for 4 years. My husband works 4 days a week and also has a pension from a previous employer


A few months ago, my pension scheme underwent some system changes, and to enable them to switch to the new systems, sent P45 type info to HMRC, in order to close the old system


This really confused HMRC, who thought I was leaving a 'job' with my pension provider and starting a new job with my current employer. So HMRC sent all my income details from my pension to my employer, who have added this figure on to my running totals for the year. The result of this was that I paid £100 too much tax in January. Neither my employer or HMRC can correct this - I've just got to wait to the new tax year to get a refund.


So I'm really concerned, if we wait until half way through a tax year next year, and HMRC get confused with our P45's from our jobs, and think we both are just starting 'work' with our current pension providers, this could cause a similar problem, with much bigger tax overpayment problems affecting both of us, at a time when we need our pension income to actually live on.


So my reasoning is, by stopping work early in the tax year, it'll be a damage limitation exercise, as the figures involved would be much less for any potential problems.


Also as Dave says, we'll be able to stop work at the beginning of the good weather, and enjoy a summer of getting used to our new life, with the opportunity of keeping active in the garden and days out,