Early Retirement

Jack_Itin

Thread Deleted

Freecall

Assuming you have no other income then £5,580 pa and £3,600 pa are both below the personal allowance so no tax to pay.

There are no NI contributions due on pension income.

jem16

Jack_Itin wrote: »

Hello, I am hoping to take early retirement next April (2015) at age 62, I have a pension forecast of £32.500 lump sum, plus £465 a month pension,my wife gets £300 a month pension, so would be on nearly £800 a month, would we pay any tax on this ?

Tax is calculated individually and you both have £10,000 tax free Personal Allowance. On those figures alone you would not pay any tax.

Is your wife receiving her state pension yet? If she is how much?

plus would I still have to pay N I contributions ?

NI is not due on any pension payments.

Jack_Itin

The £300 a month the wife receives is her old age pension, she doesn't quite get the full amount, I think it is something to do with when she had our son in the seventies......she didn't work for a while........Jack

Jack_Itin

The plan is to use £12000 of the lump sum to pay household bills for the 3 years until I get my old age pension....currently they come to nearly £300 a month.....gas, electric, water, council tax, t.v. licence, so £3600 a year, I have rounded it off to £4000 a year. so £12000 should cover any rises in costs......that would give us £190 a week for food, clothes etc .for two of us,....no mortgage, no rent, no kids at home, no car,...any opinions welcome.......Jack.

atush

the 32.5K, is that lump sum set in stone or could you take less and get a higher income?

xylophone

Hello, I am hoping to take early retirement next April (2015) at age 62,

You will be receiving your state pension under single tier rules ( the legislation has passed into law).

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

http://www.thisismoney.co.uk/money/pensions/article-2630415/Individual-statements-new-state-pensions-expected-summer.html

You might need to review your tax situation when you draw your state pension.

Jack_Itin

I could take less than the £32.500 and get a slightly larger monthly amount......but this option seems to be favourite,.....it's those damn monthly bills.........Jack

Goldiegirl

Jack_Itin wrote: »

The plan is to use £12000 of the lump sum to pay household bills for the 3 years until I get my old age pension....currently they come to nearly £300 a month.....gas, electric, water, council tax, t.v. licence, so £3600 a year, I have rounded it off to £4000 a year. so £12000 should cover any rises in costs......that would give us £190 a week for food, clothes etc .for two of us,....no mortgage, no rent, no kids at home, no car,...any opinions welcome.......Jack.

As you can see from my signature, I'm also planning for an early retirement next April.

This year, I'm having a trial run. We are living within our post retirement budget, putting the rest of our income into savings.

So my suggestion is, start living on £190 pw now, to get used to it, and to make sure it's feasible to live on this figure.

Jack_Itin

Goldiegirl, Now that's a good idea , the general opinion is that we should be able to manage, of course every case is different, but £200 a week, with no bills......a lot of pensioners live on a lot less......Jack

Goldiegirl

So far our experiment is working really well.

I've made a few changes to things like supermarket spending, and we now cook most things from scratch, which we find saves money

I've got more clothes than I could ever wear, so things like recreational clothes buying will be a thing of the past. I'll only be buying clothes I need in future.

But I think small compromises like that will be outweighed by never having to work again!

Good luck with your plans:)