When will early retirement age rise

Silian

Snakey wrote: »

I'm 43 and am hoping that this particular proposed change will get quietly abandoned in favour of the much bigger pension overhaul that's (presumably) going to be announced - although probably not in any detail, since they have to at least pretend to be carefully considering the condoc responses - in the Autumn Statement.

Assuming we are to get a completely new type of pension, it would be straightforward enough to keep the current access age for "old style" plans (which will be closed to future contributions) while making the "new style" plans whatever age or formula you like. This benefits those of us in our thirties and forties - an age-range which includes a lot of the decision-makers and influencers - while most people younger than that probably have no idea that retiring at 55 is even "a thing" anyway, so there may not even be much of an outcry.

Why would you hope that? Most people will be worse off if they axe tax relief at source.

For me it would mean I will have to retire a year later. It isn't as bad as I initially thought, but I still hope they don't do it.

Snakey

I mean: given that this overhaul will be happening no matter what, I am hoping that the changes previously suggested but not yet enacted will be quietly dropped along the wayside. Not that I hope that we move to T-E-E, which wouldn't be much good to anybody with the income levels needed to fund an early retirement.

Snakey

And my original post, in which I had completely misunderstood what you were saying and in fact had also forgotten what I'd originally said, read as follows (as I see somebody saw it before I got in with the edit, and I don't want to look dishonest or make anybody else look silly):

True, yes I was thinking entirely of my own situation when I said that.

My Plan A was (before they changed the rules) to retire at 50. Having it shifted back to 55 was a blow, and I'm anxiously eyeing up the likelihood of future increases. It's the potential double-whammy that I don't like - not only will I not be able to use my pension to retire earlier, but because I'm forced to leave it to grow for longer I might fall foul of the lifetime allowance (a nice problem to have, I grant you, but somewhat frustrating that there's nothing I can do about it apart from stop making those lovely, lovely tax-efficient contributions in case they turn out, with hindsight, to have been the opposite).

So I need to fund the (potentially increasing) gap with savings from taxed income. Which, obviously, is not as tax-efficient - I'd get hit at 42% on the way in, whereas I don't benefit if it's not taxed when it comes back out since I won't be earning at that point.

If they change the pension system to T-E-E I can console myself with the knowledge that I'm no worse off saving outside a pension than in one. (This doesn't actually stand up to scrutiny, assuming there would be some sort of a government boost to pension contributions, but I'm trying to make the best of it by concentrating on the loss of higher-rate tax relief and the NI savings that come with salary sacrifice. At least the AE and the £5k divi exemption should mitigate the tax-along-the-way.)

I'm seriously considering having a longer working life after all, but going part time when the pension changes come in. If I was no longer paying higher rate tax then the withdrawal of tax relief would be less painful, and it would give me taxable income up to the personal allowance from 55 (or 56, 57, 62 etc) to 67 so that at least I'd see some benefit from the two E's.

Silian

Snakey wrote: »

And my original post, in which I had completely misunderstood what you were saying and in fact had also forgotten what I'd originally said, read as follows (as I see somebody saw it before I got in with the edit, and I don't want to look dishonest or make anybody else look silly):

True, yes I was thinking entirely of my own situation when I said that.

My Plan A was (before they changed the rules) to retire at 50. Having it shifted back to 55 was a blow, and I'm anxiously eyeing up the likelihood of future increases. It's the potential double-whammy that I don't like - not only will I not be able to use my pension to retire earlier, but because I'm forced to leave it to grow for longer I might fall foul of the lifetime allowance (a nice problem to have, I grant you, but somewhat frustrating that there's nothing I can do about it apart from stop making those lovely, lovely tax-efficient contributions in case they turn out, with hindsight, to have been the opposite).

So I need to fund the (potentially increasing) gap with savings from taxed income. Which, obviously, is not as tax-efficient - I'd get hit at 42% on the way in, whereas I don't benefit if it's not taxed when it comes back out since I won't be earning at that point.

If they change the pension system to T-E-E I can console myself with the knowledge that I'm no worse off saving outside a pension than in one. (This doesn't actually stand up to scrutiny, assuming there would be some sort of a government boost to pension contributions, but I'm trying to make the best of it by concentrating on the loss of higher-rate tax relief and the NI savings that come with salary sacrifice. At least the AE and the £5k divi exemption should mitigate the tax-along-the-way.)

I'm seriously considering having a longer working life after all, but going part time when the pension changes come in. If I was no longer paying higher rate tax then the withdrawal of tax relief would be less painful, and it would give me taxable income up to the personal allowance from 55 (or 56, 57, 62 etc) to 67 so that at least I'd see some benefit from the two E's.

That does make sense. I can see how, especially the livetime allowance looming can make that look attractive.

I am personally saving a lot in my ISA that I would have preferred to get tax relief on. But I also don't want the government to be able to tell me when I can retire so I take the 40% hit. Maybe when I'm 5x-6x (whatever the government changes it to by then) I will regret it, but I'm pretty sure that I won't the year that I get to retire .

gadgetmind

Silian wrote: »

I am personally saving a lot in my ISA that I would have preferred to get tax relief on.

I've been maxing ISAs and pensions for many a decade, but am still 5h1t scared of HMG changing the rules.

Snakey

Up until they reduced the annual allowance, I was able to get full higher rate relief on pension contributions and max out my ISA. It looks like I'm stuck with some 40% this year, but since that's partly thanks to an increase in my income I'm not complaining (well, apart from beating myself up for not having a crystal ball and putting an extra £40k in before the Summer Budget).

You know they're gonna change it, don't you? They wouldn't have issued that condoc just so that they could say "oh OK, we'll leave things as they are". I'm amazed they came up with it so quickly, since I'm sure they didn't expect to win the election, perhaps it has cross-party support. If not, I wonder whether it's a plan to stuff the public sector? I don't know enough about public sector pensions and the associated contractual position to know whether it would be possible to (effectively) force greater contributions from the employees via tax law changes.

Silian

Snakey wrote: »

Up until they reduced the annual allowance, I was able to get full higher rate relief on pension contributions and max out my ISA.

Just how much money do you need to retire!?

Snakey wrote: »

You know they're gonna change it, don't you? They wouldn't have issued that condoc just so that they could say "oh OK, we'll leave things as they are". I'm amazed they came up with it so quickly, since I'm sure they didn't expect to win the election, perhaps it has cross-party support. If not, I wonder whether it's a plan to stuff the public sector? I don't know enough about public sector pensions and the associated contractual position to know whether it would be possible to (effectively) force greater contributions from the employees via tax law changes.

I would have liked to say that there is no way they can alienate the population so badly to implement this. But unfortunately a lot of people think that it is actually a good idea.

Snakey

Silian wrote: »

Just how much money do you need to retire!?

Always more than I've got, I suspect. I understand that it's far from uncommon, in these days of not having index-linked final salary schemes, for people to never feel quite comfortable that it's safe to wave goodbye to the regular income and start spending the savings.

I want to be done by 50, since that was my original plan, which is a seriously long retirement (one hopes) to have to fund. As I bought a flat somewhat later than I would have liked I find myself with a mortgage which may not be quite gone by then, but I still haven't ruled it out completely.

The other risk, of course, is that future changes to pension access age won't come with enough advance warning - imagine carefully dividing up your savings to last until 57, only to get to 54 and have them say "oh sorry, it's going to be 62 now" and then have to try to get back into the workforce at that age and with your technical knowledge four years out of date.

What's your magic number?

kidmugsy

nicknameless wrote: »

just over 10 years from the fact it would be good to have a modicum of certainty.

That's two general elections away. Parliament cannot bind its successors. So certainty cannot be available. Why not give Mr Corbyn a bell? Maybe he has a cunning plan.

Silian

Snakey wrote: »

What's your magic number?

Enough to live comfortably (but not excessively). I can then cut down to the essentials in times when the markets are bad.


Once I have that much, my plan is to work one extra year for a buffer (current plan is 45).



Right now I’m adamant that I won’t fall into the “just one more year” trap, but you never know. Seeing how much your money grows at that point (instead of spending any) can get addictive. (nevermind the safety aspects of it).