Retiring early: Persuading the Spouse

Pollycat

I agree with atush.
It would be silly to underestimate the potential problems in suddenly - and I do mean suddenly - having someone in the house that you've had all to yourself for a time.
I retired 3 years before my OH and had got myself into a nice routine and BAM! There was somebody else who wanted to use the PC when I was using it.
We soon sorted it by rearranging the study so I had my own space & buying a laptop.
But it did cause some friction briefly.
Now - almost 10 years on - we're used to doing some things together & some things apart.

Magnolia

Just do it! If your finances are sound enough then buy a motorhome and travel.

My DH retires end of January 2016 - already booked 2 holidays and have planned 2 months in Europe going wherever the wheels take us!

bigadaj

Magnolia wrote: »

Just do it! If your finances are sound enough then buy a motorhome and travel.

My DH retires end of January 2016 - already booked 2 holidays and have planned 2 months in Europe going wherever the wheels take us!

Well if one of them goes off in the motor home that should stop the conflict at home at least!

saver861

Andypandyboy wrote: »

We discovered that the total pension pot was almost £900k,

Nice discovery!! For that size of pot, I would have thought you would have been aware to some degree.

Andypandyboy wrote: »

that we could greatly reduce outgoings despite having a child at university and that if the worst happened we would be fine. It didn't happen, in fact a promotion happened, but a lot of stress has been lifted and we both have the luxury of being able to say "shove it" if it ever gets too much.

That's a good position to be in of course. However, it does mean you may be working for a somewhat smaller net gain. By way of simple example, if you can get a pension and other changes that comes to say 60% of your take home salary, then effectively you are working for 40% of your actual salary. Put another way, you could retire and make up the 40% working part-time and still have the similar income than that of working full time.

If you continue working and were to get fired for whatever reason, you could end up having difficulties getting your pension, depending on whatever scheme you are in.

I recall having a discussion with someone who had full DB pension contributions. He was pondering on whether to retire or not. I pointed out that his pension alone would be the equivalent of half his salary and, as such, he was effectively working full time for 50% of his salary. Taking other options into account he worked out he was working for even less than half his salary. Decision made on the spot in the corridor!

zagfles

saver861 wrote: »

Nice discovery!! For that size of pot, I would have thought you would have been aware to some degree.



That's a good position to be in of course. However, it does mean you may be working for a somewhat smaller net gain. By way of simple example, if you can get a pension and other changes that comes to say 60% of your take home salary, then effectively you are working for 40% of your actual salary. Put another way, you could retire and make up the 40% working part-time and still have the similar income than that of working full time.

If you continue working and were to get fired for whatever reason, you could end up having difficulties getting your pension, depending on whatever scheme you are in.

I recall having a discussion with someone who had full DB pension contributions. He was pondering on whether to retire or not. I pointed out that his pension alone would be the equivalent of half his salary and, as such, he was effectively working full time for 50% of his salary. Taking other options into account he worked out he was working for even less than half his salary. Decision made on the spot in the corridor!

That makes no sense. If you delay taking a pension, in almost all cases the pension would pay more. Or you have the ability to take the pension and carry on working as well.

So you're not working for 40% or 50% of salary. You're working for full salary and either increasing the pension you get when you eventually retire, or getting the pension on top of your salary.

Gers

Just do it!

I jumped ship in March this year after working since the age of 16. For the final few months I went down to a four day week and even agreed that my day 'off' would be Monday one week and Friday the next - thus giving me a four day weekend every fortnight.

Since retiring early I've enjoyed myself so much - I've unwittingly picked up a casual job, a two day a month on and another part-part time one. nothing which entails having to be out of the house in the morning or tied to a desk.

You need to go where your heart lies, you've sorted the money issue ( it is very strange going from a full time salary every month to a FS pension) but you've demonstrated it's doable.

Good luck in whatever you decide.

seven-day-weekend

zagfles wrote: »

Or even 2 will do if there's just 2 of them.

Seriously - I don't see what the problem is. If one spouse is used to being home alone and will have their routine disrupted by the other also being at home, they need to grow up, frankly. Or separate. Or use separate rooms. It's really quite simple.

The household is home for both of them. One doesn't have the right to dictate what TV channel to watch or what to set the heating at, just because it's what "they're used to".

Get a second TV, get an extra heater in one of the rooms. It's not rocket science!

Absolutey, couldn't have said it better myself.

I said earlier on that being retired didn't mean you had to sit in a chair and watch TV all day. Neither do you have to live in each others' pockets. It is perfectly acceptable to do different things to each other and to have different hobbies.

Just have two TVs and a place where each of you can have your own space. Simple.

TheTracker

zagfles wrote: »

That makes no sense. If you delay taking a pension, in almost all cases the pension would pay more. Or you have the ability to take the pension and carry on working as well.

So you're not working for 40% or 50% of salary. You're working for full salary and either increasing the pension you get when you eventually retire, or getting the pension on top of your salary.

Imagine someone earns £60k pa with a £40k FS pension if they retire now or £41k if they retire a year later, and that they live 30 years after retirement. So they could earn 40*30= £1200 or 60 + 41*29 = £1249. So in effect they worked that final year for £49k benefit not £60k.

One must calculate personally using salary, FS pension, incentive to delay pension, and years to live. Probably a simple algebraic equation (any IFAs here?). Sometimes it'll be in your benefit, other times not.

zagfles

TheTracker wrote: »

Imagine someone earns £60k pa with a £40k FS pension if they retire now or £41k if they retire a year later, and that they live 30 years after retirement. So they could earn 40*30= £1200 or 60 + 41*29 = £1249. So in effect they worked that final year for £49k benefit not £60k.

But that's not a usual sort of increment, only 2.5%pa. The scheme I'm in has a late retirement factor of 8%pa, though it includes inflation (final salary based on salary at NPD), so maybe 5-6% typical after inflation, this seems to match other schemes.

So on 5% LRF, pension would be £42k. £42k times 29 years = £1218k. Add the £60k salary for the final year and it's £1278k.

As opposed to £40k * 30 years = £1200k.

So retiring a year late would gain you £78k!

One must calculate personally using salary, FS pension, incentive to delay pension, and years to live. Probably a simple algebraic equation (any IFAs here?).

I was going to comment but I think there've been enough toys thrown of the pram recently

Sometimes it'll be in your benefit, other times not.

Well quite.

OK here's a go at the algebra. Seem to be doing a lot of that recently.

Let i = real LRF ie with inflation increase on top or based on final salary assuming salary increases with inflation. Assume it compounds annually.

Let y be expected life expectancy at normal retirement date.

Let p be the pension at normal retirement date.

Let n be the number of years delay.

Assume pension keeps up with inflation ie is index linked or uses limited price indexation but inflation doesn't exceed the cap.

Total pension if you retire at the earlier retirement date (real terms, today's money) = p*y

Total pension if you retire n years later = p*(y-n)*(1+i/100)^n

So to work out which way you get more pension, check which is greater!

Or just check y against (y-n)*(1+i/100)^n as p can be eliminated.

Of course there's a lot of guesswork, particularly how long you'll live, inflation not exceeding the LPI cap etc. Also no account of spouses pension, though for some schemes that doesn't alter with early/late retirement factors.

saver861

zagfles wrote: »

That makes no sense.

It makes perfect sense to me ... but lets see if we can break it down to a simple example.

Someone has accrued a pension worth say 50% of their salary and they can draw it if the choose to retire. So, they can carry on working and earn their full salary or they can retire and still get the equivalent of 50% of the salary they would have got had the carried on working.

Equally, following this simple example, they could retire, work 2.5 days per week and have pretty much exactly the same income. They can still contribute to a further SIPP etc in these circumstances, so thus not necessarily removing options.

So, in effect, the net gain for working full time is 50% of the salary.

Clearly thats the simplest form of example, and there are other options etc if they can draw their pension and carry on working etc. However, the point being if someone is a financial position to retire then by carrying on working full time, they are not necessarily gaining optimum benefit.

They are working for less £'s per hour than they might have done earlier in their career!!