Retiring early: Persuading the Spouse

zagfles

saver861 wrote: »

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.

Why are you assuming the pension won't increase if it's delayed? Try reading the rest of my reply.

nearlyrich

I am planning to finish work at the end of June I am 55 in July, currently have a well paid job but most of my take home goes into an ISA and my pension funds. I have to wait till I am 67 before I get my state pension but I have planned to leave work at 55 since I was 28. My Dh is older and we want to spend time travelling for longer than 2 weeks at a time. My DD is about to give birth soon and all in all it is the right time to go for time over money.

saver861

zagfles wrote: »

Why are you assuming the pension won't increase if it's delayed? Try reading the rest of my reply.

I was not assuming anything. In the case which I referred to where someone had maximum DB pension contributions - on the old LGPS scheme, the max you could get was 40/80 pension, i.e. half of your final salary.

Yes, there are various options depending on the circumstances. The pension can increase each year etc which could then be collected at retirement date. The individual circumstances would establish overall gain.

The more general point I'm making in the simplest of terms is that once someone has accrued a significant pension benefit, the ongoing years working have a decreasing benefit in terms of actual salary gained.

So, if someone is on a salary of £20,000 and has accrued a pension of £10,000 and is able to retire at that point then they get £10,000 per year, even if they choose to sit at home all day long. If they continue to work they get £20,000, obviously only £10,000 more than they would get if they stay at home.

Sure, their pension could increase. So following the simple example, if the pension increases by £1,000 per year for an extra years work, it would still take ten years to make up the £10,000 (using just raw numbers and assuming living long enough etc). If said person retired and worked 2.5 days per week for that year, they earn an extra £10,000, thus getting the exact same income for working 50% less time.

My point is the benefits in terms of £'s per hour for working is somewhat less - in the simple example above 50% less.

Tigsteroonie

zagfles wrote: »

Or here's one that had a few people stumped at Christmas:

Two best friends are having a chat in the playground at their primary school.

...

I cannot see that anybody answered this ... the original two best friends are both boys, and are therefore the grandfathers of the final two daughters.

Thrugelmir

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.

How many people are in this fortunate position these days?

zagfles

saver861 wrote: »

I was not assuming anything. In the case which I referred to where someone had maximum DB pension contributions - on the old LGPS scheme, the max you could get was 40/80 pension, i.e. half of your final salary.

I don't think that applies any more.

In almost all cases, delay the pension and it increases by about the sort of amount which makes the total pension paid over the entire expected retirement about the same.

So your point is wrong for most people. You gain by the amount you earn. Your delayed pension payment is generally compensated by getting a bigger pension. You don't lose it.

zagfles

Tigsteroonie wrote: »

I cannot see that anybody answered this ... the original two best friends are both boys,

Correct.

and are therefore the grandfathers of the final two daughters.

Wrong. It's more complicated than that. Remember the original two boys are the middle generation. They both go onto to do the same job as their mums.

They both have a daughter each. Their daughters do the same jobs as their mums (not their dads). But one becomes a nurse and the other a childminder.

So their mums must be childminder & nurse. But the boy who became a childminder married a nurse, and the one who became a nurse married a childminder!

So the daughters (youngest generation) do the same job as their mums but not their grandmothers. The paternal grandmother of the one who becomes a nurse is a childminder and vv. The maternal grandmother's job could be anything (other than nurse/childminder!).

saver861

zagfles wrote: »

So your point is wrong for most people. You gain by the amount you earn. Your delayed pension payment is generally compensated by getting a bigger pension. You don't lose it.

Ok, let me put it another way.

If Mr Smith has the opportunity to retire today he has two options.
a), look at how much in hand income he can generate in retirement from pension, lump sum returns, etc etc.
b) look at how much in hand income he gets from carrying on working.

The difference between the two is what he is actually working for. Now, lets say, the pension does increase from working an additional year. There will be a set time before Mr Smith can achieve the equivalent financial income from scenario b, and that is assuming Mr Smith does not do any income generating work in retirement. If, he generates income from working in retirement then the time to get to the equivalent financial situation is almost certainly not possible.

I took retirement last year. I'm freelancing for about ten hours per week. My income is probably as much or more so than when I was working full time. Pension + ten hours = full time salary!!

So roughly speaking, if I work two days per week I'm achieving the same financial income than if I had not retired and continued to work five days per week. In other words, I would have been working an additional three days for zilch financial gain in that year.

Its true my pension would have increased when I go to claim it. However, it would take a lonnnng time for that percentage increase to be the equivalent of my salary for the three extra days I worked in that year. It would take in the region of forty years to make it up.

That's without taking into account any pension I might generate from my two days per week working in retirement, which would near cancel out the additional pension increase if I had carried on working.

The situation is not dissimilar to the work v benefits argument we keep hearing about. Many on benefits don't work because the amount they get for working is not significantly greater than their collective benefits.

While the these scenarios are entirely different in principle, the numerical concepts are largely the same. If you are in a position to retire and can generate a good pension, it may not pay to continue working. That's simply my point.

atush

zagfles wrote: »

I don't think that applies any more.

In almost all cases, delay the pension and it increases by about the sort of amount which makes the total pension paid over the entire expected retirement about the same.

So your point is wrong for most people. You gain by the amount you earn. Your delayed pension payment is generally compensated by getting a bigger pension. You don't lose it.

You migth be right, you might not.

But we know of recent case here where where the person (woman) didnt take her pension when it came due. And carried on working. And now finds that they get 0% uplift, plus no backpayments of pension not taken. Was 3-5 years I think
So not all pensions have an uplift in deferment

zagfles

atush wrote: »

You migth be right, you might not.

But we know of recent case here where where the person (woman) didnt take her pension when it came due. And carried on working. And now finds that they get 0% uplift, plus no backpayments of pension not taken. Was 3-5 years I think
So not all pensions have an uplift in deferment

Which is why I said 'almost all'. Not 'all'.