Please help - desperate to retire early!!

Miss_Penny_Pincher_2

I am finding my job very demoralizing and I feel that I will be much happier if I can retire as soon as possible. I have been looking for a new job for over a year now and am hoping that when one turns up maybe I will no longer be so desperate to retire – had several interviews but no success as yet.

I’m nearly 30 years old and wish I didn’t feel this way as I’m happy in all other areas of my life but finding it hard to cope.

A lot of my early retirement focus has been on paying off the mortgage so that there would be nothing to tie me into working but I was wondering if my plans make sense and if there is anything I can do to improve them. I have calculated that throught the overpayments I’m making from my savings we would pay mortgage off by May 2011 (to fit in with a new 3 year fixed rate) which is when I would be able to afford to retire.

During that time I would continue paying into LGPS which would only have 7 years service by 2011 but I don’t think I will be able to access until I am 60 anyway. Mr Pincher also has his own occupational final salary pension scheme. Our joint shares and savings would be enough for back up at £10k and Mr Pincher would continue to save £200pm and I would try to save as much as I can.
I would say that in terms of potentially investing I’m fairly cautious and probably categories 3-4 in terms of risk prepared to take.

Mr Pincher is very loving and he did say if our salaries were switched it wouldn’t be a problem for me to stop work. Currently after pension contributions I bring home £1470pm from main job and he brings home £880pm. I also have a part time job which I enjoy and would like to keep but it only pays £120pm. Mr Pincher pays £380pm towards mortgage and all bills every month. These currently cost us £1,260 so I make up the rest. He has said he doesn’t mind continuing to contribute £380pm even when mortgage is finished. Bills should only be around £240pm then and I think I would enjoy a happy lifestyle living on just the £140pm left over and my £120pm earnings from part time job. This relies on Mr Pincher’s generosity though which I don’t like having to do.

I feel like this is a bit foolish and a coward’s way out and would leave us living even more modestly in retirement but all day at work I feel anxious and as though I’m going crazy and I just think of how I can escape as soon as possible – even 4 years more feels too long.

noh

I don't know your circumstances but will the total of all your monthly costs be only £240? This seems a very low figure.
I am single and have recently opted out of full time employment. It took me till 51 to be able to afford it. I have calculated my total monthly costs to be around £750 thats with no mortgage and I don't waste money!
You need to do a realistic budget, I used the calculator available here http://www.moneysavingexpert.com/budgetcalculator.phtml
but you need to be realistic its no good deceiving yourself.

Nigel

tanith

I agree with noh I don't think £240 per month for all bills and upkeep , food etc can possibly be right , you need to look at it again.......

Miss_Penny_Pincher_2

Thank you for your replies – I was wondering if the amount I was allowing myself was too low but the £240 is just for bills (excludes food) and is the monthly average of our bills excluding mortgage from last 2 years. These are all our bills:

TV license £11
Water £15
Internet £10
Gas & electric £50
Mobile £30 (hoping to switch to cheaper contract when ends in December)
Council tax £86 (£1,024pa at moment)
Buildings and contents insurance £8 (costs £16 but Mr Pincher pays half)
Leasehold £6 (we own leasehold house and have to pay freehold company twice a year)
Burglar alarm maintenance £4
Total = £220pm on average

I allowed an extra £20 for a bit of inflation / increase in council tax. We are happy with freeview and Mr Pincher pays for the BT landline by direct debit but we hardly use it so only costs him £12 a month and we may get rid of it.

We usually spend £45 a month each on food, leaving me around £215 from my £260 spending budget for everything else e.g. eating out, clothes, leisure etc – I’m a penny pincher so it’s enough for me. I know it’s manageable as I have strictly recorded all outgoings for nearly 2 years Some months I have spent less than £90 but my spending jumps up around Christmas time so works out at just under £260 a month on average.

I am concerned about how we would pay for larger items such as appliances and repair work as currently I can put aside savings for this but as Mr Pincher would be saving £200 a month and we would have the £10k buffer I thought that this could possibly be enough. Also once a year he gets his annual bonus which is around £950 which he likes to spend on stuff for the house, a holiday and a new computer game

This is how I worked it out:

Incomings
Mr Pincher’s contribution £380 (he has offered to make this £400 if I’m not working)

Part time job £120 (employer has asked me if I’d like to do more hours so could increase this)

Mr Pincher’s savings £200 (cover repairs etc – it’s a modern low maintenance house but boiler is now 16 years old. This still leaves him with £300pm to spend on what he likes which he has lived on for nearly 2 years.)

Total £700

Outgoings
Bills £240
Spending money £260
Total £500

Thank you for looking at my SOA - I thought it was realistic but do you think I’ve missed anything?

chesky369

I'm afraid that even if you retired early, at under 30, you've still got several years of working life to go unless you change your way of life drastically. It would be better if you changed your job - even your career - as retiring in the next ten years will not be an option. What is your actual job at present?

tanith

Miss Penny Pincher have you even thought about how your State Pension would be affected if you ceased paying National Insurance Contributions at your age? I really think there are a lot more implications to your retiring at your age than you have realised... What would happen if your OH either lost his job or became ill? (god forbid) but it happens....

Garnet_Gem

If you retired early would you pay for your own National Insurance stamp? It's very important to keep this up as it will affect your future finances. Perhaps you could job share or find another job with part-time hours. If it all works out then you could take the next step and give up work. There used to be someone on this forum who's signature said that he/she had an income of £500 per month, that they were debt-free and that they could still save. Can't remember the name though.

sarah_h_4

Retire at 30 what a waste. You have 30+ years of woring life in which you can build up a nest egg and plan for a good future. If you feel you are in a dead end job that makes you unhappy. Dont give up keep looking around until you find a job that you are happy with. Is there no spope to expand the hours on your part time job which you say you are happy with. Dont write your self out of the job market because your prescent job makes you unhappy. Although I am looking to retire from my prescent job it is only to move on and do something I now find much more exciting. Dont back your self into a hole were you have no job and very little money to live on. Thats call unemployment. Retirement is having the financal backing to start enjoying the later years of your life.

noh

Your SOA is missing many items. You need to be realistic and calculate monthly costs for everything ie birthdays/christmas holidays (even if it is just a few days a year) medical/dental costs transport costs household maintenance and as another poster has already mentioned you need to pay voluntary NI contributions to ensure you will receive a full state pension in your own right. Also I find it very difficult to believe that your food budget is £90 a month for 2 people.
I think that if you did give up work now you would find it impossible to make ends meet and you definately would be would be very badly off after state retirement age in 37 years time if you make it that far.
So to answer your original question your plans do not make sense you need alot more savings behind you. My suggestion would be to find a job you are comfortable with and if you really can live on your husbands wage alone do that and save all yours for at least ten years and then it may be possible.

Nigel

Miss_Penny_Pincher_2

Thank you everybody for your opinions - I have given them all a lot of thought.


Chesky – I work in local government in quite a specialized role – similar jobs are few and far between and don’t inspire me any more! I agree changing my job is the ideal which I am aiming to do – I won’t be retiring for at least 4 years anyway so will be 33 by then! Today I decided to make sure I achieve my dream of being a housewife and not waste my whole life working! The first step I thought I would take is asking MSEs to see what they suggest…

Tanith and Garnet-Gem – thanks for the warning about the National Insurance Contributions – I will definitely look more into them. If the worst came to the worst and DH did become ill then I would just have to work again. Ideally we would need £1,000pm between us (when we are mortgage free) to live the lifestyle we have now which we are very happy with. Garnet-Gem your suggestions make a lot of sense to me - I had been putting off looking for part time work until the 4 years was up as was determined to get rid of the mortgage ASAP but will definitely keep my part time job during ‘retirement’. Like you say a budget of £500 each is realistic and has allowed us to have plenty of luxuries as well as covering vet bills etc.

Sarah h – I beg to differ I feel it’s a waste to not have the chance to do what you will enjoy most especially as we only have one life! Why waste years when with careful planning can afford to live and enjoy the life want to lead?

The ultimate dream would be to have income from savings of £1,000pm but would need a nest egg of around £300k in savings to earn that much interest and maybe that should be my plan…? But it’s not necessary as DH is happy to work so we only require £120pm to make up the short fall which I already earn working just 4 hours a week in my second job. My LGPS pension will pay out £2,500pa after 7 years service and DH would have a better occupational pension and that’s not including state pensions.

Noh – thank you for your concerns but we have found that our joint £760pm spending money / savings does cover birthdays / Christmas / medical / transport (we don’t run a car) / household maintenance but I will look into the cost of NI contributions. I recommend you check out the Old Style board – you will find that £90 a month for 2 people is in fact quite extravagant! Even though we buy free range meat and eggs we cook most meals from scratch, rarely waste food and make our own bread.

If instead of 4 years from now, how about finishing full time work in 6 years – those extra 2 years would allow us to have built up savings of around £50k (bringing in around £200pm in interest) and be mortgage free and my LGPS will have increased to around £3,500pa and DH’s salary should have increased too!

siamese0109

Hi - I'm looking to retire in 5 years time and have just contacted the LGPS for an idea of what I might expect to get. I've paid in for 27 years and expected to be able to claim at 60 but not any longer it seems. This is some of the reply I got from them:

The scheme rules have changed recently and the normal retirement age from the scheme is now 65. It is possible to draw your pension from age 60 but there would be reductions applied to your benefits.

There are protections in place which would mean that if you were to receive your benefits at 60, the benefits based on your membership to 31/03/2008 would be protected and would not be reduced. However, the benefits based on your membership from 01/04/2008 onwards would be reduced. The current reduction factors would be 23% for your pension and 12% for your lump sum.

I am sorry but I am unable to send you an estimate of your retirement benefits at the moment because your expected date of retirement is after 30 March 2008.

A new Local Government pension scheme is going to be introduced on 1 April 2008, and we don’t yet know how scheme benefits will be calculated for service from 1 April 2008. If you contact us once the new scheme is in place we should be able to provide you with an accurate retirement estimate.