Regret retiring too early with not enough money?

michaels

westv wrote: »

Beware of a North Korean inspired crash! :eek::D

I think we have had a series of potential crises that have turned out not to be and therefore the market no longer sells off much on 'threats' - of course it will only take one threat to turn into a real disaster for that blaseness to be proved wrong.

lakelady

I have very recently taken the plunge, and taken Voluntary Severence at 58.

I am not taking my occupational pension early, so am going to have to live on my VS pay for 18 months, and it was 75% of salary.

When I am 60, I will get about 11k a year plus a lump sum of about £35k until SPA at 66.

Altogether, savings, investments etc are somewhere in the region of £110000 (not including the lump sum to come).

The house is paid for, my husband has a pension of about £1200 a month, and will get a bit more in 3 years when other, smaller ones kick in.

On the face of it, I don't think that we should struggle; but I would really appreciate any suggestions as to how to make this work for the best.

A the moment, I still feel like I am living on a salary, as my last salary payment was on 25 July; but next month there will be nothing, and unless something unexpected happens, I won't be earning again.

I have realised that this means that doing things like changing bank accounts could be tricky, as my outgoings are always going to exceed my (non-existent) income.

I have a Santander 123 account; but am not sure if it will still pay interest on the first £20k, as I won't be paying in new money, and their T&Cs say that you have to pay in £500 a month. I do recycle from other accounts such as TSB and Nationwide; but on my list of things to do is finding out whether this is enough to get interest - if not, I need to seriously reconsider my banking.

I will probably get independent financial advice, but before I do, I would be glad of any suggestions that I could take to the appointment. I have learned about the SIPPS tax perk from reading this forum, for instance. Any other tips would be much appreciated. TIA

Thrugelmir

lakelady wrote: »

I have very recently taken the plunge, and taken Voluntary Severence at 58.

Was there an option to buy more pension?

tempus_fugit

lakelady wrote: »

I have a Santander 123 account; but am not sure if it will still pay interest on the first £20k, as I won't be paying in new money, and their T&Cs say that you have to pay in £500 a month. I do recycle from other accounts such as TSB and Nationwide; but on my list of things to do is finding out whether this is enough to get interest - if not, I need to seriously reconsider my banking.

All you need to do is pay in £500 from one of the other accounts and then send it back the same day. I do it with standing orders and the money doesn't have to to "stay" in the account for any length of time, as long as £500 is paid in at some point then you will get the interest (plus two active direct debits of course).

k6chris

lakelady wrote: »

On the face of it, I don't think that we should struggle; but I would really appreciate any suggestions as to how to make this work for the best.

Congratulations on taking the plunge and welcome to your new life! The (very simple) penny dropped for me recently that in order not to run out of money in retirement, you need to spend less that your pension income / saving drawdown brings in. Unlike when you are employeed, where you can always hope for a pay rise or work a little longer, that 'luxury' is no longer available. So there are two pieces of information you need; how much money you will have coming in and how much is (or will be) going out.

The income can be worked out by a simplish spreadsheet that maps each of your pensions (you and your husband) which will give you an idea of the income each year and how that will change as pensions / state pension kick in. The outgoings can be worked out by looking back over bank / credit cards statements etc, this will allow you to see both how much you are spending and where it is going. I know this sounds slighlty dull, but it is a real opener to see how much money you are actually spending on different areas and allow you to prioritise. Doing this work now, whilst you still have a good chunk of savings, will stop you 'frittering' that buffer away and also judge how much of the savings you will need to top up your monthly income or alternatively, how much you can spend on a new yacht :rotfl:(seriously, don't buy the big retirement present (new car / motorhome / yacht) before you have worked out if you retirement will be soup or sushi!).

Good luck, hope you like spreadsheets!!

michaels

You need to think about using your savings to equalise your income pre and post state pension, no point living aas a pauper for the next 8 years then having a big jump once you are 66.

Thrugelmir

michaels wrote: »

You need to think about using your savings to equalise your income pre and post state pension, no point living aas a pauper for the next 8 years then having a big jump once you are 66.

Are you suggesting that life ends at 66?

enthusiasticsaver

I plan to retire at the end of this year just shy of my 58th birthday. My husband retired last October aged 58 but has a substantial pension of £23.5k per annum. My pension is much smaller, around £5k per annum but my salary is only £12k and I have a second pension which kicks in 2 years later which will give me £4k. Effectively therefore by 60 I should be up to 75% of my salary and we have savings to supplement these until state pension age of 66 for both of us.

We won't be doing world cruises but will be holidaying abroad probably once a year with a few UK trips throughout the year. My husband was an engineer and still loves doing it as a hobby so has kept busy with that. Most of our friends took early retirement 58-60 so our social life now revolves around lunches out and we have a granddaughter we look after one day a week. I love reading, theatre, playing the piano, walking, going down to the gym/pool and gardening. None of these are really expensive so well within our budget.

We belong to the National Trust, the local country club for the gym/pool/exercise classes and socialising and both have separate hobbies. I think we will be fine and am looking forward to it. Some of my friends are having to carry on working but that is because they cannot afford to retire not because they do not want to.

gadgetmind

enthusiasticsaver wrote: »

has a substantial pension of £23.5k per annum.

This alone makes you millionaires. Well done.

Kynthia

enthusiasticsaver wrote: »

I plan to retire at the end of this year just shy of my 58th birthday. My husband retired last October aged 58 but has a substantial pension of £23.5k per annum. My pension is much smaller, around £5k per annum but my salary is only £12k and I have a second pension which kicks in 2 years later which will give me £4k. Effectively therefore by 60 I should be up to 75% of my salary and we have savings to supplement these until state pension age of 66 for both of us.

We won't be doing world cruises but will be holidaying abroad probably once a year with a few UK trips throughout the year. My husband was an engineer and still loves doing it as a hobby so has kept busy with that. Most of our friends took early retirement 58-60 so our social life now revolves around lunches out and we have a granddaughter we look after one day a week. I love reading, theatre, playing the piano, walking, going down to the gym/pool and gardening. None of these are really expensive so well within our budget.

We belong to the National Trust, the local country club for the gym/pool/exercise classes and socialising and both have separate hobbies. I think we will be fine and am looking forward to it. Some of my friends are having to carry on working but that is because they cannot afford to retire not because they do not want to.

If you don't have enough NI years for a full state pension when you stop working, then see whether your grandchild's would be happy to transfer their NI credits to you if they don't need them. I've just done this for my mum because she cares for my daughter and I don't need the NI credit for claiming child benefit for an under 12 year old.