How easy is it to decide to stop?

bompey

Hello All,
I’ve been following here for about 2 years due to being disillusioned/fed up with work. I’m about to turn 50 and have had a high pressure job, I think I have enough savings to stop but 50 feels too young. Will I have enough money to last me 40 years? I don’t think a part time job is for me but how do you know the right time to stop?
Cheers

xylophone

Presumably you have an occupational pension? And/or a personal pension?

Is any part of your pension provision defined benefit?

You will make sure that you and spouse are eligible for full new state pension?

Does your wife have occupational/personal pension provision?

Will it be easy to find part time work should you want it?

Are you able to work fewer hours for your current employer?

k6chris

You don't have to make a 'forever' decision. Take a 'gap year' or 'career break' and see how it goes. I have had 2 such breaks, one for 18 months and recently one for 6 months. I am about to start an open-ended career break - no idea if or when I will use the R word, I just know not-work > work. Good luck.

OldMusicGuy

You do a long term financial plan. You look at what you would do if you gave up work and how much you would spend to sustain your non-working lifestyle. You then look at income streams you might have in later life, like state pension and any defined benefit pensions. Any shortfall will have to be made up from DC pension pots and savings, plus things like downsizing your house if you want. That allows you to decide if you can afford to give up work.

If you have savings/investments/DC pension pot, you could use a 3.5% safe withdrawal rate for planning purposes to give a rough idea of how long that money would last. Understanding SWR was a big step for me in retirement planning (even though I don't actually use it now I have retired). If you don't know what SWR is, you need to do some more reading....

The big issue is deciding how much you will spend in retirement. If you want to do lots of travel, you will need plenty of money. If, like us, you want to stay at home, do the garden, read books and indulge in hobbies, you won't need as much.

Like k6chris said, maybe a career break or just a change of jobs would help? Or could you consider consulting/ad hoc work?

crv1963

OldMusicGuy wrote: »

You do a long term financial plan. You look at what you would do if you gave up work and how much you would spend to sustain your non-working lifestyle. You then look at income streams you might have in later life, like state pension and any defined benefit pensions. Any shortfall will have to be made up from DC pension pots and savings, plus things like downsizing your house if you want. That allows you to decide if you can afford to give up work.

If you have savings/investments/DC pension pot, you could use a 3.5% safe withdrawal rate for planning purposes to give a rough idea of how long that money would last. Understanding SWR was a big step for me in retirement planning (even though I don't actually use it now I have retired). If you don't know what SWR is, you need to do some more reading....

The big issue is deciding how much you will spend in retirement. If you want to do lots of travel, you will need plenty of money. If, like us, you want to stay at home, do the garden, read books and indulge in hobbies, you won't need as much.

Like k6chris said, maybe a career break or just a change of jobs would help? Or could you consider consulting/ad hoc work?

I had a period of time reading through lots of threads, a bit of wider researching so I got an understanding of the terms like SIPP, SP etc, risk and looked at the various providers of savings vehicles. Then I worked out our number as OMG suggests above.

Look at what you want to do in retirement, how much it costs, and then what you have now so you can work out what you need to save. Once you know what you need, how can you get it? We looked hard at our outgoings, changed providers for energy, insurance etc, then the savings were put for us into paying down debt, saving and now from this month pension. We were amazed at saving almost £800 on bills and discretionary spending that had crept up or as others call it lifestyle creep!

We don't live an ash cloth and cinders life, we enjoy the now, but we don't just "flash the cash" anymore either!

bompey

Thanks for the replies. the numbers stack up, but I think my problem is getting out of the mindset of a regular salary and being able to save, to starting to spend all that we have saved.

crv1963

bompey wrote: »

Thanks for the replies. the numbers stack up, but I think my problem is getting out of the mindset of a regular salary and being able to save, to starting to spend all that we have saved.

We're taking the attitude that the spending of the savings will be a purpose in itself. We have identified which pots (still in accumulation) will be taken at a SWR and which can be ran down to zero. The SIPP I mention above is one which can be ran down to zero until SP kicks in, another pot is to be taken at a SWR. ISA in my name is for EF, and added to as we go along.

Others plan differently, you have to do what feels right for you.

OldMusicGuy

bompey wrote: »

Thanks for the replies. the numbers stack up, but I think my problem is getting out of the mindset of a regular salary and being able to save, to starting to spend all that we have saved.

That is the tough one. I had worked for 40 years without any breaks or periods of unemployment. I was a total "wage slave". It's a real shift in mindset that can be tough to get used to, especially if you are risk averse like me. As long as you have fall back positions (eg you could go back to work if you had to) you should be ok....

Linton

bompey wrote: »

Thanks for the replies. the numbers stack up, but I think my problem is getting out of the mindset of a regular salary and being able to save, to starting to spend all that we have saved.

Yes, getting used to spending money does take some time, though practice helps. We have a plan with an expenditure budget set up so that if we reach extreme old age there will be enough money to pay for the standard of care we would want. The budget can then be used as a target rather than a constraint. If you have enough left over to take an expensive holiday dont feel guilty about taking one, if that is what you want to do. On the small scale perhaps you may like to buy rather more expensive wines or other luxuries than previously



As retirement progresses and some of your initial assumptions prove to have been too pessimistic your plan may show excess capital at death and so you can increase your annual expenditure budget or perhaps use some of your capital for a large one-off purchase.


As with deciding to retire in the first place, unless you are adequately provided with guaranteed inflation linked income a detailed financial plan during retirement is essential in my view.

Triumph13

I can sympathise with you - I went through exactly the same things leading up to pulling the plug at 52 last October. It's a really complicated decision to make. For me it was about having enough money that the impact of an extra year's money was no longer worth as much as having the extra time. Then a bit extra to help me sleep at night.

Maisie78

Maybe take a year out and go travelling or do something you've always wanted to do or re-train. never too old to re-train or learn something new. 40 years is a long time to potter about, make sure you are going to use your free time wisely and it's fulfilling. And make sure you don't die with all that money in the bank, you can't take it with you when you die lol. Be wise, spend some and LIVE but leave enough for old age. You're still young