Best time of year to retire (UK!)

zagubov

LHW99 wrote: »

There used to be 3 specific dates for teachers to retire - 31st August, 31st december and I think 30th April. You were expected to give (I think) 3 months notice. It was part of the contract, and if you had a short term contract it would run until one of those dates.

Quite so, and whether you took your retirement just before or after your retirement age depends on how much work you might return to afterwards. (this probably relates to teachers more than other jobs).

Not working afterwards:
If you retired before your birthday, you'd get a very slightly but permanently reduced pension.

If you retired after, you'd get a full pension, slightly increased by your extra payments. However by taking the salary longer, you could lose a few months pension income which you don't ever get back.

Working afterwards:
If you retired before your birthday, you'd get a very slightly but permanently reduced pension. If you return to work after even one day's gap, and you'd have no limit on how much work you could do later, during which you could earn new pension. This way you could work and earn more.

If you retire after, you'd get a full pension, slightly increased by your extra payments. However by taking the salary longer,you need to seriously limit your new work so the pension doesn't make you exceed your old salary (or it'll be cut off/abated so it doesn't). This way you need to go part time.

Needs careful thought, as it's your decision. Your union and pension agency can answer questions but not offer advice (nor can I).

ashpan

ScoobyZ said:

AnotherJoe wrote: »

One consideration, as you did point out, if you wait until you have earned around £12k in the tax year, then you can claim back all the tax you paid, so the last few months you are earning much more on a % basis than normal.
OTOH if you retired, say, now, then you miss out months of commuting in the dark and cold.

As it happened i retired in June for other reasons than financial and that worked out fine, plus you do then get the summer to enjoy, rather than retiring later in say December when another summer has gone, one you'll never get back.

So I suppose for back end of the year it depends if that is early to avoid all the cold months of commuting or late and you extended it over that past summer.

I agree with this retire after you have made 12.5k and get the tax back. Then draw pension in next tax year. Also you should get a few bank holidays in as well

im thinking of retiring this year from education, i currently work part time and earn around £14k pa, so how would the £12k target relate to or benefit me tax-wise? Should i work until the end of the financial year or not, ive been told if i resign so my last working day is the last day of term i will be paid for the summer holidays, not to be sniffed at!

Dazed_and_C0nfused

You might want to put other things ahead of tax when making such a big life decision.

The £12.5k reference was in relation the current Personal Allowance.  If you are earning say £2k/month in taxable salary you will pay tax each month as your taxable pay is £24k/year.

If you stop work after 6 months and have no more taxable income in that tax year you would only actually have £12k taxable income and therefore be due all the tax you had paid in the first 6 months of the tax year back.

Which might be a nice refund of c£1,150.

But working another month would gain you an additional £2k taxable income (before deductions) and you would still be able to claim c£1,040 back in tax.

cfw1994

When I posted this thread back in November ‘19, who knew the world would change so dramatically!
My plans to consider ‘stepping down’ from the day job sometime last summer got put on pause...but the end is now in sight for me: notice is given, the end of April is drawing closer.  

Slightly daunting, yet incredibly liberating at the same time.....

Clearly The Markets heard the news, crashing the DC pot by a nasty chunk this past week....timing is everything.....hey ho, hold on, it’s a bumpy road ahead....
Nebulous’s thread reminded me I should remember to contact insurers......wonder what other things should be done in the next couple of months...I’m sure there was a thread on that somewhere here...

Steve182

Today being March 1st, best time would be March 2nd!
On a more serious note, if you are normally a HRT payer maybe choose the retirement month that results in you being a basic tax payer just beneath the threshold that tax year? And obviously not take any pension drawdown that pushes you over that threshold  tax year... 

Albermarle

Steve182 said:

Today being March 1st, best time would be March 2nd!
On a more serious note, if you are normally a HRT payer maybe choose the retirement month that results in you being a basic tax payer just beneath the threshold that tax year? And obviously not take any pension drawdown that pushes you over that threshold  tax year... 

If you can work it like that then it makes sense. Of course you would pay HRT in the working months but you would get a refund later .  I am retiring this year and would have to retire late Autumn/early Winter  to do this, but I prefer to go whilst it will still be Summer weather .

shinytop

I retired in August, went straight on holiday and never went back.  I don't think it matters beyond the sensible financial planning already mentioned. 

stephenadarglas

Winter trip - Florida Keys.  Spring Trip - Las Vegas.  End of summer trip - whatever comes along!!!

quirkydeptless

I didn't really think of best time of year for my retirement date, but I'm quite happy with 1st July in retrospect. I get lots of the summer with lockdown easing and two lots of jabs in me, I get 3 months of salary, enough to get another year of NIC pension contributions, and a low enough annual salary to get a nice tax rebate 

billywhizz1966

I have decided September 8 for me and go on holiday to our villa. I will have maxed out my pension allowance of £40k and not pay much if any tax as will have only just earned over £12,500 when I go.