Saving to retire early.

andys15

Thanks Alex. I think because I have only 9 months left it seems I just may as well finish the mortgage. I really shouldn’t have done it this way. 

I am kicking myself a little, as I had about £60k in April. I considered putting into the stock market as it had fell so much, but instead I put it into the mortgage, where my interest rate is only 1.19%. 

Believe it or not I am high risk adverse, but I was spooked around 4 years ago when we had VR at work, and I thought if it became CR I would be screwed and struggle to pay the mortgage. Since then I have wanted the security of owning the house, then if I lost my job, I could get a job doing doing anything to pay the bills. 

Unfortunately I am in a profession which is not transferable to any other job. I have no real qualifications except GCSEs,  so I would not have been able to find anything that pays anywhere near what I currently get. 

Eco_Miser

As mentioned above you could put the first few months savings (up to £20k) into an S&S ISA in something cautious and leave it to grow for 7-10 years' 

You could then put each of the next months savings into a five year fixed rate deposit - meaning that five years later when you're retired £7500+ becomes available each month. Adjust as you near retirement.

Thrugelmir

andys15 said:

Thanks Alex. I think because I have only 9 months left it seems I just may as well finish the mortgage. I really shouldn’t have done it this way. 

Being mortgage free is a great position to be in.  Don't concern yourself.  Plenty of people do kick themselves when they lose their jobs in later life with a sizable mortgage left to pay.  Better to optimise than maximise. As life has a habit of throwing a curved ball when you are least expecting it. 

Albermarle

Some contradiction in the following two statements 
I was allowed to take out my final salary pension and put it in a SIPP which is run by a company. 

It’s currently worth just over a million

Believe it or not I am high risk adverse
So you gave up a guaranteed pension income , in return for an amount that is presumably now largely invested in risk based financial products, which may or may not produce a larger /smaller/same income as you had before .
The pension scheme did not 'allow' you to do it , they will have wanted you take the Million to get the liability off their books .

veryintrigued

Guessing that OP is aware that the private pension age looks set to rise from 55 to 57 with looming legislation.

andys15

Yes I gave up the final salary pension for a few reasons. 1. The CETV values were in a bubble it seemed at the time
2. The final salary pensions finishes when my wife and I pass away. 

3. I get an uplift in my salary every month which will enable me to retire early. I knew the rules had changed for me to not be able
to get my pension until I was 57. I can now save the uplift after the mortgage has gone to retire earlier. 

andys15

veryintrigued said:

Guessing that OP is aware that the private pension age looks set to rise from 55 to 57 with looming legislation.

Yes. I was aware 3 years ago. 

Albermarle

andys15 said:

Yes I gave up the final salary pension for a few reasons. 1. The CETV values were in a bubble it seemed at the time
2. The final salary pensions finishes when my wife and I pass away. 

3. I get an uplift in my salary every month which will enable me to retire early. I knew the rules had changed for me to not be able
to get my pension until I was 57. I can now save the uplift after the mortgage has gone to retire earlier. 

It can be a good idea for some to  take a CETV and rely on investment returns  to match what would have been a guaranteed income . However would not normally be for the 'very risk averse' the opposite in fact .

DiggerUK

Well andys15, you certainly choose your own path. I've heard many reasons why people have been persuaded to exchange a final salary pension for a risk based pension pot, but being worried about not having a pension income in death is a first.

I am in the 'clear your mortgage above all other financial decisions first school' for much the same reasons as you. A secure no risk roof over ones head.

Going in to retirement with oodles of cash is all fine 'n dandy if you can keep those cash reserves away from inflation shortfall. 

In the here and now, as well as the foreseeable future, it's a bad plan; given current returns on cash and there being no real basis for any bank to need to pay you above inflation rates.

Given the time frames you talk about, then equity based investments are above the five plus years often recommended for such savings to make it worthwhile. I don't recommend the risk and you don't seem to like risk.

There are options being advised by other posters for you to consider. Digger Mansions put all its retirement savings in gold with no regrets. Gold is also best for a five plus years, ten years preferred, 'buy 'n hold' plan.
May not interest you in the slightest, but at least you could be buried with what's left..._

andys15

Thanks digger. 

The point I am making about the death is that the pot I would have in a final salary pension goes with my wife and I. So if we die in a car crash a week after retiring then the pension is gone for my family. 

Whereas with it now being in a SIPP, the kids will get it.