How much to live on

GunJack

https://forums.moneysavingexpert.com/discussion/comment/80027893#Comment_80027893

..but the OP doesn't have £750k on paper….they have a £19k p.a. DB pension plus a lump sum plus £170k in savings. If they drop dead the day after taking the pension the estate will be £170k plus lump sum possibly plus some death benefit from the pension.

The only time you could call the DB pension £500k is if it is transferred out to a DC scheme, and we all know how likely that is…

jackieblack

Arrived at work yesterday to the news that a colleague (of 15+ years) had died suddenly at the weekend. Only in their early sixties and had been talking about taking early retirement for the last few years but never actually 'pulled the trigger' (although had dropped a day a week in order to spend time with grandchild). No known health issues, although no-one would be surprised if stress was a contributory factor…

Stuff like this really helps focus your thoughts on the things that are most important to you.

So, thanks to a slight change of plans and the next Bank Holiday weekend, I might get a couple of hours to look at my budget. I'm going to see if I can manage on £10k + my mortgage payment (on the basis that one way or another that will be gone before I can 'retire'). If, pre State Pension I can get half(ish) that by taking LGPS pension early and the rest by part-time or seasonal work, I'll be fine with that. I also need to sort out the various savings pots to get a more accurate idea of the total value.

Came home to a letter from LGPS with some options about merging (or not) my two pension records which I need to look at - there are pros and cons, some of which I don't really understand, and some of which are things that don't appear relevant/likely, but one is related to the option of taking it early…

I feel like 'the universe' is encouraging me to take a closer look at this stuff!

Gin_and_Milk

Wow, @jackieblack , sorry to hear about your friend. Things like this certainly do put things into perspective. I also got my LGPS statement the other day. The plan has always been to go at 60, partly because that is when the mortgage will be paid off. Having seen the figures it might be possible to go earlier, and as I am in the process of setting up a bit of a side hustle for my retirement fund I'll hopefully boost my income some more.

You're post has given me the impetus to set the wheels in motion, it's so sad that your friend had uhmed and ahh'd about retiring and never got chance to do it.

@Brighton01 - nerves are normal and not necessarily a bad thing, but just go if you can. We only get one shot at life!

GunJack

https://forums.moneysavingexpert.com/discussion/comment/80028657#Comment_80028657

try asking @Silvertabby as a former LGPS Administrator she may be able to clarify some stuff

Organgrinder

If it helps, I've been round and round my spreadsheet and guiide hundreds of times. Nerves are normal.

What it boils down to for me is quality of life. I enjoy my job but I'm finding it ever harder working full time, yet i'm fitter now than when I was 40.

I'm a teacher, but only started 15 years ago so no automatic lump sum for me. I have two other DB pensions from my previous career and a DC pot of about 30k.

If i took all my DB pensions now (56) I'd have approx £19k pensions and no debts but I don't have enough savings for what I would like, so for me a phased teaching retirement makes sense. I'm hoping to go to 3 days a week and continue this for 3-4 years.

I wouldn't be taking all my pension benefits but sufficient to boost my savings to cover the period to 67.

By the time I want to fully retire (60) my total savings should total £90k, my pensions to £21k pa and I'd also continue exam marking which boosts my income by up to £3k a year. This sees me through to SPA where I can hopefully enjoy a £31k pa retirement with a rainy day pot of about £50k still in the bank.

I've factored in everything I can think of. Holidays. Cars. Etc etc. I have three periods in mind. Phased retirement to 60. Early retirement to 67. State Pension Age at 67. At no time does my disposable income ever get lower than now whilst working full time. The one worry I have is something major like a new roof but that's the rainy day money I guess.

So far, noone i've spoken to who has done this has regretted it, and noone thinks it's a bad idea. If it doesn't look like it's working I may continue part time for longer. Ultimately though, if my plan provides me with more disposable income than I have now, I do wonder what the hell I'm worrying about.

Roger175

https://forums.moneysavingexpert.com/discussion/comment/80027702#Comment_80027702

You make a very interesting point here about the fact that it's not something you discuss with friends.

I find these type of forums and hearing other peoples experiences fascinating. I too don't discuss these sort of things with friends. This is for a variety of reasons, but mainly because most of them are hopeless with money and I think would be quite envious to know our finantial details.

It's not like we could even discuss it with those parent we have remaining, because they seem to come from a different generation whereby you get to, or very close to, state pention age and then retire on your SP plus DB pension. In our case things are very different and actually not at all what I expected when we started on our journey.

It seems to be now that if one seeks early retirement, you need to look at having the finacial reseouces to plug the gap between early retirement and SPA, thereafter things become a lot simpler.

In our case my wife has a modest level of DB pensions (just below £10k pa) which will kick in later this year and all mine are DC schemes, but we have reasonable cash and SS ISA savings which means we will be more than comfortably for the period we need to 'plug' I can afford to leave all my DC pensions fully invested for many years, which actually influences investment decisions etc - I had always assumed I would need a life-styling approach so that I would be protected from market turmoil as I approached retirement and looked to buy an annuity, but it's all turned out very differently!

Albermarle

It's not like we could even discuss it with those parent we have remaining, because they seem to come from a different generation whereby you get to, or very close to, state pention age and then retire on your SP plus DB pension

Although in the past DB pensions were more prevalent than DC schemes, the majority of the previous generation would have no pension provision at all, apart from the state pension.

It seems to be now that if one seeks early retirement, you need to look at having the finacial reseouces to plug the gap between early retirement and SPA, thereafter things become a lot simpler.

At least early retirement is a possibility for more people nowadays, since the advent of pension freedoms. Although I believe the average retirement age is still around 62/63. Although you see a lot of posters on here and the Pensions forum retiring in their 50's, this is still only a small minority of the general population.

Organgrinder

https://forums.moneysavingexpert.com/discussion/comment/80029470#Comment_80029470

The changes to the pensions regulations in 2015 was a game changer. Prior to that, for the majority of people the lump sum and/or savings were the only things that could plug the gap between early retirement and state pension age.

I only became aware of the options in the last couple of years and with my lump sums being over £60k, I can recycle £18k into a pension across 3 financial years and more thereafter in what is a fairly tax efficient way of plugging the gap. The rules allow me to recycle up to 30% of my lump sums without penalty over 5 financial years, 2 before the lump sum and 2 after. For example (assuming no growth) I should be able to reinvest some £38k before I retire, by investing more after the restrictions on recycling end. This has a net cost to me of £30.4k and assuming no growth in real terms a potential to draw down £32.3k after tax. A £1.9k benefit from the taxman for little work. But if i get 2% real term growth over the period until I retire and also until SPA I can still draw what I need and have a small lump sum left over of about £4k. Not a huge amount but nice all the same.

And if it doesn't grow, I have my other pot and savings to fall back on.

BooJewels

My father would have been 90 this week and he retired at 50 - which was perhaps unusual for his generation - he'd been a college lecturer.  Him and Mum had a great time, they bought a motorhome and went all over the UK and Europe in it, had nice days out, pottered in the garden, went out for lunch etc.  So I'm truly grateful that they had that quality time together.  My husband died at 62, so my retirement plans were totally turned on their heads.  So if you do have the chance to get the best out of life, please don't squander the opportunity - as @jackieblack sadly demonstrated.  I've had a few friends who have retired early and not one has regretted it or gone back to work - they're all having way too much fun.  My younger sister has a plan to go at 60.

Don't forget to factor in things you won't need if you're not working - like travel to work, car parking, shop bought lunches, money into office collections, sponsoring work mates kids, the purchase and dry cleaning of work clothes etc etc.  My friend who was a nurse worked at the local hospital which closed and she was moved to one further away - it was when she factored in the petrol she'd save, plus removing the 80 minutes a day sat in the car, largely at traffic lights, that it tipped the balance in her calculations - both emotionally and financially.

Pollycat

BooJewels said:

My father would have been 90 this week and he retired at 50 - which was perhaps unusual for his generation - he'd been a college lecturer.  Him and Mum had a great time, they bought a motorhome and went all over the UK and Europe in it, had nice days out, pottered in the garden, went out for lunch etc.  So I'm truly grateful that they had that quality time together.  My husband died at 62, so my retirement plans were totally turned on their heads.  So if you do have the chance to get the best out of life, please don't squander the opportunity - as @jackieblack sadly demonstrated.  I've had a few friends who have retired early and not one has regretted it or gone back to work - they're all having way too much fun.  My younger sister has a plan to go at 60.

Don't forget to factor in things you won't need if you're not working - like travel to work, car parking, shop bought lunches, money into office collections, sponsoring work mates kids, the purchase and dry cleaning of work clothes etc etc.  My friend who was a nurse worked at the local hospital which closed and she was moved to one further away - it was when she factored in the petrol she'd save, plus removing the 80 minutes a day sat in the car, largely at traffic lights, that it tipped the balance in her calculations - both emotionally and financially.

Conversely, don't forget to add in things that might go up if you're not working - like energy costs.