Which month is best to retire in

Bimbly

Well, I'm a fan of over-thinking, so here are my thoughts:

APRIL!

I mean, September is good in order to be half way through the tax year so you get some tax back. I always take two weeks holiday at the beginning of September and it's a lovely time to be off, but the thought of getting to grips with the new way of life with the whole winter ahead doesn't appeal.

Having said that, a colleague retired just before Christmas and I thought that it would be a bad time because of the days being short and it generally being cold and dark. But I actually envied her having the time off after Christmas - even with all that rain - so not a bad choice if it suits you. It suited her, as she got voluntary redundancy.

I've thought summer might be good, but actually in April you have some time to do the garden and some time to sort out the house etc so you are prepared to relax for the summer.

What clinches it for me is that on the April after my 60th birthday, I am entitled to my 25 year bonus. So it would make sense to hang on until then. I think working through those three months after the Christmas break would be hard, but the thought of breaking free as the weather improves is attractive. In that particular year, the way Easter falls basically means I would go in the Easter holidays and not come back. So, having been pushed that way by taking the bonus into account, the more I've thought about it and the more it seems attractive.

I seem to recall this was mentioned in one of the Squirrelled Nuts threads and some already retired folk seemed to think spring/summer worked for them.

Of course, much could happen between now and then. But those are my over-thunked thoughts 

mark55man

Thanks all, in order of preference then it seems to be

1.  now!
2. As soon as possible whatever the date
3. March/April 
4. June/July
5. Whenever

The drivers seem to be

1. Kicking off retirement with a bit of sunshine/hope
2. tax/NI optimisation
3. work/benefits optimisation
4. Unavoidable (health / redundancy)
   

My spreadsheet says late summer in a couple of years is ASAP - but will try and bring it forward - or at worst if I can't face retiring into winter another few months isn't the worse thing in the world - maybe parttime if I can get away with it.  Let's see what the year brings , until then time for a bit more overthinking

Albermarle

mark55man said:

Thanks all, in order of preference then it seems to be

1.  now!
2. As soon as possible whatever the date
3. March/April 
4. June/July
5. Whenever

The drivers seem to be

1. Kicking off retirement with a bit of sunshine/hope
2. tax/NI optimisation
3. work/benefits optimisation
4. Unavoidable (health / redundancy)
   

My spreadsheet says late summer in a couple of years is ASAP - but will try and bring it forward - or at worst if I can't face retiring into winter another few months isn't the worse thing in the world - maybe parttime if I can get away with it.  Let's see what the year brings , until then time for a bit more overthinking

I tried to engineer mine so to finish yesterday   - weather improving and will have earnt enough to use up my personal allowance and get a decent tax rebate , as I planned to live on cash until following April 5th .
However due to delays finding a replacement and them having to give three months notice , plus a two month handover period had been pre agreed , I am now leaving mid July . However I have some holiday to take as well, although looks like it will be Costa Back garden this year .
In theory I could just have gone at a time of my choosing, but I wanted to see a nice smooth handover as the company/job/clients have been good to me ( and my bank balance !) 
As someone else already said if ones retirement is long then the exact month of starting it is probably not very important.

Nebulous2

I think there could be a dollop of - you will know when you are ready.  I tried to calculate what I wanted for a pension, I'm on a DB scheme, and kept feeling I had an incentive to keep going. Each year I accrued additional service, and my actuarial reduction for going early reduced, so the additional pension for each year was a reasonable chunk. I had always imagined September, save up some holidays and get paid to the end, while leaving early in the month - we often go to France / Spain touring just as the summer rush is dying down. 

Last year was strange at work, but an unexpected payrise added to my pension and reflecting on it over Christmas I decided I'd had enough. My family were supportive and I handed in my notice leaving end of March.  We had all the money we would need, possibly not all we would want - but it is a trade-off with healthy years / months versus more money. 

So I'm out - with less planning than many people here would have, and have found adjustment tougher than I expected. However the decision to go was absolutely the right one, based on I'm ready to go. 

hemeloid

I think for completeness it is worth mentioning that with those with DB pensions, there may be rules in play that could affect timing of retirement, such as application of actuarial reduction and application of annual indexation.

From what I've read there can be a culture shock for those newly retired who are used to working long hours or working to deadlines. To suddenly have lots of free time in retirement can cause difficulties in adapting. For them, generally spring / early summer provides more opportunity to keep occupied than when the weather turns.

pensionpawn

Albermarle said:

mark55man said:

Thanks all, in order of preference then it seems to be

1.  now!
2. As soon as possible whatever the date
3. March/April 
4. June/July
5. Whenever

The drivers seem to be

1. Kicking off retirement with a bit of sunshine/hope
2. tax/NI optimisation
3. work/benefits optimisation
4. Unavoidable (health / redundancy)
   

My spreadsheet says late summer in a couple of years is ASAP - but will try and bring it forward - or at worst if I can't face retiring into winter another few months isn't the worse thing in the world - maybe parttime if I can get away with it.  Let's see what the year brings , until then time for a bit more overthinking

I tried to engineer mine so to finish yesterday   - weather improving and will have earnt enough to use up my personal allowance and get a decent tax rebate , as I planned to live on cash until following April 5th .
However due to delays finding a replacement and them having to give three months notice , plus a two month handover period had been pre agreed , I am now leaving mid July . However I have some holiday to take as well, although looks like it will be Costa Back garden this year .
In theory I could just have gone at a time of my choosing, but I wanted to see a nice smooth handover as the company/job/clients have been good to me ( and my bank balance !) 
As someone else already said if ones retirement is long then the exact month of starting it is probably not very important.

I can't disagree with your preferences / drivers. Looking at my garden, listening to the birds and bees, watching the swing chair ease back and forth with a cold beer in my hand and a good book to read, retiring yesterday wouldn't have been too soon! My plan is to go for a clean start to the tax year and with Spring starting to kick in. However if someone pi$$es me off at work (I'm getting to the Victor Meldrew stage of my life, well in terms of patience / suffering fools...) I could go anytime however I have a daughter with two years of uni remaining so I'm going to grind it out until the April of her final year, and at 80% hours over that last year.

TVAS

If in Month 12 you have no taxable income taken from April Month 1 to Month 12 March. Take drawdown income in Month 12 even if you had income in the previous 12 months.

The reason being twofold. Before your state pension kicks if you are in that fortunate position if you take income in Month 12 you will have the totality of your personal tax allowance £12,570, this also applies to each tax threshold so £50,270-£12,571 =  £37,699. This is because pension tax is cumulative just like PAYE tax so the allowance is divided into 12 months so if it is not used in month one it will be added to month 2 and so on. It also means any under or overpaid tax is sorted quicker in the following because you took income at the end of the previous tax year. 

mark55man

@tvas - so you mean if in drawdown I take money from my DC pot in March (month 12) then I can judge it against the whole year allowance (at each tax band).  Whereas if I took the equivalent in Month 1 - I would be taxed as if that annual amount was a monthly instalment and then have to wait to get it back. That's a useful reminder.  Certainly if there is a per withdrawal charge doing one a year might be sensible and that could catch you out.  

pensionpawn

TVAS said:

If in Month 12 you have no taxable income taken from April Month 1 to Month 12 March. Take drawdown income in Month 12 even if you had income in the previous 12 months.

The reason being twofold. Before your state pension kicks if you are in that fortunate position if you take income in Month 12 you will have the totality of your personal tax allowance £12,570, this also applies to each tax threshold so £50,270-£12,571 =  £37,699. This is because pension tax is cumulative just like PAYE tax so the allowance is divided into 12 months so if it is not used in month one it will be added to month 2 and so on. It also means any under or overpaid tax is sorted quicker in the following because you took income at the end of the previous tax year. 

Surely you just 'pay yourself' one twelfth of the PA per month or advise HMRC that you are 'retired', receive no other income than from your pension(s), and pay any tax due in month 12?

cloud_dog

I have a cunning 5 year plan (it's not really cunning just plain old boring numbers plan really).  But, I plan to hand my notice in on 1 June, (I get my bonus on 31 May).  With one month notice minus appropriately accrued holidays it will leave me with 10 working days before I leave.  It is possible the company may pay me my o/s leave but I very much doubt it.  The only thing nagging at the back of my mind is the very short period for any hand-over to colleagues but, I can start early with hand-over documents/notes.  

I'm still mulling over where to take the money from for the first retired (partial) year.