Can I afford retire next year at 55 ?

QrizB

Notepad_Phil said:

QrizB said:

buyhighselllow said:

So my wife is 55, still working PT and earns well under the threshold for income tax. As this is unlikely to change if she retires, this would seem like a no brainer for her to do if I am understanding it correctly ? How quickly after paying in £2880 can you draw off the £3600? 

In your wife's case if she's earning more than £3600 pa she can pay more into a pension and get more benefit from the system.

If, for example, her gross pay is £6k pa she could pay £4800 into a pension and have £1200 added in tax relief. Then when she comes to withdraw it, it will still leave her below the Personal Allowance.

How quickly will depend on the pension provider. With some of them it takes a couple of months to have the tax relief credited to the account. This forum is full of threads about this, with suggested pension providers named.

Though as soon as she took 1p of taxable income (rather than the 25% tax-free lump sum) she would fall under MPAA rules and be restricted to putting in £3200 herself, plus £800 from the government, making a total of £4000 pa.

That's very true.

I've been wondering about this from Mrs QrizB's perspective; she's self-employed with a variable but low income but is likely to get a full SP (needs three more years of contributions, has over a decade to make them). She has a relatively small DC pot (£10s of k, not hundreds) so we've got a pretty good chance of getting it all out without paying tax on it, even while doing the £2880 thing.

I'm thinking we'll work backwards from her SP age and plot a withdrawal trajectory to suit.

Scrounger

Notepad_Phil said:

QrizB said:

buyhighselllow said:

So my wife is 55, still working PT and earns well under the threshold for income tax. As this is unlikely to change if she retires, this would seem like a no brainer for her to do if I am understanding it correctly ? How quickly after paying in £2880 can you draw off the £3600? 

In your wife's case if she's earning more than £3600 pa she can pay more into a pension and get more benefit from the system.

If, for example, her gross pay is £6k pa she could pay £4800 into a pension and have £1200 added in tax relief. Then when she comes to withdraw it, it will still leave her below the Personal Allowance.

How quickly will depend on the pension provider. With some of them it takes a couple of months to have the tax relief credited to the account. This forum is full of threads about this, with suggested pension providers named.

Though as soon as she took 1p of taxable income (rather than the 25% tax-free lump sum) she would fall under MPAA rules and be restricted to putting in £3200 herself, plus £800 from the government, making a total of £4000 pa.

To avoid triggering the MPAA, she could use the 'Small Pots Rule' to withdraw up to £30,000 (in 3 chunks of <=£10k) over 2 or 3 tax years. 

Scrounger

Korkyb

Hi buyhighselllow !

I've hit the same point as you (also 55 and & in the NHS).

Just a couple of weeks ago I made the decision to get off the treadmill & now "retiring" in around 5 months.

My position is a wee bit better than yours.


- Should end up with £23k (ish) pension after actuary reduction but before tax.

- Wife retiring end of next year at 55 but she is special status so no actuary reduction for her (around £11k pension).

- Wife also has another old pension which should bring in £2k when she hits 60.

I'm also extremely lucky in that due to the specialised nature of my role after retirement I can also get a post at a grade lower than I presently am which will mean a much, (much) lower stress job that I don't have to "take home" with me.

I'm in 2 minds whether to commit to 6 or 12 hours per week to start with (I can add extra shifts almost at my convenience because work is so busy).

The lower grade is Band 6 & all out of hours so even 6 hours per week would bring in an extra £8k - £9k PA  before tax.


I've had a previous encounter with the big "C" & (touch wood) I'm so far one of the lucky ones.


Life is just too short & as has been said already if you are sensible you can cut your cloth to match your income.

Bobinyorkshire

Did you consider  the ‘step down’ option in the NHS pension? That’s what I chose to do and this increases each year with the annual uplift. I moved from an 8a to 6 for a year,  securing the step down,  and then went part-time. It has help with life adjustment to both less hours and less money

buyhighselllow

Korkyb said:

Hi buyhighselllow !

I've hit the same point as you (also 55 and & in the NHS).

Just a couple of weeks ago I made the decision to get off the treadmill & now "retiring" in around 5 months.

My position is a wee bit better than yours.


- Should end up with £23k (ish) pension after actuary reduction but before tax.

- Wife retiring end of next year at 55 but she is special status so no actuary reduction for her (around £11k pension).

- Wife also has another old pension which should bring in £2k when she hits 60.

I'm also extremely lucky in that due to the specialised nature of my role after retirement I can also get a post at a grade lower than I presently am which will mean a much, (much) lower stress job that I don't have to "take home" with me.

I'm in 2 minds whether to commit to 6 or 12 hours per week to start with (I can add extra shifts almost at my convenience because work is so busy).

The lower grade is Band 6 & all out of hours so even 6 hours per week would bring in an extra £8k - £9k PA  before tax.


I've had a previous encounter with the big "C" & (touch wood) I'm so far one of the lucky ones.


Life is just too short & as has been said already if you are sensible you can cut your cloth to match your income.

Bobinyorkshire said:

Did you consider  the ‘step down’ option in the NHS pension? That’s what I chose to do and this increases each year with the annual uplift. I moved from an 8a to 6 for a year,  securing the step down,  and then went part-time. It has help with life adjustment to both less hours and less money

I'm pretty specialised which means if I stay, or retire and go back to the NHS it would probably be only to do Admin or Vaccination, or possibly 111 in some shape or form, but dealing frontline with stressed people is not particularly attractive. However there are possibilities and I think on balance I am going to carry on planning to retire next year from my chosen career. 
I think it will be possible to supplement income with PT work, but I don't want to become a PT hours slave.I can't rule out money from our parents which could be quite a game changer, but as I said earlier, I just never factor that in because of the potential variables. 

RetSol

Hello @buyhighselllow.

I think you will be fine. You have enough in db + sp in the long term. And enough in savings (ISA/SIPP) in the shorter term.

I think that you know this and that is why you are asking the question.

A few thoughts:

can you cut your outgoings?  You think that you need c. £30 k p.a.. That is a lot and I think that you could probably trim it considerably, if needs be.  Not saying that it would be ideal, just that it could be done.

maybe you are not really "retiring" but you simply need a couple of years in which to recharge your batteries and look around at the possibilities before relaunching into the next phase. 

retirement is a process these days, not an event.  What about a rest followed by a few years of part-time work before retirement proper? 

Best wishes, whatever you decide to do. 

From a civil service "retiree" aged 57 about to embark on a new career. 

buyhighselllow

RetSol said:

Hello @buyhighselllow.

I think you will be fine. You have enough in db + sp in the long term. And enough in savings (ISA/SIPP) in the shorter term.

I think that you know this and that is why you are asking the question.

A few thoughts:

can you cut your outgoings?  You think that you need c. £30 k p.a.. That is a lot and I think that you could probably trim it considerably, if needs be.  Not saying that it would be ideal, just that it could be done.

maybe you are not really "retiring" but you simply need a couple of years in which to recharge your batteries and look around at the possibilities before relaunching into the next phase. 

retirement is a process these days, not an event.  What about a rest followed by a few years of part-time work before retirement proper? 

Best wishes, whatever you decide to do. 

From a civil service "retiree" aged 57 about to embark on a new career. 

Thanks for your thoughts. helped me to reflect, especially the idea of it being a process rather than a cliff edge.
Outgoings are under close scrutiny, and this year, my" write all your spending down" is possibly atypical as we are enjoying and catching up on a lot of things missed and postponed in the last 2 years. I'm always reviewing essential cost of living expenses. I think I will need a PT activity of some sort after a time of adjustment, either paid or voluntary. 
Posts like those have helped me feel less stressed about the idea. 

Korkyb

buyhighselllow said:

Thanks for your thoughts. helped me to reflect, especially the idea of it being a process rather than a cliff edge.
Outgoings are under close scrutiny, and this year, my" write all your spending down" is possibly atypical as we are enjoying and catching up on a lot of things missed and postponed in the last 2 years. I'm always reviewing essential cost of living expenses. I think I will need a PT activity of some sort after a time of adjustment, either paid or voluntary. 
Posts like those have helped me feel less stressed about the idea. 

Glad you are going for it & best of luck.

You only live once   

RetSol

Posts like those have helped me feel less stressed about the idea. 

Great. I don't think that you or I have a lot to be stressed about, financially.

It's simply a case of adjusting...