Best time of year to retire?

Sarahspangles

I’m working through ‘DIY Pensions’ which suggests setting a target date for retirement as the basis of calculations. As it’s likely to be my call, rather than an employer’s, is there an optimum time of year?  If the book covers this I haven’t got to that bit!

Pat38493

I don’t think there is an optimum time of year that would apply to everyone - however there could be an optimum time of your for you individually depending on a few different factors.

In particular if you are putting a deferred DB pension into payment as soon as you retire, it can be beneficial to retire after the anniversary date of the original deferment due to the weird way that annual revaluations are calculated.

Other reasons could be do do with tax - e.g. you might not want to retire near the end of the tax year if you are a high earner and expect to be a much lower earner in retirement.

Also obviously if you get an annual bonus, you might want to retire after it’s paid in that year!  

However I’m not sure if matters that much in the long run of a hopefully lengthy retirement.

Other than that - Spring feels good to me  

p00hsticks

I think we have had a discussion on this board a while back, but probably too long ago to easily find the thread. 

One (quite topical) factor is what your State Pension forecast says. If you are a relatively high earner then you don't need to work through the whole of the tax year to get a full years NI credit, so if you are still short of the maximum amount it might be worth working through the spring / summer for as long as it takes to gain another full year. 

Edit - actually the search function worls better than I remember! Previous threads on the subject here
Is there a best time of year to retire? — MoneySavingExpert Forum
Best time of year to retire (UK!) — MoneySavingExpert Forum
Is there a best time of year to retire? — MoneySavingExpert Forum

El_Torro

I’m not near retirement myself but from people I know who have retired it seems that the end of winter / early spring is a good time to do it. This gives you good(ish) weather to get outdoors and do stuff with all your new found time. Makes the transition easier rather than retiring when the days are short and it’s cold and miserable outside. 

There are financial reasons to do it differently, worth considering the non-financial aspects too though.

Sarahspangles

Thank you all, that gives me factors to consider.

I do have a deferred DB pension but as it’s covered by the 85-year rule it’s paid unreduced as soon as I’m 60 (I’m mid-50s). The anniversary of deferral is in July and my 60th birthday in December which sounds like it falls right anyway?

No annual bonuses, not predictable ones anyway.  I can currently avoid paying higher rate tax by diverting income to my SIPP.  But that’s a good point about ending a contract during the tax year.  The DB pension uses up my tax free allowance in the tax year after I turn 60 but I could make sure I use all the personal allowance the year before.  Which would mean leaving around May Day.

I will accrue a full State pension by the end of this tax year.  Actually earlier, but I’ve committed to working a full year.

So far the only suggestion OH has made is that I match his retirement age of 60 3/4! 

zagubov

In some jobs like teaching, you're only allowed to leave on three dates in the year (end of April, August, December).
An advantage of choosing August is that you see your students through their end-of-year exams, plus you get paid and accrue pension benefits for the summer holidays.
All other dates have to be mutually agreed with your employers. You may well want to leave before or after a birthday depending on your future pension benefits/ working requirements

Peterrr

My employer has supposed “unlimited annual leave” which is a double edged sword as we earn no accrued holiday entitlement. Additional being a U.S. company, taking more than 3-4 weeks can be frowned upon.
My particular role is very busy Jan to Jun, meaning I take my holidays Jul to Dec. 

I think quitting after my hols and ahead of the busy season will work best under my circumstances.

cambb

I get an annual bonus so intend to leave in April. The bonus will be paid in June but ill be in the new tax year by then so hopefully will benefit from the tax difference. 

Peterrr

cambb said:

I get an annual bonus so intend to leave in April. The bonus will be paid in June but ill be in the new tax year by then so hopefully will benefit from the tax difference. 

Check your employment contract to ensure you don’t forfeit the bonus through resigning before it is paid. I know of a couple of folk who got caught out that way.

Sarahspangles

zagubov said:

In some jobs like teaching, you're only allowed to leave on three dates in the year (end of April, August, December).
An advantage of choosing August is that you see your students through their end-of-year exams, plus you get paid and accrue pension benefits for the summer holidays.
All other dates have to be mutually agreed with your employers. You may well want to leave before or after a birthday depending on your future pension benefits/ working requirements

I’m aiming to hand over as a governor before I retire!  If I was still a parent governor that would be in September to allow for an election but nowadays I’m co-opted so at any convenient break.

I do project work for a living so I know what you mean about seeing students through their exams - ideally I would reach the end of a project.  That’s partly why I’m thinking about it now, I’ve maybe got two more fixed term contracts to go….

The problem with my birthday is that it’s close to Christmas and gets eclipsed. But I guess my last working day doesn’t have to be my official retirement party day….

Albermarle

I do have a deferred DB pension but as it’s covered by the 85-year rule it’s paid unreduced as soon as I’m 60 (I’m mid-50s)

Be aware there can be delays in starting payment of DB pensions. I think typically they need a minimum of two months notice to get it organised, exchange paperwork etc If you are unlucky and dealing with a big incompetent pensions administrator ( rather than the ex employer directly) you might find months of delays, weeks without any responses, mistakes  etc .
Mine took 7 months from first application to first payment .