Take VR and retire early?

Triumph13

Obvious question - Does he have a protected retirement age in the scheme that allows him to take the pension now rather than having to wait until the normal minimum age of 55?

Phossy

Does your husband like his job?

Simplistic view - Financial positives are a redundancy package now (which is probably worth ~ a years salary) and early access to a DB pension (albeit a few years down the line). 

Financial Negatives - Giving up a salary.

If he was to take the VR, then you will have another year at least to make some considered decisions, as opposed to this rush at an emotionally charged time. Consider it a break and a chance to have something much better. Staying in the role may seem safe, but who knows if it will exist in a year.

For me I was fortunate enough to get VR at 50 from a company that I'd been with since college. Best thing I've done (and this is 10 tyears ago now) . Had 3 months off, visited lots of old friends, recalibrated and took another job that was hugely rewarding and developed me more as a person; I learned more there in a year than I'd done in the last 5 years (or more) in my previous role. 

Embrace the opportunity and focus on the positives.

devildolly

Cobbler_tone said:

devildolly said:

Thanks @Cobbler_tone If husband was home, we no longer have £450 childcare each month, and wont have to fork out £180 a week to cover the school holidays. We would also get more than 10 days off together a year (13 weeks school holidays vs 12 weeks leave between us don't math!), so the benefits on this side are huge. Fine with me working and him home. He is the default parent anyway, despite salaries being similar (I also get bonuses but don't ever count these in salary) mine is the 'bigger' job so its always worked this way for us.

I can increase my AVCs, but with the current mortgage and childcare combined at the moment, I cant afford to put more in. I could if we didn't have the childcare, even more so when the mortgage is gone. 

And yes, VR or CV come up every few years but he is usually not offered, we suspect they go for 'cheaper' options. 

I can see it isn't a straight forward decision. I would be a little concerned if you genuinely can't afford to increase pension contributions on that joint income. You are missing out on so much 'free' money. This would be my no.1 priority for both of you. In real terms the childcare costs are a drop in the ocean compared to your husbands salary but you might see more time together as valued a lot more.
I guess the VR would give him 18+ months net money and time to resolve your inheritance situation.
I would just think carefully (which you clearly are) as with £150k gross coming in and affordability issues over increasing a minimum pension contribution, you clearly have some very meaty monthly outgoings. 

Fair point. The mortgage and childcare are our biggest expenses, accounting for half our take home pay. We could increase contributions if we really needed to, but the plan was always to up savings rather than pension for me. The main reason being our age gap. I didn't want all my savings locked in to a pension until I am 58 (provided this doesn't change again), as my husband would be 70 by then. Its an adding complication we were trying to deal with. We needed to have some in ready access before 58 so we can have some good early years together (I am open to working again in future if needed). I understand what we are missing out on tax wise, but upping contributions impacts how much we can put into savings. The inheritance probably changes all of this, so need to rethink again. 

devildolly

RPI, is that limited? Mine is RPI up to 5%

Nope, not limited. The last increase according to the documents we had was 5.7%. 

Obvious question - Does he have a protected retirement age in the scheme that allows him to take the pension now rather than having to wait until the normal minimum age of 55?

He can take it from 50 if made redundant, or from 55 if not. 

Stubod

..sounds like a no brainer to me, I would go for it...you are a long time dead. One of our regrets was not retiring sooner!!

Good luck with whatever you decide. If hubby feels they need to work for the social interaction side of things, he can always find a part time / bank work job somewhere??

devildolly

Phossy said:

Does your husband like his job?

Simplistic view - Financial positives are a redundancy package now (which is probably worth ~ a years salary) and early access to a DB pension (albeit a few years down the line). 

Financial Negatives - Giving up a salary.

If he was to take the VR, then you will have another year at least to make some considered decisions, as opposed to this rush at an emotionally charged time. Consider it a break and a chance to have something much better. Staying in the role may seem safe, but who knows if it will exist in a year.

For me I was fortunate enough to get VR at 50 from a company that I'd been with since college. Best thing I've done (and this is 10 tyears ago now) . Had 3 months off, visited lots of old friends, recalibrated and took another job that was hugely rewarding and developed me more as a person; I learned more there in a year than I'd done in the last 5 years (or more) in my previous role. 

Embrace the opportunity and focus on the positives.

Thanks. In the first sentence you say early access to DB a few years down the line. If he takes VR, his pension kicks in now at 52 at the same amount as he would have gotten at age 60, so the pension (even the lower value) and redundancy would see us through 3+ years with no drop in income. 

He does like his job, been there for 30+ years, its not very stressful, doesn't love it or hate it. The only 'stress' we really have is being time poor with regards to work/life balance. 

Agree totally on embracing the opportunity, still very scary!

devildolly

Thanks all for the comments so far. Super useful to help work through the decision, and things to consider. 

GunJack

How about....

Take redundancy and pension
Transfer all rental income to his name
He takes the child benefit
Bin off both mortgages when inheritance comes through

I think his nett income under the above probably won't be too much less than his current takehome, plus as you've said the savings on childcare and mortgage payments would be substantial. More time together is worth it's weight in gold, especially with a biggish age difference between you.

devildolly

GunJack said:

How about....

Take redundancy and pension
Transfer all rental income to his name
He takes the child benefit
Bin off both mortgages when inheritance comes through

I think his nett income under the above probably won't be too much less than his current takehome, plus as you've said the savings on childcare and mortgage payments would be substantial. More time together is worth it's weight in gold, especially with a biggish age difference between you.

This is a great option, not something we have considered yet. Thanks! Will crunch some numbers on this probably later today. 

Yes, time together with an age gap is key!

Bigphil1474

Agree with the no brainers. If you consider the mortgage payments as being from his wage, if you pay the mortgages off with the inheritance, add to the savings in childcare etc. are you any worse off net if he drops to just his pension payment? The personal benefits can't be counted in £'s obviously. You are miles better off than most, and any bits of tax saving for the future if you put extra in your pension pot and all that malarkey is nothing compared to being happy. And he's young enough to go back to work if needed, or do a bit of part time consulting from home so best of both worlds.