Long Sabbatical/early retirement - pretips

mutley74

Hi

I am looking to take an extended sabbatical (1-2 years) which probably lead into early retirement at 52 years. I was planning to take this March /April next year.

Before I give any notice to my employer and I am currently still receiving a salary. Is there anything one recommends that should be applied for or considered?

I was thinking of applying for another credit card for future travel and spending. I have 2 already and very high credit score.

artyboy

My second "sabbatical" started when I was 50 and 3 years later is still going strong 😀

Anything credit related, and especially cards, definitely sort now. If you're living off savings/investments until more formal pension arrangements kick in, it's hard to position that as income on applications. Yes, you are likely expected to notify change of circumstances, but the reality is that if you are paying in full each month, no one is likely to care.

so if your plan is to travel extensively, get that Amex Platinum plus a fee free travel card in place.

Oh, and, have some sort of plan or goal for your time, otherwise you fall into a trap of your days getting filled up with meaningless nonsense!

Vitor

Get a full health check inc. bloods with BUPA etc. in case you have something bad, better to find out when your eligible for employee's sick leave. Check life assurance, it may be linked to your role and may need to be increased if you're losing a death in service benefit. Also, any dread disease' insurance may lapse when it's not replacing a salary after sick-leave expires.

Work out the five-year “bridge” in detail. At 52, your pension is unlikely to be accessible until 57, unless you have a protected pension age, so ensure your cash and investments genuinely cover that period, including market falls and unexpected house/car costs.

Before handing in notice, check your employment contract for notice, bonus/commission, share scheme vesting, etc. It may be worth timing departure just after a bonus or annual leave entitlement crystallises.

Use the salaried tax period deliberately: pension contributions and planned capital-gains realisations can be more valuable while you still have earnings. Once retired, your taxable-income profile may be quite different.

Obtain a State Pension forecast and check your National Insurance record. A year out of work can leave a non-qualifying year, although whether buying it later is worthwhile depends on the forecast.

Update your will and beneficiaries, and consider a continuing and welfare power of attorney.

mutley74

Thanks both for your replies.

I currently have 2 credit cards including an Amex, over £10k in credit. I have already applied to increase one and will consider applying for a 3rd.

Checked NI record and I would have 35 years end of current tax year. However, there is an educational trip to asia I would like to join but that leaves end of March for 3.5 weeks. It is unlikely my work would give me the time off which works out at 4 weeks. So I was going to either resign before or ask them if I can get 1 month sabbatical, then depart in May.

I lose out on employer benefits such as sick pay, life insurance etc. I have no dependents so dont need life insurance for now (unless to cover for IHT liabilities). My work doesn't give bonuses.

hugheskevi

I am looking to take an extended sabbatical (1-2 years) which probably lead into early retirement at 52 years. I was planning to take this March /April next year.

Before I give any notice to my employer and I am currently still receiving a salary. Is there anything one recommends that should be applied for or considered?

Would this be some sort of unpaid leave or resignation? If you can get unpaid leave that is much better than resignation as it keeps options open and you might remain eligible for things like death in service payments.

Some things to consider:

• If you are going to have no taxable income in 2027/28 then working until you have at least earned the level of the Personal Allowance would be desirable.
• Plan any pension contributions, eg, to bring income below higher rate tax, before you leave.
• If you plan to indulge in bank account switching to claim incentives then get the best offers done whilst you still have a salary coming in (the best payments typically want to see salary not just a payment of £x amount).
• Once you are within 12 months of the tax year you expect to have no tax income in, use of Regular Savers and Fixed Rate savings accounts that pay interest on expiry of term can be useful, as then the interest is taxable in a tax year when you have low income.
• If you have a mortgage it will be extremely difficult to change it without a regular income. Early June can be a great time to leave, as then you benefit from all the Bank Holidays and probably earn a State Pension qualifying year as well as hopefully using up your Personal Allowance
• Understand the P50 tax reclaim progress ready for after you have left
• Sign up to any employee benefit partner schemes your employer has, you are likely to be able to continue using them after you leave for things like discounted gift cards for supermarkets, etc.

mutley74

https://forums.moneysavingexpert.com/discussion/comment/82163677#Comment_82163677

Thanks. I checked my employer sabbatical policy and all benefits & payments are stopped and there is no open assurances of work at the end of the period.
I would have ideally worked till June. But with this educational trip to asia for a month I been invited to join through a sports club. Its unlikely my employer will give me the time off. Thus, I need to decide do I resign (or choose early sabbatical) in March or do not join the trip (which might not be arranged for another 2 years).
If I do the former just means I lose out 2-3 months of pay and benefits.

LHW99

Checked NI record and I would have 35 years end of current tax year.

Having 35 years is not the point - you will be under transitional arrangements (fter the change in 2016).

You need to read it all and see if the magic words "you cannot increase your….."

mutley74

https://forums.moneysavingexpert.com/discussion/comment/82163762#Comment_82163762

please can you clarify what you mean? I thought it was just requirement to have 35 years when I checked my HMRC gateway.

Just checked on HMRC and did not fully realise teh change in rules on 2016.
I check my pension checker on HMRC:

Your forecast is £241.30 a week, £1,049.22 a month, £12,590.69 a year in 2041

Yorkie1

Just checked on HMRC and did not fully realise teh change in rules on 2016.
I check my pension checker on HMRC:

Your forecast is £241.30 a week, £1,049.22 a month, £12,590.69 a year in 2041

Yes, but does it say that you need to keep contributing in order to achieve that, or that you cannot increase it any further?

QrizB

Your forecast is £241.30 a week, £1,049.22 a month, £12,590.69 a year in 2041

What did it say immediately after/below that?

Did it give a separate (lower) number for what you'd accrued to date, for example?

DRS1

The language underneath will tell you what you have accrued based on your contributions up to April 2026 (I am guessing there maybe it is April 2025). If at April 26 it says you need 1 more year to get the full amount then if your employment in 26/7 gives you a full year of class 1 NICs then you will be OK. Maybe when the 26/7 year gets added to your record it will say you are a few weeks short (because you stopped work in order to go on your Asian field trip) - it would then be worth seeing how much you would need to pay to fill that year. It is likely to be a lot less than filling a completely empty year. But if you are anyway going to work for a full year before you get to SPA then even that small top up may be a waste of money.