Retirement calculations - Can I ever retire ?

I finished two years ago at 62, never fortunate enough to have a works pension, currently living off savings, loving every minute of it, spend when we need to, loads of holidays etc, you never know the day!

Knowing what I know now I would have gone earlier.

However I should add when we were both earning we didn't waste a lot on luxuries, never had big mobile / sky TV contracts, had hand me down furniture, but paid off our mortgage by 30 so that left us in a position to save.

Just wish the the interest rates would go up!!

If you can go, do it, retirement day was the best day of my life and still loving it.
 

DCLane

Found in the Yorkshire hills ...
I’m about 12 years behind you, but I expect there will still be a state pension, just not sure how much it will be or when I will receive it.
No government would have the balls to stop either the NHS or state pensions.
No, but they might make the state pension means-tested. That would mess with my retirement calculations.
 

delb0y

Guru
Location
Quedgeley, Glos
I was in a meeting at work the other day with three twenty-somethings, and there's grizzled old me at 56. All three were seriously discussing opting-out(*) of the work pension scheme as the £90 or £100 they put in, could, in their eyes, be used for better stuff. I gave them the benefit of my immense wisdom on the subject ("Don't"), but I can't help but wonder if they don't have the right idea. If, in 40 years time, the state pension is means-tested and / or only paid to those who don't have other pensions, then why save for an other pension? I still think "Don't Opt Out" is the right advice, but I can see why it might be seen otherwise.

(*) Luckily, my naive 19 year old self didn't realise he could have opted out or I might have been tempted, too.
 

Gunk

Well-Known Member
Location
Oxford
I worked with a chap who was early ‘50’s good salary, large house, large interest only mortgage, Fancy car and holidays but no pension provision. There are lots out there like that.
 

dodgy

Guru
Location
Wirral
I work with a few guys who are prioritising paying off their mortgage over paying into their generous company pension scheme. I've tried to explain how much they're missing out 🤷‍♂️
 

BoldonLad

Über Member
Location
South Tyneside
Ahh....misunderstood sorry. I read it as state pension.
BUT.....state pension for a couple is not far off £300 per week. So.... £15K a year tax free. Plus your private pension. Not a bad sum really.
State Pension is not tax free. It is added to any other income, including Works / Private Pensions, and, some benefits, and is then taxable in the "normal" way, if taxable income exceeds the personal allowance (£12,500 at present, I think).
 

BoldonLad

Über Member
Location
South Tyneside
Having gone through roughly this scenario (ie retired at 60, when state pension age was 65), I would say...

1. Will your "works pension" pay out in full at age 60, or, will you have to take a reduction by retiring early? In my case, the "hit" on my pension was 50% for taking if five years early.

2. Having established 1 above, work out what your annual retirement income will be for the period 60-67, that is, works pension, plus any investment income you may have. Consider waving the lump sum, unless you really need it, and, it will increase your pension.

3. Spend some time working out your outgoings, be realistic, no point having to live on stale bread, on the other hand, there will be savings, ie no travel costs to work, no office collections.... etc. We also went down to one car. In 12 years, we have only once encountered a "car conflict".

4. Compare outgoings with income. Provided Income is equal or greater than outgoings, you have a chance ;)

5. Maintain control, as income falls, it is more necessary than ever to be in control of what you have. This does not mean being scrooge, it just means having a plan and monitoring it, making adjustments if necessary.

In my case, household income fell to 40% of "in work income", but, we have managed perfectly well. I can honestly say there is nothing we have wanted to do, which we have not been able to do for money reasons. The biggest difference I find is, if a fairly large, unexpected expenditure "occurs", then, I have to plan more carefully how to handle it.

Good luck. Retirement is fantastic! ;)
 

All uphill

Well-Known Member
Only you know what you will need to be content in retirement. There's no point denying it if you dream of big, long, expensive holidays, cars or meals out.

If you love the simple things you really won't need too much money.
 

Jimidh

Über Member
Location
Midlothian
I am often interested in the split between public sector and private secfor when it comes to early retirement, amongst my close friends and family the public sector members got out far earlier than the private sector one's, the self employed often later in life. Now I wonder if that is because the self employed get more pleasure from work, or because generally many have earned less so have not had the opportunity of saving.
This is interesting - I’m 53, have my own business and could if I sold up retire relatively comfortably if I wanted. But I still enjoy it and i think I would miss it. Plan to sell up in the next 4-5 but need to plan tapering off to being semi retired as I don’t think I could switch off completely.
 

Drago

Flouncing Nobber
Location
The Oval Office
I worked with a chap who was early ‘50’s good salary, large house, large interest only mortgage, Fancy car and holidays but no pension provision. There are lots out there like that.
Yep, and when someone else who had planned ahead is able to retire before they're elderly its exactly these eejuts who complain about the injustice of it all. Well, I also had the choice of a flashy new German car every 2 or 3 years or retiring and I made my choice, just the same as they made theirs.
 

Gunk

Well-Known Member
Location
Oxford
If you genuinely want to pack up work at 60 and don’t have the benefit of a non contributory final pension scheme, then you have to do two things, firstly start making contributions into a personal pension as early as possible and secondly live within your means. Unfortunately there is a whole population who have done neither but are enjoying expensive holidays and nice lease cars. It is worrying, we’ve become an odd society when we haven’t really learnt the lessons from the financial crash in 2007.
 

johnblack

Senior Member
I'm still a bit young for retirement, but planning for it now. I put as much as possible in to my work pension as the returns are pretty good and it reduces my tax (sorry Jeremy), also I get an annual bonus, which I don't take but stick in to the pension, again reduces my tax.

My plan is to keep on sticking in as much as I can for the next few years and then drop my hours, not sure I'd give up the job as other benefits such as car, pension and healthcare are worth too much.

They're the things that it's difficult to price when you jack it all in.
 

SkipdiverJohn

Veteran
Location
London
Fundamentally, if you want to retire (irrespective of age), you have to sort your finances out so you won't have any outstanding debt to service by the time you intend to pack in work. That requires you to live below your means when you are younger, get a paid-for roof over your head ASAP, and pay as little tax as possible so that as much of the money you earn as possible is actually benefitting you, not being handed over to muppet politicians to waste.
When I was younger, I concentrated on getting my house paid off early using my overtime earnings, whilst also putting some money into my work pension. Once the house was cleared, the overtime earnings went into tax-efficient vehicles, like taking a PEP/ISA out every year, employee share schemes, inflation-proof NS & I Index Linked certs, and putting some AVC's in my pension on top of the regular amount. I have had a cardinal rule of never paying the 40% tax, no matter how much I've earned. I've always diverted as much as necessary into share schemes/AVC's in order to keep my taxable income on the basic rate, when I had an exceptionally high earning year. I do as much as possible using salary sacrifice too, so I don't pay the 12% NIC's as well as saving the tax.
My unavoidable household outgoings have essentially hit a plateau now I don't have any debt to service, and I can easily live within my net earnings after deductions and pension contributions are taken out. I don't intend to work beyond 60, and hopefully will go PT a couple of years before that. Aim to be a receiver, not a payer, of interest. Don't pay to borrow other people's money - make sure they are the ones paying to borrow yours!
 
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