Early retirement advice

You should get onto the Money Saving Expert pensions forum and ask some questions there. There is a wealth of knowledge available there, although you will need to reveal more about your situation to get better advice. Lots of good forecasting tools about to give you an idea of how robust your plan is. E.g. guiide, voyant, ficalc, firecalc to mention a few. I like ficalc as an easy to use back testing tool with a nice user interface.

who doesn’t?!?

Me. I’m mid-50s, decent pension accruing, but even when it matures I don’t fancy giving up work. Going part-time perhaps, but I love what I do (except on the days when I absolutely hate it, but that just shows I care about it).

I can’t give you financial advice, but I would advise knowing what you’re going to do with your time. 
For some folk that’s doing a different job, something that interests them more, for others it’s travelling or the like - I can think of examples of both on here. 
But have a plan.  The happiest “retirees” I know all do a bit of work - voluntary, part-time, consultancy, trustee, whatever. 

Early retirement is good if it can be justified.

+1 for MSE pension forum.

Plenty of good, UK YouTube channels - e.g. James Shack,  Meaningful Money, Pension craft.

Depends on your learning style. I learnt most of my financial stuff from the free meaningful money podcasts.

Based on what I now know I have ‘fired’ my financial advisor and am saving a lot of money in fees every month while also feeling a lot more confident in the imminent retirement if my wife and my continued wind down…

As per the PP I also rate James Shack and the Money Saving Expert site

If you want to retire before you've built up a full state pension you can buy missing years (which is a no-brainer). If so then look at this:

https://www.youtube.com/watch?v=Al8G7_jf-k4&ab_channel=JamesShack

Posted by: igm

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who doesn’t?!?

 

Me. I’m mid-50s, decent pension accruing, but even when it matures I don’t fancy giving up work. Going part-time perhaps, but I love what I do (except on the days when I absolutely hate it, but that just shows I care about it).

I can’t give you financial advice, but I would advise knowing what you’re going to do with your time. 
For some folk that’s doing a different job, something that interests them more, for others it’s travelling or the like - I can think of examples of both on here. 
But have a plan.  The happiest “retirees” I know all do a bit of work - voluntary, part-time, consultancy, trustee, whatever. 

Yeah we have thought about that and certain will have plenty to keep us occupied. Alongside the many leisure activities, we will both probably get part time jobs or do volunteering but definitely something without the considerable stress and responsibilities of our current jobs.
Aim is to to be more busy and active whilst we still have our health but actually to enjoy life.

Can’t offer advice on where to look for advice as for me it was retire or my health would have deteriorated to the point I’d be sacked or I’d hurt myself. 

Best advice is, do it. If you think can manager just do it, it’s surprising how much you can reduce spending to manage. Almost a year in since I retried and almost 18 months since I last worked. It’s the best thing I did, loved my job but it wasn’t doing me much good.

I know lots of retirees now and most just enjoy themselves, no tied in with little job and any voluntary work they do is very much on their conditions. 

Meaningful money podcast is really good and free.  I m retired but kept a few things on to keep my feet on the ground, just things I enjoy doing and pay accordingly.  Whole mix of pensions and investments so no worries financially.

See pension wise

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise, but do your homework as only 1 free hr each

read up on (and understand the pros and cons ) of 

- annuity

- drawdown

- ufplus

- 25% tax free options (*make sure you understand how this interacts with compound interest)

- can you do salary sacrifice/avc for the last 3 years of work and is it worth it. (*tax relief , 25% tax free)

- your state pension amount and date.

- tax free income things and if you can use them and if it makes sense to use them (*changes like the wind per budget but, capital gains tax free allowance, tax free savings allowance, isa income, dividend income tax free allowance etc)

Oh, ps , suggest you do a will and poa(financial, medical) 

55 here, and wife now only works a day a week in a local fabric shop (her hobby is sewing )- no plans to change that. I've taken some tax free from some small pensions, and I plan to work for at least another five years before thinking of doing something else - I've a 21 and a 24 year old at home who are not financially independent, so retirement won't really happen till they leave home. I quite enjoy the role, but if things change I'd look at VS scheme (we always have something on the go). I'd certainly look at volunteering in something I'd enjoy !

Depends on whether you consider ‘semi-retirement’ as simply putting your feet up, enjoying life and living off the proceeds of your pension, or more as a period of slowing down, accepting that you might not have the same lifestyle as before but you retirement funds are assured?

5 years ago at 55 I was in a similar position and speaking to a FA my pensions were OK, so it was simply a process of trying to avoid touching my pension until I was 65. Best piece of advice was to size-down, but to buy the smallest place that fits your needs rather than what you can afford. We sold our 4 bedroom house in Hampshire and had a 2 bedroom house built on the Isle of Mull - COVID messed it up a bit, so we spent a year in a rental elsewhere whilst the house was built. There was enough proceeds from our house sale to mean that I only need to work part-time. As it happens, I have built up a small business here plus working part time that a big chunk of savings + investments remains untouched.

I’m now 60 and absolutely no regrets - my pensions are still forecast to give a reasonable income - despite Truss and possibly Trump (well above what we’re currently living on, plus a bit of savings) I’ll continue to work part time as much to keep me busy. I’ll be able to sell-on my business as it generates a reasonable revenue when needed. I’ve got an ongoing (hopefully not too serious) health issue that I’ll need to manage - but staying active by riding a bike, running and kayaking. OK, no big holidays for the time being but we’re not big holiday people anyway.

We’re just in the process of sorting out Mrs DB’s NI contributions so she gets full state pension, plus I need to work out what I do with my pension pot when it matures but no huge rush. I just heard about someone I knew this week, he retired last year at 65 and his funeral is next week…

I second the James Shack videos on YouTube. He also has a simple spreadsheet you can download to see how your numbers stack up.

Just retire if you can afford to. Do it only when you are absolutely sure the maths stack up. 

Then do something else that you enjoy or do nothing, and if it brings in some money so be it.

If I could retire now I would do it in an instant, then concentrate on enjoying and learning to cook my traditional food that I enjoy. e.g. proper stir-fried and soup noddles that are so good, only available from my home town, I have not been able to taste it anyway in the world yet.   

I haven't worked since the age of 42 and officially retire next year. If you can afford to why not? I don't follow the line you'll get bored, you might if you retire at 68 but if you're young and full of energy and enthusiasm you'll never be bored. I found I have to make an effort not to do too much with a body that is less and less able to cope with what not working allows me to throw at it. I've done very little "voluntary, part-time, consultancy, trustee, whatever. " It soon felt like work, **** that.

Financially? Don't expect financial products to perform as well as they claim and you hope, and manage actively - this year's top performing fund probably won't be in a few years time. I've found it harder and harder to get good returns compared with inflation as the years go by. donald above offers good advice via those YouTubes.

SO retired early from being a senior medic a few years ago. Claims to have no idea how work fitted into the time available. Now busy with a variety of fun things. 

I understand I am expected to continue working until the time is right. NP work can be great fun, everyday is a chance to do something new. It is however one less day to ride in the hills, read more fiction, play with photos, watch movies, …

I can offer little further advice, but I’m finishing work, at 58, on Wednesday and can’t wait!😀

I retired early last October at 54 (unfortunately due to ill health), but even if I hadn't got that approved I was going to apply for early retirement this April due to my health struggles. 

Other than the ill health it has, and would have been the best decision with the stress reduction being very noticeable. I have all my years in for state pension and my local government pensions are enough for our modest lifestyle along with my wife's good wage. 

My house elf lifestyle now means I can potter about getting bits of house work/shopping/cooking done most days  to save my wife additional work with her working full-time.  Then i get time to do whatever fun things I feel able to do after that like to get fresh air on my ebike, bird/wildlife watching, and thinking of getting back into RC model flying. 

I do feel pretty socially isolated at times though as my variable health and limited energy means getting involved in and committing to groups/volunteering is a challenge. I keep trying to find social things to do, but it's not been working out so far.

That's the one thing I do miss about working, the social side,  but I also knew plenty of people who loved WFH as they didn't have to be social.

Just do it.   This 64yr old is posting from the aussie  outback having retired 4 years ago.

I don't miss work at all.  You need less money than you think.

TJ - you were one of the folk I was thinking of who’s getting retirement right - you seem to have a plan to do lots of stuff (mainly involving travel). 
I may be wrong but I doubt it. 

Whatever you do count the cost of a FA over the years. It's extortionate for advice that is all in the public domain IMO ; and often laughably poor.

Build your own .xls, it's not difficult. It will take you a few hours and you will be tweaking it a lot to start with. It will become your dashboard as your progress your plan.

Start with your current financial needs and forecast your future needs taking account inflation, (pessimistic) asset growth rates, tax etc... And then plan your future income pre and post retirement including state pension, tax free drawdowns, contributions, ISA etc...

You'll soon reach a conclusion which will tell you at what age you should be able to retire for a given life expectancy. And then add contingency 😂.

It's not an exact science of course but understand your own data prior to using an online tool which by definition doesn't know you ad well as you do.

Its not gone quite as planned

.

I am also fortunate in being content doing stuff cheaply ie camping

I finished work at 56 3/4. Wanted to take a break after working continuously since I was 16 but other than a 3 month job (that I also walked from) that break turned into retirement. I went to Uni but worked every weekend and every holiday as I was a mature student (23) so had mortgage commitments by the time I started. Got a full time job after and had quite a good career, working for a number of large organisations. I fell out with the boss of my last place and walked (I was at a senior level so if I didnt walk I would have been pushed eventually)

Finances should work out ok for us and Mrs Surfer is continuing to work for another year or so until the mortgage is finished. She is happy in her work (4 days) and works from home. I think I would continue to work a bit but for what I did I have found it difficult to find any part time work and ageism is a very real thing. My CV looks very good and I am very experienced and qualified however I had no end of agencies questioning me to determine my age before putting me forward to employers. That came as quite a surprise at the time.

I'm 55 and finishing Friday. No money worries, but I've let my IFA deal with everything. The job was starting to take its toll health wise. I literally cant wait! 

Yep, will be retiring as soon as those numbers come up in the lottery/premium bonds.

Just retire if you can afford to. Do it only when you are absolutely sure the maths stack up. 

The trouble with that advice is that folk are less-likely to take a risk and retire...

I've just turned 60 and TBH since Covid and WFH haven't felt pressured* to retire, luckily the company I work for is closing and my cohort is going end of May.  Decent payoff plus 40 years of pensions with multiple companies (half are DB).

OH retired early last year - barely see her during the day.

My plan is to take a long summer off and to look for a short-term contract (I've contracted previously, specialist skills) over winter - more to push back on boredom than for the cash.

* - previously I had a 90 mile round trip commute

I finish on Thursday at age 57. Plans are to spend even more time in the camper.

Got a couple of riding trips planned for April in the UK before we start using the 90 days in 180 for 3 riding trips that we have planned in Europe. Riding new and old places.

Going to visit youngest daughter, Abigale, in Rotorua NZ in January next year.

The maths more than stacks up for me (and I'm a mathematician), but I enjoy what I do and have other things I'd like to achieve professionally first.

I think if you have a pension pot type defined contribution pension scheme the basic rules are: 1) annuity income is about 1/20 what you've saved and suited to those who don't care for risk. 2) you can drawdown about 1/25 of your pot to live on each year for income. 3) you probably don't need as much as you think due to taxation and hopefully no mortgage. 4) Max your state pension by buying years if you have not already, they are £850 each and worth about £6500 - you only need to draw for three years to be cost effective.

Simple example; pension pot of 230k would buy an income of 11,500 or approx 1000 pcm to live on tax free (under the threshold). Same for a 4% drawdown where the capital will grow back. Add on state pension, when it comes (which will make you a taxpayer again on that private pension), to double your income, and cruise spending money 😉

IANAFA - but take 4) seriously to buy those 35 years if you won't get there by retiring early.

IANAFA - but take 4) seriously to buy those 35 years if you won't get there by retiring early.

One thing confusing me - my NI record has 29yrs full, I understand you need 35 to qualify for full pension...

So 6 more years...but on my forcast it just says I need 2 more years 🤔 

I understand you need 35 to qualify for full pension

I don't pretend to understand the full details, but...

35 years is for the New State Pension, which started 2016.   There is some transition from the old pension which means the actual number of years is variable if you started pre 2016.  There are lots of threads on MSE about this, or you can ring the Future Pension Centre, or https://www.ageuk.org.uk/information-advice/money-legal/pensions/state-pension/new-state-pension/ etc.

@tired - "4% drawdown" - are you confusing that with the "4% rule", or have intentionally ignored inflation?   (There was a recent monevator article on UK-specific SWR rates)

Posted by: mattyfez

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IANAFA - but take 4) seriously to buy those 35 years if you won't get there by retiring early.

One thing confusing me - my NI record has 29yrs full, I understand you need 35 to qualify for full pension...

 

So 6 more years...but on my forcast it just says I need 2 more years 🤔 

 

Mine is actually very similar - it also says I need to make just 2 more years and then I'm at maximum state pension!

4% rule. Is 1/25 of n year one and same monetary value each year to last 30 years with inflation

https://moneyweek.com/personal-finance/4-per-cent-pension-rule#:~:text=What%20is%20the%204%25%20pension,on%20track%20with%20their%20savings.%22

35 years is for the New State Pension, which started 2016. There is some transition from the old pension which means the actual number of years is variable if you started pre 2016.

Ahh, thanks for that...it kinda makes sense now... i just recently bought 2 years of missing contributions...I'm glad I didn't to too mad now, if I only actually need 2 more years! I plan to stop work long before I get it so that works out ok!

Right - consensus seems to be that 4% is not considered valid for UK, plus one has to adhere to the other conditions - 60/40 stock/bonds split, 30 year horizon, and understanding sequence-of-returns-risk.   It can also be pessimistic if you are going to get a full state pension and might have some small old defined-benefits.  e.g. you might have enough of that guaranteed income stream to cover lifestyle and then any investments are for treats on top.

(IANAFA either 🙂

Double post.

Just a further comment that 25% of the income from your pot can be taken tax free, and that's not the case in the US scheme and not accounted for in the 2-3% rule for the UK. Of course annuities make a lot of sense as the risk is borne by the provider, just as in a final salary scheme. Most people are pretty risk averse - hence annuities.

I am going to buy an annuity, been offered c5% yield but employer bumps it up if I buy through them, worth checking as I didn't know.  I like it's simplicity, not the biggest decision for me as it's c10% of income.

If it was higher I would be doing more research into options.

Congratulations to those retiring this week. Honestly you’re going to love it, there is no getting bored as you can do what you want when you want. For me I now have to check my plans when asked if I want to go somewhere or do something as I say yes to so much now. Yesterday I helped a some younger friend move into their first family home, they’d would have found it a lot harder just the of them. There is always something to do and none of it is work and none of it you are bound to. 

I'll echo what Drac says about you'll be busy. We were a group of seven at work, and four have retired. We still meet up for meals etc. Guess who are the hardest to pin down - the retirees. Us 'workers' just book the afternoon off, the retirees have to plan it in !

If you already have the mortgage paid off you should be in a good position to understand what your ongoing expenditure might be in the future unless you want to do loads of fancy Caribbean holidays. Then compare this figure to the total sum of what your pensions would pay out if you took them as an annuity. If these numbers are close (or even better the pensions meet the needs with a bit over) then you're golden. The downsizing idea can then be used to close any gap or even become a "good times" pot if you are lucky.

Don't worry about when you think you might die, but factor in how many years you think you will be active. Odds are you will need a lot more money at 65 than at 85. 

Don't worry about when you think you might die, but factor in how many years you think you will be active. Odds are you will need a lot more money at 65 than at 85. 

Based on watching my folks and in-laws (divorced, so two lots) it tailed off for all of them from 75ish.

IMO the issue for folk now (with most not having DB Pensions) is the 'gap' between their retirement and when the State Pension kicks in, and this applies whether they've decent private pensions or not.  And for those who own their house, downsizing/equity-release is always a good back-stop (later in life).

downsizing/equity-release

We are planning on downsizing at a point in the future after our kids have left home. It seems, to me, to make sense in so many ways – lower council tax bills, lower heating and lighting bills, less exterior and internal maintenance. We'd probably still get a three-bed (currently live in a four-bed) just so the kids still have somewhere to stay when they come to visit.

@johndoh ditto. We have a 4 bed detached and my eldest is moving out soon. The house will be much too large for us as a couple and we will free up some cash.

Another option is to downsize even more and pay for the kid(s) to stay at a local Airbnb when they visit.  All depends on how often they come to stay. For example, you could downsize to a 2 bedroom apartment and travel extensively with the additional capital.

IMO the issue for folk now (with most not having DB Pensions) is the 'gap' between their retirement and when the State Pension kicks in, and this applies whether they've decent private pensions or not.  And for those who own their house, downsizing/equity-release is always a good back-stop (later in life).

it can be an issue, but with a DC pension its fairly easy to take more out in the years before you're 67 then take less out once the state pension has kicked in. Tax free lump sum can help with that too. 

For example, you could downsize to a 2 bedroom apartment and travel extensively with the additional capital.

and not worry about the property whilst travelling. No garden for those who don't DO gardening but do DO travel is a nice idea. We'll downsize and probably not have paid off all the mortgage. But will be retiring to a (much) cheaper area as has a colleague recently.

Another option is to downsize even more and pay for the kid(s) to stay at a local Airbnb when they visit.  All depends on how often they come to stay. For example, you could downsize to a 2 bedroom apartment and travel extensively with the additional capital.

Yeah we could, but we would also like to have something for the kids to inherit* – they are going to need all the help they can get. We should still have enough to enjoy our retirement with capital from a house sale along with our modest pensions.

*We know this may not happen if one or both of us ends up in a care homes for a long time, but we can't plan around that scenario.

I took a tax free lump sum out of one of my pensions last June when I retired, and set up a monthly payment from the same policy to last for the 5 years until the state pension kicks in. By keeping good records on our spend over the last few years we know what is likely to be needed. (Obviously we assumed a rate of inflation, that may or may not be reasonable.) 

Yeah we could, but we would also like to have something for the kids to inherit*

Not sure on the amount of years gap between you and your kids but a lot of people are going to inherit money well too late to be of any real benefit for say buying a house.  I am 57 for example and have not yet inherited anything and I will be retiring in a few years with a paid off house so while inheriting something would be nice it is far too late to give anyone "all the help they can get"

I am 57 for example and have not yet inherited anything and I will be retiring in a few years with a paid off house so while inheriting something would be nice it is far too late to give anyone "all the help they can get"

Conversely, I, too, am 57 and I received an inheritance 14 years ago as my dad died at 69, my mum at 70. This is why we have a four-bed detached with a big garden rather than the tiny two-bed end terrace with a postage-stamp garden which provided great help as our kids have grown up with their own bedrooms and a garden big enough for trampoline, climbing frame, vegetable garden, marquee birthday parties etc. Thanks mum and dad – I'd rather have you here, but it was a great help.