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The big eye opener for me is how little tax I'm now paying which makes your money go a lot further
Ive been trying to work out scenarios around that. Using a drawdown and with the first 25% being tax free, so hypothetically say that chunk was 150k, I’m assuming that could be taken at a rate of say £3000 a month for 5 years without paying any tax at all ?
I'd have ripped their hands of for a £60k payoff. First £30k is usually tax free, so even on 40% tax onnthe rest, that's still something like £48k in hand. For most folks thats heading towards 2 years worth of net wages.
Yep, agreed on all points. Basically I'm working the next year for nothing at all.
I think basically the missus wasn't keen on working and me not. Which I can understand. But then she has career goals etc and doesn't want to retire yet. I very much do want to retire and get on with my life before I am too old.
I'd have ripped their hands of for a £60k payoff. First £30k is usually tax free, so even on 40% tax onnthe rest, that's still something like £48k in hand. For most folks thats heading towards 2 years worth of net wages.
Yep, agreed on all points. Basically I'm working the next year for nothing at all.
I think basically the missus wasn't keen on working and me not. Which I can understand. But then she has career goals etc and doesn't want to retire yet. I very much do want to retire and get on with my life before I am too old.
Interesting thread
I was forced in to 'retirement' in January when I was made redundant aged 51.
What I have found in the following months is that for me
1. I am not ready to retire
2. Having time on your hands is great, but everyone else is out working + I have now bike nearly all the trails within a 3 hr drive of where I live that have been on my bucket list
3. You can do all DIY jobs etc that need doing at home, but the easy/cheap ones get done fairly quickly, then it gets expensive, then you think will you live here long enough to justify it.
4. Its fairly cheap to get out and about in your local area doing stuff, but overnight stays these days are not cheap.
5. Mrs FD is still working, son still at school so limits what I can do ie going away etc
6. Utopian part time work does not exist
7. Utopian voluntary work does not exist (given constraints of 5 above)
So luckliy Ive found a fixed term contract, and actually what we have learnt from this is that I may be able to work for 6 ish months a year, and still have a redundancy payment in the bank.
I think it has made us both realise that we could / should both try and retire no later than early 60's
@FunkyDunc - I definitely wasn't ready aged 50. Financially, I'd have been fine but mentally, I still needed something - and my wife was still working too. That meant I ended up doing part time work, but something I really enjoyed and completely different from my previous career.
At age 60 I was definitely "ready".
Interesting post, I have 2 friends who stopped working at a similar age to you and both came to the same conclusion. Both are now back at work in less stressful jobs and are much happier.
It has altered my plans for early retirement a bit.
How large a pot do you suppose it would cost to buy that kind of annuity - £300k ? Not that small really.
I'm just in the throes of taking an annuity based on a £320k pot, and they've offered me a pension of ~£16.5k, which I'm quite happy with. Granted that's from a DC scheme not DB, but it's presumably similar. All the calcs ive looked at seem to suggest "Pension offer = 1/20th of fund value" or so, and I'm currently aged 62.
For those that look the leap in the last few years with pots ranging up to 500k or so, how is it working out ? For you, for your partner if there is one ?
Not sure if I posted in this thread a few years ago when it started, but here goes ......
Got pissed off with the idea of working on average 50 hour weeks to afford the rent for a flat i didn't want to live in, in a city I didn't want to live in, each year running faster just to standstill (German taxes are a bitch).
We sold everything we didn't need. Built out a van and left our old life behind.
We've been in the van for three years now. This year I'll be 43.
I (work) worked for three months when back in Germany at the start of this year. Got stuck in with a few projects with the lads I used to work with and picked up a fair bit of private (read cash in hand) work. Banked enough that I don't need to worry about my bank account for the next couple of years.
The GF (of 23 years, really should start referring to her as something a little more official) started her own brand management business just as we hit the road. That's going really well and she's got enough clients currently that she doesn't want anymore, otherwise she would be to busy to enjoy life. What she earns in six months more than covers our outgoings of 22k€ a year (we run a tally.... To cover everything from fuel to repairs/servicing, weekly shop to posh meals out, activities such as bike park and keeping the bikes running to insurances to cover any **** ups).
I've got savings just shy of 400k. I started saving when in my early 20's. I've not had to touch them since we've been in the road, which is just as well, as they've taken a battering the last few years. I'm also in the lucky position of not having to pay capital gains tax when I cash out as I've been outside the UK for more than ten years
Think we'll be in a position this year to put 20-30k into my Hargreaves account.
I figured a long time ago that my generation will be expected to work way into their 70's (look at Denmark and Germany is already considering doing something similar).
My old man retired at 64. He's spent the best part of the last 18 years sitting on his arse looking out of the window at a garden he's in no shape to keep well kempt. The rest of the time he's sat watching shite TV or reading the Daily Mail.
The GF's folks are also mentally fit, but physically frail.
I figure I would rather spread my retirement out now whilst I'm physically fit enough to enjoy it.
It's surprising how little money you need when you're not trapped in the hamster wheel.
Ive been trying to work out scenarios around that. Using a drawdown and with the first 25% being tax free, so hypothetically say that chunk was 150k, I’m assuming that could be taken at a rate of say £3000 a month for 5 years without paying any tax at all ?
Yes that's one way of doing it but taking a little less lump sum and paying a bit of tax as you go along is another option to consider.
Under PAYE and a salary of £67k you would take home £49,170, but a drawdown of £67k gives you £59,464 assuming you take 25% tax free lump sum out of the £67k and haven't taken it all in one go.
4. Its fairly cheap to get out and about in your local area doing stuff, but overnight stays these days are not cheap.
Very much so. Unfortunately Mrs S won't entertain the idea of a camper van
For those that look the leap in the last few years with pots ranging up to 500k or so, how is it working out ? For you, for your partner if there is one ?
Not sure if I posted in this thread a few years ago when it started, but here goes ......
Got pissed off with the idea of working on average 50 hour weeks to afford the rent for a flat i didn't want to live in, in a city I didn't want to live in, each year running faster just to standstill (German taxes are a bitch).
We sold everything we didn't need. Built out a van and left our old life behind.
We've been in the van for three years now. This year I'll be 43.
I (work) worked for three months when back in Germany at the start of this year. Got stuck in with a few projects with the lads I used to work with and picked up a fair bit of private (read cash in hand) work. Banked enough that I don't need to worry about my bank account for the next couple of years.
The GF (of 23 years, really should start referring to her as something a little more official) started her own brand management business just as we hit the road. That's going really well and she's got enough clients currently that she doesn't want anymore, otherwise she would be to busy to enjoy life. What she earns in six months more than covers our outgoings of 22k€ a year (we run a tally.... To cover everything from fuel to repairs/servicing, weekly shop to posh meals out, activities such as bike park and keeping the bikes running to insurances to cover any **** ups).
I've got savings just shy of 400k. I started saving when in my early 20's. I've not had to touch them since we've been in the road, which is just as well, as they've taken a battering the last few years. I'm also in the lucky position of not having to pay capital gains tax when I cash out as I've been outside the UK for more than ten years
Think we'll be in a position this year to put 20-30k into my Hargreaves account.
I figured a long time ago that my generation will be expected to work way into their 70's (look at Denmark and Germany is already considering doing something similar).
My old man retired at 64. He's spent the best part of the last 18 years sitting on his arse looking out of the window at a garden he's in no shape to keep well kempt. The rest of the time he's sat watching shite TV or reading the Daily Mail.
The GF's folks are also mentally fit, but physically frail.
I figure I would rather spread my retirement out now whilst I'm physically fit enough to enjoy it.
It's surprising how little money you need when you're not trapped in the hamster wheel.
Awesome post mate, love it.
been trying to work out scenarios around that. Using a drawdown and with the first 25% being tax free, so hypothetically say that chunk was 150k, I’m assuming that could be taken at a rate of say £3000 a month for 5 years without paying any tax at all ?
If you weren't 67, and not getting any other pension then yes.
But you'd be stupid to do that because you'd then get hammered for tax when you started using the other £450k. Much better to level it out and drip from both sides together.
Eg assuming no other income ( which clearly isn't right over a 20 year period, but to keep it simple)
Option 1
Take £3k pcm for 5 years and pay no tax at all because it is the free chunk.
Then take the taxable chunk at the same rate and pay about £4.8k PA tax for the next 15 years. ( 20% of £24k PA)
OR
Option 2
Take £1000 pcm from your taxable pot, but pay no tax as that is your tax free allowance
Take £750 pcm from your tax free pot and pay no tax on it
Take £1.25k pcm from your taxable pot and pay £3k PA on it ( 20% of £15k PA)
( all for 20 years)
Option 1 pays £12k more tax than option 2
....stupid piece of shit forum
Very much so. Unfortunately Mrs S won't entertain the idea of a camper van
I'm really not convinced a camper van is a cheaper option than hotels for most people. I know VW tax etc but a 5 year old California looks like it's about £50k. tax £400/service costs £500+/insurance £500+ and depreciation have got to add up to about £5 per year.
Unless it replaces a car you've got cost of capital (5%?) another 2.5k per year and we're up to £7500. Most of the time in the UK you're not going to be wild camping so you've still got to pay maybe £30+ a night for pitch with hookup. how much are you really going to use it, and how much is it really going to cost you per night.
You can probably give yourself a £10k a year budget for hotels/holiday cottages etc etc. and be away from home 90 days.
That's the equation I keep coming back to when I think about campers. What you lose is the option to go away at the last minute (but you can't do that with campsites most of the time) but you get a proper bed/toilet/shower.
Very much so. Unfortunately Mrs S won't entertain the idea of a camper van
I'm really not convinced a camper van is a cheaper option than hotels for most people. I know VW tax etc but a 5 year old California looks like it's about £50k. tax £400/service costs £500+/insurance £500+ and depreciation have got to add up to about £5 per year.
Unless it replaces a car you've got cost of capital (5%?) another 2.5k per year and we're up to £7500. Most of the time in the UK you're not going to be wild camping so you've still got to pay maybe £30+ a night for pitch with hookup. how much are you really going to use it, and how much is it really going to cost you per night.
You can probably give yourself a £10k a year budget for hotels/holiday cottages etc etc. and be away from home 90 days.
That's the equation I keep coming back to when I think about campers. What you lose is the option to go away at the last minute (but you can't do that with campsites most of the time) but you get a proper bed/toilet/shower.
Absolutely agree, but DAMN they'd be useful.. Although my depreciation would be a LOT more with 25,000 a year going on it.
Bit off topic, but.....
Re campervans..... We built out a brand new XLWB H3 Ducato to a high standard (I'm a carpenter and had a workshop at the time so that helped somewhat), with space for four bikes inside, enough insulation and heaters to survive an artic winter, enough water onboard that we can be truly off grid for two weeks at a time.
Total cost came in under 50,000€.
California size vans are a piss take. Essentially glorified glamping. Too small for two people. No storage space. Tiny load capacity. I say that as someone who owned a LWB T5 with a self built interior.
In three years we've covered just over 30,000km. 4tk of those were commuting around Munich the last five months.
You can build a decent overnight van with a few mod-cons for under 10k.
Bought our van 10 years ago when Abigale was racing and before the market went mad. Same vans and same year are still selling for what we paid for it.
I love been away in it.
Averaged 8000m a year in it. Mainly in Europe.
Got soaked today up the mountain and now relaxing with a cold beer whist everything drys
Since we've diverted into discussing vans....
There's no way a 5 year old California depreciates £5k per year. My LWB pro conversion ( didn't get a Cali as they're absolutely tiny) has dropped about £18k in the nineteen years I have owned it.
And yes alpin, I agree they are shit in comparison to bigger builds if you don't need to transport kids and use it for commuting
But FFS can people who are time served professional carpenters stop posting waffle about how little a van would cost if you used your years of hard earned experience and many weeks of hard labour to convert it.
I'm just in the throes of taking an annuity based on a £320k pot, and they've offered me a pension of ~£16.5k, which I'm quite happy with. Granted that's from a DC scheme not DB, but it's presumably similar. All the calcs ive looked at seem to suggest "Pension offer = 1/20th of fund value" or so, and I'm currently aged 62.
FFS can people who are time served professional carpenters stop posting waffle about how little a van would cost if you used your years of hard earned experience and many weeks of hard labour to convert it.
I'm flattered you think it only took a few weeks...😉
Friends have converted vans for way less and get splinters when they merely look at a piece of wood.
And if you're retired/retiring you've likely got the time to spend on a project like that.
End.
Is that inflation linked or not? 16.5k/yr in 20 years time at 2% pa (Gov target) is a little over 11k in real terms - pls check that out.
Yes, it is index-linked, and it's also a Joint Annuity, so Mrs Lawman would see 50% of it if I carked it first (although she's 11 years older than me, so that's relatively unlikely all things considered)
My grandparents all made it into their late 80s, my dad died a couple of weeks after his 91st, my mum's just turned 90 this spring. So on the whole we're quite a long-lived clan, and I'm hoping to maintain that particular family tradition
There's no way a 5 year old California depreciates £5k per year. My LWB pro conversion ( didn't get a Cali as they're absolutely tiny) has dropped about £18k in the nineteen years I have owned it.
the 5k included tax/service/insurance and looked about right comparing new prices to 5 year old vans. I know camper van prices are weird (and all van prices have been weird the last few years - our 2018 Caddy Maxi Life we bought a year old doesn't seem to have depreciated at all in that time) but surely service costs are going to increase even if depreciation slows down. But realistically how much is a 15 year old diesel van with 150k+ miles on it going to be worth in 2035 when most cars on the road are likely to be electric?
I'm genuinely interested in what the true cost per night is on a camper as I keep going back to thinking about one. how much do they cost to own and how many nights a year do people actually spend in them?
There's no way a 5 year old California depreciates £5k per year. My LWB pro conversion ( didn't get a Cali as they're absolutely tiny) has dropped about £18k in the nineteen years I have owned it.
the 5k included tax/service/insurance and looked about right comparing new prices to 5 year old vans. I know camper van prices are weird (and all van prices have been weird the last few years - our 2018 Caddy Maxi Life we bought a year old doesn't seem to have depreciated at all in that time) but surely service costs are going to increase even if depreciation slows down. But realistically how much is a 15 year old diesel van with 150k+ miles on it going to be worth in 2035 when most cars on the road are likely to be electric?
I'm genuinely interested in what the true cost per night is on a camper as I keep going back to thinking about one. how much do they cost to own and how many nights a year do people actually spend in them?
Considering a TravelLodge is about £30-50 a night, if you're just looking for somehwere to kip then a camper makes very little sense. But a camper is sometimes more convenient depending on location of where you are of course.
so back to the 'how much/size of pot' part of the topic. I get the feeling that we are often indoctrinated through our career paths that we need a very large pot to maintain a decent (subjective of course) existence post retirement, however real life experiences often seem to suggest that the £1M figure bandied about by pension advisors and the like is a pie in the sky for the majority and many are having a great time on half this amount, or in many cases less ?
Of course most people don't accumulate anywhere close to 1m during their working life - that's going to be a large proportion of their total pre-tax earnings. It's only become a thing due to people riding the house price bubble.
That's not to say it's impossible for people who have decent careers and not too extravagant lifestyles. When we lived in Japan we were saving rather more than half of our joint salaries and had a comfortable lifestyle. But it was an unusual situation (free housing was part of the deal).
Considering a TravelLodge is about £30-50 a night
FWIW I was just looking for somewhere cheap and decent (near Syston) and it seems more like £50-80. But perhaps I'm unlucky with the day/location.
Right back to the OP – my brother is in a very similar position – he owns his own home, no wife or dependents, and a significant pot (I don't know the actual amount, but I know it will be around the same). He's 53 and stopped working a year or so ago, although not officially retired. He says he may consider doing some IT consultancy work if he's interested in it, or perhaps work as a van driver or something similar (i.e., a job that requires minimal thinking). He is quite happy, he has enough to live on, and knows he'll have his state pension to fall back on too. He just spends his days walking/hiking or riding his motorbike.
Edit: I should also mention that he doesn't have expensive tastes – he doesn't holiday abroad (just has the odd week here or there somewhere within the UK), doesn't spend much on clothes, runs a 10-yr-old car and, other than his motorbike and walking, his only other 'luxury' expense is going to gigs – and those are usually at the cheaper end rather than the £100+ tickets for stadium gigs.
£36k is the magic number if your house is paid for and no debt/dependants. Part time work is key, winters can be long with short day light. Free days out still require transport of some description, you will drink a lot of coffee when out and about and lunch, beer etc. Three coffees a week is £500 a year, three beers is £700 a year and so on.
Bear in mind too that these nominal pots to retire on don't account for when you retire - 500k would give a very decent standard if you retire at 67 and have your (possibly 2x) state pensions - try retiring at 55 with the same amount, by the time your state pension kicks in your pot could be almost gone depending on whether you earn anything in the meantime and how much you spend.
£36k is the magic number if your house is paid for and no debt/dependants.
per person or for a couple? including state pensions? and you're saying working part time on top or to make it up to that?
Bear in mind too that these nominal pots to retire on don't account for when you retire - 500k would give a very decent standard if you retire at 67 and have your (possibly 2x) state pensions - try retiring at 55 with the same amount, by the time your state pension kicks in your pot could be almost gone depending on whether you earn anything in the meantime and how much you spend.
I think that's the thing.. If you want to quit work 'early' you'll need 'bridge' money such as ISAs or stocks and shares to see you through until the state (and hopefully private pensions and SIPPs) kick in.
And ideally mortgage free as well.
I'm 45 and have basically quit out of the rat race due to being mortgage free and getting a double whammy of inheritance from my dad and nan who both died within 4 years of each other...
I'm investing carefully and smartly at the moment but my private pensions are pretty meager, my NI contributions are pretty much full though.
I'm going to have to get a part time job in the next year or so.. I'm considering van driving or something that doesn't require thinking too much, as I quit my cooperate IT job through total burn out... And I'm not going back to that shit show.
I guess I'm lucky in a way, the timing of how all this happened, but I'd sooner have my family back.
We just have to play the cards we are dealt as best we can I guess.
ISAs or stocks and shares to see you through until the state (and hopefully private pensions and SIPPs)
Just to clarify (and I'm sure MattyFez meant this)...
"ISAs or stocks and shares" -> this isn't either/or: you can hold stocks and shares within an ISA (avoiding Capital Gains Tax and/or div tax depending on the holdings).
"until the state (and hopefully private pensions and SIPPs)" -> you can draw from SIPP at 55 (changing to 57 in a few years). Private pensions, for at least defined benefit (final salary) depends on the schema rules. e.g. often 60.
Bear in mind too that these nominal pots to retire on don't account for when you retire - 500k would give a very decent standard if you retire at 67 and have your (possibly 2x) state pensions
yes, in my musings, I’d likely be halfway between, probs 60, and wife would still be working part time.
Personally, I am in a tricky situation as my wife is nine years younger than me, so when I hit 67 (and I really don't want to carry on working), we really wouldn't be able to live off my pensions unless we downsize considerably and/or get an inheritance (I know it is horrible to think in these terms, but it is our reality). Of course, any inheritance could be wiped out by care home costs if things were to go that way.
I'm investing carefully and smartly at the moment but my private pensions are pretty meager,
Even when not working I think you can still pay a small amount into a SIPP and get credited 20% tax relief.
I'm mulling this all over at the moment.
Currently 53 but had enough of the corporate life so planning on binning it all in at 55.
Should have c£300k in pension pot so plan to take tax free element and live off that for 6 months and will then get part time job (c£20k pa as delivery driver or something like that) and supplement that with drawdowns from pension pot until I reach 60. At that point I will be able to collect £20k pa for life from my other pension.
Hope to fully stop working at 60 and that I'll still have enough in pot/savings to supplement the £20k until I get my state pension at 67. If not, can supplement by downsizing of my house which is mortgage free.
Does that all sound broadly doable?!?!
ISAs or stocks and shares to see you through until the state (and hopefully private pensions and SIPPs)
Just to clarify (and I'm sure MattyFez meant this)...
"ISAs or stocks and shares" -> this isn't either/or: you can hold stocks and shares within an ISA (avoiding Capital Gains Tax and/or div tax depending on the holdings).
"until the state (and hopefully private pensions and SIPPs)" -> you can draw from SIPP at 55 (changing to 57 in a few years). Private pensions, for at least defined benefit (final salary) depends on the schema rules. e.g. often 60.
Yes sorry that's what I meant... always max out your tax free stuff within ISA or SIPP before anything else...theres no resaon not to.
How much money you put into either is very situational.
I'm mulling this all over at the moment.
Currently 53 but had enough of the corporate life so planning on binning it all in at 55.
Should have c£300k in pension pot so plan to take tax free element and live off that for 6 months and will then get part time job (c£20k pa as delivery driver or something like that) and supplement that with drawdowns from pension pot until I reach 60. At that point I will be able to collect £20k pa for life from my other pension.
Hope to fully stop working at 60 and that I'll still have enough in pot/savings to supplement the £20k until I get my state pension at 67. If not, can supplement by downsizing of my house which is mortgage free.
Does that all sound broadly doable?!?!
Yes IMO / IME
£36k is the magic number if your house is paid for and no debt/dependants
Funnily enough we had an appointment with a financial advisor last week, agreed that £36k will do us very nicely, and since state pensions should cover 2/3rds of that, are probably on track; hopefully even to retire before 67.
Considering that when mrsDoris turned 41 we were still living in a one bed rental on a main road in a slightly stabby area, and retirement was looking doubtful at best, we came out of that meeting on cloud nine.
I resurrected this thread last week to get some updates and advice on how people were getting on with early retirement and sensible life costs vs fund pots not at the panacea £1M or the like.
some great posts, all very helpful as I now have a few months to make some decisions, coming out of a well payed exec job, and considering next steps at the end of the summer. I could pursue a range of options, from staying in same field, either more of the same, or something quite different, a few days a week, or alternatively a firm tightening of the belts and not work.
it is very useful reading about other people’s experiences, much appreciated.
I quit my career New Year 2024 and left at the end of April. I have a half time job that I enjoy and have continued with. In a recent change my hours have now increased by another day and I got a pay rise. All this means that I am not withdrawing from the savings/pension pot at the moment which can only be a good thing. I like the job, its new and interesting with low stress levels the majority of the time. Ideally I think I'd to do another 2 years of it when I will be 57.
I have not regretted quitting for a second and every week being effectively a long weekend has given me insight into what to do with more time off, rather than going from a stressful full time job to nothing. Its worked for me
get part time job (c£20k pa as delivery driver or something like that)
Thats pretty much full time if you want to take home £20k or gross £20k. The problem is low level work at or near NMW is available , but its also over subscribed as its accessable to alot of people. Our european cousins have Evri / Amazon delivery jobs as they are low skilled , low paid , long hours but for them its a gold mine.
What you need is something north of £14/hr , for say 3 days a week. This will gross around £15k p.a. , will still feel like being retired and free up most of your week . Alot harder to find unless you can do advanced diy. / handyman suff. Think £30 ph to build flat pack furniture is the going rate down south. Similar for fitting a new tap , painting a wall , hanging a gate , changing a light fitting , swapping a bottle trap.
@sprootlet - possibly cheeky but what line of work have you got into? Quitting early and finding something to earn "just enough" to top up a reduced pension is very attractive at the moment (more so because I'm halfway through a fortnight's leave!)
Though I'm not sure the marriage could survive that decision, for added complication.
The ideal is to struggle on at work for 3 years and 10 months till I'm 60.
I'm 53 and working 4 days a week, loving life and aiming for around 60 but this might depend on what our boy is doing as he will be 20 at that point.
My question is, do people sometimes end up restricting their life in retirement a bit, due to trying to pay as little tax as possible?
I also noted with sadness rereading the thread, that Tj's post shows in realtime that we really can't wait and need to get on with doing the things we want to do ASAP. Love that you've got up and got with achieving those plans Tj.
Yes, I don't understand this 'just be a delivery driver' semi-retirement option.
Many delivery drivers are under extreme time pressure, driving generally isn't something I find that pleasant these days, as I get older my low light vision is getting poor so winter I wouldn't enjoy. There doesn't seem to be any old giffers doing it near me.
I think I would rather ring up orders in Screwfix.
Being a delivery driver isn't the only option obviously, but I've got a couple of "retired" mates doing 2-3 days a week and enjoying it. Gets them out, they are happy driving and physically fit, 2-3 days still leaves them 4-5 days for "fun". One is in his late 60s now, but looks 10 years younger.