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Interesting that no-one has volunteered the actual income that they are living on or expecting to live on. This is not a criticism, just an observation of a British/English trait...
read all this, and most of the other post mentioned.
some very interesting stuff.
mine and the wifes reasons to finish early are a mix of wanting to spend time while we are healthy, with the grandkids. we both have had periods of ill health in the past, me with heart problems, and the wife with epilepsy. both cured for now tho.
we have zero debt apart from living bills (utilities and food ). we spend very little.
our pesions will bring us half the income of what our wages did. but we managed to save one wage most month. and both our 25% lumps are tucked away too.
so grandkids monday and tuesday. resting wednesday, and a bit of cycle pottering thursday friday.
i somehow dont see boredom being a issue.
OK.. quick question to all you retirees.
If you retired at 55 with no pension but had about £700k between you as a couple from the sale of your house, could you still downsize/rent and make this money last, or would you need to get another job at some point? I have no real idea how much you tend to spend when retired, but it wouldn't include any flash holidays etc. Just wondering if I'll ever get to retire when I stopped paying in to my personal pension about 15 years ago? When I say no pension I think its worth about £45k so practically nothing.
A few useful pointers from Tim Kasseer:
Interesting that no-one has volunteered the actual income that they are living on or expecting to live on. This is not a criticism, just an observation of a British/English trait…
Not really, it's just that no-one asked.
I'll volunteer. We (2 of us) are currently getting by on my state pension plus about £6k pa from private pension. I could take much more from my personal scheme by running down the capital but at the moment I choose to remain under the tax threshold. We don't have expensive tastes. Now when my OH gets her state pension we'll be rolling in it!
This is a great thread and it’s very generous of you all to share this info, at 49 I appreciate it helping me to plan for the future. An IFA can tell you things but dozens of individual experiences give you a much wider view. Mortgage gone next year and no other debt (nows the time to buy my new road bike, somebody please let the wife know this) I’m thinking 60 and have done for a good while.
I'll quite happily volunteer.
Worked since 15 non stop and have 1.1 million in a SIPP.
Way more than enough. Plan it correctly and 700k is the magic number for me.
You could quit on much less
I reckon you could bin work at 50 on 400k and manage fine if you aren't posh
Currently 46. I have an RAF pension from 60 @13k/yr and 400k in the company pension scheme invested reasonably aggressively. Plan is retire at 60, take max tax free lump sums and use my pot to top me up to the Higher Rate Tax limit.
Retirement will hopefully involve a few years on a boat. Grandkids are a way off yet with 16/13yo kids, but that will surely feature.
Worked since 15 non stop and have 1.1 million in a SIPP
Congratulations on that! But I thought you couldn't hold more than £1m in a pension?
You can, but any excess above 1million (approx) is taxed at retirement. Theres a bit more to it, but roughly that.
Really interesting thread. I'm 52 and probably looking to retire or work part time in the next 3-4years (house paid off and will downsize and/or relocate to Brecon Beacons where MrsG comes from). I guess for me much will come down to what work is like post COVID-19. I used to travel alot (internationally) and dont want to go back to that level of travel.
I can take my pension in 355 working days at 55 with a 20% hit, and at 60 with no hit. I have a final salary scheme with 22 years that will soon close to me, but also have saved hard in AVCs with an aim to max my lifetime allowance at 55. I planned to take 25% to pay off one mortgage - we have two on the property as one was at a rate too good to be true. I’ll probably not retire though, but if I do, I could head back to academia or do consultancy.
If I moved back to my beloved Devon (from Windsor), I could manage on the income, but it wouldn’t sustain new cars, boat and multiple annual holidays. And then there are the two adult children. I’m not a dentist but Carla lane wrote with me in mind! 😉
Congratulations on that! But I thought you couldn’t hold more than £1m in a pension?
You can, but any excess above 1million (approx) is taxed at retirement. Theres a bit more to it, but roughly that.
Bar the 25% tax free (but only to to 1/4 the lifetime allowance), all income from pensions is taxed at your marginal rate.
However, with SIPPs anything over the lifetime allowance (currently £1.07m IIRC) gets an extra 20% tax added on top, so 20% rate becomes 40%, 40% rate becomes 60% etc.
I keep meaning to try and fully understand how this is all implemented as my SIPP is at £1.3m now, so will definately be having to deal with it in 5 years time....
I keep wondering wether or not you can get divorced and have a court split the pension in two, which would bring each half back down below the lifetime allowance and then just co-habit....
I find it best just to keep the pension pot under £1m. Turns out its actually pretty easy 🙂
I keep wondering wether or not you can get divorced and have a court split the pension in two, which would bring each half back down below the lifetime allowance and then just co-habit…
You can, but the issue is that when HMRC realise you are still living together they will come after you for tax evasion.
I find it best just to keep the pension pot under £1m. Turns out its actually pretty easy 🙂
what I've learnt from this thread is where my early retirement plans have gone wrong.
i'm not loaded..;-)
i’m not loaded..;-)
neither am i mate. but i also dont want to be.
i want to be time rich now, not money rich.
neither am i mate. but i also dont want to be.
I've been very lucky, very good salary and saved shed loads (lived very modestly for my salary), hence big pension pot.
My parents in law are retired and live off pretty small private pensions (a few £100 / month) and state pensions and they have a very nice life - their biggest expenses are probably Golf club fees (£500 / year). So you really don't need a lot to retire if you have modest tastes.
However, with SIPPs anything over the lifetime allowance (currently £1.07m IIRC) gets an extra 20% tax added on top, so 20% rate becomes 40%, 40% rate becomes 60% etc.
That's not quite how it works. Any amount over your lifetime allowance that you take as a lump sum is taxed at 55%, and any amount over your lifetime allowance that you take as a regular retirement income – for instance by buying an annuity – attracts a lifetime allowance charge of 25%, on top of any tax payable on the income in the usual way.
Also, it's not just SIPPs. If you have a defined benefit pension, this is assessed against the lifetime allowance by multiplying the annual pension by 20. So even if you have no SIPP at all, if your final salary scheme is paying you more than 5% of the lifetime allowance per year (about £53.5k at the moment) the amount above that will attract an extra 25% tax.
48 here with 18 years left on my mortgage...
I don't think early retirement is something i need to worry about.
However, we are overpaying the Mortgage slightly, and paying the maximum i can into my workplace pension (with the company matching it) so hopefully i won't need to work up to the morning of my funeral.
My Wife is a teacher, and although she's been screwed over on her pension its still better than nowt.
All being well i hope i can stop full time work at 62ish, and she can stop at the same time, when she's 60.
We've both got loads of transferable skills so intend to do a little part time work to bridge the gap to state pension age.
I think its easy to downplay the time of entry into the property market, I have a sister, 6yrs older than me. comparable career paths and earnings.
bought her first house mid 90's, whereas I didn't buy my first house until the mid 2000's. she now has multiple ,largely mortgage free properties and talking about retiring in the next couple of years.
I have one pretty modest, mid terrace with a fairly large mortgage on and I'll be lucky if I retire before I'm mid 60's.
in terms of investments, my biggest regret is renting, not buying when I got my first graduate job. the first house I ended up buying, went up ~120% in the three years I dithered...
I’ve learnt I missed the boat to die young and leave a beautiful corpse and all that’s left for me is to die poor.
and all that’s left for me is to die poor.
Well you can't take it with you.....
don't think I'll ever get my head around those who're worried about boredom if they stop working (even though my dad is one!) I've got so many interests, ideas & plans I don't think even two lifetimes would be enough, work just bloody gets in the way 🤣
yup 😭I think its easy to downplay the time of entry into the property market
Some people have asked how much they need to retire.. and someone asked if £700k is enough.
There’s no one answer to that as everyone is different. It all depends on how much your annual outgoings will be in retirement. For some, £20k will be enough, for others £80k, others £100k+.
I posted some detailed financial info on the ‘Retirement - what’s it really like’ thread but will repost a couple of simple steps that will get you started if you’re wondering “How much is enough?”....
1. Start by tracking what your outgoings are today with your current lifestyle.
- Download some expense tracking software that automatically sucks in and categorises the transactions from your bank accounts, credit cards etc. Make sure you go though it regularly to ensure the categorisations are correct.
- This may sound like drudgery, but it's actually fun, and there's tremendous value in knowing what you're actually spending rather than guessing.
- So far as apps go, I've used BankTivity and Quicken in the past, but MoneyHub is my favourite these days - simple, easy, brilliant, UK(not USA) centric, and inexpensive at £10/year.
2. Do the above for at least 6 months then extrapolate it on a spreadsheet to a full year.
- Obviously, a year or more gives you much more reliable data and takes account of seasonal fluctuations such as Christmas, summer holidays, birthdays, etc.
- Doing this will give you an insight into what your actual spending is.
- Now, using a spreadsheet, project out how you think your spending in each category will change in retirement. For example, in our case we reduced the amounts each year for groceries (as we won't be feeding a family of 5), child & dependent expenses, clothing, cars (as we won't need the 3 we currently have), car insurance, telephones & mobiles, and so on - and increased the amounts we'll likely spend on travel/holidays, hobbies, entertainment, eating out, medical expenses, gifts, etc.
Some people have asked how much they need to retire.. and someone asked if £700k is enough.
MY basic pension for the years 60 - 67 will be £525 per month. Mrs TJ less plus a joint income from property of £400 per month so a total of under £1300 per month between us. thats how much we have. It will have to do. We may do some bits and piece of part time work and if we go away for long periods let the house out to gain a bit more.
We have no debt and no mortgage.
IMO yo can approach this in two ways.:
1) I need this much to retire on and work long enough to get that much or
2) I am retiring at this age and will make do with what I have
So you really don’t need a lot to retire if you have modest tastes.
It's surprising how much your outgoings reduce when you stop work.
don’t think I’ll ever get my head around those who’re worried about boredom if they stop working
Indeed.
Prior to drawing my pension I did what Digger90 suggests. I didn't use any fancy tracking software though, I just downloaded 12 months of bank statements as a CSV, stuck it into Excel and knocked up some pivot tables. It took me about a day to come up with a pretty accurate idea of my anticipated outgoings to present to my financial adviser. Looking back at the following 12 months I wasn't far off.
Which works well, but how do you capture and accurately categorise spending on credit cards, Paypal, and other sources of spending that are not directly from your current account?
Which works well, but how do you capture and accurately categorise spending on credit cards, Paypal, other that’s not directly from your current account?
It all comes out of your current account eventually, doesn't matter whether I pay by PP, CC or direct debit etc.
It’s surprising how much your outgoings reduce when you stop work
Another surprising number is how much you save when you actually retire. We are both working and probably save over 1k a month into our pensions and other savings.
ignore...
i’m not loaded..;-)
Neither am I,fortunately I don't need to be loaded so I'm retiring in a few months
It’s surprising how much your outgoings reduce when you stop work
This +1.
I'm currently paying £1350 PCM off our mortgage, an amount into my pension every month and if i'm in the office full time about £200 PCM on Fuel/Dartford tunnel tolls.
if i wasn't working/commuting, paying the mortgage or paying into a pension i'd be circa £1900 PCM better off..
Go now if you can and enjoy the grandchildren and cycling. You can't buy time no matter how much you save in the bank.
Something I think a number of people consider is what they want to leave to their dependents. With some small sacrifices I could possible retire now (56) but my 2 are at Uni and will need to get on the housing ladder when they leave and get jobs. I suppose that will dictate my timeline. I will retire when I can help with this financially then spend time helping them set up their homes from a DIY perspective, So likely a couple from years from now.
Something I think a number of people consider is what they want to leave to their dependents.
This is a good point - chap in my office who is 62 is only still working to give his daughter a chunk of Money when her baby arrives in the summer..
Not sure how this will pan out with my kids (currently 11 and 14) as we know they've been left significant values in a couple of elderly relatives Wills - so hopefully won't need much from us.. Which is good as they'll be getting the house and very little else!!
Which works well, but how do you capture and accurately categorise spending on credit cards, Paypal, and other sources of spending that are not directly from your current account?
As per footflaps. I only have 1 debit card, no credit cards so easy to track. Paypal is a doddle, just look at transaction history. OK there was some manual fiddling involved which is why it took all day.
It’s surprising how much your outgoings reduce when you stop work
Yep, agree with the posters above, I reckon I pay about £2k a month into mortgage, pension and savings, the missus perhaps twice that.
My wife is a medic and will be forced to reduce hours quite dramatically due to her pension topping out. We are 42 (me) and 45 (her). Plan is to reduce hours / pressure in 10 years time by which point kids should no longer be dependent. We both intend to be fully retired at between 55 - 60, working only through choice, if at all. Project this year is to do some serious financial planning to make that possible.
For the retirees, how long did it take between you realising you could retire and actually doing the deed? Early this year I had an IFA check my sums to confirm that I can now retire (55) and more than cover my outgoings. Before that point my thoughts were that I kinda mostly sometimes enjoy my job and so would stick around for a while longer but try to wind down the hours even further from my current 4 day week. Since then it's started gnawing away at me and every time I deal with a load of crap at work I'm thinking 'why am I bothering with this when I don't need it'. The frequency of that crap also seems to be going up but based on the reaction of others around me at work that is a real (and hopefully temporary) thing rather than just my skewed perception. My current plan is now to stick it out while Covid winds down and see what 'the new normal' is like if/when we start going back to the office, but as it stands I can't see me staying around for the 2+ years I first thought I would.
how long did it take between you realising you could retire and actually doing the deed?
I wasn't even sure I could. I was offered early retirement at 17:30 on a Friday and told I had to make a decision on the Monday morning. My wife convinced me that we'd make a go of it somehow. IIRC that was 6 weeks before my 50th birthday.
When I worked about 1/3 retirees died within 2 years, something like that. Ftse 100 company so spread of employees from head office to drivers. Seem to remember it was something like 1/3 die early, 1/3 avg, 1/3 make 90s.
A mate similar age to me died a few years ago, first non accident mortality, focuses the mind. I just potter about doing a few jobs for other people, really enjoy it as if I don't want to work I don't.
My pensions kick in at 60 so I 've a few years to go, then the state pension at 67. I have aimed to accrue the UK avg salary in retirement so 30k pa, should easily do that with property income, some shares, private and state pension.
I maxed out company pension from first job all the way through.
For the retirees, how long did it take between you realising you could retire and actually doing the deed?
For me it was not so much about the money as the age I was. I did want to go at 58 when my mortgage was clear but my other half insisted i stayed on till at least 60 ( she wanted 65) 60 is the youngest I can take my NHS pension without reduction so I had to wait until I was 60 in the end. I retired the day of my birthday
Surfer, erm yes. 😔