Talk to me about early retirement

There’s plenty of DB pension schemes open to new joiners – Civil Service, lecturers, teachers…

If 5% is not enough and 10% is too much to expect. What do you plan on?

surfer, an index-linked annuity for someone my age (even if such a thing existed!) would not be 5%. Joint life with RPI would be under 2% according to a couple of pages I’ve just looked at. I was using numbers ranging from 3-5% inflation-proofed and was comfortable with the results. I do expect to do a bit better than that really but would not have jumped off the hamster wheel if I needed 10%. Even one bad year could make a real dent in that. And I’m probably happier with a bit more risk than some posters.

I’m aiming to retire or at least take a big step back from work – some time between 8-12 years’ time (i.e. 2026-30).  I’m 38 now and have a family.

One of the biggest motivators for me was one friend taking his own life and another having a cataclysmic misfortune.  It taught me that life is short…

Of course, some people would go and buy a shedful of Santa Cruzs or a 911 – but, for me, my response was to set myself a target within reasonable distance.  It led me to discover the whole “FI/RE” thing about 18 months ago and getting my plan together soon afterwards.  Mr Money Mustache was a great starting resource and inspiration.

The whole idea of retiring early and / or achieving financial independence seemed rather abstract before doing some number crunching, but – without having really thought about it before – I’d had some big pieces of the jigsaw in place for some time.  These being:

1) Modest spending, not growing much over time

2) Being in a pension scheme since 2003

3) Regular saving habit since 2006 (equities, via ISAs)

I’m in a DB pension scheme and, although the old scheme is now closed and then new one is watered down (costing me 13.5% personal contributions!), I was in it enough time to give me about 40% of the income I need to live on from age 60.  Assuming I work for another 8 years at the same level I am at now, that rises to 100% of what I need from age 68.

I therefore have a plan that plugs the gap in between the two pensions’ income between age 60-68 and, before that, provides an income from ages roughly 46-50 and 60.  I have a sum in mind, which I now need to reach.

There are lots of unknowns and assumptions.  I have of course already seen one market crash in 2008 and realise that there are lots of other things that can change.

However, even if I don’t reach the sum I need to 100% retire by those ages, I hope that I could – for example – at least kick-back and find a more chilled out job with a smaller income.

I’m in a DB scheme and was in a really good place for early retirement, then had 2 boys.  Current plan is bought a large house to renovate, which will take many years, and when we sell on and downsize we should cover the gap between normal retirement age

DB with fixed final salary calculation compounded at 2 % means I know what I will have at retirement. I took the buy a very expensive house option, with an aim of withdrawing 25% of my pension pot to fund some of this at 55. Sadly I can’t selectively take the AVCs I’ve saved for the last 20 years (7.5% of salary on top of DB), it’s 25% of The pot value, so the index linked DB part will be reduced and I’ll have a pot for an annuity or income drawdown with tax

My contention still holds. You need to save a lot more than you think, but not so much that you can’t live. Saving it in a pension means you get tax relief, can’t touch it and don’t miss it.

i still think in the longer term, early retirement is beneficial provided I can still support the offspring as needed.

I’ll pick up my Gold plated final salary public sector pension in 523 days.

Also on a DB pension scheme accruing at 45ths which is very fortunate and maxed out on the annual contributions. Hope to retire at 55 and will be mortgage free 6 years prior to that. Already have a diverse setup to make the early retirement possible although uncomfortably exposed to my employer via share schemebs but 5.5% dividends are oh so tempting. Hoping to move back to the mother land (Wales) in 2019/2020 to aid the transition to early retirement via remote working.

One thing I would say all is don’t stop yourself enjoying today by worrying about and planning for tomorrow as we don’t know what the future has in store for us. JK.

DB accruing at 45ths? As in return after 40 years on 40/45ths of your final salary?

😯 wow

Not necessarily. You still have your tax allowance… etc

Yes, agreed.  That’s the point I was making and why I wrote “the benefit…” You need to manage your contributions so that you keep as much income as you can out of the higher band while working, and also when drawing the pension. That applies whether you’re trying to stay in the personal allowance or the 20% band (depending on how much you earn). Otherwise the only benefit is the 25% tax free, and if you’re only saving 20% tax on 25%, that’s only 5% of your pot. Is that worth tying the money up, and possibly paying a bigger fee to pension company than for an ISA? Even 0.5% extra charge at compound interest for 20 years would kill the benefit. But if you can save 40% tax, it gets much more worthwhile using a pension.

Anyone planning on taking late retirement or is that just me?!

Anyone planning on taking late retirement or is that just me?!

The way things are looking at the moment I reckon I’ll be working right up to the morning of my funeral.

Reading these posts just proves the value of db schemes, you actually know what is coming.  I have some db but have never actually worked out what it is worth.  Reason being it is part of a diversified package – property, shares and the state pension being the rest.

For income seekers i follow the questor tips in the telegraph – currently yielding 5%.

Its good people are talking about it but keep enjoying today.

The way things are looking at the moment I reckon I’ll be working right up to the morning of my funeral.

Ditto. But it’s not something that currently bothers me. I enjoy what I do; I work 110ish days a year and the work isn’t particularly tiring unless I cock up. The travel is, though!

Having seen the deterioration in my parents and inlaws from retirement, I do think that staying in some kind of work is A Good Thing. Mind you, they all have DB pensions so no massive incentive to work.

keep enjoying today

Good advice. My friend was an FA years ago and the number of people he met who were obsessed with paying off mortgages etc. Trick is to find a balance.

My DB scheme earns at something like 2.32% per annum, but has recently been moved from 65 to NPA – currently 68.  Completely expecting that to have been moved again before I get within range.

So I have a good chunk of DB kicking in at 65 and a smaller DC pension kicking in at 60 but I doubt either will be enough to retire on before the main pension at NPA

I have a big gap which I’m hoping to plug with the property sale / downsize.  Problem is both boys will be at uni age in my mid 50’s so I very much doubt I’ll be using the cash to retire :(

I bought a lottery ticket…is that an investment strategy?

The easiest way would be inheritance!  Others might achieve this by not completely retiring – if you can do some freelance type work remotely, especially on the bad weather days.

Are you serious?

Let’s say you want an income in perpetuity of £30k a year from the age of 55.

You will need a pension savings pot of about £1m!

Why would he need a living of 30k pa if he is spending his life pottering around on a yacht.  if you dont have a mortgage or the other costs of modern materialistic lifestyles you can survive on a lot less (assuming anchoring rather than marinas most of the time, using the sails more than the engine, eating wisely etc).