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I want to retire....money worries

Discussion in 'Retirement' started by surf kitty too, Aug 6, 2019.

  1. surf kitty too

    surf kitty too Occasional commenter

    I am a teacher, have done nearly 13 years according to TPS. My current pension is thus about £5K a year, with a £15 K lump sum.
    I am nearly 55. If I take early retirement, I understand that these figures will be adjusted down.

    I have a couple of other small pension pots from previous roles outside of teaching, but cannot access these until I am 60 or even 65. Then there is the state pension at 65.

    I emailed TPS asking if instead of taking a lump sum, I could have an increased pension - but I am still awaiting a reply - does anyone know if this can be done?

    I am really not looking forward to September, I want out....but I cannot live on £5k a year, the mortgage still needs to be paid!
  2. diddydave

    diddydave Occasional commenter

    As always with something as crucial and probably irreversible decisions like this I'd say you should probably pay an expert to give you proper advice rather than put too much weight in the chit-chat you will get from forums - that being said I'll offer the following from my understanding and experience (I am no expert!).

    You cannot increase the teacher pension by converting the lump sum.
    You can increase the lump sum by converting up to 25% of your pension figure.
    You could use the lump sum to pay off some/all of the mortgage
    You could use the lump sum to buy an annuity (but it won't get you much)
    Your £5k pension will be reduced to 79.6% (£3980) if you take it at 55
    Your lump sum will also be reduced to 79.6% (£11940) if you take it at 55
    Your state pension age?....I think it is 67 for you not 65: https://www.gov.uk/state-pension-age

    If you stop working/paying into the pension then the actuarial reduction* calculation means, roughly, that until you reach your late 70s you are better off taking the pension at 55 than waiting until 60.

    If you work beyond 55 then you need to check (impossible at the moment!**) what effect that will have on your pension.

    *https://www.teacherspensions.co.uk/-/media/Documents/Member/Documents/Factors/Retirement/TPS Early retirement factor guidance 10 February 2015.ashx

    Last edited: Aug 6, 2019
    Startedin82 and strawbs like this.
  3. diddydave

    diddydave Occasional commenter

  4. lindenlea

    lindenlea Star commenter

    Stick it out for another year at least. Every week you work adds to your pension income and reduces the early retirement reduction. During the year research other employment options and research how you can pay more into your TP. I think you can still do this but it does cost a lot. Or overpay your mortgage to reduce this expense.
  5. surf kitty too

    surf kitty too Occasional commenter

    I do have a SIPP too - worth a fair amount, when can I dip into that? Sorry to ask questions, no one here to ask!
  6. Marshall

    Marshall Star commenter

    What is a SIPP?

    I agree with lindenlea - try and stick it out or look for another role?
  7. phlogiston

    phlogiston Star commenter

    Self invested personal pension.
    On the figures you provide, just retiring and doing nothing will leave you with very little money.
    I would look at non mainstream providers. A friend has spent a couple of years working with kids who have fallen out of school. I don't think it generated enough money as she is returning to a school in September. My experience of an agency was that at best I got 12 hours a week working with a kid I didn't really have the skills to work with after 5 months of waiting for the phone to ring. This may be that the agency didn't actually have any work in my area.
    You need something with a contract that applies to both sides. This means someone who delivers work on a regular and predictable basis.
  8. surf kitty too

    surf kitty too Occasional commenter

    I will have to work somewhere....just think I have had enough of the teaching.
    Quite happy to take a pay-cut to do something else.
    eljefeb90 and Startedin82 like this.
  9. phatsals

    phatsals Established commenter

    You can dip into your SIPP if you're over 55. I believe that may change with the raising of the pension age.

    Even though you've had enough of teaching, every 3 months after your 55 is another 1% on you pension. Try to suck it up a term at a time and if you can, hold off claiming for as long as possible.

    Having said that, I completely understand when you've had enough. When I found myself sitting in the car park not wanting to get out I knew the time had come. I was gone not much after that.

    You could always tutor for added income.
    emerald52 likes this.
  10. catmother

    catmother Star commenter

    If you are 55 now,I don't think your state pension age will be 65. I'm 57 and mine is 67.
    Startedin82 and Jamvic like this.
  11. Gainingcontrol

    Gainingcontrol New commenter

    Is it possible to go down to 3 days a week? This will reduce your stress and still give you an income better that a full pension (possibly 70% of your f/t take home pay)? You will get 3 years extra pension if you work 5 years more.
    Startedin82 and emerald52 like this.
  12. emerald52

    emerald52 Star commenter

    Find something to reward yourself every day. I used to have a box of chocolates in my locker. At the end of every teaching day I had one and gave myself a pat on the back for getting through the day. It was a tangible, if small, reward for my efforts.
    Startedin82 likes this.
  13. mjfp509

    mjfp509 New commenter

    You can access your SIPP at 55. You can take 25% of the entire amount tax free. After that you can take as much as you like, but it will be taxed if you go over your personal tax threshold (currently £12,500).

    I don't know much you have in your SIPP or how much you require each year to live, but one idea would be to take the 25% tax free and then £12,500 (or whatever the personal allowance is until you reach 60) from your SIPP each year until you reach 60. Then you could take your teacher's pension unreduced?

    Completely understand about you wanting out. What a pity so many teachers have come to this point that there is no alternative. What have the government done to a once enjoyable / rewarding career....:(
    Startedin82 and eljefeb90 like this.
  14. lardylegs

    lardylegs Occasional commenter

    You won't get your state pension at 65, I'm afraid.
    Startedin82 likes this.
  15. Skeoch

    Skeoch Lead commenter

    If you are aged 55 and female your expectation of life is approximately 89 years, so you'd be looking at funding 34 years of retirement.... If you are male the figure is 85, so 30 years of retirement.
  16. Startedin82

    Startedin82 Established commenter

    If you've really had enough of teaching then, as you and others have said, perhaps your best option is paid work elsewhere even if part time. Some jobs are tolerable even if you've had enough but as you know in teaching there is no hiding place.

    You probably don't have enough income to retire at the moment although I don't know your circumstances.

    I have noticed that more and more employers are employing older people (no disrespect - you're still younger than me!). It depends on what sort of work you're prepared to do. I know one primary HT who became a postie for the few years prior to retirement!

    Education roles not directly within the classroom are few and far between these days sadly.
    eljefeb90 likes this.
  17. annemariedarby

    annemariedarby New commenter

    I retired 2 days before my 60th birthday in June after 35 years of full time teaching.Had a break in contract of 1 day and will continue in my Head of Department role until 31st August. Going back to the same school and working only 2 days as a UPS3 teacher from September. With my Teachers Pension and 2 days teaching I will bring home slightly more than I do now as I no longer will pay into the Teachers Pension scheme. I also work as a Senior Examiner on 2 GCSE papers which is a nice little earner and allows me to work from home between June and October. Could do more work with them if I wanted to. There are lots of opportunities beyond the classroom. A friend of mine does one to one A Level tuition from home and earns £40 per hour. Beats teaching a class of 25 any day.
  18. eljefeb90

    eljefeb90 Senior commenter

    I totally wanted out of teaching. I needed a change and had not really thought of working somewhere else.I have now accrued no fewer than nine casual contracts and turned down one or two other opportunities, mainly in exam invigilating and working on the electoral roll. I love the flexibility of it and it gives my year a rhythm, so that every month is punctuated with some commitments. The money is the main thing, obviously, but the social aspect is just as important. I increasingly found that, as a teacher, you were basically a solitary worker and there was never much time for even social niceties as the job grew more intense and stressful.
    Interacting with mature adults who have had a wealth of life experiences is far superior to dealing with a class of adolescents.
    As you get older, it is probably the first time since your early twenties when you can have ' me time'. The responsibilities of mortgage and child rearing are over. The outgoings reduce and , with the safety net of a pension and a lump sum, you should be able to avoid the commitments and hassle of full time work and earn some fun money.
    Having said all that, when I did my sums, I learnt that my casual work amassed about £9-10K gross last year and most of it is work I could continue to do for at least a decade, should I choose to and my health holds out.
    PeterQuint, phatsals and Startedin82 like this.
  19. PeterQuint

    PeterQuint Lead commenter

    Sorry to come so late to the party.

    As has been said, you can’t convert the £15k lump sum into pension, but frankly it wouldn’t add a lot anyway.

    You say you still have a mortgage, I think the £15k would be best used paying that off.

    You could do with getting as many more years teaching in as possible, so I’ll offer one alternative. You say you want out. I completely understand that. The stress of the job is astonishing. So have you considered going, but initially only in your head? I mean decide that you’re going at some point soon, when you decide, but simultaneously also decide you’re not going to jump through endless hoops anymore.

    Just do the job. If they don’t like it, just shrug. What’s the worst they can do? Sack you? You were going anyway! 99% of the stress of the job is the fear if the sack if you don’t play ball. If you’re happy to go anyway, the cause of that stress disappears.

    From personal experience, and from what I’ve read of others, as soon as you make the decision to go, the whole stress factor lifts. A year or two more in your pension will help. A year or two more on a teacher’s salary, as opposed to a potentially lower one, will help.

    The great thing is, if you try this and it doesn’t work, you can still just go.

    The even better thing is, if it works, and they haven’t got wind of it and decided to start capability proceedings against you, you can stay another year or two, with the same frame of mind.

    If you’re very, very lucky, they might make you an offer to go. Indeed, at some point they’ll probably decide to come for you. At that point, get your union rep in and get them to negotiate you leaving with a good reference.

    But remember, YOU are in control. You go when you want.

    After that, there’s lots of great advice (above) about what to do when you leave.
  20. Brianthedog

    Brianthedog Occasional commenter

    I did exactly what Peter has described. I got to my mid 50s and was hating my job. I sat down and calculated my pension if I took it at 55,56,57 etc. I realised that I could probably afford to retire at 59 as I would have enough to pay off my mortgage, my youngest child would have left university, and we could downsize our home. We set a plan in motion. Sold our house, bought a cheaper one which we renovated with some of the equity from our old house, practiced living on much less money (saving the excess) and I felt much happier knowing that I was going. Ironically, I got a new teaching job last year out of the blue, got my pension a few months early this Easter and returned part time with the intention of finishing completely in summer. I've still not gone though! They want me to stay a couple more terms until they can replace me.

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