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Retiring Early in 2019

Discussion in 'Retirement' started by Gainingcontrol, Oct 28, 2018.

  1. diddydave

    diddydave Established commenter

    Yes I probably should have been more precise.
    The ARB is not a loss it is a reduction in what you get per year but you get it for a year longer - which is why there will be a 'break-even' point. Before this point you are 'ahead' and after it you are 'behind' but in all reality if you have worked out that you can survive on the 'before' figure it's probably academic.

    The reduction factors for the final salary are:
    1 year: 0.956 (4.4%)
    2 years: 0.912 (8.8%)
    3 years: 0.871 (12.9%)
    4 years: 0.833 (16.7%)
    5 years: 0.796 (20.4%)

    In planning I always take a more pessimistic view so rounded the reductions up rather than down.

    Looking in real numbers my wife's pension goes from £21,500 to £17,000 a reduction of 4,500 but she misses out on 5 x £17,000. She gets 3 lots of the difference back through the tax-free lump sum and with tax differences etc I did work out it was 13.8 years to hit the break even point.
    eljefeb90 likes this.
  2. Gainingcontrol

    Gainingcontrol New commenter

    As stated previously, my 20 years teaching pension will be paid unreduced due to a 55+ voluntary severance scheme, so ARB is not an issue. I will be claiming the enhanced (20 year) bank pension from May - 3.5 years early and with the ARB reduction. However, as well as the financial issues you have to factor in getting control of 3.5 years of your life while you are healthy, AND the likelihood that not working in a high pressure environment in your late 50s will prolong your life, and keep you alive to enjoy the pension for longer! If you have enough money extra time is more valuable. :)
    Last edited: Jan 24, 2019
  3. heldon

    heldon Occasional commenter

  4. heldon

    heldon Occasional commenter

    You can hold as cash within a SIPP. If you are planning quick withdrawal then is that not the best idea. HL charge nothing to hold cash in their SIPP.
  5. Gainingcontrol

    Gainingcontrol New commenter

    If you base your retirement decision on financial gain alone you will probably never retire. You may die on the job trying to earn more pension you will never get to claim. The decision is always personal and so are the consequences. As Terry Wogan once said: 'There may never be a right time to go, but there could be a wrong time to stay'.
    catmother, lindenlea and Dorsetdreams like this.
  6. Guest

    Guest Guest

    That's easy to say when you are in your position of having two enhanced pensions. Not everyone is in the same circumstances as yourself.
  7. PeterQuint

    PeterQuint Lead commenter

    I think that’s why they said “it’s always personal”.
    Prim likes this.
  8. Gainingcontrol

    Gainingcontrol New commenter

    no longer a user.
    I'm not thinking about my own situation, though I could work on, earn more and increase my pension. I don't understand the surprising number of teachers who keep working into their late 60s to 'boost their pension' beyond what they are likely to need or be able to enjoy for long.
  9. Guest

    Guest Guest

    Again very easy to say from your position. I 'retired' briefly at the age of 59 after 36 years but have returned to almost full time a few months ago. I want to build up my reserves and ensure that at 66 I receive the full state pension and have another small boost to my TP. I have a back up and no debt at all. However I simply don't believe those on here who say they manage on 12000 to 14000 a year! My pension is a few thousand more and even with shared expenses it covers bills and personal expenditure. I also save money each month for annual bills. However trips abroad and treats are on hold until I have my reserves at a safe level. To my mind that should be 50000 at least plus your own home.
  10. Gainingcontrol

    Gainingcontrol New commenter

    Each to their own. I've lived very frugally for the last 20 years (e.g. old cars and no foreign holidays), so I've saved hard and invested over that time to give myself choices now. My interests and tastes don't require a large income, but I will be able to do what I choose with my time.
  11. Dorsetdreams

    Dorsetdreams Occasional commenter

    Each to his or her own. Personally, having had sole earner responsibility for maintaining the family and home for a couple of decades, with never more than about a month's income in reserve, I'm quite happy to enter retirement without a substantial safety buffer. I see my responsibilities falling and my income more secure: fewer potential disasters, less significant outcomes and more options if anything does go wrong.
    eljefeb90 and Gainingcontrol like this.
  12. Brianthedog

    Brianthedog Occasional commenter

    Actually, I think you're being quite rude about not believing how much people can live on! My pension will be £12700 pa and I will get max lump sum of £84k. I will pay off my mortgage (£18k) and save the rest. I will need to live on this for 6 years til I get my state pension. However, I'm not stupid, I've done the sums and I will actually have slightly more cash per month now than I do with the mortgage, so I KNOW with certainty I can live well on £12k a year. I currently do a 'big' holiday every other year by saving. I'll still be able to save the same amount but will be able to holiday every year now out of school holiday time. I've added calculations for changing cars, my house has recently been fully renovated so there's will be few costs there.
    You may need excessive amounts of money to live on in your retirement, not all of us are that way inclined. Interestingly, my mother in law has a very small pension of around £850 a month and lives well, managing to save too!
    susanbarry and Prim like this.
  13. lynneseptember

    lynneseptember Senior commenter

    It is definitely each to their own. I suppose it very much depends upon what you plan to do once retired as to how much money you will need in which to do it. Some hobbies are quite expensive to fund, others less so. Some holidays are very expensive, others not so much and also factoring in just how many holidays per year you would like to have will determine, to some extent how much annual income you will need. There will always be the general bills to cover, but hopefully, unless you rent, the mortgage will be paid or nearly paid by retirement, which will be a saving, plus travel costs to and from work will disappear, etc.
    As I say, it really does depend upon what your plans are once retired.
  14. Guest

    Guest Guest

    Not rude at all just being honest in my views!!!
  15. Brianthedog

    Brianthedog Occasional commenter

    Saying you don't believe what we are saying is akin to accusing us of lying. To me, that's rude.
  16. Guest

    Guest Guest

    Well you are entitled to your opinion as I am to mine.
  17. Bedlam3

    Bedlam3 Star commenter

    When you get your pension there is less tax to pay, if any, and you don't have NICs deducted. You don't have commuting costs and most retirees no longer have a mortgage. You also have your tax free lump sum so I don't think it's unrealistic to live on £12k in retirement,
    eljefeb90 likes this.
  18. heldon

    heldon Occasional commenter

    We all have different circumstances. This forum is about trying to help each other. Let us not squabble.
  19. Sundaytrekker

    Sundaytrekker Star commenter

    Agreed, Heldon.

    Looking at my figures, with my pension being the only income for my household, I would find it extremely tight to manage on £12k. It is just possible but I’d have to cut day to day luxuries like coffee shops, new clothes, outings and meals out. Repair bills for car or house and holidays would have to come from savings. Fortunately my pension is more than this and I’m working part time.

    Everyone makes the decisions that they feel are right for them. As with other things in life, there’s no point comparing beyond that. You have to live with your own circumstances.
    eljefeb90 and Lucy2711 like this.
  20. eljefeb90

    eljefeb90 Senior commenter

    It depends whether the £850 per month is per household or per person. Per person, that sounds fine. I would say that £700 is per person would be the minimum. Obviously, unforeseen or one-off outgoings would have to come from the sizeable lump sum. Regarding saving, I thought retirement was what all the saving was for! Kicking the bucket with property plus over £30000 in the bank is not my aim in life. Sure you need a safety net and you want to cover funeral expenses and leave your loved ones something, but the great joy of retirement is to run down those accrued benefits and savings (within reason). And you can always find casual employment should you want to top up your income without it intruding into your 'me time'.

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