Retirement

[DaveH]

Not sure if this one has been posted yet but food for thought

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That is really interesting, thanks for posting that. It is a bit along the lines of what I have been thinking.

Once I hit 57, that gets into the 'interesting' zone. I can claim my company defined benefit pension, but with a 3-4% penalty for every year I go early. That puts retiring at 57 as receiving I think it was 63% of the annual income.

So for each extra year I work, I gain a larger pension from the contribution and a larger pension because of fewer penalties. The interesting bit is savings and investments designed to carry me over until the state pension.

This is hypothetical for easy numbers, but say if someone could save £10k per year of work and at 57 had £100k saved to see them through to 67, retiring at 57 would see them have £10k per year to spend. But when you put it in a table:

Savings	Years to cover	Age	Per year
£100,000.00​	10​	57	£10,000.00​
£110,000.00​	9​	58	£12,222.22​
£120,000.00​	8​	59	£15,000.00​
£130,000.00​	7​	60	£18,571.43​
£140,000.00​	6​	61	£23,333.33​
£150,000.00​	5​	62	£30,000.00​
£160,000.00​	4​	63	£40,000.00​
£170,000.00​	3​	64	£56,666.67​
£180,000.00​	2​	65	£90,000.00​
£190,000.00​	1​	66	£190,000.00​
£200,000.00​	0​	67​	£200,000.00​

What you have per year grows rapidly. So 3 more years would give an extra £8k of spend per year. For me that would be 10% fewer penalties, plus more 3 years of contributions, it all adds up to quite a significant boost to income. As I get closer to retirement, I will probably graph out the growth year on year if I continue working. I have not paid off the mortgage yet (getting close) so that is when I will know how much I can save and invest to make the above table properly. Whatever the actual figures, what I have per year after hitting 57, grows exponentially.

But the key decision is, what do I actually need? I can see how it becomes a trap. Look at the difference in just spreading out savings between 58 (my target) and 62. For just 4 more years, that along with the pension boost, is quite a sizeable bit of money. Everyone wants more money and to feel more comfortable.

That video makes a really good point. I have just walked up the garden and the grass needs cutting. I might get that or some of it done after work. I really want to get more seeds started, perhaps get some tomatoes potted up at lunch time. All this is squeezing in life around work. Yesterday I was on-site, so for anything personal the day was a complete write off. I would love to do a 40 mile cycle tomorrow, but I can not because of work. I can do that on Saturday, but that means sacrificing something else. Blah blah blah. It all comes down to one thing, trying to fit life around work.

My average life expectancy is 84. At 58, that is 26 years left (I think my dad was 75). 4 more years reduces freedom to 22, it accounts for 15% of the time I potentially have left. Would I rather have 4 more years of growing good veg where I care for the plants properly and getting in my shed to perhaps make 4 more guitars, or would I rather have 4 more years of doing IT incident management and writing infrastructure strategies?

I will see how I feel at 58, but I know I'm going to be asking the question, is 1, 2, 3, 4 more years of this really worth the extra £4k, £5k, £10k per year? Hopefully my answer will be, no fuck that, resignation time.

 

[moanjam]

That is really interesting, thanks for posting that. It is a bit along the lines of what I have been thinking.

Once I hit 57, that gets into the 'interesting' zone. I can claim my company defined benefit pension, but with a 3-4% penalty for every year I go early. That puts retiring at 57 as receiving I think it was 63% of the annual income.

So for each extra year I work, I gain a larger pension from the contribution and a larger pension because of fewer penalties. The interesting bit is savings and investments designed to carry me over until the state pension.

This is hypothetical for easy numbers, but say if someone could save £10k per year of work and at 57 had £100k saved to see them through to 67, retiring at 57 would see them have £10k per year to spend. But when you put it in a table:

Savings	Years to cover	Age	Per year
£100,000.00​	10​	57	£10,000.00​
£110,000.00​	9​	58	£12,222.22​
£120,000.00​	8​	59	£15,000.00​
£130,000.00​	7​	60	£18,571.43​
£140,000.00​	6​	61	£23,333.33​
£150,000.00​	5​	62	£30,000.00​
£160,000.00​	4​	63	£40,000.00​
£170,000.00​	3​	64	£56,666.67​
£180,000.00​	2​	65	£90,000.00​
£190,000.00​	1​	66	£190,000.00​
£200,000.00​	0​	67​	£200,000.00​

What you have per year grows rapidly. So 3 more years would give an extra £8k of spend per year. For me that would be 10% fewer penalties, plus more 3 years of contributions, it all adds up to quite a significant boost to income. As I get closer to retirement, I will probably graph out the growth year on year if I continue working. I have not paid off the mortgage yet (getting close) so that is when I will know how much I can save and invest to make the above table properly. Whatever the actual figures, what I have per year after hitting 57, grows exponentially.

But the key decision is, what do I actually need? I can see how it becomes a trap. Look at the difference in just spreading out savings between 58 (my target) and 62. For just 4 more years, that along with the pension boost, is quite a sizeable bit of money. Everyone wants more money and to feel more comfortable.

That video makes a really good point. I have just walked up the garden and the grass needs cutting. I might get that or some of it done after work. I really want to get more seeds started, perhaps get some tomatoes potted up at lunch time. All this is squeezing in life around work. Yesterday I was on-site, so for anything personal the day was a complete write off. I would love to do a 40 mile cycle tomorrow, but I can not because of work. I can do that on Saturday, but that means sacrificing something else. Blah blah blah. It all comes down to one thing, trying to fit life around work.

My average life expectancy is 84. At 58, that is 26 years left (I think my dad was 75). 4 more years reduces freedom to 22, it accounts for 15% of the time I potentially have left. Would I rather have 4 more years of growing good veg where I care for the plants properly and getting in my shed to perhaps make 4 more guitars, or would I rather have 4 more years of doing IT incident management and writing infrastructure strategies?

I will see how I feel at 58, but I know I'm going to be asking the question, is 1, 2, 3, 4 more years of this really worth the extra £4k, £5k, £10k per year? Hopefully my answer will be, no fuck that, resignation time.

I'm in a similar situation I could probably go at a push in 2 yr (58) but another yr or two would definitely make the stretch to state pension age a lot more comfortable but that extra yr or two may be the best ones you have left to enjoy fully if something unexpected happens which is pushing me to throw my lot in ASAP.

 

[Edinburgh Black Cat]

That is really interesting, thanks for posting that. It is a bit along the lines of what I have been thinking.

Once I hit 57, that gets into the 'interesting' zone. I can claim my company defined benefit pension, but with a 3-4% penalty for every year I go early. That puts retiring at 57 as receiving I think it was 63% of the annual income.

So for each extra year I work, I gain a larger pension from the contribution and a larger pension because of fewer penalties. The interesting bit is savings and investments designed to carry me over until the state pension.

This is hypothetical for easy numbers, but say if someone could save £10k per year of work and at 57 had £100k saved to see them through to 67, retiring at 57 would see them have £10k per year to spend. But when you put it in a table:

Savings	Years to cover	Age	Per year
£100,000.00​	10​	57	£10,000.00​
£110,000.00​	9​	58	£12,222.22​
£120,000.00​	8​	59	£15,000.00​
£130,000.00​	7​	60	£18,571.43​
£140,000.00​	6​	61	£23,333.33​
£150,000.00​	5​	62	£30,000.00​
£160,000.00​	4​	63	£40,000.00​
£170,000.00​	3​	64	£56,666.67​
£180,000.00​	2​	65	£90,000.00​
£190,000.00​	1​	66	£190,000.00​
£200,000.00​	0​	67​	£200,000.00​

What you have per year grows rapidly. So 3 more years would give an extra £8k of spend per year. For me that would be 10% fewer penalties, plus more 3 years of contributions, it all adds up to quite a significant boost to income. As I get closer to retirement, I will probably graph out the growth year on year if I continue working. I have not paid off the mortgage yet (getting close) so that is when I will know how much I can save and invest to make the above table properly. Whatever the actual figures, what I have per year after hitting 57, grows exponentially.

But the key decision is, what do I actually need? I can see how it becomes a trap. Look at the difference in just spreading out savings between 58 (my target) and 62. For just 4 more years, that along with the pension boost, is quite a sizeable bit of money. Everyone wants more money and to feel more comfortable.

That video makes a really good point. I have just walked up the garden and the grass needs cutting. I might get that or some of it done after work. I really want to get more seeds started, perhaps get some tomatoes potted up at lunch time. All this is squeezing in life around work. Yesterday I was on-site, so for anything personal the day was a complete write off. I would love to do a 40 mile cycle tomorrow, but I can not because of work. I can do that on Saturday, but that means sacrificing something else. Blah blah blah. It all comes down to one thing, trying to fit life around work.

My average life expectancy is 84. At 58, that is 26 years left (I think my dad was 75). 4 more years reduces freedom to 22, it accounts for 15% of the time I potentially have left. Would I rather have 4 more years of growing good veg where I care for the plants properly and getting in my shed to perhaps make 4 more guitars, or would I rather have 4 more years of doing IT incident management and writing infrastructure strategies?

I will see how I feel at 58, but I know I'm going to be asking the question, is 1, 2, 3, 4 more years of this really worth the extra £4k, £5k, £10k per year? Hopefully my answer will be, no fuck that, resignation time.

First thing you need to do is consider whether the actuarial adjustments are actually penalties.

You get a lower amount per year, but you get paid for more years.

Do that calculation and work out your break even age. Then ask yourself, when you reach that age would you a) prefer to have had the extra years 20 years earlier or b) be happy that you're now quids in

 

[DaveH]

First thing you need to do is consider whether the actuarial adjustments are actually penalties.

You get a lower amount per year, but you get paid for more years.

Do that calculation and work out your break even age. Then ask yourself, when you reach that age would you a) prefer to have had the extra years 20 years earlier or b) be happy that you're now quids in

I did that, but it does work both ways. When I did it, I think it was in your early 80s where you get more out of the scheme going early than going later.

But the other aspect is, do I want to sit at home feeling a bit skint at 60, unable to replace the car that is on it's way out, but smug in the knowledge that if I live another 24 years then I will have got one over on the pension company?

For me it is all about considering the annual income. One I know that is comfortable, I will be off.

I do have a smaller defined benefit part so one thing I'm considering is to build that up to two years of tax allowance and draw that out for the first two years of retirement, that would hold off drawing my DB pension for 2 years, which would be a 7% boost to that.

 

[42]

I did that, but it does work both ways. When I did it, I think it was in your early 80s where you get more out of the scheme going early than going later.

But the other aspect is, do I want to sit at home feeling a bit skint at 60, unable to replace the car that is on it's way out, but smug in the knowledge that if I live another 24 years then I will have got one over on the pension company?

For me it is all about considering the annual income. One I know that is comfortable, I will be off.

I do have a smaller defined benefit part so one thing I'm considering is to build that up to two years of tax allowance and draw that out for the first two years of retirement, that would hold off drawing my DB pension for 2 years, which would be a 7% boost to that.

But of course the thing with DB pensions is that they die with you (or maybe an element of a smaller widows pension). So the longer you leave it, increases the chances of getting nowt. My view is, as long as its affordable take it as early as you can.

 

[Darlo1973]

That is really interesting, thanks for posting that. It is a bit along the lines of what I have been thinking.

Once I hit 57, that gets into the 'interesting' zone. I can claim my company defined benefit pension, but with a 3-4% penalty for every year I go early. That puts retiring at 57 as receiving I think it was 63% of the annual income.

So for each extra year I work, I gain a larger pension from the contribution and a larger pension because of fewer penalties. The interesting bit is savings and investments designed to carry me over until the state pension.

This is hypothetical for easy numbers, but say if someone could save £10k per year of work and at 57 had £100k saved to see them through to 67, retiring at 57 would see them have £10k per year to spend. But when you put it in a table:

Savings	Years to cover	Age	Per year
£100,000.00​	10​	57	£10,000.00​
£110,000.00​	9​	58	£12,222.22​
£120,000.00​	8​	59	£15,000.00​
£130,000.00​	7​	60	£18,571.43​
£140,000.00​	6​	61	£23,333.33​
£150,000.00​	5​	62	£30,000.00​
£160,000.00​	4​	63	£40,000.00​
£170,000.00​	3​	64	£56,666.67​
£180,000.00​	2​	65	£90,000.00​
£190,000.00​	1​	66	£190,000.00​
£200,000.00​	0​	67​	£200,000.00​

What you have per year grows rapidly. So 3 more years would give an extra £8k of spend per year. For me that would be 10% fewer penalties, plus more 3 years of contributions, it all adds up to quite a significant boost to income. As I get closer to retirement, I will probably graph out the growth year on year if I continue working. I have not paid off the mortgage yet (getting close) so that is when I will know how much I can save and invest to make the above table properly. Whatever the actual figures, what I have per year after hitting 57, grows exponentially.

But the key decision is, what do I actually need? I can see how it becomes a trap. Look at the difference in just spreading out savings between 58 (my target) and 62. For just 4 more years, that along with the pension boost, is quite a sizeable bit of money. Everyone wants more money and to feel more comfortable.

That video makes a really good point. I have just walked up the garden and the grass needs cutting. I might get that or some of it done after work. I really want to get more seeds started, perhaps get some tomatoes potted up at lunch time. All this is squeezing in life around work. Yesterday I was on-site, so for anything personal the day was a complete write off. I would love to do a 40 mile cycle tomorrow, but I can not because of work. I can do that on Saturday, but that means sacrificing something else. Blah blah blah. It all comes down to one thing, trying to fit life around work.

My average life expectancy is 84. At 58, that is 26 years left (I think my dad was 75). 4 more years reduces freedom to 22, it accounts for 15% of the time I potentially have left. Would I rather have 4 more years of growing good veg where I care for the plants properly and getting in my shed to perhaps make 4 more guitars, or would I rather have 4 more years of doing IT incident management and writing infrastructure strategies?

I will see how I feel at 58, but I know I'm going to be asking the question, is 1, 2, 3, 4 more years of this really worth the extra £4k, £5k, £10k per year? Hopefully my answer will be, no fuck that, resignation time.

Makes you think doesn't it? What's the point in working another 3 years for a better pension if you are going to miss out on the 3 healthiest years of the rest of your life when you could be enjoying yourself?

We had our office manager made redundant last week aged 60 (apparently in a "digital" workplace we don't need office managers!) and she was quite happy about it. I can get Coplilot to draft SOPs while I spend time arguing with people on the internet.

I can get access to my SIPPs next year but I think I will try to hang on for another couple years to get the mortgage paid off. Doing the maths, take £16k out of the SIPP each year tax free (25% (£4k) tax free then rest covered by annual allowance) then another, say, £16k from ISAs means £32k tax free which would be equivalent to a gross income of £40k then maybe do a bit of part-time work or consultancy if I get bored.

 

[DaveH]

Makes you think doesn't it? What's the point in working another 3 years for a better pension if you are going to miss out on the 3 healthiest years of the rest of your life when you could be enjoying yourself?

We had our office manager made redundant last week aged 60 (apparently in a "digital" workplace we don't need office managers!) and she was quite happy about it. I can get Coplilot to draft SOPs while I spend time arguing with people on the internet.

I can get access to my SIPPs next year but I think I will try to hang on for another couple years to get the mortgage paid off. Doing the maths, take £16k out of the SIPP each year tax free (25% (£4k) tax free then rest covered by annual allowance) then another, say, £16k from ISAs means £32k tax free which would be equivalent to a gross income of £40k then maybe do a bit of part-time work or consultancy if I get bored.

At the minute, I'm thinking go at 58 and rather than part-time work if I'm bored (I know I will not be), part time work will be an option if I find I am a bit more skint than I anticipate.

There was a job I spotted the other day, part time at the local Uni sports centre, as a technician. I got the impression they wanted someone who knows how to network and configure their running machines. The job desc said something like "must have some experience in some level of technical role". It felt like they were looking for someone who could do slightly more than turn on a computer. It looked canny. 10 years too early, but doing that, getting free sports centre membership and topping up my pension, didn't feel like a bad option.

The interview might have been amusing. "What experience do you have of connecting devices to an enterprise network?", "Well I used to be in charge of your network and built half of it myself before I moved on".

It would be nice if something like that came up around retirement time.

 

[Darlo1973]

The interview might have been amusing. "What experience do you have of connecting devices to an enterprise network?", "Well I used to be in charge of your network and built half of it myself before I moved on".

It would be nice if something like that came up around retirement time.

Quite common in the corporate IT world for people to be brought back in from retirement - at consultancy rates - to work on migration of systems which they had put in years previously but which none of the current staff understand. It's almost as if doing a bad job of documentation and knowledge transfer guarantees you a nice little earner in retirement. When I was just starting out a lot of old timers made good money from Y2K patching systems which they had built in the 80s.

 

[Ralf81]

Im thinking of going when im 60 will have 350k in cash in bank and pension currently worth 300k so hopefully grows before I take it

 

[Matt Hopkins]

Im thinking of going when im 60 will have 350k in cash in bank and pension currently worth 300k so hopefully grows before I take it

Pension might, the cash won't, not in real terms anyway. Or have you not got the cash yet?

 

[Edinburgh Black Cat]

I did that, but it does work both ways. When I did it, I think it was in your early 80s where you get more out of the scheme going early than going later.

But the other aspect is, do I want to sit at home feeling a bit skint at 60, unable to replace the car that is on it's way out, but smug in the knowledge that if I live another 24 years then I will have got one over on the pension company?

For me it is all about considering the annual income. One I know that is comfortable, I will be off.

I do have a smaller defined benefit part so one thing I'm considering is to build that up to two years of tax allowance and draw that out for the first two years of retirement, that would hold off drawing my DB pension for 2 years, which would be a 7% boost to that.

Good that you're considering the tax implications. That's the bit people often miss when it comes to weighing up the pros and cons of 'penalties for going early'.

As you say, the key thing is affordability. @42's advice is solid, as soon as it is affordable, go for it. You can always get another job, you can't get the time back.

 

[Ralf81]

Pension might, the cash won't, not in real terms anyway. Or have you not got the cash yet?

Im sure pension will grow and i like cash wont touch pension till im 67

 

[Town End Farmer Giles]

I'm in a similar situation I could probably go at a push in 2 yr (58) but another yr or two would definitely make the stretch to state pension age a lot more comfortable but that extra yr or two may be the best ones you have left to enjoy fully if something unexpected happens which is pushing me to throw my lot in ASAP.

Im 58. Another year, financially, would have been perfect for me. Tidy increase in my savings,one more year pensionable service, one less year reduction,one less year to make my money last until state pension. And they offered me a nice pay rise to do one more year...but I still retired.

If I run short of money it won't be for a good few years, and then we just cut back a little until I get state pension. If my health deteriorated I'd regret not going sooner as stress could be a factor.

Time worries me more than money.

 

[Swindon On Tour]

Im thinking of going when im 60 will have 350k in cash in bank and pension currently worth 300k so hopefully grows before I take it

One thing I can guarantee is that you are closer to death every day.
Factor that in Mate as grim as it might sound.
Money is nothing without health and time will not wait for it no matter what you have in monetary value.

If you are sensible with money you might surprise yourself that you don’t need as much as you think you do. Equally you can always top it up by a part time job that you might even enjoy.

60 is a great number and age to retire. If you could go earlier mind then definitely think about it. Good luck

 

[Fletch]

Im 58. Another year, financially, would have been perfect for me. Tidy increase in my savings,one more year pensionable service, one less year reduction,one less year to make my money last until state pension. And they offered me a nice pay rise to do one more year...but I still retired.

If I run short of money it won't be for a good few years, and then we just cut back a little until I get state pension. If my health deteriorated I'd regret not going sooner as stress could be a factor.

Time worries me more than money.

in fairness thats a great age to retire anyway, still plenty of active years ahead , some just hang on until their 60s as they cant face not having 100% of their salary eventhough comfotable anyway .
Each to their own, completely different mind if your family is struggling and you need to work in your 60s

 

[Ralf81]

One thing I can guarantee is that you are closer to death every day.
Factor that in Mate as grim as it might sound.
Money is nothing without health and time will not wait for it no matter what you have in monetary value.

If you are sensible with money you might surprise yourself that you don’t need as much as you think you do. Equally you can always top it up by a part time job that you might even enjoy.

60 is a great number and age to retire. If you could go earlier mind then definitely think about it. Good luck

59 now so year to go worked since I was 16 to be honest dont spend as much now no mortgage etc

 

[Matt Hopkins]

Im sure pension will grow and i like cash wont touch pension till im 67

59 now so year to go worked since I was 16 to be honest dont spend as much now no mortgage etc

I know you haven't given much info but you seem to be going to use cash to bridge the gap to SP. You do know that isn't the most tax efficient way to take your pension don't you?

 

[Town End Farmer Giles]

in fairness thats a great age to retire anyway, still plenty of active years ahead , some just hang on until their 60s as they cant face not having 100% of their salary eventhough comfotable anyway .
Each to their own, completely different mind if your family is struggling and you need to work in your 60s

Aye, just felt the right time. Pension pays the bills,draw down from the lump sum as and when necessary to top it up, pay for holidays etc and if its looking a bit depleted in a few years, well, so be it.

 

[Ralf81]

I know you haven't given much info but you seem to be going to use cash to bridge the gap to SP. You do know that isn't the most tax efficient way to take your pension don't you?

What do you recommend hoping my pension pot grows to 400k by 67

 

[Shandy drinker]

Our HR director has a spot in our quarterly "town hall" (I hate that term). It always starts "You guys are awesome and we are doing great things this year" then pivots to "but as you know money is tight so there is a hiring freeze, we are delaying promotions and bonus pools will be cut"

Remember HR aren’t there for you

They are there to protect the company
Be very careful what you tell them