Early retirement

[Corradobrit]

I explained this recently to our 30 year old millennial, made him very depressed.

In a low wage (for most), high cost of living economy like the UK's, I can fully understand his reaction.

 

[Van Diesel VW]

If you have worked there for a while, might be better to wait for CR.

Why, am I missing something, terms of VR are enhanced where as CR will be at rate set by Government.

 

[Ch1pbutty]

Why, am I missing something, terms of VR are enhanced where as CR will be at rate set by Government.

Employer can enhance CR, well beyond government rate...but depends on employer.

 

[Goss]

Fag packet Maths.

State Pension (couple)
£442 x 52 = £22,984pa
Which would provide minimum lifestyle level of retirement according to PLSA

Retire at 67 with a total pension pot of £500,000, if you take 25% tax free cash, you will be left with £375,000 remaining in your pot. With a lifetime annuity, you might expect to receive £23,600 a year.

So state pension roughly worth £375,000 per couple maybe? My math could be wrong.

I think the assumptions the financial advisors give is generic, we have been advised that there is likely to be a requirement for lesser income after the age of 75 because we will generally slow down! We semi retired during lockdown aged 57 and 56 and took financial advice which is when this cropped up.

The tap supplying income stays open after retirement because you have greater opportunity to spend than what was the cost of the mortgage but at 75 the tap slows down the income because of lack of motivation, novelty wears off, mobility issues, health etc.. I looked at my dads situation (he is 90 and fit and healthy) and its does match his retirement. He was well below the suggested pension fund recommendations when he retired at 60 but has lived off the capital assisted by a couple of small pension funds that are less than state pension. His state pension is only 50% because he only worked for 30 years.he has topped up using his fund which is now very low but at 90 he has more than enough.

Very difficult to balance because of all the variables that life throws at you.

Goss

 

[BeagleMum]

I am a recent ‘retiree’ having decided to stop at Christmas last year at 58 and after 40 years of working. My wife is 8 years younger and will keep going for another year or so as she loves her job. I’m in the live as many good retirement years as you can before age catches up! Have been hitting David Lloyd hard and she’d approx 1.5 stones already and much much fitter!

For me it’s the stress reduction which has made the biggest difference along with the time to do a lot more. The associated ‘guilt’ of not working passed quite quickly!

If you can consider it or just don’t!

Completely agree about stress reduction, for me stress was a huge factor in wanting to take early retirement, I’ve never regretted taking early retirement for a second.
Three years ago I was diagnosed with Cancer, one of my earliest thoughts was to be so thankful I’d taken early retirement, if Cancer was going to take me, at least I was into my seventh year of retirement.
I would have hated to have to deal with the additional stress of the Cancer diagnosis and ongoing treatment whilst still working and face the possibility of after a lifetime of work, not actually getting to retire.Every day is a bonus.

 

[JollyGoodShow]

Thats a good way to work it out.

(Forgetting about state pension, drawdown later in retirement and other factors for the time being) A couple on £40k a year (moderate level of retirement) need a pot of £1,000,000

I explained this recently to our 30 year old millennial, made him very depressed.

I’m not sure it’s as bleak for the 30 year old. If you invest £160k now and wait 37 years to retire at 67, and if on average you achieve 5% real investment returns, you’d have £1m at age 67. Nevertheless £160k is still a chunk of money, even if it’s pre-tax.

Some parents can tax efficiently help their children by funding their children’s pensions up to the limit that their children can shelter from tax.

 

[Mansfieldman750]

I’m not sure it’s as bleak for the 30 year old. If you invest £160k now and wait 37 years to retire at 67, and if on average you achieve 5% real investment returns, you’d have £1m at age 67. Nevertheless £160k is still a chunk of money, even if it’s pre-tax.

Some parents can tax efficiently help their children by funding their children’s pensions up to the limit that their children can shelter from tax.

By the rule of 72, at 4% return you will double your initial investment every 18 years, at 5% every 14.4 years, and at 6% every 12 years.
Huge difference.
You could be lucky, you could be unlucky.
One thing for sure, you can’t afford NOT to be invested for the long term.
Cash deposits won’t cut it.

 

[Barry Chuckle]

On this subject it was in the news this week that more people in the UK are 'unavailable for work' than ever before. Of course much of this is down to long term illness but a significant proportion are people who've decided they no longer wish to work through choice. I'm guessing Covid has encouraged my to reassess their priorities in life.

This is likely to prove a significant challenge as this is affecting applicants for jobs, I'm wondering if governments will make it more difficult for many to retire early due to budget changes?

 

[Mansfieldman750]

On this subject it was in the news this week that more people in the UK are 'unavailable for work' than ever before. Of course much of this is down to long term illness but a significant proportion are people who've decided they no longer wish to work through choice. I'm guessing Covid has encouraged my to reassess their priorities in life.

This is likely to prove a significant challenge as this is affecting applicants for jobs, I'm wondering if governments will make it more difficult for many to retire early due to budget changes?

Well, there is compulsory enrolment into workplace pensions now.
I would think it quite likely that some future government would say that no one is entirely dependent on the state pension now ( unless they foolishly opted out, or were unable to work ) so we are going to cut back on it.
But then again, 12 million votes, which government would be brave enough to do it ?

 

[Carabiner]

I think the most disturbing thing to me is that I'm guessing most folk (enrolled on workplace pensions) assume that's it, sorted, job done. I fear the nation are sleep-walking into realising too late that the default workplace (mostly DC pensions) are just not going to be enough by the time they retire to actually support much more than a meagre standard of living. Forcing, probably very many into extended working.

Do you know how much is in your pot now?
Do you know what it's predicted to be when you finish work?
Do you think it will be enough?
I'll bet most don't!

I should say that there's pretty good evidence that some (good quality) work has been pretty comprehensively shown to be good for health, but the choice seems like a big deal to me. I'm guessing most won't have it.

If you can afford to stop, but are enjoying it, no bother.
If you can afford to stop, and aren't finding work rewarding, I'd get out.

 

[Barry Chuckle]

Well, there is compulsory enrolment into workplace pensions now.
I would think it quite likely that some future government would say that no one is entirely dependent on the state pension now ( unless they foolishly opted out, or were unable to work ) so we are going to cut back on it.
But then again, 12 million votes, which government would be brave enough to do it ?

Also the minimum retirement age is increasing from 55 for those born after 6/4/73 to 57

 

[Corradobrit]

I think the most disturbing thing to me is that I'm guessing most folk (enrolled on workplace pensions) assume that's it, sorted, job done. I fear the nation are sleep-walking into realising too late that the default workplace (mostly DC pensions) are just not going to be enough by the time they retire to actually support much more than a meagre standard of living. Forcing, probably very many into extended working.

Do you know how much is in your pot now?
Do you know what it's predicted to be when you finish work?
Do you think it will be enough?
I'll bet most don't!

I should say that there's pretty good evidence that some (good quality) work has been pretty comprehensively shown to be good for health, but the choice seems like a big deal to me. I'm guessing most won't have it.

If you can afford to stop, but are enjoying it, no bother.
If you can afford to stop, and aren't finding work rewarding, I'd get out.

This is so true. I worked for 5 years in San Francisco and the amount I accumulated in a pension work related pension scheme which was a DC arrangement was pitiful. I then moved to another academic institution who offered a proper 401K with matched contributions. I could fully allocate where those funds were invested and chose medium risk stock mutual funds. After 19 years of contributions I accumulated enough to retire on at 65 (although I could have opted earlier withdrawal without penality at 59 1/2 but the benefits take a huge hit).
Yes there is way too little forward retirement planning, of which I'm equally guilty. I just got lucky.

 

[Mansfieldman750]

This is so true. I worked for 5 years in San Francisco and the amount I accumulated in a pension work related pension scheme which was a DC arrangement was pitiful. I then moved to another academic institution who offered a proper 401K with matched contributions. I could fully allocate where those funds were invested and chose medium risk stock mutual funds. After 19 years of contributions I accumulated enough to retire on at 65 (although I could have opted earlier withdrawal without penality at 59 1/2 but the benefits take a huge hit).
Yes there is way too little forward retirement planning, of which I'm equally guilty. I just got lucky.

Yes, but I’m just grateful no one ever told me to give up motorbikes, women and drink and put more in my pension pot when I was young.

 

[pjm-84]

Do you know how much is in your pot now?
Do you know what it's predicted to be when you finish work?
Do you think it will be enough?
I'll bet most don't!

Yes.... to the pence. I wasn't interested in my 20s/30s/40s due to motorbikes / women and drink, but now in my 50s its more of a priority
No, as it will depend on how much I pay in over the next few years and the growth of the pot.
Million dollar question...how long are we going to live? How much do you want to spend? What is the cross over curve? However yes I could retire now and live comfortably

 

[The Blue Merle]

What’s people’s thoughts on early retirement good or bad interested either way

Don’t put a title to it, just do what makes you happy and if you have to call it something to someone then just say it’s a time out.
Just enjoy whatever you do

 

[Barry Chuckle]

Yes.... to the pence. I wasn't interested in my 20s/30s/40s due to motorbikes / women and drink, but now in my 50s its more of a priority
No, as it will depend on how much I pay in over the next few years and the growth of the pot.
Million dollar question...how long are we going to live? How much do you want to spend? What is the cross over curve? However yes I could retire now and live comfortably

My ambition is my cheque to undertaker bounces!

 

[Corradobrit]

My ambition is my cheque to undertaker bounces!

Glad I'm not one of your aires

 

[pjm-84]

We have no kids...... so my sister's and my SIL's children will be eyeing up our pots.

I've already earmarked 50k, for the oldest adult, for a diversity and inclusion charity (of his choice). That was an expensive 5min conversation for him.

 

[Tourdeyorkshire]

So a question for you early retirees, if I may. My wife and I are 53 and in the throes of selling our business (not something I’d wish on anyone - it’s stressful).

What’s your advice on financial planning? I’m rather allergic to IFAs. Is there independent advice or a good book on how to plan investments etc that has worked for you? Or did you just bite the bullet and pay someone?

 

[Robert&Catherine]

So a question for you early retirees, if I may. My wife and I are 53 and in the throes of selling our business (not something I’d wish on anyone - it’s stressful).

What’s your advice on financial planning? I’m rather allergic to IFAs. Is there independent advice or a good book on how to plan investments etc that has worked for you? Or did you just bite the bullet and pay someone?

I share your aversion. I was recommended to start with a few funds from AJ Bell that matched my risk profile… if after a while you still don’t feel comfortable investing that way they are easier to incorporated in to an IFAs portfolio. I have a US 401k that has been invested in similar funds for many years and started a uk pension using AJ Bell.

 

[Mansfieldman750]

So a question for you early retirees, if I may. My wife and I are 53 and in the throes of selling our business (not something I’d wish on anyone - it’s stressful).

What’s your advice on financial planning? I’m rather allergic to IFAs. Is there independent advice or a good book on how to plan investments etc that has worked for you? Or did you just bite the bullet and pay someone?

You are on the right track. Read books and steer clear of IFAs.
You could start with :
Common Sense on Mutual Funds by Jack Bogle.
Stocks for the Long Run by Jeremy Seigel.
Winning the Losers Game by Charles Ellis.
These are American but the same message applies. If you want something British, the Long and Short of it by John Kay is good. Smarter Investing by Tim Hale was good on asset allocation.

When you come to choosing an investment platform, look carefully at charges. Hargreaves Lansdowne and AJ Bell are not the cheapest out there. For instance Halifax Sharedealing charges only a flat £36 per year.

If you are thinking if he’s read all them books he must be rich, I wish !.
But I haven’t lost money and as Warren Buffet says about investment.
Rule1) Don’t lose money.
Rule 2) Don’t forget rule 1.

Enjoy your reading.

 

[Barry Chuckle]

You are on the right track. Read books and steer clear of IFAs.
You could start with :
Common Sense on Mutual Funds by Jack Bogle.
Stocks for the Long Run by Jeremy Seigel.
Winning the Losers Game by Charles Ellis.
These are American but the same message applies. If you want something British, the Long and Short of it by John Kay is good. Smarter Investing by Tim Hale was good on asset allocation.

When you come to choosing an investment platform, look carefully at charges. Hargreaves Lansdowne and AJ Bell are not the cheapest out there. For instance Halifax Sharedealing charges only a flat £36 per year.

If you are thinking if he’s read all them books he must be rich, I wish !.
But I haven’t lost money and as Warren Buffet says about investment.
Rule1) Don’t lose money.
Rule 2) Don’t forget rule 1.

Enjoy your reading.

Rather disagree with the sweeping generalisation of steering clear of IFA's I'm guessing there is probably good and bad. I've always thought I was reasonably savvy around investing and have done OK, but as the old adage goes I don't know what I don't know.

He's pointed out various tax strategies as well as funds I couldn't access myself, fund performance and charges are only one thing, but I've managed to extricate some of my money at a tax saving over 20% than if I'd done it myself with my limited knowledge. Even Martin Lewis advacates the benefit of getting good Independent financial advice.

 

[Mansfieldman750]

Rather disagree with the sweeping generalisation of steering clear of IFA's I'm guessing there is probably good and bad. I've always thought I was reasonably savvy around investing and have done OK, but as the old adage goes I don't know what I don't know.

He's pointed out various tax strategies as well as funds I couldn't access myself, fund performance and charges are only one thing, but I've managed to extricate some of my money at a tax saving over 20% than if I'd done it myself with my limited knowledge. Even Martin Lewis advacates the benefit of getting good Independent financial advice.

I think we’ve been here before on another thread, Barry.
Once again I concede that good financial advice can sometimes be worth paying for.

 

[Vagophile]

So a question for you early retirees, if I may.

From an early age, I had the benefit of a good pension and never used to consider further investment except the odd savings account. I wasn't really interested in the stock market or other investments which would require (in my view) significant management input on my part which I felt could be better directed elsewhere.
One day in the 1980's I answered the door to two men, fully prepared to tell them I didn't want to know about Jesus, but, surprise, they were from an investment company touting for business. This was the start of my involvement with financial advice and I became a client of the company that these advisers represented. Since then, there have been changes, but I have continued to pay for advice from an adviser who set up his own company after leaving the national company that employed him.
My experience of the advice that I have received is all positive, so called "wealth management" has resulted in my retirement income increasing and potential dues payable on death decreasing due to my "wealth" being managed in ways that I had no knowledge of prior to receiving advice. Some of these investments are effected through companies only accessible through financial advisers.
My expertience of the"Wealth Management" industry is not so positive. The initial company I dealt with was taken over causing some problems, then later that company was taken over, causing even more problems, hence my present adviser jumping ship and me joining him.
I would say that if you can find an individual adviser that you can relate to, advice is probably worth paying for.

 

[Qnapper]

We retired me at 55 and wife around the same time and moved to Spain (we owned our own place there) bought a camervan 2019 are a few years of a motorhome in UK and have not look back ever. We both have military pensions and I got my UK pension last month so live well.
As you never know whats around the corner if you can take early retirement DO IT NOW worth every minuite of time.