Early retirement
Looking at early retirement , I know about the advantages ,but are there any pitfalls or things that cropped up after you had retired that perhaps you hadn't budgeted for ? any advice
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I early retired but only by about 6 months. I nearly returned to work as Mrs One hadn’t retired. Once she had retired things looked up. I suppose for us the thing to get used to was the sudden and dramatic drop in income. With our pensions and interest on savings etc our income dropped by roughly 65%. We do have a sort of flexible routine, nothing too onerous but enough to ward of boredom.
I took the maximum 25% tax free portion of my pensions and turned in the companies tax free ‘share save scheme’ which gave us a substantial tax free lump sum.
Good luck with whatever you decide Husky🐕
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Husky as long as you feel able to continue living in a similar way to the one you enjoy now with some inevitable adjustments I'm sure you'll make the best of retirement. It does mean the end to an income stream from work but if you can your arrange finances to give you the best outcome even if it's a bit reduced there are a lot of pluses to retiring. We took a big hit, like many others retiring unwittingly when the banks collapsed so we lost a lot of our income stream from savings. You might be lucky and see some savings start to come up a bit. I semi retired at first, doing things gradually. It was lovely when we both finished, we were slightly younger than 60 at the time. At which point we bought a caravan and for the first time in many years had time to ourselves.
Good luck to the Huskies.
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I bailed out at 53, I'll be 59 in June. For me and the job I did it was a simple choice, either carry on working or carry on towards a having a possible mental breakdown. the pressure from the directors was that bad. The best thing was when I handed in my notice and told them my plans, they tried to talk me in to staying but the decision was made. The highlight was their faces when I said I was going, I swear I heard a bang as the Engineering directors jaw hit the floor. My Wife had already had to retire early because of ill health. My Wife was a Bank manager and convinced me we could do it. one of the things she did was show me two spread sheets. Income and outgoings.
One thing that stood out was our Sky TV which we didn't use a lot. it was costing more a month than our council tax so it went.
You soon adjust and to be honest it was scary at first but I wouldn't change a thing. go for it
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Retired two years ago aged 59.The company I woked for had given us plenty of time we were due to close.Went out with a final salary pension after 42 years service.
First 3 months found it very difficult,felt anxious and fidgety all of the time.Leaving 12 hour shiftwork straight into nothing was difficult as well.
Then had a lovely holiday, and it all began to settle,now 2 more granddkids making 4 in total, Wife retired as well,joined a walking group every Wednesday, with tea and nibbles after, went to a over 50 walking football session and injured left knee! We have taken up ballroom dancing,and boy do I find it difficult especially the Waltz.
The whole week now is covered so much that you have to still book things in advance.
Yes money is basicaly half,but by being careful ect ect.
I find now that sometimes I am working harder than when at work and not getting paid for it!! I also visited a financial advisor,but a lot of he said went straight over my head.
Go for it HD but let the day come to you,and you will get into your own routine.
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This is my second year and I took early retirement in the sense that I took my tax free lump sum and pension early (which as a teacher is very generous as it's now changed for younger teachers) but for me the deciding factor was looking at income v outgoings and how much I started to value free time over money. I'm not saying I go away all the time but simple things like getting to a site Friday Lunchtime and leaving a site on Monday morning (the OH still works) makes a lot of difference.Or a walk along the beach on a Tuesday afternoon.
I'm not trying to teach you to suck eggs but make a detailed spreadsheet showing what you get in now from all sources and all outgoings and what would be the figures if you retired and factor in holidays, cars, servicing...
I'm extremely lucky that my working 'skills' are still in demand so now I work if I want to. I'm a part time inspector I also worked out that with a couple of inspection weeks a term and being an exam board examiner twice a year I would be down to about 60% so well worth the extra time gained.
Now an interesting point, after a few months, the house and garage/shed tidier than ever, cars washed each week... I actually started to miss teaching, being in front of a classroom (yes I know mad) so I started doing supply work, it's actually much easier than 'normal teaching' as there is no (contractually for day to day work) no preparation or marking. I also choose my schools wisely! It's certainly not every week and not every day and on the schools I choose I sometimes do feel guilty about taking the money.
So it's a better way of life, holidays are cheaper too not only caravan but amazing deals on going abroad.
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I retired twice, well sort of. First time at 50 redundant, but redundancy and pension kicking in meant we could have just about managed. However, certainly not bought a caravan and tow car. That came later. So I spent some time looking for another job, which took about a year. I would have stuck with that until 60 and then possibly gone part time, as others had done. Then they moved the office 20 miles into the centre of a major city, requiring 2 - 3 hours of traveling a day. When I factored in the traveling cost and the hours of unpaid traveling, it just was not worth the continued effort. So at 3 months short of 59 I retired properly. OH continued her part time work until I was 60 and other pensions kicked in, and then also retired.
Looking back, them moving the office was probably the best thing that could have happened, as it forced my hand. We have certainly never regretted it.
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My OH has also been looking into retiring in a couple of years time, or possibly earlier. So its interesting reading others thoughts on the subject.
He has taken what his company call flexible retirement at the moment which means he only works 3 days a week, with the option of extra if required. Good option to see what it's like not working. 😉
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It is always a difficult one to give an answer on as we are all different. Some people love to work but for others circumstances often force the decision. I retired at 58 but worked another 3 years part time. In my case I realised that my level of management was likely to be under review and personally I did not want to go through all that hassle. I was fortunate that I had a final salary pension and my employees had not opted out of SERPs so once you allow for the fact that you no longer pay NI I don't think I was substantially worse off than when I was working. We were able to pay off the mortgage. If you are financially secure it helps. However as others have mentioned you do have to adjust your mindset as you do need something to replace the space left by work. For most of us on this forum we have the advantage of having a hobby that can be expanded to fill some of the time. Others will struggle, some will miss the camaraderie of work. The fact that someone is are thinking about early retirement is perhaps provides a clue, someone who is immersed and happy in their work I suspect wouldn't be thinking about the option?
David
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We ( probably as many our age ) decided when I was 60yrs and the wife 55yrs were in five years time going on a world cruise and then tour Europe in caravan for at least 6 months. Lovely they say ! until the letter arrives from the D.W.P 2 years ago which read something in the lines
" Dear Mrs C thank you for the 40 yrs of hard work and contributing to the wealth of our Great country, please now carry on for another six years when we're sure things will be better and we are able to return some of the monies you have generously contributed ".
Mortgage paid kids grown up and flew the nest, this will make me 71 years of age by the time we can fulfill our dreams.
Thanks a bundle. !!
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Not exactly early retirement - but I gave up going out to work at 63. I had always enjoyed my work (IT department of a well known kitchenware retailer based in the Lake district), and also the small close knit group of colleagues.
But as two weeks off work was coming to an end I realised I didn't want to go back, so I gave three months notice and walked out for the last time on Christmas Eve 2010. I enjoyed those last months - especially being able to tell people "sorry, I won't be able to do that, I'm leaving".
I miss the people but not the work, and I was rather pleased that I was replaced by two people!
Financially it was a bit of a leap of faith, and I was ultra cautious with spending at first, but a combination of factors have meant we don't feel any worse off. The farm is doing well and I have portion control at mealtimes - no more leaving food out that should last more than one meal and someone saying "I might as well finish that off".
Of course I still work almost as hard with farm admin, but I can fit it round my life.
The house is still a right mess and don't mention the garden, but give me time - I'll get round to it sometime.
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The transition from work to retirement was fairly easy for me. When I was 53.5 years old I asked to be released on early retirement. When I was around 54 it was agreed. At that time those around me could not understand why I did not wait as redundancies seemed on the cards within the next couple of years with increased payouts. My answer was simple. The country printed pound notes every working day but nobody was printing vouchers giving additional years of life. For the last 15+ years of work I was different than many. All of the senior engineers where I worked wanted maximum promotion which gave them more money working 9 to 5 overseeing several others and also a lot of time tied ti what I considered administration rather than design and contract preparation/supervision and responsible for particular areas of the county and aspects. I, on the other hand did not have several working for me but rather several working with me. I helped other teams by producing designs for them, did my own projects, improved the abilities of those working with me and my work hours were governed by my own programming. I often worked from 7.30 until gone 7pm. At times worked partly from home and worked some time at weekends to hit targets. I never accepted overtime however and always insisted that I receive time in lieu or else management should find somebody else to hit the timescales that I did. That gave me over 12 weeks leave a year plus bank holidays etc. The management always backed down from insisting that I took overtime pay as they needed somebody that could hit tight deadlines and produce the goods to a good standard.
How did I determine that I could afford to retire? Having lost my wife at just turned 43 and having reached 48 with my youngest daughter away at uni I requested 12 months bank statements. At the time I was usually away in my caravan for around 6 weeks a year plus a few weeks abroad, weekends away and long weekends with friends. Also out several nights of the week. I reckoned that my pension would be at least around £3k short until OAP kicked in. I had some savings that would make up the shortfall. When I was around 53 Fliss came to live with me. She is 3 years older than me and I convinced her to take retirement as where she was working was a long commute timewise (and it was cramping our lifestyle with me able to take so much time off). I reviewed the situation and decided that I had enough savings to retire at 55 even if my works pension was not available until I made 60 and I could, if necessary, just walk away.
In the event, because some costs were now shared, I did not have the £3k or £4k shortfall and despite us being away for 4 months of the year my expenditure and income pretty much matched. Now that I am 65 my OAP is really surplus.
As for my capital that has increased from £280k to £370k over the last 10 years before considering the effects of inflation.
Your situation Husky is different in that you need to consider the needs of you and your wife. I only had to consider my own in relation to my retirement. If I should die before Fliss she has my house and some additional capital and a few thousand form my pension to add to her own savings and income (not a much as a married partner) and would be secure.
Go through your expenditure and income, allow for capital to replace LV and cars etc and make an informed decision
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I'm not trying to teach you to suck eggs but make a detailed spreadsheet showing what you get in now from all sources and all outgoings and what would be the figures if you retired and factor in holidays, cars, servicing...
I agree generally with Cornersteady. I would say though that if you consider all income and expenditure for a year (or two) then as long as you factor in unusual expenditure such as vehicle replacements and also present capital then the amount of detail need not be too great,
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The one thing that has "helped" at times is (we think) a savings buffer for the unexpected,although my company pension is good compared to what some even earn these days,its always handy as was the latest case when a change of car was "forced on us",without the need to have a think can we do it
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You asked about pitfalls, Husky rather than the rosy side of retirement life. I can honestly say that there were none when I had to retire in 2001. Sure my income dropped like a stone but the annual income still exceeded spending, after we got rid of the second car etc. We spent a lot more time exploring for longer periods, naturally.
But the biggest plus was that my wife and I get on like best mates so there was no problem spending more time in each others company. As you are self employed and effectively work from home, I think, you might already be spending a considerable amount of time with your wife so this shouldn't be a concern. I have known couples retire and hate it, always moaning about the other half. Remember that if your wife has a social life outside of you that she carries on when you are working then you'll need some empathy to see how your new lifestyle affects it. It might not as I don't know your circumstances and don't want to.
The income level is probably your biggest worry but maybe you can maximise income by down sizing your house.
Anyway whichever way you go you will at least have done it with your eyes wide open.
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Just been on the government website to do my pension forecast, just out of interest, roll on 2029 is all I can say!
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quite sizeable chunks taken out of my earning were NI, pension, and tax, so taking the first two out makes quite a difference and cushions the fall in come, and although you can still earn £157 per week with out paying NI. Tax will still be there of course but it might be reduced as perhaps you won't be earning so much over the £11000 threshold?
If you do take on further work you might be automatically enrolled onto a work pension (they even tried it on supply work) so make sure you ask to opt out, if of course you want to.
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The way things are going, in a few years "early retirement" might be at age 70 for both Male and Female retirees. It's important that everybody plans their finances for their retirement, even although they are entitled to those gold plated protected pensions paid for by the rest of society.
K
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even although they are entitled to those gold plated protected pensions paid for by the rest of society.
There is, at least for me, another side to that coin. For much of my life I could have earned more in the private sector. On three occasions I was offered a position with one of a number of consultancies that I had worked with at considerably greater income than I was then getting. I considered that my terms were better where I was working and that there are also things that can be more important than money.
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Husky, I think others have covered it. An analysis of income and outgoungs is essential but remember that after retirement your tax liability will reduce along with gross income, your travelling costs will reduce - will you need to keep the van, for instance.
In my experience, if you work things out on a worst case scenario and still think you’ll be OK, then you’ll be pleasantly surprised when the reality happens.
Good luck.
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if you work things out on a worst case scenario and still think you’ll be OK, then you’ll be pleasantly surprised when the reality happens.
Some truth in that TW. When I made my calculations based simply on what came in and what went out I made no allowance for the fact that some of my outgoings were in fact payment into a regular saver or the fact that most of my savings received interest which did not then figure as it was reinvested at source.
Two thirds of my savings are now set up to pay monthly - a move I started on the run up to retirement.
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Your usual"provocative" type post is like water off the ducks back for us who, when working in industries that are/were the backbone of keeping the UK going, and at much lower wages and still paid into our pension funds,whereas the private sector were mostly enjoying far more "perks" and wages than us,
We are now reaping the benifits that the govenments of the time bestowed on us after having strong representations made to them from variose trade unions
,and i am sure that we are all grateful that our years of being looked down on by some that our past efforts are now recognised
Ps it is the "golden key" which "unlocks" money to keep our pensions afloat ,not as you say
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Your usual"provocative" type post is like water off the ducks back for us who, when working in industries that are/were the backbone of keeping the UK going,
All I can say to that is ''Quack, Quack''.
Many of those that I had dealings with in consultancy could not understand why I was prepared to settle for less income.
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We both retired at 60; sold the family home and down-sized; resigned as local secretary of Lib Dems and joined the Caravan club; bought a second-hand motorhome, and set off for France with no guide book, but some clippings from MMM, and now 14 years and 155,000 miles later we're still looking forward to our next trip out.
When you retire ,and want to travel, make sure you don't have any responsibilities that tie you down. ( family duties cannot be excluded of course); get house insurance with 90 days cover and annual travel insurance included (eg Comfort Ins); and keep track of who's offering the best interest rates for your savings.
The one thing you can't assume is continued good health, so get cracking as soon as you can to do the things you want to do, and to visit the places you want to visit!
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Not sure if it has already been mentioned Husky, but the Chancellor (previous one) has decided that total years of paying N.I. contributions increased from 30 (which I had) to 35 (which I didn't) so I've been playing catch up to increase my pension when and if I qualify for it. So check your N.I.status. You can do this online with them.
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Look at income and outgoings HD, and trust me, don't leave it too late. No one knows what is around the corner, just make sure after all the hard work you get to enjoy what you want to do. Time and health are your most precious possessions.
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