Are you considering early retirement?

Lounge
41

First thing:

My father in law retired last year. He is the highly intelligent, but with a significant manual how to deal with him. Since his social world has changed - no work environment anymore - the family is the only social environment he is in and given the complexity to deal with him it is quite a challenge for the children. We truly love and respect him though which makes it more difficult.

Everybody is looking forward when he starts contracting part time in a few weeks time helping a mid size transport company getting the logistics right. He is the right person for the job and hopefully this gives some pride back and reliefs us from the same stories over and over again.

Ergo, make sure you have a social network which is appropriate for the needs of yourself and the ones around you.

Second thing:

Being 40 and a bit, I have received great help from a pre-retirement colleague in organising my work in designing complex software in the last few years. I still wonder why I never had someone like him earlier in my career when I had to figure it out myself all the time. Simple methods, like always have a second pair of eyes check the software, share ideas, or encouragement to stick to the process even when a shortcut seems appropriate.

Therefore a big thanks to those consulting and coaching younger fellows.

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42

63 in a few months time, so just over 3 years until I can claim my full state and occupational pensions.

I have been working as a police dispatcher for 17 years. There are times when I really love the job and get massive satisfaction from playing my part in getting “a result”. I am fortunate in that I am able to regard the vast majority of my colleagues as genuine friends.

One downside is that the job itself is inherently stressful and has become more so as austerity has coincided with rising demand, meaning that fewer people have to deal with more work, not helped by an utterly useless senior management team who have never done the job and would probably run screaming from the room after sitting in my chair for 20 minutes.

The other elephant in the room is that I work a 15 week rotating shift pattern including night and weekend shifts. When I started the job, after a few months getting used to it and working out the sleep routine that worked best, I coped fine. With advancing years, and several changes to the pattern (see above comment about the management team) I find myself increasingly struggling and often finding that I have not fully recovered from one set of shifts before starting the next.

Promotions within the department are as rare as rocking horse dung, and a move elsewhere within the organisation working more sociable hours would be financially unsustainable due to the loss of the shift allowance (I would have to jump two full grades to replace it).

Like many others, the current situation has made my wife and me think long and hard about our priorities. Stagnant pay, (indeed in real terms I am around 25% worse off in real terms than I was at the start of the austerity experiment) and changes to my pension scheme mean that the next 3 years will not add a huge amount to my pension income.

So, to answer the question, we will be making major changes to our lives within the next few months. My wife owns her parents’ bungalow which has been rented out for 6 years but we now have possession of it, and once a few minor repairs have been carried out and it has been made presentable it will be sold. I have also had a legacy from my mother’s estate (some of which is earmarked for my hifi). This will allow us to be mortgage and debt free, downsize from two cars to one, and leave enough over to see us through to when we claim our pensions. We may stretch this by getting low-stress part time jobs.

We have a rich social life away from work colleagues, a touring caravan that doesn’t get used as much as we would like due to my weekend working, and so doubt that the post-retirement blip will be an issue for us.

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43

I was forced to retire at 44 due to health issues. The only real question is your ability to adapt to living in near poverty. Start today by not spending money on anything nonessential. If in six months you feel you would prefer to live like that the next five years than continuing to work, you’ve got the answer.

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44

I would suggest a check of what you would get by drawing your occupational pension now.

Assuming it’s a final salary scheme there will be some kind of (probably) minor reduction in annual income (guessing 10-12% but you will be receiving it for an extra three years and it will likely be indexed from the off, so may grow between 3 and 6% over the next 3 years). And work it out on a net income basis after any income tax (assuming you get a full state pension that will take up most of your personal allowance) so you can see what the difference is in your hand.

Check the maths and see when the break even point is if you leave it for 3 years. I suspect it’s many years down the line…

Also consider the maths of any tax free cash option using the above parameters too.

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45

Thank you! Sound advice. This will all be several months away, and I have already requested two forecasts based on drawing it immediately or at 66. Just as well that I have a bit of time to play with as the pensions administration move somewhat slower than tectonic drift.

Our circumstances will make the tax free lump sum option less attractive but I am also looking at that.

During my service the scheme has been changed twice (in each case for the worse) including from final to average salary, and indexation from RPI to CPI. This also means that effectively I am in three schemes each with differing annual accrual rates, so I am unable to do a quick “back of an envelope” guesstimate.

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46

And in the words of a great detective, just one more thing.

Don’t be in too much of a hurry to repay the mortgage. Perhaps see if you can move to a 5 year fixed at around 2% or less, maybe on an interest only basis. It will cost you 10% over 5 years. Plus a set up fee at c£1k.

The equivalent sum wisely invested over 5 years could grow by 30-60% without doing anything silly. That can then also be used to supplement income for the next few years and pay off the mtg with it later. Oh and look at mtg deals while you’re still working not retired…

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47

My last advice is less about money. Stopping work, even if you find it stressful and difficult, is not always successful in restoring mental well-being. Some people (certainly not all) find the loss of status, loss of routine and disconnection from their work social group quite destabilising.

Be sure that you have thought through those issues and that you are in a good place mentally as well as in practical terms to benefit from what is a big life change. Retirement is not a panacea, it is what you do and how you adapt after leaving your regular work that makes it a success.

Bruce

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48

I found that keeping in touch with people whose company i enjoyed at work helped in easing into retirement. There is about 10 of us who keep in touch and pre-pandemic used to meet for lunch on a regular basis.

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49

I moved on to working 3 days per week several years before retiring - it was a really good move and although it itself didn’t relieve the stress that was building in the workplace (which, incidently lead to me taking my case to an industrial tribunal), but it gave me more recovery time and a much better work / life balance.

Whilst I think for most people on this forum, after retirement there will always be things to think about and to do, it is worth considering that before retirement, and the 3 day week can again help here in that it allows you to see what other activities can really occupy your day.

In my own case the old adage applies:
Now I’m retired, I’m so busy I have to ask myself “How on earth did I ever find the time for working?”

I’m now looking forward to a long retirement… assuming current Government policies don’t result in the unnecessary and untimely demise that, for me, they are risking.

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50

I would heartily recommend this book. It covers many issues in a really clear and helpful way.
image

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51

Funnily enough, I’ve had something similar since working from home. A few of us formed the TBC (Tuesday Beer Club) which I feel helped us greatly through the whole wfh thing and, one way or another, ongoing social restrictions…A great success and still going!

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52

if you are in good health and can afford to .retire now. because one does not know
what health problems you may have in the future. i worked to 65. then i started to
have health issues. which i never had before. it was good i managed to travel a lot
before retirement. i now have mobility issues because of a road accident. one never
knows what is around the corner

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53

I started drawing my occupational (final salary) pension at 57. There was a significant reduction on the amount I would have got if I’d waited until 65 but it would take until I was 81-82 until I was worse off in simple cash terms.

I had other savings which I was living off and could have continued for some years but having a regular pension income has made me much more relaxed about spending money than living off of my investments/capital alone.

I don’t know (of course!) if I’ll make it to 80 but so far I’m happy with the decision I took.

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54

Like you my scheme has been revamped several times, sometimes with options, other times without.

There has been so much mucking around with pension schemes that many people I think, myself included, find it incredibly hard to forecast ahead - contributions have more than doubled since I started what was at the time a very good scheme. Older finaly salary to CARE components are frustrating as I can take the final salary at 60 (or 55 with reductions) but can’t take the CARE component until at least 67. You may be in a similar position.

When you think about it, it is not necessarily a bad thing if you can take the final salary component at 60 or earlier and return to work with fewer hours until you’re ready to take teh CARE component. There are pros and cons including your employer’s likelihood of retaining you once you draw pension if you have to retire to do so, loss of any ‘bonus payments’ if you retire and return, but offset by not paying pension contributions.

The more I think about it the more I’ll be inclined to take pension early even if I’d be worse off doing so by late 70’s/early 80’s - firstly I may not live that long, secondly by that age many people have very basic needs in terms of purchases requiring disposable income.

Our national pensions organisation is also very slow and accuracy in some areas dubious.

As for the ‘tax free lump sum’ - I have concerns that this is low hanging fruit for HMRC even though many consider pensions tax relief a form of deferred pay which kicks in at pensionable age (as you are taxed on the pension).

55

That is good advice Bruce. The best I can say is that I’m stuck in something of a mental rut currently. I’ve not been happy with the direction work has been taking for many years. Yes it pays the bills, but I have a Pavlovian -ve response to certain aspects (mainly anti-social hours work) which puts me in a cranky fight/flight response for several days beforehand - I have insight into this, have put up with it for many years but it’s much harder than in my 20s/30s/40s. One could argue that I should just be more relaxed but it’s not that easy, and when you realise is affecting wellbeing at certain times you question it. I hasten to add I am not alone, several of my colleagues feel the same, some are pragmatic, others switch off or ‘work to rule’, some like me react negatively.

Much of it is lack of control and excessive workload - in some areas I am now simply saying no, or just not feeling any guilt if I can’t complete things in the allotted time. The issues are not of my making, but management just ask people to adopt a ‘stiff upper lip’ and ‘to step up to the plate’. In other words ‘just get on with it’.

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56

I watched in my company as the so called indispensable from CEO down left, or were forced out………not a ripple on the pond. My last few years were spent on getting my exit right, the company is still going, making its usual good and bad decisions.

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57

Alley Cat.

Perhaps work on an ‘escape’ (such as a hobby or diversion when away from work) or just better life work balance first if possible. If that feels too daunting, or fails to give you more pleasure or positive experiences then you may need to address your mood level more generally. I hope that is not too personal.

Bruce

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58

Not too personal at all Bruce.

I know my mood had been challenged in recent years by a variety of life’s stressors we have little control over, and I went part-time some years ago when my parents were extremely unwell. The pandemic has not helped.

I find it sad that I rarely enjoy work, but it’s also interesting how simple things like pottering in the garden/around the house, nature, short breaks are so much more enjoyable.

I probably should have asked ‘Are you considering taking your pension early?’ rather than early retirement - the difference being that even with reduced pension taking it early I could potentially drop my hours further or consider other options.

I don’t feel ready to retire but am getting to a point I no longer want to carry on in the same manner with work without changes. Again, I’m not alone in this.

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59

The pandemic encouraged me to delay early retirement for several months as I no longer had a long commute and the prospects of doing more travelling in retirement were limited.

I am a patent attorney and was able to schedule my work to provide little stress. Some people in my line of work increase their stress levels by leaving cases till the last minute.

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60

If you are counting on doing this, please make absolutely sure you can. I am fairly sure that in the nhs scheme for example you cannot take the age 60 bit without taking the age 67/68 bit at the same time. It’s not set out very clearly anywhere in the pension docs members get but I have found statements to that effect a couple of times when I have looked for them. I would assume it’s the same in all public sector schemes.

If my understanding is correct; you forgo (so?) the age 60 bit from age 60 to when you do retire with no recompense for taking it later; but if you take the 67/68 care bit early you have an actuarial reduction in that.

They said there is supposed to be a set of new public pension scheme rules coming out that give people the choice to move service from 2015 to 2021 into the pre-2015 scheme meaning the part of pension reduced for taking it early becomes much smaller. I think Covid must have delayed its introduction. All to do with the age discrimination claim brought (by the fire service union?) that the govt lost re allowing people within so many years of normal retirement age to stick with the old rules past 2015.

Pensions are complex!

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