Early Retirement.

Starbuck said:
How much do you need to retire ?
Obviously it depends on what you do with life but assuming you still want to travel regularly and don't want to cut down on nights out, spoiling Grandkids at Xmas, driving a nice car you would still need a net pension of a few grand a month.
If you can do that at 55 people have been doing better pension planning than I have :(
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There’s obviously some very well paid people on here, or should i say people who were earning well above minimum wage and have been able to save enough to retire well before state pension age. I would guess that isn’t an option for most people unfortunately, and the majority will be working at least till state pension age, and in many cases beyond - I’ll probably be one of them.
 
gramercy said:
Without knowing your figures, or wanting to, I suspect you’ve got a decent pot based on those contributions and the length of time you appear to have been there.
Can you cut back on what you think you might beed in retirement?
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Probably... Its just that when you look at the figures of how much you lose for going pre retirement age (about 25%, I think), it makes me unsure of what I will need to be comfortable. Mortgage is paid off in 3 years so I think I will look to put £300 to £400 each month into AVCs for 10 years.
 
ThatFragranceGuy said:
If you can afford it, it's worth looking at an overpayment calculator to see how even small overpayments made each month can snowball over the life of a mortgage to cut your overall payment down massively and shave off some years.
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I don't want to be contrary. I also make small overpayments, but overpaying a mortgage isn't neccessarily the best way of paying it off. The interest rate is typically low so it may make more sense to pay the amount you were going to overpay into a pension as a regular voluntary contribution. that way you get not only the tax relief, but typically a higher rate of return and then you can use your tax free lump sum to pay off some of the mortgage. Like I said I am not trying to agrue with what you said, but just pointing out there are some different ways of achieving this. Whichever way you do it, small regular overpayments\contributions over time can have a big effect.
 
Nano said:
They can't afford not to. If they don't put something aside while working then when they get to retirement they will be left with just the state pension.

On minimum wage of £11.44 from April a 37.5 hr week job will pay £22,369. Without pension that would give a take-home pay of £19,625. With pension it would be £18,980 but you'd have £1,290 in a pension. That £1,290 only costs you £645. 50 years of no pension would give you £32k which I assume would be spent and not saved so would give no return but contributing to a pension and assuming a modest 4% growth above inflation would give you a pension pot of £206k. A £206k pension pot can get you a tax free lump sum of £50k and a yearly income of £10k.

If you take the £645 and invest it independently and not in a pension (with the same growth) you will have £103k. The pension is the better option.

Pensions are not a scam and the earlier you start the better.
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It’s all well and good saying it’s only this much extra a month to find but if you’re already struggling to make ends meet, struggling to pay the rent or mortgage, or haven’t enough to put the heating on or put food on the table every day, how on earth are you supposed to find this extra money to put in a pension every month ?
 
Merlin said:
It’s all well and good saying it’s only this much extra a month to find but if you’re already struggling to make ends meet, struggling to pay the rent or mortgage, or haven’t enough to put the heating on or put food on the table every day, how on earth are you supposed to find this extra money to put in a pension every month ?
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it is very difficult, but the issue is that the rent, heating and food requirements aren't going to disappear when you cease working.

in the case of people on low or minimum income I think there should be some more help to bolster state pension. I'm not enough of an economist to know where that comes from (tax/NI, employers etc?)
 
I was in a very fortunate position to be able to retire at 45 and so I quit my job and took two years out to see what it was like to actually be retired. I hated it after a year and missed that buzz from working and achieving things.

So I'm working now because I want to and thoroughly enjoying it, if I stop enjoying it I will have another rethink.
 
gramercy said:
it is very difficult, but the issue is that the rent, heating and food requirements aren't going to disappear when you cease working.

in the case of people on low or minimum income I think there should be some more help to bolster state pension. I'm not enough of an economist to know where that comes from (tax/NI, employers etc?)
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Which is why lots of people will have no choice other than to continue working past retirement age
 
Merlin said:
It’s all well and good saying it’s only this much extra a month to find but if you’re already struggling to make ends meet, struggling to pay the rent or mortgage, or haven’t enough to put the heating on or put food on the table every day, how on earth are you supposed to find this extra money to put in a pension every month ?
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You don't find it. It goes into your pension before you receive it. That's the beauty of paying into a pension instead of saving what you have left over. If you try to do that you invariably spend it. 5% contribution on minimum wage is £53 a month of £1,635 take home or 3%. Is 3% of your income now going to make enough difference to your life that it is worth sacrificing 100% more than your state pension income when you retire? That is also why it is so heavily incentivised. You get twice as much as you put in, even if it doesn't grow. With growth you will get 6x what you contribute. There are not really any better investments.

I fully get that it is hard when income is low. This country doesn't do enough for its low earners so you have to take the opportunities that are there and a pension is one of those opportunities. I can't imagine anyone is approaching retirement age and only receiving the state pension and thinking they have made the correct choice.
 
Merlin said:
There’s obviously some very well paid people on here, or should i say people who were earning well above minimum wage and have been able to save enough to retire well before state pension age. I would guess that isn’t an option for most people unfortunately, and the majority will be working at least till state pension age, and in many cases beyond - I’ll probably be one of them.
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Little tip stick in at school
 
Nano said:
You don't find it. It goes into your pension before you receive it. That's the beauty of paying into a pension instead of saving what you have left over. If you try to do that you invariably spend it. 5% contribution on minimum wage is £53 a month of £1,635 take home or 3%. Is 3% of your income now going to make enough difference to your life that it is worth sacrificing 100% more than your state pension income when you retire? That is also why it is so heavily incentivised. You get twice as much as you put in, even if it doesn't grow. With growth you will get 6x what you contribute. There are not really any better investments.

I fully get that it is hard when income is low. This country doesn't do enough for its low earners so you have to take the opportunities that are there and a pension is one of those opportunities. I can't imagine anyone is approaching retirement age and only receiving the state pension and thinking they have made the correct choice.
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Not being funny but it sounds like you’ve never been in a position where you’ve really had to struggle to get by from day to day. I’ve been there got the T-shirt - through no fault of my own i lost everything when my first relationship broke down. I had to start from scratch again at 40 with a new mortgage, i was only able to do so because i received a small inheritance at the same time,along with my share of the equity in the house i shared with my ex. She got the four bed house which we paid £78500 for (it’s now worth £375000) my ex’s mum paid off the remainder of her mortgage, whilst i had to lash out £125000 on a pokey two up two down (it’s worth perhaps £140000 now), she got the car and all the house contents too. Along with starting a 24 year mortgage at 40 i also had to pay child maintenance for our three girls, which i don’t begrudge as they’re my responsibility too, but for about ten years i usually had more going out each month than i earnt. I wracked up a huge debt and i can assure you it wasn’t from living extravagantly, it was just from everyday expense's that i couldn’t avoid. I eventually paid back every penny of what i owed but it took me a long long time. I’m not bitter, i may not be rich financially but I’m rich in many other ways - I’m now married to a wonderful girl who definitely isn’t with me for my money 🤣 i have my three brilliant kids who are now grown up, and I’m reasonably healthy as far as i know, but when you say it isn’t money you have to find to put in a pension it’s still money you don’t receive from your wage, and believe me when you’re on the bones of your ass every penny counts. Sorry if this sounds like a rant, it really isn’t, and I’m not having a go at you, but things aren’t always as straightforward or easy to do as they seem for some people.
 
ThatFragranceGuy said:
If you can afford it, it's worth looking at an overpayment calculator to see how even small overpayments made each month can snowball over the life of a mortgage to cut your overall payment down massively and shave off some years.
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I can’t afford the monthly payment as it is, like alot of folk it rocketed this year thanks to Liz and kwasi.
 
Aet290204 said:
I can’t afford the monthly payment as it is, like alot of folk it rocketed this year thanks to Liz and kwasi.
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It’s an all too familiar problem now for lots of people unfortunately - i feel for you, and i know what a strain it is when you’ve got bills coming left right an centre as well as a mortgage or rent to pay. Hang in there and eventually things will get a bit easier for you mate
 
About the only thing I miss about work is Fridays and the finishing work for weekend buzz I used to get and maybe having a couple of beers, now it is just another day
 
I must be missing something. But I'll be over the moon to stand corrected.

Surely to retire before 60 and have the lifestyle that has been mentioned (eat out occasionally, a holiday every year, season ticket, run a car) you must need a pension pot of circa £500,000? Which is nigh on impossible to achieve for most people with modern work pension funds. Gone are the days of final salary, golden handshakes.
 
Gains said:
I must be missing something. But I'll be over the moon to stand corrected.

Surely to retire before 60 and have the lifestyle that has been mentioned (eat out occasionally, a holiday every year, season ticket, run a car) you must need a pension pot of circa £500,000? Which is nigh on impossible to achieve for most people with modern work pension funds. Gone are the days of final salary, golden handshakes.
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Those who have retired or are about to may well have benefited from final salary schemes, at least in the earlier part of their careers. Makes a big difference.
Going to be much harder into the future as you say.
 
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