Advice re retirement

[Cheerymom]

Hello helpful Mns, I need advice.

I am 49 and work FT as teacher, I am on a great wage (62k) and about to move into a new house. Due to luck I had great equity in a flat I bought in London so my new mortgage is only 445 per month. My net pay is 3200. I have no children, debts or other bills beyond household. My spending is on eating, travel and charity. I have never had any help financially , been independent since 18 and grew up in poverty. I mention this as it reflects my fear of being old and broke ( like all of my elderly relatives).

My question is this, do I over pay mortgage so can be mortgage free at 55 and cash in teaching pension? Or do I play the long game and buy back years? I have been teaching for 25 years and I don't relish the thoughts of it much longer.

All advice welcome.

[Soontobe60]

Teacher here about to retire, albeit only a year early. On your salary, at your age, you have 6 years min to work, but will have 31 years worth of pension if you go at 55. I would use your spare cash to pay off your mortgage as soon as possible, then add extra years to your pension. Y the time you retire at 55 you'll probably get a pension of 25k reduced by 4.5% for each year you retire early. That's if you're only on final salary. If you're on final and career average, it's a whole different calculation!

[Cheerymom]

Thank you Soontobe60, its slightly complicated as I have moved from UK to Ireland. But both seem to be the same. Good luck to you retiring soon, do you get a state pension ( later at 65?). There is definitely a time when one just can't teach anymore. In Ireland its final salary, but UK teaching pension works out at 10k a year, if I retire at 55. I feel dreadful in a way knowing so many people don't have this option but I cannot keep doing teaching.

[BackforGood]

Overpay, for sure.
Then you have options.

[VanGoghsDog]

I'd do a bit of both actually. I'd put 80% of spare cash to mortgage and the rest to pension.

I am 51, no kids etc, mortgage free from overpaying years ago and now puting 50% of my pay into the (not final salary, pretty mediocre) pension, aiming to have half a million by age 55. That means saving £200k over the next five years .

But, yes, pay down the mortgage for sure.

[Soontobe60]

I agree OP, teaching at 60 is not the pleasure it used to be. I won't get my state pension til I'm 66. What I did was to work backwards by starting with working out how much income I would need to be able to live comfortably when I draw my teachers pension, then look at the figures to see at what point my pension would be worth that figure. Taking into account the fact that I will pay off my mortgage with some of my lump sum, and downsized a couple of years ago, using the equity from my old house to renovate the house we now live in, I actually can manage well on a much smaller pension than I thought I'd need. Bearing in mind that I won't pay National Insurance and pension contributions from my pension, and can pay off my substantial mortgage and a coup,e of small car loans, i'll actually have slightly more disposable income (plus a substantial tax free lump sum to fall back on).
Unless Brexit sees food costs quadrupling, When I receive my state pension, I'll be better off in spending terms than I currently am!

[JoJoSM2]

Given your 40% tax bracket, I’d be putting as much as possible towards your pension.
You’ll still have plenty left to overpay the mortgage.