Talk

Advanced search

Advice re retirement

(7 Posts)
Cheerymom Sun 27-Jan-19 23:03:51

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 Sun 27-Jan-19 23:15:33

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 Mon 28-Jan-19 00:17:46

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 Mon 28-Jan-19 00:33:57

Overpay, for sure.
Then you have options.

VanGoghsDog Mon 28-Jan-19 00:41:57

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 <gulp!>.

But, yes, pay down the mortgage for sure.

Soontobe60 Mon 28-Jan-19 07:12:55

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 Thu 07-Feb-19 00:41:55

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.

Join the discussion

Registering is free, easy, and means you can join in the discussion, watch threads, get discounts, win prizes and lots more.

Register now »

Already registered? Log in with: