AIBU to think I'd like to retire at 55?

[Petals23]

I'm 45 now, been working in the same job as self employed since 19. I've been paying into pension since 25 and at the moment have about 120,000 pounds saved. Ideally I'd like to retire at 55. I'd appreciate anyone's view.

Honestly, I get sick and tired of these threads.

Why don't people see a FA?

OP if you have a pot of £500K, and live till you are 85 (expected for a woman) how will that sum last you that long?

For a start, we don't know what may happen with inflation. I am old enough to remember when it was much higher.

Even the simplest sums will tell you that £500 / 30 is £16K a year in current sums. It will be less with inflation over 35 years- a lot less. Possibly half current value.

On £16K pa present money, you would pay 20% tax over the £12K (current rates.) Roughly, you would have around £15K to live on which is not much more than £1000 a month, £250 a week until you are 70 most likely. This is NOT taking into account inflation so in real terms it will be a lot less.

Forget the state pension. At your age now, with 22 years to go on it, the age may rise to 70 or longer. The terms for a SP may change out off all recognition.

I semi-retired and work a couple of days a week and I highly recommend that as a toe in the water, rather than a cliff edge fall, into retirement. I draw my full (company) pension and 40% of previous salary and take home more than I was when I was working 5 days.

I was fed up of work and champing at the bit to retire and had been expecting to retire fully, but I'm very glad I did this halfway step. I have loads of time to do social stuff; any more and I would be bored. Working makes me appreciate the time off more. The extra money is VERY useful especially since I have more holidays etc.

Semi retirement is definitely worth considering, especially since there's such a gap between 'early retirement' and state pension for most people now.

I wonder what you are planning to do. Personally I'd find just pleasing myself all day a bit unmooring I think.

If you're expecting to be fed up with your job or for it to be too exhausting after another 10 years, have you thought of planning a less stressful/demanding and more rewarding role or job. I'm in my 60s and lucky enough to be self employed doing something very interesting and rewarding (and 'meaningful', at least to me). The pay is relatively poor but on top of a pension I'd be financially comfortable as well as really satisfied, even if I was single. (luckily dh earns more so we are fine). If I did have a pension alongside (I don't, yet, my pot is too small) I could take a lot of time off too.

I could quite easily live on around £1200 a month with no major outgoings.

But £1200 a month in today's figures may be worth £600 or £300 in 35 years time.

Huge amount of financial ignorance here.

And £1200 a month is not a lot of money.
My very elderly mum lives on that. She has no car, but she does need work doing on the house at times- new boiler, central heating repairs, paying for a gardener and odd-job men now she is on her own.
This has to come out of the monthly income and yes, she has some savings too but not mega bucks.

OP- you need to work with a financial advisor. We have one and it's an eye opener. You are not qualified to do this on your own.

A PP, on the subject of semi-retirement

I highly recommend that as a toe in the water, rather than a cliff edge fall, into retirement. I draw my full (company) pension and 40% of previous salary and take home more than I was when I was working 5 days.

Well that’s great for you, but did you read that the OP is self-employed? She doesn’t have a company pension scheme.

Also, very few occupational pension schemes will allow you to retire early on your FULL pension. Are you sure about that? It’s usually reduced for early drawdown, unless (in certain circumstances) you are terminally ill.

Even if the OP were part of an occupational scheme, your recommendation depends on an employer being ok with you working part time whilst drawing your occupational pension. Unlikely for most people.

And I am with @JinglingHellsBells on the financial advisor thing: don’t sleepwalk into a poverty stricken old age.

@Iamthewombat The poster you refer to could be 60 or 65. Some occupational pensions can be taken at that age and yes you can carry on working. DH started taking his pension (full) at 65 when he was still working.

I am planning on retiring a couple of years later than that but it might be 55 depending on how our investments perform.

I did find an IFA about 2 years ago and said here is what we have, here is where we want to be. How do we achieve it?

This has meant putting in a lot more into pensions and investments but still making sure we can live a good life now as you never know what is round the corner.

I never understand those that say they would be bored when they retire. I don't hate my job but I would prefer to go for a nice 3 hour walk mid day as we are surrounded by miles and miles of different countryside, or go to the cinema, or grab some bargains in the supermarket and bake, or get on a bus and visit different places, or go to all the events in our local churches and village halls.

Go for it! It’s my aim too!

The poster you refer to could be 60 or 65. Some occupational pensions can be taken at that age and yes you can carry on working

I get that, but because the subject of the thread was early retirement I hoped that the responses might be on topic!

The question of what's affordable on here will never be a dead set answer. I get the impression that a lot of mumsnet are on "higher" incomes and used to a different lifestyle. For instance one poster had estimated OP would have £1200 per month to live on and that was apparently really low - I guess I'm what MN would consider a low earner, my current working income is £1587. I don't struggle - no, I dont go on tons of holidays and I occasionally have to save up if I want something, but it's not diabolical. So to me £1200 once I've retired and no longer have to pay a mortgage sounds perfectly doable.

It's really personal and there's not gonna be one straight answer.

So to me £1200 once I've retired and no longer have to pay a mortgage sounds perfectly doable.

But if you’re earning £1,200 per month by working, it rises, more or less, with inflation.

If you’re drawing on a fund of cash or gilts, not so much.

Jingling “Honestly, I get sick and tired of these threads”

I love them!

I’m 43 and don’t factor in a state pension. I also assume most medical treatment won’t be free.

It does all depend on your lifestyle, spending habits and expectations.
I have a state pension now plus a very small private pension of £150 per month. No mortgage or debts.
From threads on here, that is no way enough for most people but I manage perfectly well and am happy with what I have. More would be nice but I consider myself lucky compared to many others with less.
I have all I really need.

My hubby is retiring this year at 54 and we have bought a small house in Crete. We will take out 25% of pension pot at 55 and go and live there. We are going to rent our house out here in the UK. Much cheaper all round to live in Crete and wonderful lifestyle which doesn't cost alot. We are both after quality if life for however long we live. We could put if off for another 10 years and be financially much better placed .....but we may both be dead in 10 years time

*I highly recommend that as a toe in the water, rather than a cliff edge fall, into retirement. I draw my full (company) pension and 40% of previous salary and take home more than I was when I was working 5 days.

Well that’s great for you, but did you read that the OP is self-employed? She doesn’t have a company pension scheme.*

The point I was making was that it doesn't have to be all or nothing. The OP, as a self-employed person, could choose to work a couple of days a week; the best of both worlds.

I think if you anticipate living off cash savings then yes you need to factor in depreciation from rises in the cost of living.

When I went to our IFA I said I needed to live off this amount in today's money terms e.g. that will be different in 10 years time with inflation but that's what they calculate for you.

With drawdown or flexible payments you don't need to take all the pension at once and can leave some of it investing. However, this is going to depend on how much you have to start with and how you want to access it.

Honestly the more I look at pensions the more complicated it is and is why I pay an IFA to guide me through it all. There is no way I want to work until I am 67 for the state pension. I would happily retire now but my finances won't afford that.

Using an IFA I've invested my inheritance to ensure I can retire (from nursing at least) at 55. Can get a good chunk of my NHS pension penalty free at this age too. No mortgage. I think it's doable.
Can't wait.

@user1497997754 will you need a visa to retire to Greece post Brexit? We were thinking of retiring to France and have found out that we will need a retirement visa (you can get a 10 year one), which although doable will be a lot of bureaucratic hassle.

My colleague is doing just that. She's just announced it in a staff meeting. Both her and her husband are retiring this summer from their respective jobs (he works elsewhere) at 55.

Our plans are for 60y and that's what our financial planning etc is sourcing towards. Would love it to be earlier really but reality is we need a 'bigger pot' especially if,we are to live a longer life. We want to travel more etc so want to have a decent amount of cash to be able to do,so and enjoy our retirement.

Planning on 55 too or at least switching to half time hours , mortgage will be paid off husband will still be working to cover some of the household expenses and I’ve worked through chronic illnesses for the last 20 years.

Retiring to what would be my issue.

55 is pretty young.

I see retired ladies at the gym they remark that they have completely lost that euphoria of OMG the weekend or a bank holiday.

It's the same week in and week out.

Unless you are minted you cant spend half the year on holiday

So it's the same old gym, shop, coffee for these ladies that I see.

I'd rather be at work than live like that at 55. At least you have something to do

Much cheaper all round to live in Crete and wonderful lifestyle which doesn't cost alot. We are both after quality if life for however long we live.

Aside from the Visa problems raised by a PP, what happens when you are very old and need serious medical care? What about if you need residential care?

55 is pretty young.

It is if you live healthily in your 90's.

Having seen family die early 70s with illnesses from 60 before they retired I am of the mind that I will take the chance of living a bit more frugally at 80 to enable me not to work at 55ish.

I also think the key difference is I have done the flash expensive holidays already. It isn't lots of travelling that I want to do in retirement. It's more having the freedom to spend my days locally which would be cheap to fund.

nowhere near enough