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Retire early but poor or work longer for bigger pension?

108 replies

KindnessMyFriends · 07/06/2021 19:01

Which would you prioritise, more time to enjoy yourself or less time but more money? Work another year and retire very frugally, or work another 6 years and retire comfortably. Life is so short!

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WombatChocolate · 08/06/2021 18:40

Yes, live for now and make now count.

There’s no point in spending your working life looking forward to retirement and being miserable now and thinking life can only start when you retire. Plan sensibly for the future and look to allow yourself to have some time retired and feee from work while you will hopefully enjoy it, but also enjoy the now because there might not be any retirement. And stop delaying everything for material affluence. As people say, life can be short or the quality of it limited by health or other issues which can impact anyone.

Yes, some people have to work until 70 in order to pay their rent or to just survive. But many could stop in their early 60s but keep going until late 60s because a rather more frugal retirement idea horrifies them.....but surely it’s better to have that retirement and find actually it isn’t necessary to have mega bucks to be happy, than to find by the time you get to the point of the mega bucks, your spouse can’t walk more than a mile without needing a long break, or one of you is starting to develop dementia, or the travels you might have managed 5 years ago, just aren’t possible because of tiredness now.

No-one seems to lie in their deathbed and wish they’d worked more, even those who aren’t well off.

ArseInTheCoOpWindow · 08/06/2021 18:55

I got ill health retirement last year. I’m 57. I’m absolutely flourishing! My job made me so ill, and l was exhausted all the time.

Londonmummy66 · 08/06/2021 19:07

I would seriously think about getting some advice from a pensions expert who knows about your scheme. Then look at dropping hours - I went down to four days when I had DC and took Wednesdays off. It meant that I only ever had to work 2 days at a time and didn't really mess colleagues around as I'd always be in the next day if they needed something. You could schedule that day as your "fun day" to do what you want (and keep the chores and admin for when you currently do them). It made a huge difference to my life to have one day to do the things I wanted to do (usually the fun stuff with kids at that stage). But do ask how this would affect your pension entitlement.

JaninaDuszejko · 08/06/2021 19:11

No-one seems to lie in their deathbed and wish they’d worked more

Maybe not, but there's a hell of a lot of people at my work who retire, get very bored, and a few months later come back at a lower grade or as a 'consultant'. And plenty people wish they'd done more with their life. Paid work is rewarding in many ways, for the status, the friendships, the money, the intellectual stimulation. Planning to stop doing it as early as possible is not the best option for everyone. I don't think going from working FT to never working again is good for anyone and a gradual retirement where you can reduce hours or go down a few levels to a less stressful job is a more attractive way to slow down in old age.

ArseInTheCoOpWindow · 08/06/2021 19:14

Maybe not, but there's a hell of a lot of people at my work who retire, get very bored, and a few months later come back at a lower grade or as a 'consultant'. And plenty people wish they'd done more with their life. Paid work is rewarding in many ways, for the status, the friendships, the money, the intellectual stimulation. Planning to stop doing it as early as possible is not the best option for everyone. I don't think going from working FT to never working again is good for anyone and a gradual retirement where you can reduce hours or go down a few levels to a less stressful job is a more attractive way to slow down in old age

It depends on circumstance and age. It’s been great for me. And tbh when you are at the point of retiring do you really wish you’d done more? I don’t, I’ve bloody done enough.

SwedishEdith · 08/06/2021 19:19

I think, unless you hate your job, reducing hours is a great option. I'm not sure about just getting another job. You lose all the benefits you've got from your current job - pension, knowledge, expertise, colleagues, flexibility - for still working in a, probably, lower-paid job.

Knowing someone who retired at 49 and seeing how little they've really done with that time and how insular their mindset has got makes me think you really do need a plan though.

ArseInTheCoOpWindow · 08/06/2021 19:21

I quite enjoy not doing much with my time. Why should it be packed full of activity?

flatcoatfan · 08/06/2021 19:31

@WombatChocolate thank you for explaining the McCloud judgment, I need to consider my options. As I'm clinical, I can take my full pension at 55. Maybe I should look at retirement and coming back for a couple of days a week. I'm not sure how much difference exhausting myself working full time is going to make when time is so precious. I need to do the maths. How I wish I'd paid in more when I was younger. Hindsight is a wonderful thing!

WombatChocolate · 08/06/2021 19:53

JAnina, I'm not sure many people are saying everyone should retire as soon as they can possibly afford to scrape a living or that people are suggesting everyone goes from full time to zero work in one go.....the comments are more nuanced than that. (although that will be the aim of some and is the focus of the purists in the FIRE movement) However, many are suggesting not continuing with work well beyond retirement age to purely boost the coffers of what might be a perfectly good retirement income already...ie purely for financial reasons.....frommthenpointnof view that we don't know how much life or quality of life we have ahead of us.

You are quite right though....that it's not all about money. It could be possible to have a long and dull and poverty-stricken very boring retirement.

I suspect those people didn't have a great fulfilling work experience either. A lot of it is about attitude to life. Some people will get the most out of their time at work (not just financially) and in the other areas of their non-working life whilst that age too, and then go onto have plans for retirement that are wide ranging and challenging too. Retiring early doesn't need to mean work is missed and has to be returned to to give focus and purpose in life, but certainly some kind of planning ahead and preparing is good because not working is a very big change in life and can be a shock to the system. People need to plan both their finances and also other elements about use of time too. There's no reason why those retiring early can't do that as well as those retiring at the standard or later times.

I think work gives a lot of identity and meaning to some people's lives. For some, they don't have a huge amount more in their life and stopping can leave a massive hole. Preparing to retire requires different things for different people but probably needs to start a couple of years before it happens at least and for some who have had very little human interaction outside work, or limited involvement in other activities outside work, finding some activities they would enjoy doing and starting on a small scale, so that when work ends, they aren't left alone in the house all day with no human contact or activity. Reducing to part time hours can allow that to happen gradually and also avoid the cliff edge contrast if full time work to zero work.

The reality remains for all of us, that we don't know how long we have ahead of us or how good the quality of our last year's might be. Older people have a sense of making the most of it.....and I think that can involve looking back and wishing they had done more in their working lives, but also and more often involves thoughts about time with family and friends and activities they might have liked to have done, but never quite happened for whatever reason.

Isn't it just about us making the most of the unknown amount of time we have ahead of us....that's now if we're still at work and living in the here and now to get the most out of it, but also planning ahead both financially and for the other aspects of life, so we can get the most out of non-work aspects of life too.

Having choices is such a valuable thing and it's the planning and preparing that gives you choices, so you can pick whichever option works for you, whether that's extreme early retirement, slightly early, standard or late. The thing that people find a bit sad is when they don't have choices but end up stuck working longer than they want or having a retirement that isn't what they hoped for, and they realise that with more planning ahead, it could have been different. We can't plan everything and none of us know how much time we have or the quality of it, but a bit of planning can give us more chances to enjoy the life we have.

shivawn · 08/06/2021 23:24

I would hate to ever be poor especially in retirement.....I think its one thing to be young and poor but another thing entirely to be old and poor. I'm planning ahead and making provisions now to allow me to retire early and with a good pension.

BackforGood · 08/06/2021 23:47

Such a helpful thread. Thanks to all who have added information - particularly @WombatChocolate.

I've tried 4 times to book onto retirement planning webinars put on by the LGPS and have not been successful yet. I have a very vague / poor grasp of my pension. This thread has been helpful, thank you.

FinallyFluid · 09/06/2021 00:02

We have fourteen months to go, we worked on until Dh's final salary kicked in, this year we have "double bubble"...... salary and final salary (the tax man will love us Grin ) and then next year we will have state pension and final salary and be on more or less what we are on now, which is just over twice the average annual salary.

We plan to travel, long haul, short haul, weekends away in the UK, Ireland and Europe, house is paid for, we also have £170,000 in another pension pot but again, God only knows what that will be worth by the time the tax man is finished with it.

So long answer, most of our planning really only fell into place in the last ten years and it feels good to be retiring without worrying about money, even if we fail to spend it all before we die.

secretmeetingsundertrees · 09/06/2021 00:54

@KindnessMyFriends
It's unlikely that McCloud will have much of an impact on LGPS benefits because of the way the protection of those closer to retirement was handled when the scheme changed from final salary to CARE in April 2014. That protection will be extended to certain younger members.
Some general info here:
lgpsmember.org/news/story/mccloud_qanda.php

Have you considered paying AVCs in the LGPS? These can be used to supplement your tax free lump sum without converting pension to lump sum.
Your Fund's website will likely have information about the AVC provider(s) they offer.

Each employer will have their own policy on flexible retirement. They are required to publish this so, chances are, you should be able to search for it online, but your HR team should normally be able to provide you with a copy and details of the criteria and process for approval.

GimletGal · 09/06/2021 02:11

I picked retiring early and living on less. Paid off the mortgage early, saved up an emergency fund, then worked part time for a year while living on my "retirement budget" to check it was doable. I know I took a risk, but I'm 7 years in and still no regrets.

KindnessMyFriends · 09/06/2021 04:24

@BackforGood

Such a helpful thread. Thanks to all who have added information - particularly *@WombatChocolate*.

I've tried 4 times to book onto retirement planning webinars put on by the LGPS and have not been successful yet. I have a very vague / poor grasp of my pension. This thread has been helpful, thank you.

You can ask your lgps pension provider for an early retirement forecast. I did that a few years ago for a 2022 finish, but mine is out of date as I earn more now than I did at the time of the forecast. I also get a pension statement posted to my home address every summer which is really useful.
OP posts:
KindnessMyFriends · 09/06/2021 04:26

@GimletGal

I picked retiring early and living on less. Paid off the mortgage early, saved up an emergency fund, then worked part time for a year while living on my "retirement budget" to check it was doable. I know I took a risk, but I'm 7 years in and still no regrets.
You could be me. Grin This sounds like a really smart way forward for me.
OP posts:
menomary · 09/06/2021 05:39

This thread is really informative. I'm 58, 5 years into a Lgps so have accrued a pension pot of hardly anything, despite working FT (CETV shows around only £28k currently). Job is stressful. Is it actually worth me throwing as much as I can now into that pension for a few years in the hope of retiring earlier? I have some savings so could do that. Or, should I forget that and think of doing something else with my savings to help in retirement?

Billandben444 · 09/06/2021 06:05

Having the freedom to do what you want with each day will be amazing
But not if you can't afford to - it's so important to get the balance right.

flatcoatfan · 09/06/2021 08:24

@Billandben444 I couldn't agree more. I want to have more choices when I retire not less.

GimletGal · 09/06/2021 11:47

Thank you @KindnessMyFriends, it works for me. My emergency fund is large enough that I don't worry about the risk I took. If you decide to go part time do check the effect on your pension. Mine is a final salary public sector pension and HR told me it didn't affect my accrued pension, I'd just build up proportionately less extra in my part time year. The rules may have changed since then.

I could blow my savings on a Chanel bag, BMW, a cruise and a house extension, but these things wouldn't make me as happy as not having to drag myself into the office 5 days a week has.

Summerof74 · 09/06/2021 13:54

I am in the camp of retire early.
However everyone is different. I am happy with a garden and a good book but everyone is different.
Cicero quoted ' if you have a garden and a library the. You have everything you need'.
I appreciate this wouldn't be apt for others but for me it resonates.
Depends on what you like to do. Do you like holidays and eating out?
Are you happy at home and like simple things.
It's quite difficult as you will get so many different opinions. Will you spend less on travel etc

FrownedUpon · 09/06/2021 14:24

@Billandben444

Having the freedom to do what you want with each day will be amazing But not if you can't afford to - it's so important to get the balance right.
I don’t need lots of money to do what I enjoy-gardening, hiking, reading, visiting friends & family. As long as I have enough money to pay bills with some spare for treats, i’ll be happy. Time is so precious. I’d rather retire sooner with less money.
NoviceGardenLady · 09/06/2021 14:32

Retire early with a smaller pot.

I'm absolutely not relying on any kind of pension at all through work but making my own provisions. In fact, I think I will leave my work pension scheme soon but that's another thread Grin

I would much rather have less money but more time to enjoy it.

I am 35 and planning to retire in 10 years time.

MissMarplesstylecoach · 09/06/2021 19:53

DH and I have just taken early retirement and have 6/ 7 years to go until state pension age . Our income will be about a quarter of our previous salary but we will be able to pay all the bills, run.a car , have some short breaks away and enjoy a few cheap hobbies . After 40 years of work I am happy to live more frugally and have more time to enjoy what we can afford to do .

californiansoil · 18/06/2021 13:18

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