Retiring very early- what do I need to consider?

[BippityBobbityBoo]

I’m 42 and planning to retire early, probably next year, I earn £40k. My DH is already retired and mortgage is paid off. We will probably downsize and will live off the proceeds, some savings and his small pension. He will get state pension in 5 years and I may do some small jobs to bring income (cleaning/care) My pension pot isn’t very big. What can I do to make sure I have a good pension? Thanks

Why do you want to retire completely at such a young age? What are you going to do to fill your day / have a sense of achievement in your life?

The only people I've known who have retired in their 40s went a little bit mad, had affairs and then started their own business and were much better.

Well, you can’t magic money out of nowhere so you’ll have to live on his pension when the equity from your house runs out until you’re state pension age yourself. So 25 years. I guess you could buy an annuity with the equity but unless it’s several hundred thousand pounds it won’t make up for your lack of salary.

My DH is quite a lot older than me, we want to spend some frivolous time together now our kids are adults. We have been caring for his parents for the last 7 years but this is now ending (care home). We will get a camper van and travel, lots of holidays, gym. I’ve achieved enough (for me)and hate my corporate job. I may have to return to work later in life but will do something like care which I think will be more fulfilling. I may also do some
volunteering. I just don’t want to be hard up pensioner.

will my lack of NI contribution’s mean I won’t get full state pension?

You can look into the NI contributions, have you an account on Gov.uk?

And why not retire early? Life is short, just go for it! Be happy 😊

You need 35 years of contributions to get a full state pension.
Can you afford to do everything you want on the money you'll have coming in ?
House equity money will not last forever.

Yes you won't get full state pension unless you have enough contributing years.

In your position I would: check state pension prediction, find out what pension you will get if your husband dies, consider renting out your home on Airbnb or similar when travelling, make a detailed budget using an online budget planning tool and then work out if you have enough income. Think about where you want to live when you downsize. Some parts of the country much cheaper than others. I’d probably see a financial adviser.

By the way, life is for living and if your husband is much older and you’ve been caregivers for 7 years and hate your corporate job I don’t blame you for going for it, just some planning will help you!

@bippitty I am doing something similar, I'm early forties, but we are moving abroad. We have a campervan and I am really looking forward to having some time to do what I want for a change with Jo schedule.

OP your post will be read with derision by many I suspect. You have no financial plan, you appear not to be terribly financially secure, you plan to quit work and live off your husband's meagre pension and so on.

But only you can decide what's the best for you both. If you are up for it, and can live ok on what you have then go for it. You could let out your house while travelling, there is a small pension and some savings.

Maybe you might need to factor in things like house maintenance, cost of travel, fuel, insurance, HEALTH/TRAVEL insurance (vital), and enough to eat more than a tin of beans, not that there's anything wrong with beans!

Sit down and work it out. Pretend you are staying in your house post your retirement, write every expense down and then translate that to a travel adventure situation.

I retired very early too mid 50s. I did not have a husband or partner, but I owned my house outright, got a substantial redundancy package and a hefty pension, so I am quite financially secure. I would not have done it if I had to live very frugally, but many do and can.

Best of luck.

I would be concerned about state pension eg contributions & the age moving out. Plus I can't see the nhs free at the point of care in 10 years time so I would think about how to fund healthcare

Could you frame it as a sabbatical rather than early retirement so you are not burning too many bridges in terms of future employment options in case your circumstances change or you get bored?

I agree with much of what @HappyHedgehog247 has said, I can understand your mindset but I would want to know what financial situation would be if anything happened to DH

Retiring in your 40s is something that usually takes a huge amount of planning and investment. I can understand why you'd want to if your husband is older but it sounds as if your plans are very vague and you risk putting yourself into decades of poverty. Do you really want to retire or do you want to take a bit of a career break for a few years and return?

Whatever you are planning you need to get yourself armed with very detailed information. First things to do:

1. Get your state pension forecast. You can do this online today. At 42 you are likely to be 10+ years away from a full state pension but find this out.
2. Get full detail on all sources of income for retirement, especially pensions. If there are defined benefit pensions, this should include whether there is any inflation protection and what the survivors rights are.
3. Work out what you are likely to want to spend in retirement and what the current gap between income and likely expenditure will be.

In all of your planning you need to think through not just what you will do as a couple but also what happens to you if he dies or you divorce. Personally I would only retire if I were sure that my own pension provision/investments were enough that I could rely on them alone for a reasonable retirement. You will really be in a very difficult position if you take years out of work and find yourself in your 50s/60s trying to return to work because you don't have enough to make ends meet and don't even have a full state pension for your old age.

35 years only applies if you first started making NI contributions after 2016. Anybody else needs varying amounts depending on circumstances.

Would you consider working part time? Caring is fullfilling but it’s hard hard work. And cleaning isn’t much fun either,

if you worked part time you can keep your hand in, work s couple of days a week, add to your pension and still do the things you want.

Genuine question, do you have nothing you would rather be doing when you're at work? Do you love being at work and wish you could be there more?

Is it actually that you want to stop working or that you just want to leave your current job?
A career change can sometimes do the world of good, or the other option is to take a career break, you may never go back but just take a while out to discover your options and what you really want to do.
I've had a similar experience and found I need to have the structure of work and a different career was what I needed.
Also your finances seem as though you're not really able to do this yet

You don’t have to work to pay NI. You can pay voluntary class 3 contributions which cost about £15 a week. Sounds a lot but it will make a huge difference to your state pension when you eventually get it - if you survive just 4 years past your retirement age it will have paid for itself. See www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions.

I plan on retiring about 10 years older than you which will be soon.

What has helped in the decision was to pay for an IFA who projects what income and expenditure we will have in retirement so we could see how likely it would be to run out of money.

It has been so helpful because on here and in RL you will get people telling you that you need millions invested to retire early when actually it really depends on your own personal finances.

Thanks so much for all of the advice!
I realise our plans are vague, DH is even more vague, you’ll be alright, won’t leave you destitute etc… but I want to know that I’ll be ok.

the sabbatical is a good idea and I hadn’t considered that so thanks. My employer allows 12 months sabbatical so I think I’ll start with that.

Thanks for the NI voluntary contributions advice and the state pension calculator advice too! I’ve had a look and I will get maximum state pension with 5 more years of contributions. My DHs pension would give me a widow pension of £5k and my own pension another £5k. We do live frugally so I think I’ll be ok and I do have a better idea now but will also see an IFA.

thanks for the Airbnb ideas, all good advice. We also have some savings and shares and about £350k in the house. Up north so housing is cheap. I’m also keeping my fingers crossed for a redundancy package with 22 years service.

I don’t want a career change, I don’t want to work! Was a teen mum and want to be free and selfish! 😊

We’re also considering narrow boat living so looking into that too 😊

The sabbatical sounds like a great idea. If I were you I'd work out what your retirement budget will be and try and live on that now. That'll help you to see whether it's realistic and you can put the difference in pension/investments whilst you are working.

OP, you could live to 100. That's another 60 years needing funded.

I can understand why you want to take time out and enjoy life with your husband, but I just can't see it being financially viable.

I think you would be better re-framing it as a sabbatical.

As you don't enjoy your work, absolutely chuck it and do something like care that you feel would be more rewarding. But I think many people underestimate just how much money you need to retire comfortably.

You do have options to change your lifestyle to one that suits your and your DH though. Good luck.

I’ve calculated a pension of approx £20k pa which I presume I’d get until I’m 100 years old unless I’m really naïve? With no housing costs I’m sure I could live quite comfortably on this amount