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

Absolutely don't blame you but I would make sure you do something part time to ensure you pay your National Insurance contributions.

I 'retired' from my corporate job at 53 but I run a small business that means I fill in a self assessment tax return and still pay some NI. I pay someone to cover for me when I go on holiday.

I probably work 15 hours a week at the moment which gives me lots of time to be lazy!

Before my pension age we will live on DHs private and state pension and the approx £400k we have in assets. Any shortfall I think I can gap with seasonal/temp work. I’m also prepared to work an easy job a bit later in life when DH is much older and we’ll be no longer gallivanting.
I think it’s doable!

Sorry I am slightly confused as earlier you mentioned that your pension was £5k.

What is this £20k pension and what age would it be payable?

Does the £400k in assets include the value of the home you will be living in?

Assume you can't take your pension until you are 55?

20k, is that taking account of inflation? Does the private pensions have guaranteed annual increases?

I'm slightly older than you and wouldn't consider it enough to retire but I'm keen to have holidays, cars and retain a house.

I’ve calculated it as approx £20k due to £5k my pension, £5k widow pension and just over £9.4K state pension. I’m prepared to be told I’m not working this out correctly though. It’s probably clear that I’m not too hot with financial stuff!
my pensions are payable in 2048 and widows one upon his death I suppose

What is your pension OP, is it a defined benefit one i.e. they guarantee you will be paid a certain amount each year? Does it have inflation protection?

No. I’m working on the assumption we live in a narrow bit and I’ve deducted £100k

I’m not sure re. The questions about my pension so will check this out. Thanks!

Does a widow's pension exist anymore?

My DHs work pension is continued to be paid to his NOK after his death. It’s adjusted to a lower rate due to our age difference. We have checked this one out

Yes. But you can buy years of NI contributions…
www.gov.uk/voluntary-national-insurance-contributions

I also think the next 10/20 years can be flexible and if we have any shortfall we can bridge the gap. I was more concerned with not been destitute in my own old age. I don’t think I will be

I'm planning to retire at 50 OP so I get it! My DH is 10 years older than me.

The key for me has been spreadsheets & budgets. I've calculated the amount we expect to spend each year (thinking of every single expense) and expected income and savings balance per year. This has given me comfort that our bills are fully covered by our income and our savings will not run out. We know if we want to increase our expenditure, say we want a bigger holiday budget one year, then we can do so by taking on some work.

Strongly recommend doing a budget of income and outgoings to check your position.

So your assumption is that you sell your home, use the equity to buy a narrow boat and £400k is what you will have left over at the end?

Is the intention that you live on the narrow boat full time for the forseeable future?

On your pension - do you mind saying who it is with as that will help. If you are in public sector and it is e.g. NHS or LGPS then it will generally be a defined benefit pension. Most private sector are now defined contribution i.e. you have a pot of money that might run out.

Yes that’s my rough assumption at the moment. We will have a narrow boat and a camper van. This may turn out to be a small house for approx £150k instead. This isn’t fully decided yet.

I’ve just checked my pension, it’s private sector. It’s called a sustainable multi asset pension fund if that means anything to you? Total plan value is £68k currently.
thanks for your help, I appreciate it

Here's what I would do OP. Use your equity to buy 25% outright in a part buy- (no mortgage needed) leaving you just with the rent element --but cash in the bank. This means also if at any point you have less than 16k in bank you can get help with rent and council tax. I wouldn't go for a narrow boat- they often need lots of work , depreciate and usually aren't great if you are older- nice for the odd holiday.

Pay class 3s voluntarily for next few years.

Do some temping/seasonal work if you are around - as and when it suits - this will give you occasional extra cash , means you can be flexible and also keep your CV active in case you need to work at some point.

Sounds perfectly doable to me but I live pretty frugally anyway just because I don't want a lot. I retired at 58 with small nhs pension plus savings (I have actually gone back to work part time after a good rest break but out of boredom not financial necessity). Live in mid terrace owned outright, own an ancient car and I live comfortably on £10k per annum as in I can buy anything I want at the supermarket and don't have to worry about energy bills (even though doubled), so I'd say you will be fine. Go for it! I'd love to tour around Europe in a campervan but as a single lady I haven't got the guts. Enjoy😎

@rumplestiltskinp

Yes I really enjoy work and the structure it brings to my life. Obv everyone isn't the same.

I've also known family member who retired mid 40s after selling successful businesses. It didn't work out well for them and they all went back to doing some form of work, which they enjoyed much more without the pressure to earn to survive.

Is it index linked ? Otherwise it will be worth about 2 k when your a hundred

I retired early at 56. I have got my 35 years NIC contributions for a full pension and tbh I forced myself to do the last 18 months. I am 60 now and can get my Teachers Pension every month. Just over £800 pcm. I took 1 year put with each of my 3 children but made up NICS so counted as full years. You can check NIC contributions on line at gov.co.uk. I also have the income from 8 btl properties and I am a Foster Carer to 1 16 year old so get a generous tax free allowance. My dh is 3 years younger than me and still works. He plans to work until he is 60-62. We have 20 months left on our mortgage. We also have savings and stocks and bonds. I have a second pension pot of £55k I can drawdown until state pension kicks in, in just over 6 years. DH can get some of his civil service pension at 60 but rest not until 67 when he will get a full state pension too. We got advice from an Independent Financial Advisor before I left my Teaching job, and it was well worth the cost. From what you say I am not convinced you can afford to retire yet. Look up NICS before and then visit Independent Financial Advisor before you do anything else. I do understand your wish to enjoy some time off with your DH, especially as you have been on caring duties with mil for so long. You could take a years sabbatical and then return. My prediction is that there will be a recession and many will lose what they thought of as safe jobs. I can see this lasting 2-3 years so think carefully before throwing in your job.

I get what you mean about structure for sure, I used to be exactly the same.

Definitely do your research on the narrowboat idea - it can be cheaper but you've still got license, insurance, maintenance, fuel, depreciation etc. What do moorings cost in your area and are there any available - or are you planning to continuously cruise in which case you need to be quite practical/outdoorsy/fit?

Hi wondering whether you should see it as husband / life career break in the same way many have a child career break (sometimes for 5 or even 10 years). So do some good financial planning now and the factor in a 20 hour week job in 10 years time? Might help numbers add up and still get life you want? Life Structures so different now. I had my kid at the same age you are now so will be working a long time - we all have to grab flexible life plans!

From a friend’s experience - narrow boat living is wonderful unless one of you gets seriously ill and then it becomes seriously impractical. She had cancer and though she’s fine now, that forced them back to land living.
Don’t forget to factor mooring charged etc.