If you want to retire before 67...

[RoseThornside]

And your work pension only kicks in at 67, how do you find the years before 67? I am thinking I'd like to retire at 64 or 65, but I'm already in my late 50s. I have a small work pension that I can take at 67, and obviously the government pension will start then too.

How do I fund the 2 or 3 years before that? From savings? Or is there a better way?

I'm planning on bridging the gap with personal savings.

I'm 33 🤣 want to retire late 50's. So I'm at present building up my pension scheme plus private life savings.

God knows what the pension age will be for me for my state pension, so life savings is my only way to achieve this.

I'm hoping if for the next 25 years I can maintain or even improve the £200pm I pop into life savings I'll have circa £60k for the retirement plan.

I also have another little "day to day/rainy day" savings account that I pop about £100pm into, but I never touch "the life savings account." ever.

I’m saving in a Vanguard S&S ISA to fund the gap between retiring early at 55ish & getting my DB & state pensions at 67.

Any way you could position yourself for redundancy?

For me, I cant rely on the pension.

I'm still in my 30's and the pension age is always increasing.

I work in the NHS,.so again I wont be able to collect my pension early without it decreasing significantly. It follows the state pension age.

So I'm reducing outgoing, and saving into an ISA.

The thought of working to 67 is awful - I will probably continue to 61 or 62 and then I’m done.

I'm hoping to go at 60 at the latest.

I assume you rather use savings, find a part time job or downsize your property and use the profits.

Even at 55 I didn’t really think much of pension age but something happens when you approach 60 I think and it feels like you should be winding up. Dread to think of having to do an extra 7 years to 67.

My plan was always to retire from my proper job at 55 so my plan was

• pay off mortgage at 50 and then save the equivalent amount for the next 5 years
• retire at 55 but take up some consultancy or other work for a few years to cover the bills
• retire fully at 60 and start living off savings
• draw down pension at latest possible stage

But then I had DC quite late and then realised that big job paying £££ was impossible to combine with ever seeing my DC so moved roles to something no where near as well paid and I still haven't quite figured out what my plan is, especially with the cost of living going up so much. What I do realise is how lucky I am to be the age I am (mid 40s) as I meant that I was able to get on the property ladder in my mid-20s which meant that the above plan could have been possible. Now, it just wouldn't be. Although if I'd been a couple of years older, I would be much better off as house prices would have been even lower when I first bought and I would have benefitted from a final salary pension.

Yes, it is awful, I agree. When I first started working, I expected to retire at 60. That's just not going to be possible now. Even 65 looks like it might be a problem. I too do a boring, poorly paid job only so that I can both keep a roof over our heads as well as do the best I can in terms of parenting - also still have a child in secondary school.

I do wonder with this new retirement age of 67 and those of us who've not had so long to prepare financially, how many of us will actually drop dead while still working. I certainly know a couple of women who've retired at 64/65 recently and died very shortly afterwards.

Totally agree - when it was introduced it seemed so far in the future. But now I’m approaching the old retirement age I feel quite resentful that I need to go on another 7 years. It’s a long time at this age in terms of quality of life.

I can take my teacher's pension earlier if I accept that it'll be a bit lower. By 61 or 62 it should be reasonably comfortable. Then I'll do exam invigilating, tutoring, SEN taxi escorting and theatre chaperone work. All of which can be done on a part-time, seasonal and casual basis to boost my income (whilst allowing me a few holidays!!)

I’m not exactly sure as I suspect our circumstances are so different. I believe you can put either £40k or your full gross income into a pension each year and claim tax relief. I put £40k in to mine mostly through my work DCS scheme which runs on salary sacrifice. Because of the way the contributions are calculated it’s hard to get this spot on at £40k so I work out if I’ve fallen short of £40k between the March payment and the end of the tax year and if I have contribute to a SIPP to make up the difference. You could only put £20k in immediately and gain tax relief if you both had sufficient allowance remaining and had earned enough. Of course assuming you have a few years to work you could put in smaller amounts over those. I also put £20k in S&S isa each year to provide further ways of financing early retirement so you could do this alongside.
I’m doing this late in life as struggled to make big contributions whilst bringing up children etc.

On emptying the account you can take 25% lump sum tax free. You’d be subject to tax on the remainder. If you use isas instead or as well there are no constraints on when you take the funds out - you just won’t get the tax rebate advantages.

This is an interesting thread based on the number of people who are approaching retirement and think they may have to work longer.

Genuine question for everyone but is there anything you would have differently if you’d had a crystal ball?

I am living on savings in my late 50s as I was made redundant and divorced and downsized at the same time. I am twitchy about going into my 60s and not having enough. I have a private pension I will take at 60 but it is not enough to live on. I have worked out what I need in savings per year until I am 67.

None of this was in my plan!

You need to calculate how much you can live on. That’s your ‘number’.

Most people have paid off mortgage before retiring which reduces the number. They also realise they won’t need so much as won’t be paying nearly so much tax or pension contributions. You need to ruthlessly and honestly work out what you spend in a year first.

Once you’ve done that, you know what you’ll need and can plan to bridge the gap for how many years until the pension kicks in. So, if you decide you need 2k per month, you’ll need 24k per year. You have to work out how you can get 48k for 2 years. Essentially it’s about finding a form of savings to work for you. Clearly, the younger you start, the more time to accumulate the big sums you need for bridging the gap to retirement. Most people don’t do it soon enough or accumulate enough so can’t retire early, or at least have to keep working part time. You might well be in that position.

I have a SIPP I paid into while working and that tides me over together with savings and a small civil service pension until I get my state pension at 66.

@RoseThornside when you say that your work pension is “local government” do you mean that you are a member of the Local Government Pension Scheme? (LGPS)

www.lgpsmember.org/your-pension/planning/taking-your-pension/

In which case, the scheme retirement age is 67, but you can take your pension earlier. That’s very common - what happens is that they reduce the amount of your pension but pay it for longer. For example, the reduction is 5.1% if you take it one year earlier. So you get your pension at 66, but the amount paid for the rest of your life is reduced by 5.1%.

You can also take a tax free lump sum when you retire, up to 25%. So you could take a lump sum aged 65, live off your lump sum + pension for 2 years, then at 67 you’re now much reduced LGPS pension + state pension.

LGPS also allows flexible retirement - where you take sone of your pension at the same time as work part time, though that’s discretionary. But the early retirement (for a reduction) and the lump sum are all standard options.

You can set up a private personal pension now and benefit from tax relief, and yes - you can take it out in one go. But you’re taxed on it. You get the tax relief paying in, and pay tax taking out.

I plan to retire early. I will reduce outgoings and pay off pension.
55/56: I’ll save in an ISA for this as I can’t access my pension until I’m 57
57: I’ll access my personal private pension, and draw down £x per year, using most of it
63: I’ll take my workplace pension with a 12% reduction. (2 years early as my rules are 65, and that 12% is specific to my scheme)
I’ll also take a lump sum because I’d rather have an injection of cash to have fun with at 63, than £x more for life, when I’m in my 80s
67: I’ll add state pension

Obviously that’s all going to be jiggled around based on what I can save and all the other joys life throws at us! But it shows you how a plan can have several different elements to it. The main thing for me, is that I want to have more money from 55-70 than I do from 70-85, and that’s what I’m planning for.

You should be able to access your LGPS pension before 67.

I've no idea what we'll do tbh.
I'm an unpaid carer. Never had a career (only jobs) so no works pension.
Never been able to afford a private pension on what I earnt.
State pension for us will be 68 assuming such a thing even still exists by then.
Dh has 2 works pensions plus possibly some shares soon.
Hoping to pay off mortgage by 55.
Then take dhs 25% lump sum at 55 (he just squeaks in before the age change).
Hoping this means dh can retire at 60.
Saving as much as we can too til then.

This is really interesting. I am also LGPS and my forecasts show a low level pension I wouldn’t be able to live on without the state pension.

thank you to everyone who has contributed. I’m 42 but single with kids and mortgage and working out what’s best to do with the limited amount I can save has been playing on my mind. At the moment I have been throwing it all at the mortgage but will perhaps speak to a financial advisor….this is a naive question but do they charge?

You can access your pension before 67, but it will be smaller if you do.

The question that stands out to me from your posts is do you have capacity for more work now? If so, doing that and funnelling all the extra into your pension or an ISA might be wise.

I second the MSE pension board - very knowledgeable posters. I would post your age now, your pension forecast, your state pension forecast (from gov.uk - you need to check your personal forecast, it is NOT 35yrs NI = full SP), any other pensions and savings, your salary, your expenditure now and expected in retirement.

IFAs do charge, yes. Make sure an advisor is an IFA, Independent, an FA will be tied and can’t offer all products to you and therefore you likely will not get the best outcome. Avoid SJP!
Most IFA will usually do a free intro meeting including details of fees after which you can decide whether you want to engage them or not.

Are you sure you can't collect your local government pension early?

My friend can get hers from 55. (But at a reduced rate)

I thought this was standard?