Retirement at 55

[Properlucky]

I am extremely lucky to be in a job where I have a final salary pension and I am able to retire at 55 - 9 years time - when I will have 32 years service. I could stay on after that but i’m already getting sick of the job so will probably go then. I can commute up to 25% of my pension tax free for a lump sum, and I think I will do this to travel and pay off the remainder of our mortgage.
DH and I are retiring within 4 years of each other and our take home from pensions (from the prediction calculation) looks like it will be very close to what we have coming in now if the mortgage was paid off.
Anyone else retiring/retired at 55 with a final salary pension? If so what plans did you make? Did you seek independent financial advice? (Workplace do pre-retirement courses, but i’m not sure how independent the financial advisers they recommend are). Did you find another job after retirement because you were bored or because you needed the money? Did you blow your lump sum on a round the world trip?
What else do I need to consider?
Thanks

What sector are you in? Most FS pensions have changed the early retirement age to 57 from 2025. I’m a teacher and this has caught out some colleagues.
i retired at 59, but actually still work part time still.

I retired, or rather took redundancy from the UK Civil Service with an unreduced pension at 54. This was in 2013 and the rules have changed since then.

The part that bit me was that indexation didn't cut in until I was 55. That meant I lost about £5k in the first year. Make sure you understand fully how indexation works, including how you final salary or other baseline, for pension is calculated.

My final salary was a tad over £40k but for pension purposes it was based on the best three years in the last five and then increased by CPI giving me a pension based on something like £45k (35/60ths thereof) at 55. Nobody understood the rules properly, least of all HR.

Are you sure about how much you can claim and when? On the face of it you're too young to be able to take all your pension at 60; most schemes moved post 2015 (ish) to a career average scheme with a retirement age of 66/7 - tracking State Pension.

I am similar but my DH is not in the same type of scheme
We are retiring together- have you considered that by working a couple of years more then he may be able to work a couple less (or visa versa if he was the one able to retire 4 years earlier)

I was under the impression that the age has moved from 55 to 57 but I am happy to be corrected about this? 🤔

I took my DB pension and quit work at 57, best thing I did. 🙂
I have a DC pension that I have not touched yet, was going to wait until I am 60 and start to draw on it then. I don't need the money and there is no tax incentive to draw it now (I am already over the threshold and paying tax) so was hoping the fund would continue growing and then I will draw it all down by SPA.

What is the age difference between you and your DH? You say you will retire within 4 years of each other but not who will retire first. Whoever is first to retire will find their ability to travel etc curtailed by the working pattern of the one still at work, and will either feel they are waiting for their (new stage of ) life to start or will throw themselves into new activities, friendship groups etc and find that their interests diverge.

Other PPs have addressed the need to check scheme rules for retirement age changes/restrictions, tax friendliness etc. I would get an appointment (online) with Pensionwise- it's free and really helped with pension planning even though I was financially savvy, there were some things I wasn't aware of until I spoke to them.

Good luck!

I'm going at 55, nurse with special class status so I can get the vast majority of my pension plus lump sum penalty free. I Invested an inheritance several years ago for the same purpose. I already have my 35 years NI payments. An IFA has confirmed it's all perfectly doable.
DH will go six months before me, also at 55.
Neither of my parents made it to 70.
Three years to go.

A few things to consider.

Make sure you will have sufficient NI contributions for a full state pension - buy top up years if not.

How much do you lose by taking the pension early? Also - is there a penalty?

Could you start investing now into a SIPP and build sufficient income for 1 or 2 years after you retire, thus delaying taking the DB pension for greater income later? You would receive the tax relief top-up on the SIPP, which might prove better value than taking a bigger lump sum?
The SIPP would be flexible so you could withdraw 25% lump sum tax free; plus your personal income tax allowance before you'd pay tax on it.

The only thing I would consider is the timing of your state pension. I am slightly older than you and was expecting it to go to 67 and 4 months for me, but starting to see articles about it going to 71. This will definitely affect when I can afford to retire. I would like to retire before state pension age, but don't want to find myself in the position of the WASPI women where you think you can bridge the gap to state retirement age but then find it moves!

That said it may be that you have enough without that.

I 'retired' at 60. Final salary pension from Barclays with 30 years service. I'm currently still working two days a week on the NHS bank because I like the extra money. I might stop altogether when the State Pension kicks in.
I didn't take my lump sum, going for an increased pension instead.
You may find that you need more money than you anticipate in retirement and it's quite un-nerving to realise that that's it now. This will be your income for the rest of your life. No more overtime, or bonuses or share options that may have brought in extra over the years.

Thanks for the tips and insights everyone. Food for thought abd a few things I will need to check! It’s a Police pension, 1987 scheme, and I can go at 30 years still, or 55. Because of my age I did not benenfit from tapering relief when it was changed around 2015 along with fire service and judges, but the judges have taken the government to court and govt are in the process of reinstating some of the benefits of the 1987 scheme (one being I can still go at 55). I assume this will have been sorted out within the next 9 years.
The pension calculator we have is based on the worst case scenario as it does not take into account pay increases or inflation between now and retirement date. I do have another calculator that takes into account the govt reinstating benefits but the results are wildly different.
Conservative estimate lump sum (tax free) £147k and annual pension of 19k pa.
Reinstated estimate lump sum (tax free) £202k and pension 32k pa. I honestly can’t see the larger estimate happening 😂
I haven’t thought about the state pension as the goalposts are continually moving so i’m trying to be conservative with the estimates and not include state pension!
I will need to check my state pension entitlement, as I suppose I might not get this/have maximum contributions if I retire at 55? (Is it 38 years contributions now)?
Hubby is in same job but on 2006 scheme originally and joined later in life so will not get 35 years (which he needs for full pension) but is looking at retiring at 60, which is maximum age he can go. I am younger but joined the job way before him, hence the different pension.

Are you sure of those figures? AFAIK, the lump sum would be much lower than you have said.

Have you tried the McCloud calculator? https://www.myownpension.co.uk/mccloud/

I retired early (54) after taking voluntary redundancy from the civil service. I would recommend that you go on a pre-retirement course. They provide you with a variety of information (not just financial) which is very useful. Planning for retirement is vital. I was able to get good financial advice in my 40s and really took onboard their comments. This made my early retirement much easier.

I love being retired (it is amazing) but while I found it great not everyone does and some people have difficultly adjusting (My ex-boss found it quite hard for the first 18 months). It can also put relationships under the spot light. I know of two couples who divorced after retirement but others which go from strength to strength.

Also you need to be able to say No! When I retired a couple of family members thought that would mean I could do X, Y and Z. But this is my retirement to do the things I want to do. Of course I want to help out if I can but not if it stops me from doing the things I want to do. It is important to get a good balance, be “selfish” and do the things you want to do.

Finally believe in yourself. Although my retirement has only been a few years, it has been much better than I thought it would be. Good Luck.

I’m going soon at 57 and even with transitional relief sorted out due to the case you mention snd 30 years service my lump sum is a fraction of yours. HE career anyone? No, head for the police.

I didn’t take any professional advice. I’ve read plenty and know what I’m entitled to in terms of state pension - I have full NI entitlement (just). Fortunately I paid into a stakeholder pension for years and know I have enough. Part of the lump sum will pay off the small remaining mortgage and DH is continuing in work as he’s happy to carry on.

I might well do some part time work in the future, but I’m going to spend the next year going the part of my job which never gets done - research.

Good point on family expectations, Littlellama. I’ve already laid out what I’m doing - so no one thinks I’m available at their beck and call!

I took the view that I didn’t need to do a course - I’ve read plenty and know exactly what I’m going to be doing. I’m ready for it.

@Soontobe60 That’s what the calculator is telling me. Unfortunately I have nothing else to base my assumptions on!

Surely your pension provider has a website that tells you what your pension is worth??? Otherwise, how else do you know?
As a teacher, I’m registered with the Teacher’s Pension Service and it has all my service history, pension payments and (before I claimed it) my predicted pension with calculators where I could work out how much Id get if I retired early.

I was a teacher and retired at 57. I didn't claim my Teachers Pension until I was 60. I took 25 percent as a lump sum. I managed because I had a secondary smaller pension in a Sipp. I took the 25 percent tax free from the Sipp and bought an annuity to take me from 57 to 67. Also I have a btl portfolio so had investment income. One of the things to think about is how will you use your time? After I first retired I was somewhat at a loss of what to do all day. I caught up with several jobs I had been putting off. My DH was still working. I joined a gym with a spa and swimming pool and went 3 or 4 times a week. I got a bit fitter by walking DH dogs instead of DH doing it all the time. I helped out a bit with my DGC but they love 150 miles from me so not easy. I visited my sister in Devon. I took up geniology and traced my family tree. I've been on several holidays. I have lunch out at least once a week. In the summer I like to do my garden. I bake and cook too.

Yes it’s the myownpension calculator specifically for my pension, the one where you can change your retirement date and work out what the annual pension will be depending on lump sum taken/age/number of contribution years etc. The other calculator with the higher estimate has been provided by our police federation and i’m not willing to believe i’ll get anywhere near that! I’m trying to plan now so there are no surprises and i’ve heard 10 years from retirement is a good time to start.
It’s interesting about the years between hubby and I retiring. I hadn’t thought he might be frustrated whilst i’m still working. We will definitely need to plan together. I’m so thankful for your replies, there are lots of things to consider on my list now.

The Centre for Research in Social Policy at Loughborough University.
have estimated that a single person needed £14,400 a year for a minimum income, and £43,100 a year for a comfortable retirement.
Couples required a joint £22,400 at the minimum level, £43,100 at a moderate level, and £59,000 at a comfortable level (assuming no housing costs).

https://www.bbc.co.uk/news/business-68222807

It sounds like your lump sum figures are very wrong, based on the annual pension amounts.

Did you find another job after retirement because you were bored or because you needed the money? Did you blow your lump sum on a round the world trip?

I retired at 55 on a final salary pension that is £12k per annum, so the figures you and other posters on MN quote blow my mind a bit.

When I retired I retrained in a field which has been a lifelong passion and started my own business doing that. I did it because it had been a long held plan to do so, not because I was bored and only partly for the money. My work is not highly paid and I live a very small, contented life so need very little money to do so. I'm lucky in that I own my own small place.

I definitely didn't blow my lump sum on a round the world trip. I paid for my studying, got a dog, a van for my business, a bike, a tent and an allotment. I think my old colleagues think I've lost my mind. I also do volunteering for the National Trust and a local environmental charity.

The key things are to decide what you REALLY want to do with your time, what it will cost and if you have enough money.

I'm also a retired civil servant who had to retire early at age 55 in 2010. Due to incompetence on behalf of our area Welfare Officer my personnel file wasn't forwarded on to the Pensions people within the required 3 months legal timescale so I was unable to go for a medical retirement. Had the paperwork been forwarded in time I could have retired at 55 on a full 40 year civil service pension, which would have made a considerable difference to my retirement income but instead I had to opt for warly retirement on only a 75% civil service pension.
I couldn't claim any extra state financial support because my civli service pension was just that ittle bit too high for me to qualify and I was ten years too young for my state Old Age Pension so I had to struggle on as best as I could until after my second heart attack when i realised I could claim PIP. That made a difference but having to go through the applicaltion preocess annually was a drag 🙁. In 2019 my PIP renewal application was refused, when i was still too young for the state pension, and that led to a fnancial struggle whilst i went through the appeals process.
In 2020, after the appeals process had taken almost a whole year, my PIP application was finally accepted and I did recieve a substantial cheque from the DWP for a year's back payment of PIP. In the meantime I'd had to sell my car in order to pay a couple of big bills (the kind where you need to pay up or they cut you off). I had to wait another year till 2021 when I turned 66 and could finally receive my Old Age Pension and qualify for my council bus pass; I also bought a Senior Railcard which gives me reduced rate train fares so that makes a difference also.
Now at age 69 and in recipt of a partial civil service pension, standard rate PIP and my Old Age pension I'm not exactly struggling like I was a few years ago although I'm not living in the lap of luxury either.

I would check your state pension on the years.

https://www.gov.uk/check-state-pension

DH retired a couple of months ago at 55 - he may or may not do some consultancy in the future. The vast majority of his pension is in a SIPP, and over the (old) LTA. We've taken a lot of advice over recent years about pensions/tax efficiency. Currently using financial planners - who have been excellent (well we think they are so far)- fixed fee (that can be taken from pension) rather than a %. It sounds like yours is more straight-forward being fully in final salary but I always think it is worth taking advice, even if it is just for peace of mind.

I'm 51 and have another 5 years to go get my full state pension entitlement (at 67), and I intend to do that. DH started working and paying into a pension at 17/18 whereas I went to uni etc. so I'm a few years behind him with this as well as age.

EDIT: Should've mentioned that he transferred out of two final salary pension (on much advice) - very much doubt this would be wise with a Police pension though! I'm certainly not transferring out of mine (not police but similar).

You definitely need to check your state pension forecast with DWP. I was in LGPS and had more than 35 years but as the pension scheme was 'opted out', which I guess police will be also, then I didn't get full pension so have had to buy additional years.