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

If your employer has in house retirement planning/pension advice available then I think you should take it/see what they have to say even if you then feel you need further advice. Because they will know about your current pension scheme/any changes which have happened or do happen over the next 9 years. Independent financial advice means that they're not tied to a particular financial services company, but doesn't necessarily mean that they have the best knowledge of an employer pension scheme, and presumably their advice will be focused on additional planning, for example investing your lump sum.

Also, in the years that you have to plan, do you have options within your pension scheme, for any extra contributions to police pension or state pension possible, for AVCs, any other savings and investments out of your current income. If you have any disposable income now, could you overpay on the mortgage now to save money over the term of the mortgage and/or reduce what you have to pay out of your/DH's pensions when you retire?

I retired at 57. I was a secondary teacher. I have property income that saw me through until 60. Then I claimed final salary Teachers Pension. I took 25 percent lump sum tax free. From 57 until 67 when I'll get a full state pension I also have an annuity that I got from paying into a SIPP and I got a divorce pension sharing settlement from my exh of 22 years who had earned more than me and had a better pension. So now I have my Teachers Pension, annuity payment until I'm 67 and property income. I have not gone back to part time teaching. My DH just retired at the end of March this year. He is 59. He can claim his final salary civil service pension in September when he's 60. He's taking 20 percent tax free from this pot. He has another smaller final salary pension that will only be worth £2500 a year. He is taking 25 percent tax free lump sum from that one. This is a substantial amount. He also has a Sipp he has paid into and will turn into an annuity from 60 to 67 years. This will give him a little over £7k a year for 7 years. Our mortgage is paid off and we replaced lots of things like carpets, sitting room suite and had 2 new bathrooms completed before DH will retire. DH also has some joint rental properties with me so he can draw a small income from these. He will not work for CS again but he has said he will do a few maintenance and repairs on our property portfolio because he enjoys doing DIY. Neither of us are in great health and we have a holiday home in France we plan to spend some time in as Nd to travel too. We took a retirement course and we're advised it's likely we will spend more in the first 10 years, then moderate amount in next 8 years then likely less in later years. That is a typical pattern. I manage very well on my pension in fact I save money every month and I do the gifting to my 3 DC. I've done the gifting every year since I retired. DH and I planned very carefully for many years before we retired and we both paid additional pension into a SIPP. Before I retired I used to pay £700 pcm into my Sipp to pay less tax then I got a government top up. Annuity rates are good ATM.

Interesting thread thanks. I'm way off being able to retire.

Anyone know how you top up national insurance contributions? Can you do it online yet? I can never get through to pay and worry that will mean I miss the chance to do it. Only want to back fill two years!

Log onto your Gov Gateway account, check your history and determine the years (and cost) you want to top up, ring the quoted telephone number, they will confirm the details and give you a (16-digit?) number to quote on your bank transfer, make the transfer within a specified time.
Done.👍

Did it a couple of years ago, a little hazy now but think that is it.

Op what's your monthly income ?

I would do lots of checks and get lots of advice. It is a bit of a minefield tbh especially if finance isn't your 'thing!' I found it all a bit overwhelming myself two years ago when I retired at 55 from my LA job. DH retired two years before me on a private pension - he had no lump sums.
I had my LA small lump sum and my regular pension but I also had another smaller pension, so I took a 25% lump sum from that and another small pension that I just took as a lump sum.
We downsized when DH retired so no mortgage. Took our DCs and their partners on a wonderful AI holiday, bought a car, a holiday home had 3 more holidays ourselves and then put the rest away in ISA and Premium Bonds for a rainy day.
I didn't work for a year which was great but then I got bored! I started volunteering and I now work 3 mornings a week in a job I love. This extra income is now our extra holiday fund. I didn't plan on working again it just evolved really. I absolutely do not regret retiring at 55. It was the best thing we ever did. We don't have the same amount of money per month as we did when we were working but it's worth it to just please yourself most days which is worth way more to us.

@Sagarmatha 2.7k a month net. DH is on slightly more.

I have now had my Mcloud judgement letter and projected forecast at age 60. It’s not too bad pension with no lump sum around 35k pa, pension with maximum lump sum around 25k pa and tax free lump sum around 165k. Retirement at 55 will be slightly higher lump sum and slightly lower pension but I will get a proper forecast once the pension providers website is sorted out.
I’ve made an appointment with a financial adviser for October to go over everything pensions wise and get a bit of investment for growth advice too.
I reckon I can leave at 55 and DH at 60 and we will be comfortable. If we take part time jobs a few days a week. Then we will be even better off until state retirement age. I will have maximum national insurance contributions and so will DH.
It looks like retirement at 55 will be doable as we will have paid off our mortgage by then and obviously the figures are subject to inflation and future payrises.

Have you got enough years for a full state pension ? Being 'paid up' with this at the early age of 55 doesn't sound right to me.
Check it at gov.gateway

And don't you lose 5% from your work pension a year for taking it so early ?

That's an enormous lump sum.

I will not be taking a lump sum but spreading it out.
I plan to have monthly cash payments for all of my retirement and to have 25% of each payment be tax free. I will get more money tax free that way as my pension will still be accruing returns from investment over the decades of retirement. I will also have a higher monthly payment that way because taking out 25% at the start of retirement has a massive knock down effect on what I could draw down monthly.

https://www.royallondon.com/retirement-planning/using-pension/cash-lump-sums/

£35k pension is good, plus it is highly likely to be index linked.

I agree double check your state pension entitlement as the 2016 changes mean those who were contracted out can find they are short of the full entitlement

Have you paid off your mortgage, makes a huge difference. We are only spending £2k a month

I’m nhs and swear the lump sum is in region of about 40k! I’m shocked at your lump sum amount

I thought it was 2028?

It doesn’t sound right at all …so if you are picking up around 2.7k a month….would make your salary around 50k….no way is your pension going to be 35k …..my friends in the police and she said that is no way correct

@Kitkat1523 It depends what pension you joined on. I was originally in the 1987 scheme and Inhave just had my lettermof projected benefits. My DH’s pension is not as good a much lower lump sum and yearly pension as he joined on the 2006 scheme. The 2015 scheme is worse still I think.

I’m going at 55 unless ill health makes it earlier - 53 in Feb. Defined benefit pensions will give me £12k a year and I will have £150k in savings (ISA’s and PB’s) with no mortgage so the DB will cover bills and food etc. I should have £600 a month PIP and then I have a further smaller pension pot of merged DC which could give further income if needed of around £500 a month but will probably just leave those til I reach state retirement age. Working with two chronic conditions plus had a small stroke and now waiting for surgery / cancer testing for a large ovarian growth - I’ve had enough already

@mitogoshi we will have paid off the mortgage by then (we overpay).

Sounds spot on going by what my brother & my friend got. They were both in the original pension scheme. My brother retired at 50, my friend at 52. As OP said, your friend is probably in a different fund.

@Harassedevictee I checked my NI contributions for my state pension today and it says I have full contributions every year since 1994/5 to now as I started work at 16. It’s saying I will have full state pension in 2047 of £221.20 a week and I need 6 more years of contrubutions to get this full entitlement. Would it say that if I was contracted out? I assume the government record is correct?

@Sunnydays10 I am not sure I will take all the lump sum but yes the 1987 Police Pension scheme was excellent, some of my colleagues retiring this year have been offered around £150k lump sum at 30 years. This is why the government has changed the scheme twice since then I assume!

@Properlucky if you are affected by McCloud you were contracted out until 2016. It does sound right that you need 6 more years. My advice, check it each January.

@Kitkat1523 the 1987 scheme offered 2/3 of your final salary. I can only go by what my projection letter says. I am getting independent financial advice too, just in case the letter might be wrong!