Things to consider

[RatiTeen]

I'm in my mid-50s and would like to retire at 60.

What actions people have taken and taken early retirement? Pension contributions? Advice from financial advisor? Down sizing?

Its a bit of a wide question, but yes, checking the details of your pension is a good place to start.
Work with actual figures to do with the forecast, and find out how much less it will be, depending on when you stop working.
Then it depends on your job. Some people retire and then go back again (because of the way their pension works). Some people retire and do 'bank' shifts / supply cover. Some people start doing another (perhaps less stressful) job. Others walk away from work altogether.
Then, depends on your family circumstances and if you have a partner and if they are still earning. It might make sense not to start drawing down your pension if you family income more than covers your outgoings for a while.

Depends on your housing - do you own your own property ? (presume so if you are asking about downsizing) Is there anything left on the mortgage?

Moving house can be expensive - will you gain enough, on the difference between current house and new - to make it worthwhile ? Or, if you are downsizing considerably, is it about lowering utility bills, Council Tax, etc ?

Definitely worth going to retirement seminars and speaking to a financial advisor.

Obviously, I don't expect you to answer these questions here, just pointing out, it is a "it depends" situation.

Think what you want your life to look like...what will you do with your time/ how will you structure your days/weeks? What will that lifestyle cost?

That should give you some idea of what income you need, then you can discuss with Fin Advisor what you need to do to make sure you have it.

I retired at 55 and recommend it.

I was redeployed to home care in COVID. The one thing I thought was when I retire a walk-in downstairs shower and toilet would be a massive advantage to insure your comfortable in your own home for as long as possible.

Would never of thought of that until I saw it first hand. Certainly worth considering especially if your thinking of downsizing

Basically having enough money to enjoy the life you want.

I'm retiring from my teaching job in July. I'll be 56 & 6months, I'll get a lump sum which I'm going to invest. Checked over my pension and have been keeping a detailed record of what I spent last year.

I downsized last year to a smaller house, paid off the mortgage. Bit of equity left but not a lot. House is so much warmer, easier to maintain and clean. Walking distance to a supermarket and a pub and on a bus route.

I'm going to have to get a part time job doing something for a couple of days a week to top up my pension, plus I want to still have some structure to my week.

It's scary but exciting

@RatiTeen I missed your post so this is a belated response. Things I suggest you consider

• state pension - check you will qualify for a full pension.
• expenses - do a fully costed monthly expenses, including annual bills, gifts etc. now and then look at where you are likely to spend more or less once retired. I spend far less on public transport as I no longer commute to work but far more on petrol as I have days out.
• Private/work pensions - you should have annual statements, if not get up to date figures. Get estimates if you take your pension early, I worked out the reduction meant I got slightly less for longer but by age 80 I broke even. I chose longer retirement e.g. 20 years rather than 15.
• Check if your work/private pension is index linked, this makes a huge difference.
• Work out big costs e.g. home improvements, cars and travel. I ring-fenced a pot for travel and for home improvements. The idea is to travel in the first decade + with a view to slowing down or travelling to Europe rather than global as I age/ mobility is impacted.
• Part time - I do recommend phasing into retirement 4 days then 3. I had Wednesday as my NWD so I could do classes or trips mid week to get used to it.
• Remember you do not pay NI or pension contributions on pension income. A gross to net PAYE calculator can help you see what net income you will have from your pensions.
• Look at FIRE (Financial Independence Retire Early) threads on here and MSE forums. They can be extreme but have good ideas on how to plan for retirement.
• Think about where you will want to be living at 75-80+. Do your research so you know where you want to downsize to. Don't leave it too late.

Harassedevictee

Why do you recommend phasing into retirement 4 days rather than 3? Would ypu recommend doing 4 days for a year or two and then 3?

I am asking as I do 5 days and I find it tiring. If I did 4, I would be tempted to rest on my nwd instead of doing classes and other interesting things. I am mid 50s.

I'm trying to get all the big jobs done in the house (roof, kitchen, windows) before I retire so hopefully no large amounts having to come from pension money.

I’ve started getting as much tax free income out of my Sipp and into an ISA as I can, I’m 58.
It works for me because I have £4200 spare annual personal allowance so I can UFPLS £5600 ( of which £4200 is taxable ).
From 2028 I’ll have my full personal allowance to use (£11320 due to gifting DH married allowance)
so I can the UFPLS £15000 into my ISA until I hit State pension age, at which point my Sipp will be empty apart from the yearly in/out of £3600 to gain the tax relief.

This info might help other part time workers / early retirers.

I worked out that it will save around £16000 in tax, assuming State pension uses all personal allowance by then.

It also has the added benefit of DH not paying income tax if he inherited my Sipp after 75 - he will get my ISA completely tax free whatever age I die. It’s a win/win.

I meant to add that I’m contributing £6600 a year into my Sipp until 2028. DH employs me part time ( so I get NI credits) and he is retiring then.

@user1471554720 I’ve recently started a 9 day fortnight as a start to taper towards retirement. Only on my third day off and already I am worried that I will “waste” the extra day. Probably starting it in winter has not been the best idea.

I feel I need a structure but things like exercise classes where you can drop in every other week seem scarce.

Probably just need to start planning more in advance to do days out/weekends away etc

I've also been thinking of the best time to take my pension. would it be a good idea to take at start of tax year, so tax allowances aren't taken by wages? . or does this not really make any difference?

Start cutting down your spending - I was advised to spend 10% less each year before retiring. I was told at a pre-retirement workshop that most people find they have more money than they anticipated when they finally retire and I have found this is true.

If you use your full personal allowance in your employment, it doesn’t matter when you take pension payments, although you would have to watch out that taking a large UFPLS doesn’t push you into the higher rate tax band.

Assuming employment + pension withdrawal is under £50k a year, if you took one large UFPLS , say £10000 : £2500 would be tax free and £7500 is taxable at basic rate.
However, because hmrc will assume that the £7500 will be a monthly thing, they will tax it as such at 45% so you have to claim the 25% tax overpayment back.

If you have no other income, you can take £16500ish UFPLS and pay no tax because 25% of it is tax free and the rest is at your personal allowance, assuming you don’t utilise the married allowance, which reduces it by £1250.

If someone has taken, or will take the full 25% tax free amount from the whole pot, they can just draw down taxable income monthly and pay 20% tax on anything over the prrsonal allowance.

If you’ve taken ALL the available tax free cash, you can’t use UFPLS, no matter if what’s left behind in drawdown doubles/triples.

What is UFPLS?

Uncrystalised Funds Pension Lump sum.
A lump sum that is 25% tax free and 75% taxable.

Say you have your full personal tax allowance of £12570 available .
By using UFPLS, you can have £12570 plus £ 4200 tax free. So £16770 tax free.
So it’s a good way of getting cash out of a pension in early retirement or going part time before State pension age.
It also preserves unused funds for potentially larger tax free amounts later on.

Phasing in is what I did so 4 days for a couple of years then 3.

Ideally if you can find a class or hobby etc. for your NWD it starts to build a structure for retirement.