Early Retirement - pro's and con's

[Ray H]

One other thing to mention (and consider). For a long while you will have been out at work and your partner/spouse may have been home alone. Your relatively sudden change to potentially being at home all day can impact on them.

[Chris M]

I retired at 59 and can see no downside. Ok I have less income but I have enough to do all I want to do. Biggest problem I have is that there are not enough hours in the day to do everything I want to do.

 

One tip - always try to start the day with a number of things you want to do that day. These don't have to be big things, just things to give you a target for that day. Mine today was weed the paving in the garden ans I've just completed it. Luckily I have a garden railway so I was able to run a train while doing this. Next, after reading a couple of forums, is some voluntary accounting work for a charity. If it stays dry I might have a ride on my bike later.  Sure beats working for a living!

[PatB]

15 minutes ago, Ray H said:

One other thing to mention (and consider). For a long while you will have been out at work and your partner/spouse may have been home alone. Your relatively sudden change to potentially being at home all day can impact on them.

 

Indeed. I've encountered many marriages that have lasted as long as they have because the partners barely see each other. In my more cynical moments (so most of the time) I can convince myself that the Men's Shed movement was actually established by the Other Halves to get their newly retired husbands out from under their feet ;-).

[APOLLO]

I took voluntary redundancy quite a few years ago, then worked part time for 5 years - mainly to pay up my NI stamp It's important to check for state pension - rules seem to be always changing. My (new scheme) state pension kicked in a couple of years ago - not quite the full amount as I was contracted out, but a bit more than I had planned. I was also extremely lucky to have 35 years service in a good final salary pension scheme.

 

Many good points mentioned in this thread, Keep yourself busy - house maintenance, gardening, modelling etc etc.

 

The only thing I miss is "the craic" - banter with workmates. - but I'm lucky to meet some of these in the local 'spoons twice a year for a few pints and a laugh - trouble is always the same stories are told !!!!

 

If you can afford it - go for it - you only live once, and as far as I can see these days the world of work is rapidly becoming the world of crap.

 

Good luck.

 

Brit15

[tetsudofan]

46 minutes ago, Ray H said:

One other thing to mention (and consider). For a long while you will have been out at work and your partner/spouse may have been home alone. Your relatively sudden change to potentially being at home all day can impact on them.

 

I was in a similar position when I returned to the UK after 34 years in the Far East. Everybody kept on asking Mum how was I getting on adjusting to life at home...…. but nobody asked her how she was adjusting to having to share the house especially since she had been living on her own since Dad's death in 1986.

 

Couple of years later she realised that I was useful to her especially after she was mugged and the dementia kicked in. I could give her my full attention.

 

Keith

[Oldddudders]

My father worked until 65, and had a heart attack within three weeks of retiring. He was a non-smoker, social drinker and never remotely overweight, always walked because he never learned to drive. But we had lost mum the previous year, so perhaps retirement looked like a chasm before him. He survived another 8 years before the second heart attack took him.

 

His experience prompted me to think about getting out while Deb and I were still able to enjoy life. So, thanks to the railway pension fund, although no redundancy pay-off,  I retired at 54, and then did 18 months part-time. This gave us time to get our cottage in Kent ready for sale, and find the present home in France. Four good years were followed by Deb's car crash - not her fault in any way - and consequent disability. Then cancer took her in 2012. After taking stock I seemed to slowly get my breath back, and by 2014 Sherry - whom I had known slightly at skool, and with whom I had been in touch over a number of years - had jumped ship from a worthy-but-dull marriage and agreed to marry me. Yes our marriage is unusual as my signature reveals - but I'm 70, have had 15 years retirement, and am still upright. Life is good. Sherry had planned to teach until 60, found changed circs in her skool unacceptable, and did a couple of years part-time, before retiring fully at 58, just over ten years ago. 

 

Both my best friends from skool are dead - at 26 and 63. Deb was 57. One of my brothers died at 63. Our former neighbours in Kent, our ages, were both gone years ago. All of these people died of various forms of cancer. If the Grim Reaper turns up tomorrow afternoon, I can hardly feel hard done-by, can I?

 

If the numbers add up for you, take the plunge. Work in C21 is tough stuff for most people. Don't let it compromise your life, if something better could be yours. 

[jonny777]

I retired 5 years early on a reduced (but indexed linked) pension, after a lengthy worry mainly about finances. I needn't have panicked because the lack of commuting by car meant that my petrol costs dropped by about 90%, and with the drop in mileage meant lower insurance and maintenance charges. I cut out all unnecessary direct debits for TV/phone packages, plus anything else I thought I could do without, and just took the plunge. 

 

I attended no retirement course, I planned nothing ahead - and still don't; I just take each day as it comes, unless I am booked to go away visiting relatives/friends, or they are coming to me. This would not suit everyone, but it works for me.

 

I made up my own investment advice - I put my entire lump sum in Premium Bonds. 

 

The strange thing is that I went through some psychological phases at first; starting with the idea that I was just on a long period of annual leave, and then a period of guilt because I was being paid for staying at home. My personal decision was helped my my wife continuing to work part time for a few years, but the lack of money did mean belt tightening for a time - however an afternoon sitting in the garden can be just as rewarding as one spent at the local beauty spot/tourist attraction. 

 

Now, 11 years later I do not regret the decision one bit. It is the best thing I ever did. 

 

I now get the state pension as well and a free bus pass, which is like manna from heaven - thank you to all those workers who contribute through their tax deductions. My intention was to use my lump sum sparingly if finances became a problem between retirement and state pension age, but I have not had to use it at all. However, the wife seems to have noticed this, and a new kitchen may have drifted into her thinking.....

[Colin_McLeod]

Life's too short.  If the finances stack up, then go for it.  There is a social life outside work if you want it.

 

It is possible to waste away time but if you impose a bit of self discipline that is overcome. 

 

I am as busy now in retirement, but the important thing is that I am busy doing what I want rather than busy doing what my employer wants.

[Nearholmer]

Pros: having time to involve myself with the children much more (I’m what is politely termed “an older dad”); being able to drop my part-time work at a moments notice to support my good lady full-time when she was diagnosed with cancer (thankfully now as ‘cured’ as these things can be); actually having time to do enough exercise to get reasonably fit; not having to squeeze DIY into already busy weekends; a tiny bit more model railway time!

 

Cons: it hasn’t been easy to renegotiate the domestic balance with me now “house husband” - it’s surprising how you don’t know one another’s ‘ways of doing things’ until you role swap; ‘cabin fever’ during the winter, especially when my good lady was very ill; we keep finding new DIY projects, which sometimes threaten to use more money than we now have; irritating feeling that there is a part of my brain, the bit I used at work, that is under-utilised.

 

Overall, i’m very glad I did it, because I really don’t know how we’d have managed otherwise when illness struck, but I wouldn’t say that I’m as totally positive about it as some others who’ve contributed.

[GeoffAlan]

I retired 4 days before my 55th birthday. Our finances are OK, but working another 10 yrs would have seen them better. I haven't regretted it for a single second, and I'm now 68. While we can't afford 3 holidays a year, like some of my contemporaries who worked a lot longer, we are able to do one a year and have some short breaks away.

Essentially it's a very personal decision, but my advice to a friend considering a similar choice some 10yrs ago was, do it! He hasn't regretted it either.

[CHAZ D]

I left working life 5 yrs ago just before my 60th birthday. Due to an imposed change in job role and the offer of enhanced redundancy. This has enabled me to sell my house in Berkshire (3 bed semi) and buy a 4 bed detached in Wellingborough (now 3 bed and railway room) and pay off all morgages with a cash surplus. My pension whilst not huge along with my partners pension (NHS) has allowed us to live a very comfortable life without any financial worries. Things will improve further in the future when the state pension kicks in.

It is well worth checking on the gov uk site to find the state of your state pension, you can buy extra years if necessary  (mine was sufficient that I felt it not worthwile to increase my pension by a small amount). I joined the local model railway club in Wellingborough fix locos for the local shop swim twice a week and ferry my other half (non Driver)  to all sorts of craft and garden businesses. Would not go back and do not regret the decision to retire early.

Edited July 31, 2019 by CHAZ D

[Marly51]

Met my husband when he was a university lecturer and he had already decided to take early retirement at 50 when we both moved to the Far North. Our daughter was born just before he retired. I had been self employed  for most of my professional life and continued to work part time. We have found that we are more busy than we ever were with the 9 to 5 routine, so don’t know if that is proper retirement? After the move, he was offered part time work teaching for 10 years, which fitted perfectly with pursuing his photography and painting. I have been involved in various heritage projects as a volunteer and also professionally.

Trying to extract ourselves from some of these commitments now, to focus on more time doing things together and also our individual interests. Having a daughter later in life has kept us young at heart.

My line of work meant that income fluctuated quite a bit and my private pension also suffered at the hands of the Equitable Life debacle. However, if your finances allow, I still think early retirement is well worth it to establish a new routine and enjoy life even more. PS In our house we share ALL the domestic chores and each have our own workshops/studios (having a dedicated space is a worthwhile extra) !  

[Clive Mortimore]

My wife and I took early retirement a couple of years ago and moved location. I am not sure if it was right for me. I am really lucky in having a 20 ft by 15 ft train set room, so no going back to a end to end layout along one wall of the garage, so yes there is a positive. The negative is I was running my own small dog walking business for the last 8 1/2 years of my working life and enjoyed the job, I had nice customers and nice dogs to look after, so I really miss going to work.

"Why not set up a business where you now live?", simple answer is no, we moved to a very rural area and most farmers do not need their dogs walked where commuters living in Chelmsford did.

Edited July 31, 2019 by Clive Mortimore
Inability to spell the name of England's newest city.

[Dungrange]

12 hours ago, Ozexpatriate said:

I wonder if there is anyone who regrets retiring early?

 

If there is, it doesn't look like they have found this thread.  I've not reached that stage in life yet, being just 48, and my intended retirement age has drifted up from 55 to 58 to 60 to 62, which is what I currently think is probably a realistic target for the moment.  I certainly intend to retire before I reach the State retirement age of 67 (or 68 if it changes again).

 

However, although not quite the same, due to stress and a period of depression I changed from being a full time worker (40 hours per week) to a part-time worker (32 hours per week) about four years ago and I haven't regretted that change.  My gross salary dropped by 20 per cent, but because it was the higher taxed part of my income that I was losing, the net decrease in my take home pay was less.  It also means that I'm available one day per week to take the kids to school and pick them up afterwards, which means a reduction in childcare costs.  What was originally intended to be a short term reduction in working hours has become permanent and I can now no longer see me going back to work full-time.  However, with a better 'work - life balance' I think I'll manage to stick the next 12 -15 years in the workplace.  There's always the option of going to a three day week in another decade.

 

As others have said, I think the key is to ensure that you can afford to pay all the bills that you envisage having (acknowledging that these will rise over time) and then go for it.   If you can eliminate the financial insecurity, then I'm not sure that I see any downsides.

[Steven B]

If you can afford it then go for it.

 

Make a list of the things you will miss or loose out on when you retire and make sure you put effort into replacing them. If it's the social aspect then make sure you replace it . If it's the mental challenge then replace it with an evening class or learning something new. If it's the money then don't retire!

 

There's also nothing stopping you from retiring and working at something different even if it's part time. A few hours behind a till at a supermarket, or even a model shop if your're lucky can provide social interaction and a few extra pounds in the bank.

 

 

[polybear]

Many thanks

Back in 2011 I recorded the exact spend for all outgoings for an entire year (gas, elect, petrol, model railway, holidays - you name it) - the equivalent value today of the total spent is 2.5K less than I would get as a pension, assuming early retirement.  Bearing in mind some costs will drop significantly when retired (petrol especially) then I have no concerns regarding money, luckily; however I do realise some costs will no doubt increase (Gas and Elect in particular, particularly during winter).

Luckily I'll also be entitled to a lump sum from AVC's if desired; if I were to take an increased pension and no lump sum then I would have to live for at least 43 years in order to make up the lump sum value.  No brainer....

Also, if I carried on working until 65 the pension I'd receive then would obviously be greater, however I would've missed out on all those years of pension payments from retiring early - in fact I'd need to receive my "Retire at Age 65" pension until age 81 to break even.

(I realise these calcs don't take into account inflation, growth figures etc. etc.)

So unless I'm totally missing something then fortunately the ££ should not be an issue

In addition, the Superyacht has just been serviced and the Jet is still under warranty....

Thanks

Brian   

[Dungrange]

58 minutes ago, polybear said:

(I realise these calcs don't take into account inflation, growth figures etc. etc.)   

 

Don't ignore inflation.  Even if inflation was to be a relatively low four percent per annum throughout your retirement, prices will double over about 18 years and quadruple over 36 years, which is how long your retirement might last.  That's not a major concern if you are fortunate enough to have an inflation protected final salary scheme, but if relying on the purchase of an annuity from a defined contribution pot it's worth factoring inflation into your calculations.  I suppose the other thing to consider is your spouse or partner.  Many schemes will pay a spouse's pension at 50 percent of the rate that you are entitled to.  Will your spouse or partner be adequately catered for in the event of your death?

 

It's true that some of your expenditure will fall once you give up work (such as commuting costs) but these may be replaced by additional costs over and above your increase in gas and electricity.  You'll have additional free time, so will you go on holiday more often?  Your 2011 holiday expenditure may have to be factored up.  Also, do you intend to take up any additional hobbies in your free time?  If you decide to take up golf as a way of remaining active then you'll have green fees that you didn't have whilst you were working and felt you didn't have the time to make golf worthwhile.  How much DIY did you do in 2011 that you may need to pay someone else to do when you become less able?  That said, it sounds like you probably have enough to provide yourself with the standard of living that you currently enjoy, so I see no reason not to retire if it's what you want.

Edited July 31, 2019 by Dungrange

[Nick C]

My wife and I fully intend to take early retirement as soon as finances allow (mid-late 30's at the moment, so we've got quite a lot of time to prepare, our current state pension age is estimated at 68, but I strongly suspect it'll go up to at least 70 before we get there). Yes it means spending less now, but then it's all a case of choosing your priorities. I've yet to meet anyone who has taken early retirement and regretted it, though I guess if you're a workaholic type and don't have any hobbies (unlikely on a forum like this!) then you might.

 

A good friend of mine retired at 60, and was dead by 62 - the big C again. Get out as soon as you can because you really don't know how long you'll have...

[spikey]

Well, I for one find this thread very interesting - if only to see how different people's circumstances are to mine.  Mrs Spikey and I had always been a self-employed double-act of one kind or another, so when she was diagnosed with cancer just over a year before we planned to retire, the two immediate consequences were instant retirement and around £40K less in the kitty than we'd anticipated having upon our planned retirement date.

 

However, by re-evaluating what really matters to us and what doesn't, becoming experts at frugality, and happily doing without many of the things that others consider to be essential (especially in their retirement), we somehow manage to live very well on a total income from all sources of under £8K a year.  And I'm able to finance my railway from that

[34theletterbetweenB&D]

14 hours ago, Ozexpatriate said:

I wonder if there is anyone who regrets retiring early?

I have known three, two now dead.

 

First died after three years from retiring at 55. He was single and felt that life might have been slightly better had he still been working when the massive stroke hit, as he might have seen more people he knew in his last nine months after the stroke. He had been having a really good time in the two and a bit years of his healthy retirement mind, and not a care in the world...

 

The other late departed was a copper, CID all his life. Perfectly well off, happy family life, broad social circle of which I was one among a great many. But nothing could replace the dogged pursuit of untangling just what had gone on, he was born for it. Even going for his first degree and then doctorate in philosophy could not fill that void.

 

And finally, one of my primary school teachers (she is all of ten years older than I am, started teaching at 20 on the old TTC certificate) and quit after one Ofstedding too many. (Just a year before she was planning to go at 60.) It's only a slight regret, that she didn't get one more year of the lovely children who made her working life such a joy. (She appears to remember all of us. We were reaquainted when she recognised me in John Lewis; apparently it was the way I was playing with the crockery that we were selecting as a wedding gift. And you would never guess, she still volunteers to help with reading in primary school; but apparently it's not quite the same as being class teacher.)

[TheSignalEngineer]

5 hours ago, PatB said:

...........................I can convince myself that the Men's Shed movement was actually established by the Other Halves to get their newly retired husbands out from under their feet ;-).

Mine said one day "Why don't you get that stuff out of the cold garage and build a layout in the spare bedroom? Within two days board construction was under way. My photo kit and library also migrated from the room we used as an office and I put up a sewing workbench in its place so we both had room to work on our own projects.

 

I would agree that hobbies are important. We grow vegetables and do a lot of off-road cycling. My wife still plays league tennis to quite a high standard. The other thing that occupies a lot of our time is two grandsons who live only 8 miles from us.  For me the secret is keep busy and keep as active as possible. 

[The Stationmaster]

Having retired at 52 I think that probably counts as 'early' so how do you set about it?

 

1.  Look at your income and outgoings but the latter is really the most important bit.  I went under redundancy so immediately paid off the mortgage  which was really just about the only saving as travel to work had been free although iIoccasionally bought a snack at lunchtime.  But having gone early I also had a reduced pension (see below - possibly some things to consider?).  But the difference in the net financial position from BR Executive Grade salary anda mortgage to level pension (see below) and no mortgage was a net loss of £10 per week.  

What matters is your new income against your new outgoings.

 

2.  I was offered, before I'd even finished work, a consultancy job on what we now call a zero hours contract.  I was basically able to chose what I wanted to do so wasn't working all the time but the big thing it did was still give me the social contact with a working group of people.  As it happened although it didn't last too many years but it took me to Australia and involved me in some interesting jobs which kept my brain active (and it paid a final salary pension).

The loss of the social involvement of some jobs - just actually being with other people is an important thing to consider.

 

3. Keeping yourself active, or at least your brain active (probably the more important thing) after you leave your career job is always something to bear in mind

 

4.  Do you know what you will do with your time or having to put up with being at home all the time.  That really is somethinga lot of folk don't consider - you need to.

 

5.  Does your work ,or things it involves, really interest you?  There might therefore be a big hole when you leave so you need to think about how you will fill that hole or make up for things you enjoyed about the job but have lost.  Not that I could do anything to match it but I lost out on regular trips to various European countries and getting to meet and work with railway folk in other countries - and I did miss that.

 

The Interesting World of Pensions

 

A.  What you need to very fully understand is exactly how much your pension small print is likely to impact going early - the biggest question on even a final salary pension is how much will you lose by going early.  Can you afford to do that?

 

B.  Does your pension offer what the BR scheme and various others (such as I believe the police) call a 'level pension.  This means that if you go early your pension is increased up to age 65 at which point it is reduced - it can make a big difference on your ability to live and 'enjoy life'.  But don't forget the bang when it drops as you hit retirement age (and the state pension cuts in).  Well worth checking out.

 

C.  Always consider the balance between what you will take as continuing pension and your retirement lump sum (assuming your pension offers one).  By commuting some of the lump sum you normally buy extra pension - but the conversion can be derisory.  In this  balance you also have to look carefully at the implication of tax rules - your pension fund should be able to advise you on this and explain the various options/mixtures of lump sum and continuing pension.  Life expectancy - if your crystal ball happens to work is an important factor here.

 

Very important point - if you can get yourself made redundant go for it (and it might also mitigate your tax bill if any of the redundancy money can be out into your pension fund - that can be a lot sometimes).  However my grand plan sank because my intention to make myself redundant on my 56th birthday - and thus get a full pension and a nice present of redundancy money never happened because I was offered redundancy several years earlier at a time when I knew it was definitely there and there might not be another.

In other words planning is one thing but the unexpected can happen (so go when you can).

 

And overall - if you can afford you're mug if you don't take the opportunity.  Best of luck with it, whatever you decide.

[polybear]

29 minutes ago, The Stationmaster said:

 

 

1. What matters is your new income against your new outgoings.

 

Luckily my outgoings have always been considerably less than my income, and I'm confident I'll be able to maintain that after retirement; I'll have some other income sources also, as well as being able to look forward to a boost when the state pension kicks in.

 

2.  The loss of the social involvement of some jobs - just actually being with other people is an important thing to consider.

That's one of the main considerations at the moment, so I'm being careful....

 

3. Keeping yourself active, or at least your brain active (probably the more important thing) after you leave your career job is always something to bear in mind

Luckily both are pretty much intact.  I'd dread working to 65 and be too knackered to do anything.

 

4.  Do you know what you will do with your time or having to put up with being at home all the time.  

Plenty to do at home - DIY, Hobbies etc. so keeping busy will be easy.

 

5.  Does your work ,or things it involves, really interest you?  

I've been lucky over the years and had some pretty good overseas jollies too, but they're getting thin on the ground now

I'm mainly either in the office or sorting out cr*p for storage or disposal.  I'll not miss either. 

 

The Interesting World of Pensions

 

A.  What you need to very fully understand is exactly how much your pension small print is likely to impact going early - the biggest question on even a final salary pension is how much will you lose by going early.  Can you afford to do that?

I've just received a formal pension prediction from the Pensions Dept. based on a specified retirement date, so I know exactly what I'll be entitled too/options are

 

B.  Does your pension offer what the BR scheme and various others (such as I believe the police) call a 'level pension.  This means that if you go early your pension is increased up to age 65 at which point it is reduced - it can make a big difference on your ability to live and 'enjoy life'.  But don't forget the bang when it drops as you hit retirement age (and the state pension cuts in).  Well worth checking out.

I have options of:

1. A full Pension

2. A reduced pension + lump sum (tax free)

3. Stepped pension variations of 1 & 2 above, which reduce yearly from my state pension date.

(I'm favouring option 2 at the moment)

The pension is payable for the rest of my life, and is reviewed/increased each year to cater for cost of living etc.

 

C.  Always consider the balance between what you will take as continuing pension and your retirement lump sum (assuming your pension offers one).  By commuting some of the lump sum you normally buy extra pension - but the conversion can be derisory.  In this  balance you also have to look carefully at the implication of tax rules - your pension fund should be able to advise you on this and explain the various options/mixtures of lump sum and continuing pension.  Life expectancy - if your crystal ball happens to work is an important factor here.

I'm carefully planning the value of my AVC fund to pretty much equal the tax free amount I can take.

Derisory? Oh yes.  If I were to commute all of my lump sum into a larger pension then it would take 43 years to get the lump sum value back again......

I won't be taking that option, no sirree.....

 

Very important point - if you can get yourself made redundant go for it (and it might also mitigate your tax bill if any of the redundancy money can be out into your pension fund - that can be a lot sometimes).  However my grand plan sank because my intention to make myself redundant on my 56th birthday - and thus get a full pension and a nice present of redundancy money never happened because I was offered redundancy several years earlier at a time when I knew it was definitely there and there might not be another.

Redundancy? I wish.  There was a lot of that in the late 80's & 90's, with many close to retirement getting 104 weeks' money plus a paid-up pension.  Those were the days (assuming you wanted to go, of course - some didn't).

In other words planning is one thing but the unexpected can happen (so go when you can).

I've seen several hang on too long, and lived (or not) to regret it.

 

And overall - if you can afford you're mug if you don't take the opportunity.  Best of luck with it, whatever you decide.

Many thanks

 

[john new]

1 hour ago, polybear said:

 

I went at 58 with the red option B2 as above and have never regretted it. The one thing I would check though, as stated by others, is that you have enough years of NI payments for the full pension (what decades ago was the stamp) as C Govt are frequently changing the rules. I was well over but with changes in govt policy - ???

 

As an example of changes that can affect later income - when I first thought about deferring my state pension claim by 12 months to raise the amount payable I am fairly sure in my mind that the calculation for how much the extra percentage would be was multiples of 7 weeks, when I did make the claim roughly 18 months later it was the current blocks of 9 weeks, and don't ask a woman born in the early 1950s about OAP qualification changes, men have been hit with some changes, women from the 50s have been absolutely hammered.

Edited July 31, 2019 by john new

[polybear]

13 minutes ago, john new said:

I went at 58 with the red option B2 as above and have never regretted it. The one thing I would check though, as stated by others, is that you have enough years of NI payments for the full pension (what decades ago was the stamp) as C Govt are frequently changing the rules. I was well over but with changes in govt policy - ???

 

 

At the end of May 2019 I had 38 year's contributions (*my employer's pension scheme was contracted out, though this may have changed), giving a state pension of £156/week.  For a full pension I'd need another 3 years to qualify (I'll pretty much have another year if I take early retirement, so actually I'll be about 2 years short).  A full pension would be £168/week.

However, I can buy the missing years (for *I think* £780 for each missing year) - it seems that I'll earn this sum back thru' increased state pension payments after only 3 years, so a no-brainer really