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You should get onto the Money Saving Expert pensions forum and ask some questions there. There is a wealth of knowledge available there, although you will need to reveal more about your situation to get better advice. Lots of good forecasting tools about to give you an idea of how robust your plan is. E.g. guiide, voyant, ficalc, firecalc to mention a few. I like ficalc as an easy to use back testing tool with a nice user interface.
who doesn’t?!?
Me. I’m mid-50s, decent pension accruing, but even when it matures I don’t fancy giving up work. Going part-time perhaps, but I love what I do (except on the days when I absolutely hate it, but that just shows I care about it).
I can’t give you financial advice, but I would advise knowing what you’re going to do with your time.
For some folk that’s doing a different job, something that interests them more, for others it’s travelling or the like - I can think of examples of both on here.
But have a plan. The happiest “retirees” I know all do a bit of work - voluntary, part-time, consultancy, trustee, whatever.
Early retirement is good if it can be justified.
+1 for MSE pension forum.
Plenty of good, UK YouTube channels - e.g. James Shack, Meaningful Money, Pension craft.
Depends on your learning style. I learnt most of my financial stuff from the free meaningful money podcasts.
Based on what I now know I have ‘fired’ my financial advisor and am saving a lot of money in fees every month while also feeling a lot more confident in the imminent retirement if my wife and my continued wind down…
As per the PP I also rate James Shack and the Money Saving Expert site
If you want to retire before you've built up a full state pension you can buy missing years (which is a no-brainer). If so then look at this:
who doesn’t?!?
Me. I’m mid-50s, decent pension accruing, but even when it matures I don’t fancy giving up work. Going part-time perhaps, but I love what I do (except on the days when I absolutely hate it, but that just shows I care about it).
I can’t give you financial advice, but I would advise knowing what you’re going to do with your time.
For some folk that’s doing a different job, something that interests them more, for others it’s travelling or the like - I can think of examples of both on here.
But have a plan. The happiest “retirees” I know all do a bit of work - voluntary, part-time, consultancy, trustee, whatever.
Yeah we have thought about that and certain will have plenty to keep us occupied. Alongside the many leisure activities, we will both probably get part time jobs or do volunteering but definitely something without the considerable stress and responsibilities of our current jobs.
Aim is to to be more busy and active whilst we still have our health but actually to enjoy life.
Can’t offer advice on where to look for advice as for me it was retire or my health would have deteriorated to the point I’d be sacked or I’d hurt myself.
Best advice is, do it. If you think can manager just do it, it’s surprising how much you can reduce spending to manage. Almost a year in since I retried and almost 18 months since I last worked. It’s the best thing I did, loved my job but it wasn’t doing me much good.
I know lots of retirees now and most just enjoy themselves, no tied in with little job and any voluntary work they do is very much on their conditions.
Meaningful money podcast is really good and free. I m retired but kept a few things on to keep my feet on the ground, just things I enjoy doing and pay accordingly. Whole mix of pensions and investments so no worries financially.
See pension wise
https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise, but do your homework as only 1 free hr each
read up on (and understand the pros and cons ) of
- annuity
- drawdown
- ufplus
- 25% tax free options (*make sure you understand how this interacts with compound interest)
- can you do salary sacrifice/avc for the last 3 years of work and is it worth it. (*tax relief , 25% tax free)
- your state pension amount and date.
- tax free income things and if you can use them and if it makes sense to use them (*changes like the wind per budget but, capital gains tax free allowance, tax free savings allowance, isa income, dividend income tax free allowance etc)
Oh, ps , suggest you do a will and poa(financial, medical)
55 here, and wife now only works a day a week in a local fabric shop (her hobby is sewing )- no plans to change that. I've taken some tax free from some small pensions, and I plan to work for at least another five years before thinking of doing something else - I've a 21 and a 24 year old at home who are not financially independent, so retirement won't really happen till they leave home. I quite enjoy the role, but if things change I'd look at VS scheme (we always have something on the go). I'd certainly look at volunteering in something I'd enjoy !
Depends on whether you consider ‘semi-retirement’ as simply putting your feet up, enjoying life and living off the proceeds of your pension, or more as a period of slowing down, accepting that you might not have the same lifestyle as before but you retirement funds are assured?
5 years ago at 55 I was in a similar position and speaking to a FA my pensions were OK, so it was simply a process of trying to avoid touching my pension until I was 65. Best piece of advice was to size-down, but to buy the smallest place that fits your needs rather than what you can afford. We sold our 4 bedroom house in Hampshire and had a 2 bedroom house built on the Isle of Mull - COVID messed it up a bit, so we spent a year in a rental elsewhere whilst the house was built. There was enough proceeds from our house sale to mean that I only need to work part-time. As it happens, I have built up a small business here plus working part time that a big chunk of savings + investments remains untouched.
I’m now 60 and absolutely no regrets - my pensions are still forecast to give a reasonable income - despite Truss and possibly Trump (well above what we’re currently living on, plus a bit of savings) I’ll continue to work part time as much to keep me busy. I’ll be able to sell-on my business as it generates a reasonable revenue when needed. I’ve got an ongoing (hopefully not too serious) health issue that I’ll need to manage - but staying active by riding a bike, running and kayaking. OK, no big holidays for the time being but we’re not big holiday people anyway.
We’re just in the process of sorting out Mrs DB’s NI contributions so she gets full state pension, plus I need to work out what I do with my pension pot when it matures but no huge rush. I just heard about someone I knew this week, he retired last year at 65 and his funeral is next week…
I second the James Shack videos on YouTube. He also has a simple spreadsheet you can download to see how your numbers stack up.
Just retire if you can afford to. Do it only when you are absolutely sure the maths stack up.
Then do something else that you enjoy or do nothing, and if it brings in some money so be it.
If I could retire now I would do it in an instant, then concentrate on enjoying and learning to cook my traditional food that I enjoy. e.g. proper stir-fried and soup noddles that are so good, only available from my home town, I have not been able to taste it anyway in the world yet.
I haven't worked since the age of 42 and officially retire next year. If you can afford to why not? I don't follow the line you'll get bored, you might if you retire at 68 but if you're young and full of energy and enthusiasm you'll never be bored. I found I have to make an effort not to do too much with a body that is less and less able to cope with what not working allows me to throw at it. I've done very little "voluntary, part-time, consultancy, trustee, whatever. " It soon felt like work, **** that.
Financially? Don't expect financial products to perform as well as they claim and you hope, and manage actively - this year's top performing fund probably won't be in a few years time. I've found it harder and harder to get good returns compared with inflation as the years go by. donald above offers good advice via those YouTubes.
SO retired early from being a senior medic a few years ago. Claims to have no idea how work fitted into the time available. Now busy with a variety of fun things.
I understand I am expected to continue working until the time is right. NP work can be great fun, everyday is a chance to do something new. It is however one less day to ride in the hills, read more fiction, play with photos, watch movies, …
I retired early last October at 54 (unfortunately due to ill health), but even if I hadn't got that approved I was going to apply for early retirement this April due to my health struggles.
Other than the ill health it has, and would have been the best decision with the stress reduction being very noticeable. I have all my years in for state pension and my local government pensions are enough for our modest lifestyle along with my wife's good wage.
My house elf lifestyle now means I can potter about getting bits of house work/shopping/cooking done most days to save my wife additional work with her working full-time. Then i get time to do whatever fun things I feel able to do after that like to get fresh air on my ebike, bird/wildlife watching, and thinking of getting back into RC model flying.
I do feel pretty socially isolated at times though as my variable health and limited energy means getting involved in and committing to groups/volunteering is a challenge. I keep trying to find social things to do, but it's not been working out so far.
That's the one thing I do miss about working, the social side, but I also knew plenty of people who loved WFH as they didn't have to be social.
Just do it. This 64yr old is posting from the aussie outback having retired 4 years ago.
I don't miss work at all. You need less money than you think.
TJ - you were one of the folk I was thinking of who’s getting retirement right - you seem to have a plan to do lots of stuff (mainly involving travel).
I may be wrong but I doubt it.
Whatever you do count the cost of a FA over the years. It's extortionate for advice that is all in the public domain IMO ; and often laughably poor.
Build your own .xls, it's not difficult. It will take you a few hours and you will be tweaking it a lot to start with. It will become your dashboard as your progress your plan.
Start with your current financial needs and forecast your future needs taking account inflation, (pessimistic) asset growth rates, tax etc... And then plan your future income pre and post retirement including state pension, tax free drawdowns, contributions, ISA etc...
You'll soon reach a conclusion which will tell you at what age you should be able to retire for a given life expectancy. And then add contingency 😂.
It's not an exact science of course but understand your own data prior to using an online tool which by definition doesn't know you ad well as you do.
Its not gone quite as planned
.
I am also fortunate in being content doing stuff cheaply ie camping
I finished work at 56 3/4. Wanted to take a break after working continuously since I was 16 but other than a 3 month job (that I also walked from) that break turned into retirement. I went to Uni but worked every weekend and every holiday as I was a mature student (23) so had mortgage commitments by the time I started. Got a full time job after and had quite a good career, working for a number of large organisations. I fell out with the boss of my last place and walked (I was at a senior level so if I didnt walk I would have been pushed eventually)
Finances should work out ok for us and Mrs Surfer is continuing to work for another year or so until the mortgage is finished. She is happy in her work (4 days) and works from home. I think I would continue to work a bit but for what I did I have found it difficult to find any part time work and ageism is a very real thing. My CV looks very good and I am very experienced and qualified however I had no end of agencies questioning me to determine my age before putting me forward to employers. That came as quite a surprise at the time.
I'm 55 and finishing Friday. No money worries, but I've let my IFA deal with everything. The job was starting to take its toll health wise. I literally cant wait!
Yep, will be retiring as soon as those numbers come up in the lottery/premium bonds.
Just retire if you can afford to. Do it only when you are absolutely sure the maths stack up.
The trouble with that advice is that folk are less-likely to take a risk and retire...
I've just turned 60 and TBH since Covid and WFH haven't felt pressured* to retire, luckily the company I work for is closing and my cohort is going end of May. Decent payoff plus 40 years of pensions with multiple companies (half are DB).
OH retired early last year - barely see her during the day.
My plan is to take a long summer off and to look for a short-term contract (I've contracted previously, specialist skills) over winter - more to push back on boredom than for the cash.
* - previously I had a 90 mile round trip commute
I finish on Thursday at age 57. Plans are to spend even more time in the camper.
Got a couple of riding trips planned for April in the UK before we start using the 90 days in 180 for 3 riding trips that we have planned in Europe. Riding new and old places.
Going to visit youngest daughter, Abigale, in Rotorua NZ in January next year.
The maths more than stacks up for me (and I'm a mathematician), but I enjoy what I do and have other things I'd like to achieve professionally first.
I think if you have a pension pot type defined contribution pension scheme the basic rules are: 1) annuity income is about 1/20 what you've saved and suited to those who don't care for risk. 2) you can drawdown about 1/25 of your pot to live on each year for income. 3) you probably don't need as much as you think due to taxation and hopefully no mortgage. 4) Max your state pension by buying years if you have not already, they are £850 each and worth about £6500 - you only need to draw for three years to be cost effective.
Simple example; pension pot of 230k would buy an income of 11,500 or approx 1000 pcm to live on tax free (under the threshold). Same for a 4% drawdown where the capital will grow back. Add on state pension, when it comes (which will make you a taxpayer again on that private pension), to double your income, and cruise spending money 😉
IANAFA - but take 4) seriously to buy those 35 years if you won't get there by retiring early.
IANAFA - but take 4) seriously to buy those 35 years if you won't get there by retiring early.
One thing confusing me - my NI record has 29yrs full, I understand you need 35 to qualify for full pension...
So 6 more years...but on my forcast it just says I need 2 more years 🤔
I understand you need 35 to qualify for full pension
I don't pretend to understand the full details, but...
35 years is for the New State Pension, which started 2016. There is some transition from the old pension which means the actual number of years is variable if you started pre 2016. There are lots of threads on MSE about this, or you can ring the Future Pension Centre, or https://www.ageuk.org.uk/information-advice/money-legal/pensions/state-pension/new-state-pension/ etc.
@tired - "4% drawdown" - are you confusing that with the "4% rule", or have intentionally ignored inflation? (There was a recent monevator article on UK-specific SWR rates)
IANAFA - but take 4) seriously to buy those 35 years if you won't get there by retiring early.
One thing confusing me - my NI record has 29yrs full, I understand you need 35 to qualify for full pension...
So 6 more years...but on my forcast it just says I need 2 more years 🤔
Mine is actually very similar - it also says I need to make just 2 more years and then I'm at maximum state pension!
4% rule. Is 1/25 of n year one and same monetary value each year to last 30 years with inflation
35 years is for the New State Pension, which started 2016. There is some transition from the old pension which means the actual number of years is variable if you started pre 2016.
Ahh, thanks for that...it kinda makes sense now... i just recently bought 2 years of missing contributions...I'm glad I didn't to too mad now, if I only actually need 2 more years! I plan to stop work long before I get it so that works out ok!
Right - consensus seems to be that 4% is not considered valid for UK, plus one has to adhere to the other conditions - 60/40 stock/bonds split, 30 year horizon, and understanding sequence-of-returns-risk. It can also be pessimistic if you are going to get a full state pension and might have some small old defined-benefits. e.g. you might have enough of that guaranteed income stream to cover lifestyle and then any investments are for treats on top.
(IANAFA either 🙂
Double post.
Just a further comment that 25% of the income from your pot can be taken tax free, and that's not the case in the US scheme and not accounted for in the 2-3% rule for the UK. Of course annuities make a lot of sense as the risk is borne by the provider, just as in a final salary scheme. Most people are pretty risk averse - hence annuities.
I am going to buy an annuity, been offered c5% yield but employer bumps it up if I buy through them, worth checking as I didn't know. I like it's simplicity, not the biggest decision for me as it's c10% of income.
If it was higher I would be doing more research into options.
Congratulations to those retiring this week. Honestly you’re going to love it, there is no getting bored as you can do what you want when you want. For me I now have to check my plans when asked if I want to go somewhere or do something as I say yes to so much now. Yesterday I helped a some younger friend move into their first family home, they’d would have found it a lot harder just the of them. There is always something to do and none of it is work and none of it you are bound to.
I'll echo what Drac says about you'll be busy. We were a group of seven at work, and four have retired. We still meet up for meals etc. Guess who are the hardest to pin down - the retirees. Us 'workers' just book the afternoon off, the retirees have to plan it in !
If you already have the mortgage paid off you should be in a good position to understand what your ongoing expenditure might be in the future unless you want to do loads of fancy Caribbean holidays. Then compare this figure to the total sum of what your pensions would pay out if you took them as an annuity. If these numbers are close (or even better the pensions meet the needs with a bit over) then you're golden. The downsizing idea can then be used to close any gap or even become a "good times" pot if you are lucky.
Don't worry about when you think you might die, but factor in how many years you think you will be active. Odds are you will need a lot more money at 65 than at 85.
Don't worry about when you think you might die, but factor in how many years you think you will be active. Odds are you will need a lot more money at 65 than at 85.
Based on watching my folks and in-laws (divorced, so two lots) it tailed off for all of them from 75ish.
IMO the issue for folk now (with most not having DB Pensions) is the 'gap' between their retirement and when the State Pension kicks in, and this applies whether they've decent private pensions or not. And for those who own their house, downsizing/equity-release is always a good back-stop (later in life).
downsizing/equity-release
We are planning on downsizing at a point in the future after our kids have left home. It seems, to me, to make sense in so many ways – lower council tax bills, lower heating and lighting bills, less exterior and internal maintenance. We'd probably still get a three-bed (currently live in a four-bed) just so the kids still have somewhere to stay when they come to visit.
@johndoh ditto. We have a 4 bed detached and my eldest is moving out soon. The house will be much too large for us as a couple and we will free up some cash.
Another option is to downsize even more and pay for the kid(s) to stay at a local Airbnb when they visit. All depends on how often they come to stay. For example, you could downsize to a 2 bedroom apartment and travel extensively with the additional capital.
IMO the issue for folk now (with most not having DB Pensions) is the 'gap' between their retirement and when the State Pension kicks in, and this applies whether they've decent private pensions or not. And for those who own their house, downsizing/equity-release is always a good back-stop (later in life).
it can be an issue, but with a DC pension its fairly easy to take more out in the years before you're 67 then take less out once the state pension has kicked in. Tax free lump sum can help with that too.
For example, you could downsize to a 2 bedroom apartment and travel extensively with the additional capital.
and not worry about the property whilst travelling. No garden for those who don't DO gardening but do DO travel is a nice idea. We'll downsize and probably not have paid off all the mortgage. But will be retiring to a (much) cheaper area as has a colleague recently.
Another option is to downsize even more and pay for the kid(s) to stay at a local Airbnb when they visit. All depends on how often they come to stay. For example, you could downsize to a 2 bedroom apartment and travel extensively with the additional capital.
Yeah we could, but we would also like to have something for the kids to inherit* – they are going to need all the help they can get. We should still have enough to enjoy our retirement with capital from a house sale along with our modest pensions.
*We know this may not happen if one or both of us ends up in a care homes for a long time, but we can't plan around that scenario.
I took a tax free lump sum out of one of my pensions last June when I retired, and set up a monthly payment from the same policy to last for the 5 years until the state pension kicks in. By keeping good records on our spend over the last few years we know what is likely to be needed. (Obviously we assumed a rate of inflation, that may or may not be reasonable.)
Yeah we could, but we would also like to have something for the kids to inherit*
Not sure on the amount of years gap between you and your kids but a lot of people are going to inherit money well too late to be of any real benefit for say buying a house. I am 57 for example and have not yet inherited anything and I will be retiring in a few years with a paid off house so while inheriting something would be nice it is far too late to give anyone "all the help they can get"
I am 57 for example and have not yet inherited anything and I will be retiring in a few years with a paid off house so while inheriting something would be nice it is far too late to give anyone "all the help they can get"
Conversely, I, too, am 57 and I received an inheritance 14 years ago as my dad died at 69, my mum at 70. This is why we have a four-bed detached with a big garden rather than the tiny two-bed end terrace with a postage-stamp garden which provided great help as our kids have grown up with their own bedrooms and a garden big enough for trampoline, climbing frame, vegetable garden, marquee birthday parties etc. Thanks mum and dad – I'd rather have you here, but it was a great help.
Same here. Small amount from my mum's flat many years ago paid the deposit for the nice house we're in now. A bit from my dad's estate a few years ago has been invested and has given me a buffer to go self employed will let me retire a good few years early. I think they'd both be happy that they've really helped me out, but as above, would rather have them around. Conversely wife is about a generation behind. Her parents have recently inherited and really don't need it.
I'm intrigued that nobody, with the partial exception of johndoh, has mentioned passing on any money to their kids to get a foothold as they reach adulthood and try to by a house in a stupidly inflated property market.
Is that because you are planning to, but just haven't mentioned it?
Because you have no kids?
Because you hate your kids?
Or can't afford it ( and yet can still afford to retire early)?
Or are under the delusion that, because you made it work for yourself, your kids just need to buck up their ideas and stand on their own two feet?
I've got about enough to comfortably retire just now, but not be able to help the kids buy houses etc. given that I brought them into this world I feel I have an obligation to support them ..... including doing what I can to offset the insanity of their position vis the housing market.
Nobody else?
To add to what thegeneralist has said, something that gets said on YouTube money videos quite often is 'its better to give with a warm hand than a cold one' that struck me so I acted on it.
I decided to take something from my savings this tax year and give to my daughter (you can gift £3k per year) I'll try to do the same for the next few years. She was over the moon and very grateful, she's 28 and living in London and hoping to head to Australia to work for a couple of years. If she spends it or saves it I don't mind but at least I can see her have it and possibly use it to benefit her now.
At 53 I've been thinking about packing in at 60, so this is all part of my planning for that date. I've got a mix of 13 yrs DB and what will be 15yrs DC.
I'm intrigued that nobody, with the partial exception of johndoh, has mentioned passing on any money to their kids to get a foothold as they reach adulthood and try to by a house in a stupidly inflated property market.
Is that because you are planning to, but just haven't mentioned it?
Because you have no kids?
Because you hate your kids?
Or can't afford it ( and yet can still afford to retire early)?
Or are under the delusion that, because you made it work for yourself, your kids just need to buck up their ideas and stand on their own two feet?
I've got about enough to comfortably retire just now, but not be able to help the kids buy houses etc. given that I brought them into this world I feel I have an obligation to support them ..... including doing what I can to offset the insanity of their position vis the housing market.
Nobody else?
Thats a very good point and must admit maybe we are being selfish?!
All other comments here have had me going into full on jfdi mode.
I expect there is an element of I had to buy my own house without help so why shouldn’t my kids….but I admit that’s ignoring the ridiculous state of the housing market now.
But on the other hand, I have 3 kids and not sure I could afford to help them all if I kept working anyhow - other than I suppose down sizing my own house and giving them the profit from that.
But also other factors, eg will they all want property? Do I give it to daughter who is currently with a partner who doesn’t seem that keen on getting a job that would sustain a mortgage etc?
From a more philosophical perspective, is it selfish to want to spend the last years of our lives when we are truly healthy and fit doing what we want to do rather than continuing to work in jobs that don’t make us happy? I’ve spent over 30 years working in a career that has admittedly been successful and paid well but not one I have enjoyed.
'its better to give with a warm hand than a cold one'
Absolutely – if we are able, we'd help our daughters before we die, but obviously we'd want to still enjoy our retirements too. My wife's mum and dad have started doing what white101 is doing - gifting their annual allowances, however, they are gifting it to their five/six grandkids, not their three children so one of my daughters will have a very nice nest egg so she will be able to realise her dream to travel the world after A-Levels or uni. The other is spending hers on horses as quick as she gets it 🤣
To answer thegeneralist. We have no kids so we can splaff our cash on whatever we fancy. Our nieces and nephew will all be looked after by their parents so no real necessity to help them either.
You can actually give a whole lot more than 3k per annum if you want.
You can make a regular gift of any amount you want completely free of tax so long as you can afford it out of your regular income. The gov website has the specific example of paying your child's rent for them. If your income exceeds your normal expenditure by a significant margin, you can give away this excess with no tax implications.
You can also make large occasional or one-off gifts of any value at all, far in excess of the 3000 pound annual exemption. You just have to (legally speaking) keep a note and if you die within 7 years the gift will form part of the estate for inheritance tax purposes. However if you live 7 years this gift is free of all tax. It can be as big as you want. Like a house. If you gave away so much that the estate didn't have enough left in it to pay the IHT, it's theoretically possible that HMRC could come after the recipient for this, but this isn't likely to happen unless you really set out to do this (ie by giving away everything on your death-bed). Otherwise, the extra tax just comes out of the estate, there is no liability on the recipient.
Of course the 3000 each year is a decent wedge and it's a reasonable starting point. But it's not a limit.
I'm intrigued that nobody, with the partial exception of johndoh, has mentioned passing on any money to their kids to get a foothold as they reach adulthood and try to by a house in a stupidly inflated property market.
I'm 65. My dad is still alive at 92 and my mum died 2 years ago and I got an inheritance from her. If I live as long as she did my kids will be in their 50s before they inherit from me, if I live as long as my dad they'll be in their 60s. They were lucky enough to get some money from my mother's will, which they have used to reduce their mortgages in two cases/go towards a deposit in the other. We also gave them some cash to help with the house buying process. We've just acquired a grandchild, and we will be amending our wills to give most of the money to grandchildren as they are likely to be of an age when it actually will be useful for homebuying.
@onewheelgood I gave both of my kids a non trivial lump of cash to add to their deposits to allow them to buy their first houses. It took a chunk of our cash and (I am 60) in a few years time when we downsize (roughly 3-5 yrs from now) we will look for ways to pass what we can afford to them in a tax efficient way, at the time when they need it most, not in 25yrs time (?) when they are likely set up and probably need it less. When we snuff it I want them to have had most of their inheritance in the years when they are struggling to make ends meet. Hopefully they will get a sum at the end as well but my mum (and likely my mil and fil as well) will lose everything to care costs and their home will be sold to pay them.
Nobody else?
60 y/o and my Mum is still alive, living in a barn we converted for her - 2 of our kids have houses (and families of their own) and the 3rd could afford to buy if he wanted to.
We've said to the kids that when we go there'll be no cash etc, but they will have our house to divide up between them - but I'm hopefully by this point they'll be near retirement too.
And giving gifts, just pay for things; Grandkids school-fees is an easy one, as you can have the contract with the school rather than you kids, or other costs they have, pay them directly.
I dont have children
Re this paying for missing years NI thing. If you retire part way through a tax year, what are the criteria for HMRC to decide if you have paid in sufficient NI for that to be a qualifying year for your state pension?
I seem to have read very conflicting things on the web. One version is that as long as your NI contributions = £X it doesn't matter even if you only worked the first month in that tax year (May) you will be credited with a full year. The other version is that you have to have a full years worth of NI contributions regardless of the total sum and that you need to pay for every week you have not contributed.
Anyone able to clarify what happened with them as i'm sure not everyone waited until the end of April?
I had a part year and hmrc wanted a small amount to buy a full year, I am buying voluntarily and this was ages ago so things may have changed.
I am deliberately keeping 2 years short of max as if I got a job, I would be accruing more years. If I was maxed out now, any extra years would not earn me any more pension.
On the kids front we pay for stuff as needed from income. Junior finished his higher education with no debt because we paid everything up front. We paid a "year off" in Berlin which in fact enabled him to reach the stage where he gets an income from his music. I lend him my car whenever he needs one because I don't use it much - it's four months since I last saw it, I'll see it next when it's due for a service. We provide accomodation if when and where he needs it but can't afford it. They're all ways of transfering wealth without actually writing him a cheque.
Some of my mates do the same and some reckon we spoil him. Fact is that the "spoiled kids" are now more able to fend for themselves as they are better qualified and not hampered by debt.
As for the 4%. Yes you need to take into account inflation. You also need to take into account future trends in market caps, earnings, profitability and interest rates. If you'd offered me the returns on my current share investments in the early 90s I'd have said something impolite and stuck it in something yielding the overnight bank rate which was 9%. Market caps based on current P:E ratios and low interest rates are something of a rarity in economic history - you'd be unwise to base future trends on recent trends.
You only need 35 year's worth Blackflag, and even if you are short those missing weeks or even years don't cost much. Not worth worrying about IMO, Just make sure you pay for every extra year you can if you aren't at 35. Whatever extra you need to pay in you get back within 3 years of retirement.
"I'm intrigued that nobody, with the partial exception of johndoh, has mentioned passing on any money to their kids to get a foothold as they reach adulthood and try to by a house in a stupidly inflated property market."
Back in the 80s my parents gave me the deposit for my first flat. £3k on an £18k flat. It meant I had my first mortgage aged 21.
I have given my kids some cash in similar circumstances. If it can be afforded it makes more sense giving kids cash when they need it rather than after you are dead when they may not need it as much.
All my 3 kids have had a nice lump some from my parents which has enabled them to buy houses. I plan to do the same with my grand kids. I don’t expect or want any inheritance from my parents and would prefer they leave their money directly to their grandchildren.
I agreed that with my parents, db, 10% to each grandchild and the rest divided between myself and my sister. My sister has 3 kids so was pleased and like me has reached a stage where inheriting won't change much - if indeed we ever inherit as first we'll have to outlive the oldies and second it's quite likely to finance end of life care.
I am deliberately keeping 2 years short of max as if I got a job, I would be accruing more years. If I was maxed out now, any extra years would not earn me any more pension.
poolman - this doesn't make sense (to me), any chance you could explain your thinking in case I'm missing something?
FWIW - I've a reasonable understanding of NI having implemented payroll systems in the 80's & 90's plus worked with NIRS2 (National Insurance Recording System) as a Contractor.
It makes perfect sense to me intheborders. You can buy back years for up to the six previous years so If you're already at 33 years you can wait until just before you retire to buy the missing years (don't leave it too late the paperwork takes forever) - and if you work a couple of years before then you won't need to buy any extra years at all.
"I'm intrigued that nobody, with the partial exception of johndoh, has mentioned passing on any money to their kids to get a foothold as they reach adulthood and try to by a house in a stupidly inflated property market."
Then you haven’t been reading closely.
It makes perfect sense to me intheborders. You can buy back years for up to the six previous years so If you're already at 33 years you can wait until just before you retire to buy the missing years (don't leave it too late the paperwork takes forever)
I bought 2 years the other week... You can pay it online now from the same place you check your NI record.
It makes perfect sense to me intheborders. You can buy back years for up to the six previous years so If you're already at 33 years you can wait until just before you retire to buy the missing years (don't leave it too late the paperwork takes forever) - and if you work a couple of years before then you won't need to buy any extra years at all.
Ah, that's the bit I was missing - it was the way he said "deliberately keeping 2 years short", what he means is that he's not buying until he needs to.
Ta
"I'm intrigued that nobody, with the partial exception of johndoh, has mentioned passing on any money to their kids to get a foothold as they reach adulthood and try to by a house in a stupidly inflated property market."
Then you haven’t been reading closely.
I'm terribly sorry, please forgive me. Perhaps you could point me in the direction to aid elucidation.
I’m 52 my kids are 18 and nearly 22, I plan to be around when they buy their first home. Of course I will help them but I also still want to enjoy myself.
Downsize, gift the house to the kids at state pension age, pay them "market" rent from the state pension and live seven years. I think that's probably the most tax efficient means of doing things and avoiding IHT (depending on house price). Of course it assumes there will be other pension income, but if you are retiring early, then there will have to be.
Excellent Mattyfez. They've been putting more and more stuff online over the last couple of years, I'll check that out before making this year's payment. I'd like to bet I still get the bill in the post though. I'm always amazed that the UK government has such faith in the French Post Office, really important documents get sent to me by ordinary post.
Excellent Mattyfez. They've been putting more and more stuff online over the last couple of years, I'll check that out before making this year's payment. I'd like to bet I still get the bill in the post though. I'm always amazed that the UK government has such faith in the French Post Office, really important documents get sent to me by ordinary post.
I think you can only pay for missing years though... Not current year. I'm not sure.
I think that's probably the most tax efficient means of doing things and avoiding IHT (depending on house price)
If your estate is north of a million pounds, then merely giving them the house might well not be enough to bring it under.
If your estate is under a million pounds, it's not liable for IHT anyway (probably).