I personally would be quite happy with a couple of Tesco till shifts
Mrsdb found it quite difficult to get a "wind down" job, most employers thought she'd get bored and leave, it's something I've thought about too but decided I'd rather do my current job* for less hours than take a large pay cut per hour.
*only average UK salary but quiet easy on me & much better than minimum wage.
A few friends have found the sweet spot with a part time role that pays a decent rate and keeps below the tax allowance, netting around £1k a month to supplement a couple of k from pension/savings, again with no or minimal tax for the first good few years utilising the 25% tax free etc.
I personally would be quite happy with a couple of Tesco till shifts
Mrsdb found it quite difficult to get a "wind down" job, most employers thought she'd get bored and leave, it's something I've thought about too but decided I'd rather do my current job* for less hours than take a large pay cut per hour.
*only average UK salary but quiet easy on me & much better than minimum wage.
I watched my father in law negotiate a nice deal - moved from sales manager of a mushroom seller to inspecting stockists and quality. He was paid 5 days per month to travel the UK (including overnight accommodation) and randomly inspect supermarkets who had their stock, then send simple reports to the new sales manager and team. Was paid £1k a month to do this for 6 years - basically he and my MiL spent the time touring all sorts of random places in the UK at someone else's expense...
Quite a few colleagues are on compressed or even part time hours before they step off into retirement. All depends on your employer and your role.
keeps below the tax allowance, netting around £1k a month to supplement a couple of k from pension/savings, again with no or minimal tax for the first good few years utilising the 25% tax free etc.
This sounds like effective tax avoidance. But it does mean a fairly low income. OK for later years, but something of a change if you were taking home much more before retiring.
If you had a 500k pension pot and 50 or 60k in cash/savings you could have a combined ‘in your hand’ of 4k a month for close to 5 years, possibly getting you to to state pension age. Not necessarily the most tax efficient way to do over say a 20 year pension period though, but would increase available disposable income in the early years.
I seem to be doing ok on the pension front thanks to sticking in good sized contributions from relatively easy in the career. I kinda thought i'd not be able to retire until 60 or whatever, but maybe I can do it at 55 if I don't go mad (30k a year or whatever). I have a chunk in an isa, and it occurred to me the other day I could just burn through that from age 55 to 57 when my pension would kick in - somehow feels wrong as that's my 'savings' and just spending them seems somehow 'incorrect'. Any downside to this?
I guess the main one I can think of is that it means all your savings are then effectively in your pension, which means the double taxation thing when I die (I know it's not actually double taxation as I didn't pay tax on it in the first place - i'm not anti tax!). Anything else? Means testing of the state pension I guess would screw my maths, as would a tax raid on large pension pots which I assume will come sooner rather than later.
But, the 25% you can take tax-free, do you have to do self-assessment for that
Not sure I’ll ever not do self assessment though most times I seem to owe money despite PAYE. My SO has continued to do it every year since retiring and each year has had a refund from HMRC.
keeps below the tax allowance, netting around £1k a month to supplement a couple of k from pension/savings, again with no or minimal tax for the first good few years utilising the 25% tax free etc.
This sounds like effective tax avoidance. But it does mean a fairly low income. OK for later years, but something of a change if you were taking home much more before retiring.
£3k per month take home is about 50% more than national average take home pay, it might be something of a change for those used to more but to call it a fairly low income?.... even if you are talking joint income it should be plenty to live on if retired & mortgaged paid off etc
I turn 43 this year and whilst I have no thoughts on retiring, I'm a little nervous given I only have about £100k in total savings (mostly pensions). Seems I'm in it for the long haul.
I have a chunk in an isa, and it occurred to me the other day I could just burn through that from age 55 to 57 when my pension would kick in - somehow feels wrong as that's my 'savings' and just spending them seems somehow 'incorrect'. Any downside to this?
no real downside, I think it’s a mindset thing, spending it after years of saving to it..
Ultimately, despite all the moaning in the right wing press, the reality is that middle income earners in the UK (whether retired or not) don't pay enough tax to support the services we want. You cant get good services and pensions by just taxing the very rich - the middle needs to pay more (and they do in the European countries many of us visit)
The good news is, if things carry on like this, the middle soon will be! Average wages are now only about 20% below the higher tax threshold.
I just looked up some previous years, out of interest. Adjusted for inflation, in 2019 the top rate kicked in around £65k in today's money, in 2010 it was about £68k, in 2000 it was about £62k, and in 1990 it was about £58k in today's monday. So middle-higher earners are definitely getting taxed more.
Higher rate tax is not something that's concerned any household I've ever lived in, but a few more years and it just might...
all your savings are then effectively in your pension, which means the double taxation thing when I die (I know it's not actually double taxation as I didn't pay tax on it in the first place - i'm not anti tax!).
really all depends on size of pot, you get 25% tax free, so with a large pot and spreading that out over say 10 years, and adding in the 12k a year tax free income, you could keep a decent monthly income with low or no tax.
for the ‘when you die’ bit, and assuming you’re considering inheritance tax, if your estate is under about £1M it won’t really amount to much, and if it’s over that then it’s probably fair enough !
we plan to spend most of the pot, and leave a decent chunk in the house to the next generation, all below IHT Threshold. God willing 🤞
Factoring in the house it might be over a million when I cork it - kinda depends on the market. If it happens to stay favourable then the withdrawal rate will leave most of the principle - reasonably unlikely it'll go down to nothing. As I say no problems paying the tax, but I guess i'd be stupid if I didn't minimise it. Essentially a choice between retiring early and leaving the kids a larger pot that only gets taxed once (as opposed to IHT + the receivers marginal rate).
I turn 43 this year and whilst I have no thoughts on retiring, I'm a little nervous given I only have about £100k in total savings (mostly pensions). Seems I'm in it for the long haul.
£100k is good. Now it's do you have spare to make this a lot better over the next 5/7 years to really see it grow. Have you paid attention to what it's invested in? Consolidated any other pensions. Checked on lifestyling and when it kicks in and if it can be turned off.
A few of these threads last year kicked me into looking at it properly so spent 6 months learning about it, getting all the ducks in a row and playing with spreadsheets to see where we are at and what is needed to be done.
Meaningful Money is superb for guiding what you should do and this is probably the main season to listen too before getting sucked into everything else https://meaningfulmoney.tv/category/podcast/season-25-finance-os/
All assuming most of it doesn't go in care home fees, like MIL's estate. Let's hope for a long 'mobile/healthy' retirement.
That Guardian article really wasn't aimed at most of the people on this thread who are already doing something, even if they think they should be doing more.
It was aimed at people who are doing nothing, the message is you really need to think about this a bit and do something. I've had conversations with people about this stuff over the years who have zero financial literacy. As soon as you talk actual numbers, interest rates etc they just glaze over and become paralysed by indecision/disinterest/fear. Result - they still have no pension. Hopefully auto-enrolment has improved this slightly, but we still had one of our daughters outraged at this deduction from their pay packet and wanted to opt out...
but we still had one of our daughters outraged at this deduction from their pay packet and wanted to opt out...
Employer contributions are free money that will compound nicely from a young age... total no-brainer even if the company scheme isn't very generous!
I think it’s a mindset thing, spending it after years of saving to it..
This, very much this. It's exactly what a pension adviser said to me a couple of years ago when I first started thinking about it. But it's a big change of mindset after ~40 years of saving in various ways & places, and I'm still a way off properly committing to it, despite finishing work in Apr at 62, and having just got all my (4) bits of pensions into actual payment this month. That took a little while to administer, although they did say "It will likely take 10 weeks or so to get these into payment"
I turn 43 this year and whilst I have no thoughts on retiring, I'm a little nervous given I only have about £100k in total savings (mostly pensions). Seems I'm in it for the long haul.
100k compounded at 4% for the next 25 years to retirement at 68 (by then it'll be 68, if not later) will be 270k approx
Add in another 10% pa of an average sort of salary of £32k (your + Eer contribs) would be another 3200 x 25 = 80k and also compound that at 4% over 12.5 years (rough and ready of averaging growth of a sum that starts from zero but increases over period is to compound over half that period) = 130k. Total is 400k in today's money
I'd say you're well on the way, and as salary grows and you can increase the amount you put in, and also hopefully returns-inflation are better than 4% ....you're a damn sight better off than a lot of people.
If nothing else, youngsters, start early and max out the free money from the Eer and taxman.
4% is weak but allows for inflation to be reducing the effective amount....
^^ very much this, and retiring today with a 400k pot would be quite doable for most people, and even before mid/late 60’s.
Yep. Based on my own recent experience, and assuming you're in reasonably good health, it should give you an annuity of about £20k. That depends a bit on whether you take the tax free lumpsum at the start, and a few other variables, but it's reasonably indicative
I'm getting very near to retirement (certainly mentally) and interested in people who have taken lower paid shelf stacking or delivery type jobs to keep some additional income coming in or to keep occupied.
There must be many people on here with a high to very high degree of autonomy in their roles - how do you manage working and being at someone else's beck and call? Quite likely working to some frightful person on a bonus driven mission! Showing my prejudices here.
I'm in the multiple smaller pensions from various employers bracket and needing to change the mindset from saving to spending while these pensions and the state pension phase in.
If you had a 500k pension pot and 50 or 60k in cash/savings you could have a combined ‘in your hand’ of 4k a month for close to 5 years, possibly getting you to to state pension age. Not necessarily the most tax efficient way to do over say a 20 year pension period though, but would increase available disposable income in the early years.
Can you check this/ confirm what the point was as I'm not getting it. Not saying it is wrong, but not seeing where it leads...
4k pcm is £48k PA, so lasts loads more than 5 years, but probably a bit less than 20.
What am I missing?
100k compounded at 4% for the next 25 years to retirement at 68 (by then it'll be 68, if not later) will be 270k approx
I guess that as this is an early retirement thread the message you will need to work to 68 isn't welcome!
What am I missing?
I was trying to demonstrate by example how to get a living income out of the fund without paying more than very minimal tax
I turn 43 this year and whilst I have no thoughts on retiring, I'm a little nervous given I only have about £100k in total savings (mostly pensions). Seems I'm in it for the long haul.
you are better off than I was at 43, I had 65k in my pension. With a tail wind (8% p.a) for the next 7/8 years I hope to have 500k at 60. If not then I will work on. As others said, compound interest/time is your friend.
was trying to demonstrate by example how to get a living income out of the fund without paying more than very minimal tax
Righto. I'll re-read it tomorrow to see if I get it. Not that it matters 🙂 . Cheers for elaborating
No worries, it was just an example
For those who are just starting out with pensions or a fair few years from retirement but want to add as much as they can, if you are in a role which pays a bonus of any sort its well worth checking with the company HR people about salary sacrifice. You can put a bonus directly into your company pension ( I think you can with a SIPP style pension as well but I have no experience in that) thus avoiding paying tax on the bonus now.
I've been fortunate to pay in money for the last 7 years via this method and it has given my pension a needed boost over and above the normal monthly contributions.
If you are higher rate tax payer and go this route you will need to check in annually with HMRC to claim back the tax relief (another nice bonus) this is fairly straightforward via the .Gov website. If you are standard rate this is done via PAYE.
On the early retirement front I recently watched a video about annuities and how they had to change after the government changed individuals access to pensions years ago coupled with auto enrolment in DC schemes. I hadn't really considered them as a flexible option, but they are.
I have a DB pension kicking in at 65 and state at 67, so I toyed with dropping my 2 DC's into an annuity from 55-65 and see what I was offered. I figured I would look for some work 2-3 days a week to keep the brain ticking over as well.
a quick check using a calculator at L&G website and for my £180k pot they offered £15k pa for 10 years, £45k upfront and £18k at end of 10 years. Which has my interest, only 14 months to think about it! Although by then we will probably have had another interest rate cut which usually has an effect on annuity prices.
