# Retirement



## doctor Bob (17 May 2021)

This is mainly aimed at business owners and the self employed.
Question is when do you know you have enough to retire.


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## Garno (17 May 2021)

I would think it is when you start buying things without first looking at the price.


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## powertools (17 May 2021)

Truth is Bob nobody knows if they have enough to retire unless they know how long they have left to live.


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## Cabinetman (17 May 2021)

I would ask your accountant, but first I would ask your pension pot company for an up-to-date high and low estimate. I think we’re in for a period of higher inflation over the next few years (thanks Joe) and it’s surprising how it can eat into a fixed income. Ian


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## Cabinetman (17 May 2021)

powertools said:


> Truth is Bob nobody knows if they have enough to retire unless they know how long they have left to live.


 Well not quite true, your pot buys an annuity, if you die sooner they win if you live a long time you win, it’s always worthwhile telling them that you’re a heavy smoker and drinker they’ll think you’re going to die soon so can be a little bit more generous, well it’s worth a try ha ha.


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## Spectric (17 May 2021)

doctor Bob said:


> This is mainly aimed at business owners and the self employed.
> Question is when do you know you have enough to retire.


Big question that is as much physiological as financial. Before I did it this was a topic of great discussion and many views and arguments for and against. The truth is that for many they cannot see life with a reduced income and or cannot let go of the money, but there are no equations to determine the answer because one of the big variables is time and you cannot give this a real value. Why, because you do not know how much you have and so you do not know the period for which you need to plan. Solution for me was a spreadsheet of all cost and expenditure with all savings and pensions, then hard thinking because you want a decent standard of living but without wanting the impossible, if you aim too high you will set a target for which you will work until you drop, so as they say you will need to cut the cloth to suit the income.

Few pointers to think about. 

You will have higher expenditure in the early years because you can and will want to do more because your body allows it.

Once you reach state retirement and you and the missus have full contributions then this gives a reasonable income to support life and the basics, will you have savings to just top it up for the extras?

For me I calculated total expenditure to cover essentials, increased this by 3% per anum upto my state retirement age to see what it cost, and will my incomes cover or will I need to dip into savings, this gives a good idea and is what made me realise I could do it. But as I said time is precious and I have known people who have got close to retiring, then hanging on for an extra period to get more money that they did not really need and then droping so really retiring is a gamble between time left and accumulating more but do a spreadsheet and it may open your eyes, also dependant on your current age. 

Finally it is really great when time is all yours, you can do what you want and just get on with living and forget the stress of working, customers, meeting deadlines, jugling jobs and chasing materials.


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## eribaMotters (17 May 2021)

Doctor Bob, I was not self employed, I taught in a secondary school but my method on making the decision on retirement may, or may not be of use.
I worked out that to "exist", food, running 2 cars, basic maintenance on them, gas, electricity, water, insurances etc etc came in at about £1250 a month. When my net pension exceeded this I knew I could retire. My lump sum would have to pay for breakages, items wearing out and holidays until I hit government retirement age and a state pension. 
I retired after 35 years in a classroom [I'd had enough of 60+ hr weeks] just short of my 56th birthday. So far 4 years in I think it is working financially although I've had to break down the figures as we moved and took on a big building project.

Colin


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## Spectric (17 May 2021)

Cabinetman said:


> Well not quite true, your pot buys an annuity,


The advice given to me was to avoid buying an annuity, the returns these days are very poor compared to the days of 12% plus interest, probably why the old interest only mortgages are no good. An annuity means you are giving away control and your asset, better solution is a draw down system which a good advisor will explain but it can also reduce your tax burden and you still have the lump.


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## Blackswanwood (17 May 2021)

This may help piece it together @doctor Bob 





__





How long will my pension need to last? - Office for National Statistics






www.ons.gov.uk





The Pension Advisory Service also give free generic advice.


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## Trainee neophyte (17 May 2021)

"Making predictions is hard, especially about the future."

If your pension fund is entirely financial - stocks, shares, annuities etc, then you are dependent on the system continuing without too many boats being rocked. If you retire at 70, and die before you are 80, then you can be reasonably confident that tomorrow will be roughly the same as yesterday, but if you want to retire at 50 you might be looking at needing 40 or 50 years of stability and predictable growth. That sounds like a big ask to me - it's an entire working lifetime.

Income producing assets that can weather a storm sounds like a good idea - don't forget that inflation is a) built into the system and b) always higher in real life than any index shows. What will the world look like in 50 years? How much will a loaf of bread cost, and in what currency?

My thinking is assume that the government and financial system is out to get you, and plan accordingly. Even teachers, with their government supplied index linked, supercharged pensions tend to be pretty poor once they get past 80.


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## doctor Bob (17 May 2021)

Thanks for posts so far.
I think I've done alright in life so far, I have a big house morgage free, other assets such as a 7 acre field with a commercial venture on it (good retirement income). Some decent savings.
I have a pension pot I pay in a lot of money to each month, won't be massive as I only started 15 years ago, but decent. My wife has a very good pension pot.
I'm approaching 56.
Thinking of going at 60.


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## gregmcateer (17 May 2021)

Good thoughts up above. 
I'm a business owner, too and do have concerns about income being enough when I'm ready to retire. Not helped by my first pension being with the' rock solid' provider Equitable Life - that weren't bang after I'd been contributing for a few years .
But hey, life goes on. I've got a few investments and now contribute as much as I can to a pension. 
Periodic advice from a pension advisor I hope means I'll keep at least sort of on track.
As said above, although it's tedious, you need to look at what you HAVE to spend, what you want to spend and try to think of some unpredictable items.


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## gregmcateer (17 May 2021)

Oh, and when you're ready to stop, don't keep your share of any business you had, unless you are prepared to stay out of running it - you'll just get fed up, and p*** off your old employees/ partners


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## mikej460 (17 May 2021)

I retired at 60 after a successful career where I earned a very good income. After our house was paid for I'd had enough of work and commuting was just too stressful. We had good financial advice (not cheap but worth it) and my pension pot together with a lot of 'what if' spreadsheets etc, convinced me it was doable. I'll never be as well off as I was but I'm far happier in this new stage in my life after being retired now for over 4 years. One piece of advice I can offer is to think about what your outgoings will be at 10 year intervals because as you age you will likely to need less. I've seen income projections that gave me the same income at 90+ years of age! I think I would struggle to spend even my state pension in my 80s. I do think a contingency pot is a good idea, just in case of major unforeseen issues arising.


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## Lons (17 May 2021)

I retired at 68 Bob and could easily have kept going although finances made retirement possible several years earlier but I was still enjoying work even though I had started taking time away for extended long haul trips which I'm now pleased I did because my wife has had a series of issues and on Friday will be having her 5th operation in the last 5 years so with hindsight I now wish I'd retired at 60.
I agree with what spectric said and you'll find that once you've adjusted your whole outlook on life will change as you start to relax and explore other interests, the only people I know who have struggled are those with few interests away from work.

On the other side, I have a close friend who owns a distribution business which he's been trying to sell for a while, he's now 76 and I rang him this morning as he's not well. Struggling with a seriously painful back they can not fix, he has diabetes, had a heart attack 3 years ago and has just been told one of his kidneys is operating at only 20% and the other at 15% so he will need dialysis 3 times a week and quite possibly a transplant. He's left it too late to enjoy any retirement so the one piece of advice is do it as soon as you can possibly afford to as the most important thing going forward is your health.

Try to keep back a decent emergency fund, this operation for my missus is having to be paid for privately as she just can't afford to wait 2 years for the NHS. ( there goes my new car fund.  )


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## doctor Bob (17 May 2021)

Yes when I go I want out completely.
whether I worked 1 or 7 days a week, I'd still stress the same about the business.
Talked to my business partner today to plant the seed.


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## Myfordman (17 May 2021)

I agonised long and hard over the when to retire question. Every spreadsheet I created could be made to give a different answer according to figures picked for inflation and investment yields and how long I might live. No help at all
In the end it was a mixture of quality of life (how much of my job I still enjoyed becoming less and less) and the degree of care needed by my wife.
I jumped at just over 55 years and consoled myself with being able to get a shelf stacking job at B&Q because I knew a fair bit about DIY.
That was 12 years ago. Absolutely no regrets I took as much cash as I was allowed to and started a new business buying and renting out local property. I can do it all from home apart from the odd bit of maintenance either myself or supporting a few local tradesmen. 

My advice would be JFDI Bob


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## D_W (17 May 2021)

Can you draw 3-4% per year from your assets, take a little investment risk and live comfortably? If you can, you've got enough to retire. 

My parents got a bit past that point but retired very early (54) and then found that they spent less in retirement than they expected because they were out of the rate race and comparing themselves to a smaller group. Dad expected to spend a lot of money golfing and offset it by working part time (don't ask - house rule with my mom - no house money spent on golf regardless of the surplus) and mom spent her time making and selling things rather than traveling (she tried traveling, dad did, too, and after a couple of years of off and on vacations to far off places, they liked being at home better). 

Buying something like an annuity here is generally an asset settlement (you've traded all risk at that point for a lower return). If you plan on living for a long time, some of your egg should probably remain invested with spendable bits for a nearer horizon kept a little safer. dividend paying equity (like consumer staples and industrials) are sort of the new fixed assets here in the states and over every historical period have beaten annuities badly.


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## Spectric (17 May 2021)

mikej460 said:


> I retired at 60 after a successful career where I earned a very good income. After our house was paid for I'd had enough of work and commuting was just too stressful. We had good financial advice (not cheap but worth it) and my pension pot together with a lot of 'what if' spreadsheets etc, convinced me it was doable. I'll never be as well off as I was but I'm far happier in this new stage in my life after being retired now for over 4 years.


I can remember from a pre-retirement workshop that for many it is that step into the unknown, a big change in daily routine and the fact you are entering that 3rd stage but once over that step it can be a great feeling, Mike realised that you have to give up some income to get over this step but quote "I'm far happier in this new stage in my life ".

I can also say the same, and a big part is keeping occupied which can be easy or difficult depending on yourself but most seem to say they do not know how they had time to actually go to work. I know some people who do voluntary work for a few hours a week and others who work part time doing something they really like rather than the job they had but you do need to get to grips with the finances, good financial advice may be helpful. What you don't want to end up doing is having to work for less because you got the sums very badly wrong and only you know your finances. Also don't keep finding excuses to put it off, take a positive approach otherwise you end up chasing a moving target you never reach and so many also get it wrong, wake up one day and realise they have missed any chance of a decent retirement, eg read @Lons post.


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## Spectric (17 May 2021)

Remembered a couple of retirement stories from some years back. Got talking to a couple in a narrow boat on the grand union canal, nice couple in there fifties and happy doing what they had always wanted, cruising the 2000 miles of Uk canals and visiting many places. They sold everything, house, cars the lot and brought this boat to live on to live the dream. I asked what will happen when you get to old to live this lifestyle, the reply was we will be hopefully skint, very old and will crawl into social services to get free accomodation in an old peoples home and let the state keep us. 

Another couple I bumped into was in Colarado, living in a camper van and craving UK tea. They were touring the states, visiting anything and everything and were really enjoying themselves, just missing some home comforts like tea and the sign on their camper said " we are british and just spending the kids inheritance"


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## mikej460 (17 May 2021)

Spectric said:


> I can remember from a pre-retirement workshop that for many it is that step into the unknown, a big change in daily routine and the fact you are entering that 3rd stage but once over that step it can be a great feeling, Mike realised that you have to give up some income to get over this step but quote "I'm far happier in this new stage in my life ".
> 
> I can also say the same, and a big part is keeping occupied which can be easy or difficult depending on yourself but most seem to say they do not know how they had time to actually go to work. I know some people who do voluntary work for a few hours a week and others who work part time doing something they really like rather than the job they had but you do need to get to grips with the finances, good financial advice may be helpful. What you don't want to end up doing is having to work for less because you got the sums very badly wrong and only you know your finances. Also don't keep finding excuses to put it off, take a positive approach otherwise you end up chasing a moving target you never reach and so many also get it wrong, wake up one day and realise they have missed any chance of a decent retirement, eg read @Lons post.


In my case it was my wife who urged me to retire and I must confess it was a bit of a mental challenge for the first few months as I found I actually missed the intellectual challenge of work and also being around people. However, I do like to keep busy! so this was quickly replaced by the challenge of various major projects that have been on the back burner for years. For example I have a smallholding which keeps me fairly busy, I'm currently building a new timber and stone greenhouse for Mrs J followed by a new workshop. I also take an active part in community projects in our village which provides just enough human interaction! I certainly don't miss getting up at 5:30am to travel to lord knows where every day. Having said that I do know several self-employed people who love their job and have no intention of retiring.


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## Lons (17 May 2021)

Yeah we bought a motorhome late 2018 Roy, it's been laid up for 18 months due to Covid and my wife's health, hopefully we'll be able to use it again by the end of the summer.
When my FiL retired my MiL stuck a notice up saying "twice as much husband, half as much money". It took him a while to adjust and started organizing kitchen cupboards and telling her she'd been doing the vacuuming all wrong...for the past 35 years, that pi**ed her off just a bit. It all settled down once he got his head around it.


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## Terry - Somerset (18 May 2021)

In my mid 50s work started to become more of a chore than a pleasure. Kids grown up with good jobs. Mortgage paid off some years earlier. 

By background a chartered accountant, copious detailed spreadsheets followed. I had worked for 20 years in the public sector and 20 in the private - reasonably comfortable (but not massive) salary and pension.

Finally volunteered for redundancy with a reasonable package - initially somewhat nervous about affordability and the future.

What I have found 7 years on is that normal working goals associated with the pursuit of more money, promotion, power, influence, acquisition of material goods now seem very shallow. 

time and freedom is a huge benefit - unquantifable financially. 
as a minimum one needs the income to fund essentials (food, tranport, roof over head, etc) with a little left over
the "left over" does not need to be massive - providing you are prepared to flex expenditure to fit what is available
invest to minimise risk. The pain of losing £10k would be greater than the pleasure gained from making £25k! 
have a financial contingency plan - in my case sell a buy to let flat whose rental forms part of my income. I could also downsize my main house and still have an entirely comfortable place to live
few in their final days reflect on their life think "I wish I had spent more time at work". 
At 60 there may be 15 (+/- 15) years of good active health. Your planning horizon is limited. A 25 year old has a planning horizon of 50+ years, yours is 5-25 (sad but true). Make the most of it!


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## Bristol_Rob (18 May 2021)

doctor Bob said:


> Thanks for posts so far.
> I think I've done alright in life so far, I have a big house morgage free, other assets such as a 7 acre field with a commercial venture on it (good retirement income). Some decent savings.
> I have a pension pot I pay in a lot of money to each month, won't be massive as I only started 15 years ago, but decent. My wife has a very good pension pot.
> I'm approaching 56.
> Thinking of going at 60.


60 is my magic number. Your financial state sounds solid. Go for it.
If something happens you can always go back to work!
Or
Do a part time job doing something different. 

Who knows you may even make a few things to sell to generate funds for that next tool. Might be the incentive you need.


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## Keith 66 (18 May 2021)

I just retired at 59, I was in a trade that was notoriously poorly paid (boatbuilding) for most of my career & didnt have a decent pension. The private pension i did start back in the 80's was rubbish & i cashed it in a year ago. I would have been better off buying tins of beer & having the pleasure of drinking it then got a better return running the aluminium in for scrap.
I ended up in a job as a technician in a school (rubbish money too!) but did enjoy it at times. I will have a small pension from that when i reach 66.
My parents have both passed away, mum most recently & her legacy has given me enough to see me out, Just.
I have seen too many guys hoarding their pennies & worrying themselves sick about their index linked final salary pensions, scared shitless someone will take it from them, they stop work look around & dont know what to do.
Me i love making things, boats, musical instruments, engineering. I have a first class workshop & time to use it. 
I am as busy as i ever was at work. Happy days!


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## Daniel2 (18 May 2021)

Terry - Somerset said:


> ...snip
> What I have found 7 years on is that normal working goals associated with the pursuit of more money, promotion, power, influence, acquisition of material goods now seem very shallow.
> ...snip



Very wise words.
Stopping "work" allows you to see life with a fresh focus.
But, seriously, do it while you can still enjoy it.


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## Cooper (18 May 2021)

Trainee neophyte said:


> Even teachers, with their government supplied index linked, supercharged pensions


While I appreciate that my teachers' pension is a wonderful thing, may I challenge Trainee's quote? The teachers pension is not subsidised by the government. Teachers pay quite a large chunk of their income into supper-an and employers pay a massive amount, I when I was still at school our contribution was 6% and the schools 13% of my income. This is why a lot of private schools are now trying to leave the scheme. My pension is paid from current contributions by colleagues still at the chalkface. Indeed I believe recent increases to teachers' contributions have put the scheme into surplus.
When I started teaching in 1975, an older colleague took me aside to give me his view of the scheme, which he considered a total rip off. He pointed out the fund was massively in surplus, as the average length of retirement of a teacher retiring at 65 was only 18 months. Indeed many of my colleagues, didn't even reach retirement (staff rooms were like smoking carriages on the trains of the day) only their widows were able to claim a half pension. Happily now things have changed and I have calculated, by the rate of actuarial reduction, teachers are expected to have an average of 15 years of retirement. 
We (both teachers) retired on a half salary, I was surprised that we managed our modest lifestyle quite comfortably. The bonus was no longer paying national insurance (how long will that last?) or super-an. 
I hope Trainee is wrong about our circumstances when we are in our 80s (in 10 years). 
Don't get me wrong, I realise we are in a very privileged position, though as *eribaMotters pointed out I feel we earned it.*


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## spanner48 (18 May 2021)

For me, the question was irrelevant: I HATED retiring. I would happily have gone on doing the work I like until they planted me. I GOT retired by the coronavirus, which killed off my business.


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## ian33a (18 May 2021)

my wife and I both retired at 57. We had planned to do this.

I had an occupational scheme which funded some of it , my wife the same. The rest was funded by pumping Maximal amounts into pension schemes while running my own business.

When possible, we also invested money into ISA investment schemes.
Upon retirement we took out all of the lumped sums available, typically 25% and invested most of this in further investments, largely through ISA schemes again. We didn’t blow the money on frivolity.

As a previous poster stated, if you can live off 3 to 4 % percent of your investments, a decent set of investments should remain cash neutral when charges are taken into account. Even if they deplete slightly, they are unlikely to reach zero during a remaining lifetime.

ISA schemes are good because they are tax free of investment accumulation and are also tax free when you take an income from them. That way, if you pick a decent investment vehicle, you can retain the capital invested and minimise the tax that you pay as you draw a monthly income from it. Minimising tax liability is priceless.

Taking the 25% lumped sum is good as the money moves from a domain that you may have no control over (and would be subject to tax if you take it as income) to a domain that you control and can be sheltered from tax. It also ends up in your hands rather than somebody else’s for the whole of your remaining life and to others upon your death.

although costly, I strongly suggest that proper financial advice is taken.

Also, unless you are extravagant, you don’t need as much money in retirement as you do when working. It’s hard to put a price on the free time that you have available to you but the value of it is immense.


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## Terry - Somerset (18 May 2021)

> The bonus was no longer paying national insurance (how long will that last?) or super-an.



This is a good point to remember, but it gets better than this when thinking about income needed:

you don't pay NI of ~12%
don't pay into a pension, take it out - possibly saving 3-15%+
reduced gross income will save tax at your top rate - for many 40%
no commuting or other work related costs
The average income of the top 10% of pensioner households is £54k pa. 

For high earners the income required in retirement is in the 60-70% range of pre-retirement - possibly even less as by then:

kiddies will have flown
no mortgage - house fully owned
no need for retirement saving


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## Spectric (18 May 2021)

doctor Bob said:


> I think I've done alright in life so far, I have a big house morgage free, other assets such as a 7 acre field with a commercial venture on it (good retirement income). Some decent savings.
> I have a pension pot I pay in a lot of money to each month, won't be massive as I only started 15 years ago, but decent. My wife has a very good pension pot.


Sounds like you have got the first stage well covered, that is both mortgage and debt free which opens up the third phase nicely. I would say it looks like you could walk away now but that would be a step change, maybe you can wind down so start taking a day or two off for yourself and then see how it feels, having a large house also opens up the possibility for downsizing, releasing capital at some point as you may think a move may be in order. It has been years since I worked in Harlow, the days when I sometimes cut through the Matchings to avoid conjestion caused by a large water pipe being laid but I bet there has been some really huge housing developements in the area since and maybe moving to downsize is another possibility. It is something I did, just had enough of the continous building in Chelmsford to Colchester corridor area and hugh traffic issues being piled onto the A12 so I just uped sticks, got a job up North and then retired in a more peaceful area, although this is now being destroyed by over development and many nice places are just ghost of there former selves.


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## Spectric (18 May 2021)

mikej460 said:


> In my case it was my wife who urged me to retire and I must confess it was a bit of a mental challenge for the first few months as I found I actually missed the intellectual challenge of work and also being around people.


Yes the mental aspect can be a challenge, you spend your life learning to perform a job and then all this knowledge is no longer needed, and if you have been in a job for a long time it can be like another life, almost like having another family but doing other things and getting involved soon replaces this and you can share knowledge with others on forums like this so it is not totally unused.



Lons said:


> When my FiL retired my MiL stuck a notice up saying "twice as much husband, half as much money". It took him a while to adjust and started organizing kitchen cupboards and telling her she'd been doing the vacuuming all wrong...for the past 35 years, that pi**ed her off just a bit. It all settled down once he got his head around it.


Once you are at home all day you can easily start to tread on the other halfs toes, but it is just a case of working together so you both maximise the enjoyment of retirement together, you just have to get through the adjustment phase and Northumberland is a nice place.



Terry - Somerset said:


> What I have found 7 years on is that normal working goals associated with the pursuit of more money, promotion, power, influence, acquisition of material goods now seem very shallow.


But this is how it is, you are groomed into this way of living from birth, once you step aside and become a spectator you see life for what it really is and too many people waste so much life not just to get a living but because enough is never enough, a question I and others used to ponder is why does someone who makes say a million bonus on a Friday go back to work Monday.

Surely retirement is the objective to a working life, it is something to aim for because we are not here just to work until we drop, that makes life really pointless and we deserve our own time in later life to have our own pace and not keep trying to keep up with the ratrace as our bodies resist.


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## doctor Bob (18 May 2021)

Bristol_Rob said:


> Who knows you may even make a few things to sell to generate funds for that next tool. Might be the incentive you need.



I think when I go, woodwork will be very low down on my agenda. I have a few projects to mind, I'm trying to buy a 3 acre field next to my house, I want to plant it as an arboritem and have some alpacas
I have a classic car.
I like keeping fit.
I do a lot of unpaid work for a group I belong to
I want to do a lot of walking.
Get more dogs.


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## doctor Bob (18 May 2021)

Trouble with downsizing is I lose the house I love.


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## Spectric (18 May 2021)

Bob

They are all really great ambitions and I can see why woodworking is not there, a lifetime doing something is often best left behind and having a commercial workshop would make a home workshop a nightmare for you as everything that was easy and could be just done would become more difficult but please continue to share your knowledge on these forums, things you have learnt are very valuable to people like myself who are learning and come in from other fields.


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## mikej460 (18 May 2021)

Spectric said:


> Surely retirement is the objective to a working life, it is something to aim for because we are not here just to work until we drop, that makes life really pointless and we deserve our own time in later life to have our own pace and not keep trying to keep up with the ratrace as our bodies resist.


Yes and no, my aim in life was to develop a successful and personally rewarding career. For the first half of my working life retirement seemed too long away to contemplate, short of paying into a company pension. So we enjoyed the various trappings along the way, nice house, cars, holidays etc. which I certainly don't regret. As I reached my mid 30s I thought about it more and actually setup by retirement fund to retire at 60 then forgot about it. In my late 40s it started to become more of a goal to retire early and I ploughed more cash into my pension pot and again forgot about it. It was only at 59 when I received a letter from my pension companies telling me their worth and the various rules on draw down etc. did I actually start to really think about retiring. So I took the plunge and, to paraphrase what you and others have said, I am no where near as financially well off as I was, but this stage in my life is rich and rewarding in many different ways.


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## BucksDad (18 May 2021)

I am still 30 years from state pension age so this talk of retirement is just wishful thinking for me at the moment. For my generation I don't think there will be much of an extravagant retirement given the cost of housing and very few having a final salary pension. Right now I am paying very little into my pension. My goal is to be mortgage free within the next 5 years, then we'll save for the kids uni fund / housing fund. After that I will think about retirement funds.

However I have watched my first boss / mentor (small business) be diagnosed with Parkinsons roughly 8 years ago and seeing the effect it has had on him is harrowing. He has finally fully retired I think, albeit he has only just sold on the company IP to another company. However he still has the company to wind up and distribute the proceeds to the shareholders. Watching him trying to work over the past 8 years has been awful.

This has all been complicated by the fact that he and the other shareholders have all fallen out, there are no robust company by-laws in place to help deal with all this and they've also all been sticking their head in the sand about it.

Having seen all this unfold, my advice to anyone who has a shared interest in a business with others is that if/when you want to dispose of your share, you put in the preparation work now so when the time comes, everything is in place to be able to do it as quickly and pain free as possible.


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## D_W (18 May 2021)

doctor Bob said:


> Trouble with downsizing is I lose the house I love.



Then don't do it. Both of my retired parents (same ones now retired for 19 years) still are together and living on a 5 acre property tied to 21 acres total. They have an ungodly amount of trees (nearly the whole property is wooded and they have a solid acre of hilly yard with ornamental bits everywhere) that require a professional arborist group once or twice a year. Their house is 2000SF just in the downstairs and they are not demanding of interior space - but if and when the stairs become dangerous, they will be able to convert downstairs rooms into elder areas (actually, their downstairs is bigger than my entire house - never thought about that, and I don't want for a bigger house to take care of or pay for, either). 

My father can't believe that I can stand living on a postage stamp, and when we visit them in the summer, I always end up saying "why do you want to fool with this rubbish for 5 hours a week every week? I think they'll live there to the end, but they're comfortable enough to know that they can do what they want rather than following someone else's formula.


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## Sandyn (18 May 2021)

With modern bank accounts it is relatively easy to look at where the money goes, I analysed our annual spending, which is always scary, lol I then created a massive spreadsheet of every investment we had to find out our total net worth, then classify investments into pensions ISA's shares and other investments to see what income might be generated. Pension funds and managed investments vary between 3% to 10%. 
I then did a what-if analysis on different draw down methods based on different returns and different draw down times. An annuity is not an option for me. My wife was lucky to have a really good annuity from her work pension.
Rather than think about how long I would survive, I worked on how long will I be capable/willing to enjoy a lifestyle where I would spend that amount of money. 
You can find a balance point of pension which will mostly be offset by generated revenue. That was two years ago and spending has dropped during the pandemic. I haven't touched any pensions. Last year was a apprehensive time for pension investments. The market really fell for a while, but some still made a reasonable return. As well as pension planning, you should also consider death planning, lol. We have gone through all accounts to put them into joint names, I have assigned nominees for all my pension funds. it would be tax free for them should I kick the bucket before I'm 75. Also done the wills, so I'm good to go!!


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## doctor Bob (18 May 2021)

I think I'm probably good to go at 60. The trigger has been my father who was active till 80 ish then parkinson has struck him down quickly, he's now in a home (end of life) at 86. Retiring at 60, 20 years would be good; 15 or less sounds not very long.


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## Jim Dance (18 May 2021)

Lucky to retire at 54, best advice i got was from a nurse at a hospice who told me, out of all the regrets she had heard from people on their death beds, no one had ever said 'I wished I had worked for bit longer'


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## D_W (18 May 2021)

Cooper said:


> While I appreciate that my teachers' pension is a wonderful thing, may I challenge Trainee's quote? The teachers pension is not subsidised by the government. Teachers pay quite a large chunk of their income into supper-an and employers pay a massive amount, I when I was still at school our contribution was 6% and the schools 13% of my income. This is why a lot of private schools are now trying to leave the scheme. My pension is paid from current contributions by colleagues still at the chalkface. Indeed I believe recent increases to teachers' contributions have put the scheme into surplus.
> When I started teaching in 1975, an older colleague took me aside to give me his view of the scheme, which he considered a total rip off. He pointed out the fund was massively in surplus, as the average length of retirement of a teacher retiring at 65 was only 18 months. Indeed many of my colleagues, didn't even reach retirement (staff rooms were like smoking carriages on the trains of the day) only their widows were able to claim a half pension. Happily now things have changed and I have calculated, by the rate of actuarial reduction, teachers are expected to have an average of 15 years of retirement.
> We (both teachers) retired on a half salary, I was surprised that we managed our modest lifestyle quite comfortably. The bonus was no longer paying national insurance (how long will that last?) or super-an.
> I hope Trainee is wrong about our circumstances when we are in our 80s (in 10 years).
> Don't get me wrong, I realise we are in a very privileged position, though as *eribaMotters pointed out I feel we earned it.*



In my state (both parents were teachers), my parents paid 7% of their income as a contribution to their pensions. At this point, the contribution level is about 1/5th the cost of the pension. 

The actual annual cost right now to fund prior deficits is probably about 40% and likely a bit short (the state - taxpayers - pick up whatever isn't negotiated into teachers' contracts). 

As far as average life expectancy in the 1970s, your coworker was just wrong. For someone retiring as a teacher at age 60 (recalling that you are already there if you retire, and teachers in the US generally have longer life expectancy than almost any other cohort - its' a good job with retirement benefits and no indigence in retirement, and the workload is low compared to white collar professions, which translates to longevity and generally relative good health). I would guess that the average life expectancy for someone in the UK already age 60 is probably another 26 years or so from teachers. 

In the 1970s (heavily dependent on smoking or not, etc), it was probably 2/3rds that. 

There is a lot of misinformation given about the actual cost of pensions and whether or not they were in surplus - they never really were. They didn't account for realistic asset returns or increases in longevity (that had already been occurring steady for 3/4ths of a century by then) and dealing with planning for those makes for answers people don't like (higher contributions vs. benefits). 

You did what my parents did, though, and they are comfortable - contribute to the system, retire after working (instead of early) and follow the rules. That will take care of you. 35 years is full retirement without any reduction here and in my state (varies state to state), the replacement is a lot higher, or was until necessary revisions began to be undertaken - it's about 80% here. Cost for a couple for pre-65 health insurance right now, unless you're poor and go to the federal exchange (which limits costs to something like 10% of income) is about $25-$30k per year. My parents paid to remain part of the school group insurance - that ate a lot of their pre-65 check, but they had planned for it. 

Their more free-spending friends are still living in little houses, blowing money on cars and trips and expensive restaurants and complaining about having to pay a mortgage. All of them believe that someone "stole" the money from their pension fund (including my parents) without realizing that they are the ones who did it.


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## doctor Bob (18 May 2021)

as a business owner I have set up my own pension I currently put in whatever I can, way more than normal 5%, I probably put close to the limit some years.
Tax free saving really.


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## Trainee neophyte (18 May 2021)

Cooper said:


> I hope Trainee is wrong about our circumstances when we are in our 80s (in 10 years).


So do I! I apologies unreservedly if I came over as anti - teacher. Probably I'm just jealous.

In actual fact I retired at 32 - gave up the career, income, mortgage etc and set out to travel the world. I am, and will continue to be, very, very poor in UK terms, and my pension prospects are limited to zero. However, my life is brilliant, and although I don't have time to do all the things I want to, I do manage quite quite a lot more of them than if I had a 9 to 5 job. I don't go on holiday, but where would I go that's better than where I live?

So from someone who retired 20 years ago - work is hugely over rated and should be treated with the contempt it deserves.

Remember Trainspotting?

_“Choose life. Choose a job. Choose a career. Choose a family. Choose a ******* big television, Choose washing machines, cars, compact disc players, and electrical tin can openers. Choose good health, low cholesterol and dental insurance. Choose fixed-interest mortgage repayments. Choose a starter home. Choose your friends. Choose leisure wear and matching luggage. Choose a three piece suite on hire purchase in a range of ******* fabrics. Choose DIY and wondering who the pineapple you are on a Sunday morning. Choose sitting on that couch watching mind-numbing spirit-crushing game shows, stuffing ******* junk food into your mouth. Choose rotting away at the end of it all, pishing your last in a miserable home, nothing more than an embarrassment to the selfish, cabbage-up brats you have spawned to replace yourself. Choose your future. Choose life . . . But why would I want to do a thing like that? I chose not to choose life: I chose something else. And the reasons? There are no reasons. Who needs reasons when you’ve got heroin a really good beach?”_


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## clogs (18 May 2021)

I just walked off the job at 55....self emp hands on management...was responsible for 10 experimental engineeering units at a value of £4.5millon each.....got the job done and quit.....16hrs a day 7x365.......
I only have my state pension .....
read on.....
my pension pot was stolen by the men in suits years ago, so everything after that went into property and machines....forward planning......nothing much in my pockets tho....
now at the age of 72, living in a nice part of the world with a 4 bed 4 bath home for rent in the summer.....(we live in a caravan during that time and happy to pay local taxes on it) plus just gonna buy a 3 bed house back in Blighty for the pension top up extras....
Still working and loving it, just wish my body was a bit stronger but I get by....
we don't own any flash cars or want to, everything is pre 1999....just not bothered .....all aquired years ago for the above reason...
or have been into designer clothes etc etc......we just live in shorts n a T shirt for all but 6 weeks of the year.......
you really have to plan ahead...we'd been planning for 16 years....
I also brought a full prof engineering w/shop of machines, most of a wood mach/shop plus all the ramps and gear for a working garage.....
I will soon start again repairing pre 1920 vehicles.......yipeeeeeeee....
Soon to have a self built 200m2 barn and all my above gear.....
I brought with me 2 very collectable tractors and a 1920's Citroen pick up that needs finishing.....but already have clients waiting....
enough to keep me busy.....

So my advice to you is as long as u dont go hungry, enough fuel in the tank for the cars....house paid for plus a few grand for incidentals....GO FOR IT.....but YOU must enjoy what you do with your time.....what ever you do.....

to add, I was never glad to be back in the UK at any time, as spent most of my life working abroad.....
so much nicer to live in the sunshine here...tho it's not for everybody tho.....
from experience most of my family were farmers those that quit early died off and those that worked on lived a long life......
you just gotta choose what suits you......
lastly my plan is to teach a young local, lad or girl as much as poss before I go.....and in going..... 
told the wife I want to die on the job or over the tools.....after that who cares.......hahaha.....
good luck to you.........


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## Daniel2 (18 May 2021)

Similar to Trainee Neophyte and Clogs, I "opted out", at 32 and, must say,
never looked back.


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## doctor Bob (18 May 2021)

I also opted out, at about 25/26 (think trainspotting) ................... not by choice, more by dubious brain changing choices, which although pleasurable for a while took me to hell and back, I joined life again (as most people see it) at 34.


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## Daniel2 (18 May 2021)

Perhaps "opted out" wasn't quite the right phrase


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## Essex Barn Workshop (18 May 2021)

At 18 I was persuaded to put the max allowed from pay straight into a pension. I did that every month for 30 years and, at 48, gave up stressful work. I ‘retired’ on a Friday and started a new, low pressure and entirely different job on the Monday! 8 years later and I’m now in my workshop all day earning a few bob.


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## D_W (18 May 2021)

doctor Bob said:


> I also opted out, at about 25/26 (think trainspotting) ................... not by choice, more by dubious brain changing choices, which although pleasurable for a while took me to hell and back, I joined life again (as most people see it) at 34.



More realistic pattern you had. The oft given retirement advice online "you're saving too much for retirement!" is given assuming you never cease contributing, you work 40 straight years, nobody has disability or sudden cash needs, and that your income level stays the same. 

A baseline assumption of 10% contributed steadily into something fairly high risk early on and tapering off only when you have the expectation to spend the money is probably fine. 

The fact that only a small percentage of the population will consistently do that over a long term isn't. My parents saved too much. I never saw them mind it - life has been pretty comfortable because of that. The cruel truth is that most people who "save too much" in retirement are the ones who also don't have enormous consumption habits in retirement. My mothers' friends do (retired teachers with strong pensions here, but they can't bring themselves to save a nickel if short term pleasure is around the corner....and it always is if that's all the further one can see into the future). 

What's interesting is to see free spending people resentful of money that others' have saved, and how it's unfair...

...and then folks like me who are less free spending and my parents even further, I guess kind of resentful that some people can relax so easily and spend their money without any anxiety. I don't want any of the things that they've got, but do perceive their state of obliviousness and joy as being kind of a gift.


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## doctor Bob (18 May 2021)

D_W said:


> but do perceive their state of obliviousness and joy as being kind of a gift.



same here, my anxieties can be a killer at times.


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## beech1948 (18 May 2021)

doctor Bob said:


> same here, my anxieties can be a killer at times.


Bob 
I have just lived through all the Covid stuff and at age 72 am now ready to retire in the next 2 yrs. I spent a year of 14-16 hr days for 7 days a week making sure my business could survive and we almost went under. It came close to that. I own an 80 person AI software house. 

This effort has just about broken me of the need to work plus I have just been diagnosed with a cancer.

My way out is too put the business on the market and with the degree of interest I'm getting I and my dependants will be fine.

Annuities absolutely no as they are just a form of robbery. We will be drawing down cash from my pension pot as well as investing in property.

The question over what a business owner should do is dependent on the type and style of business. Some will generate more value than others.


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## marcros (18 May 2021)

How does your business partner feel about it Bob? You are giving 4 years of notice so it isn't a sudden thing, is he concerned, sees it as an opportunity or given no indication at the moment?


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## Spectric (18 May 2021)

BucksDad said:


> I am still 30 years from state pension age so this talk of retirement is just wishful thinking for me at the moment. For my generation I don't think there will be much of an extravagant retirement given the cost of housing and very few having a final salary pension.


Your first problem is that they keep moving the retirement age, I dare say yours will be nearer 70 and so even more reason to think ahead. Before retirement you should be aiming for financial stability, a key milestone for retirement but I can understand the issues with cost of housing and living your generation face today. 

I have often thought about how I would handle living today if I was suddenly twenty again and I think I would have emigrated because the odds are better elsewhere, and so many people will be spending their entire life paying for what is essentially a pile of bricks with over inflated prices and I have tried to understand what has gone so wrong.



Sandyn said:


> I analysed our annual spending, which is always scary, lol I then created a massive spreadsheet of every investment we had to find out our total net worth, then classify investments into pensions ISA's shares and other investments to see what income might be generated. Pension funds and managed investments vary between 3% to 10%.
> I then did a what-if analysis on different draw down methods based on different returns and different draw down times. An annuity is not an option for me. My wife was lucky to have a really good annuity from her work pension.
> Rather than think about how long I would survive, I worked on how long will I be capable/willing to enjoy a lifestyle where I would spend that amount of money.


That is the only way to do it, turn it into a big picture that you can visualise and then work out the must pay, needs and then wants and you have the right idea of spending to enjoy a lifesyle because there is no point having a great big pot of money when your body is not upto doing what you could have. One good reason not to do the lottery because sods law says you will probably win when you are proped up on a zimmer frame, peeing your pants and being fed and so to old to reap the rewards.



Trainee neophyte said:


> I am, and will continue to be, very, very poor in UK terms,


You have to define poor, if there is more to life than just money then you could be lifestyle rich but cash poor. I often look around and see so many unhappy looking faces but they are driving expensive cars, coming out of large expensive properties and really should be smiling if wealth gives true happyness. Read the book written by some Tibetan Deli and it will make you think, he thinks many people chase happyness through materialism but it only delivers short term relief until the next purchase, also on Tv you see people who are obviously very poor and work hard just to survive but they manage to smile, they are content with their lot and not wanting all the time for more like so many in the west.



beech1948 said:


> Annuities absolutely no as they are just a form of robbery. We will be drawing down cash from my pension pot as well as investing in property.


Sorry to hear about the cancer, hope treatment goes well. Cannot agree more on Annuities, good idea back in the day but no more, but investing in property I would question as I also looked into that domain but ran, figures did not add up. Hand over £100K and get it back at £475 a month, this will take 17 years to get the cash back not taking into account maintanance, insurance and income tax so I would rather spend the 100K over that period. Don't take it the wrong way but you are 72, that to me is time to just spend and enjoy anything and everything without tying money up in bricks, you have done your stint at grafting so just enjoy life and keep away from stressful things and again all the best getting rid of that cancer.


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## Trainee neophyte (18 May 2021)

Spectric said:


> lifestyle rich but cash poor.


That's me, that is. 

I "work" 3 or 4 hours a day. Work is defined as something I _must_ do, as opposed to something I _want _to do. Sometimes I don't work for weeks, but I'm still busy as a busy person being busy. Even the things I must do are a result of my lifestyle choices, so could be defined as voluntary even if I don't enjoy them that much. For example, I _must_ cut the grass, otherwise it could catch fire. A week of wielding a strimmer isn't fun, per se, but I get to make the place tidy, enjoy my fabulous land, and keep fit all in one. After strimming I can go to the beach, because why not? 

I pretend I work very hard, but it is mostly pretence.


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## doctor Bob (18 May 2021)

marcros said:


> How does your business partner feel about it Bob? You are giving 4 years of notice so it isn't a sudden thing, is he concerned, sees it as an opportunity or given no indication at the moment?



Yes I want him to be prepared and happy.
We have been great mates for nearly 25 years.
He will carry on in some form or other.
The idea is to bounce ideas around for a few years as to how we do a fair "split". I'm not greedy and more concerned he can carry on and earn a decent income.


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## Flynnwood (18 May 2021)

doctor Bob said:


> Yes I want him to be prepared and happy.
> We have been great mates for nearly 25 years.
> He will carry on in some form or other.
> The idea is to bounce ideas around for a few years as to how we do a fair "split". I'm not greedy and more concerned he can carry on and earn a decent income.



1. Employ a Manager on circa £25K - £30K
2. Get two apprentice like peeps who are enthusiastic (zero hours if req'd)
3. Sit back.


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## Lons (18 May 2021)

Spectric said:


> investing in property I would question as I also looked into that domain but ran, figures did not add up. Hand over £100K and get it back at £475 a month, this will take 17 years to get the cash back not taking into account maintanance, insurance and income tax so I would rather spend the 100K over that period. Don't take it the wrong way but you are 72, that to me is time to just spend and enjoy anything and everything without tying money up in bricks, you have done your stint at grafting so just enjoy life and keep away from stressful things and again all the best getting rid of that cancer.



I looked at that as well Roy and didn't go for it either even though I could have bought something very run down and refurbished through my business however it's not quite as you state, the property value would unless something went very wrong, retain the purchase value or more likely increase so any profit from the rental after expenses has to be viewed in a similar way as you would interest on savings.
I agree though at 72 maybe spend it or use as supplement to pension e.g. drawing down £5k pa is still going to last 20 years in simple figures.

I'd also echo re the cancer, and hope you can get it sorted Beech.


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## Sean33 (18 May 2021)

doctor Bob said:


> This is mainly aimed at business owners and the self employed.
> Question is when do you know you have enough to retire.


I would say when you really start thinking about it. My thoughts, would not take an annuity, check your pension provider, take the 25% tax free lump sum and use that until it runs out, then drawer down annually on the balance. One thing i would do is check all the T&Cs of your provider, i found out with one of mine that when i popped my clogs 50% of the pot goes with it! have a very boring pension with the Pru now, whatever is in there goes to the missus and when her numbers up the kids get it. Still all kinds of things you can do with business premises etc that may be worth a look at
hope this helps
Sean.


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## doctor Bob (18 May 2021)

Flynnwood said:


> 1. Employ a Manager on circa £25K - £30K
> 2. Get two apprentice like peeps who are enthusiastic (zero hours if req'd)
> 3. Sit back.



The manager would be the lowest paid man in the company by quite a bit.


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## BucksDad (18 May 2021)

Flynnwood said:


> 1. Employ a Manager on circa £25K - £30K
> 2. Get two apprentice like peeps who are enthusiastic (zero hours if req'd)
> 3. Sit back.



Living wage foundation puts the living wage at £10.85 / hour for London area. That works out to £22.5K per year. You're suggesting a small amount over that for the manager of a bespoke kitchen company? I think your ideas of salaries are at least 10 years out of date


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## Spectric (18 May 2021)

Lons said:


> the property value would unless something went very wrong, retain the purchase value or more likely increase so any profit from the rental after expenses has to be viewed in a similar way as you would interest on savings.


It can be made to sound ok and would be great if you could afford it at say 25 to 30 but once that 100K is invested you now only have that £475 a month to play with, and at a retirement age that money is to me more useful in the early days rather than later when I may no longer fully utilise it. The other issue is location, over a ten year period my old southern property increased in value by over 20% wheras my northern one has only increased by around 4% so location is another key factor. It is also why you can move south to North but very hard to do the opposite, I would struggle to get a flat now in the same area south.


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## nickds1 (18 May 2021)

My mother's ambition was to die bankrupt - didn't quite manage it...

I've just "sort of" retired. Never been so busy! Key is to keep the brain going and to have lots of GENUINE interests...

Did a spreadsheet some years ago that details pretty much everything coming in and going out. When I stopped commuting, that gave back nearly 8K - (ticket, parking, fuel, all those coffees and sandwiches etc.). No suits/ties/smart shirts etc. needed etc. It's amazing how much goes on just "doing work" - obviously this all depends on the type of work you do... but we also don't have expensive tastes (we run cars for a long time, don't do many miles etc.) and grow a lot of our own food, built our own house...

Now I keep finding new business ideas, though I'll never employ folk full-time again and never rent offices etc. Luckily, I'm extremely technical, so web-based business are nice and easy...

You just need a tiny bit more coming in than going out. You can live well and have a load of fun on not-a-lot if you are sensible and get your priorities right.


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## Lons (19 May 2021)

Spectric said:


> It can be made to sound ok and would be great if you could afford it at say 25 to 30 but once that 100K is invested you now only have that £475 a month to play with, and at a retirement age that money is to me more useful in the early days rather than later when I may no longer fully utilise it. The other issue is location, over a ten year period my old southern property increased in value by over 20% wheras my northern one has only increased by around 4% so location is another key factor. It is also why you can move south to North but very hard to do the opposite, I would struggle to get a flat now in the same area south.


I absolutely agree with all that Roy but it doesn't change what I said in response to your comment that it would take _17 years to get your £100k back _as that £100k is invested in the property and would be returned if you sell it so rental is income just as much as if you got interest by investing the lump sum.
Nobody with any sense would do that if their only income would be the rental. Of course there's a risk in buying property just as there is if investing in the stock market and if you put your £100k in the bank it would have lost money in real terms. Quite right about location, I live in Northumberland and my house would be a kings ransom in the South East but the flip side is that the £100k would have bought 2 properties and probably a higher rental yield.
As I said, I researched it and didn't do it in the end though looking back I regret not doing so at the time, too old now for it to make sense.

Why would you want to move back to the south btw?


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## D_W (19 May 2021)

Jim Dance said:


> Lucky to retire at 54, best advice i got was from a nurse at a hospice who told me, out of all the regrets she had heard from people on their death beds, no one had ever said 'I wished I had worked for bit longer'



The only people I've seen resent retirement are folks who wanted to choose when they leave on their own, but their company does it for them. Often, there's some entitlement involved and lack of awareness of what goes on around them (as in, "my company generally lets go of engineering managers around age 54-60, and it's a big company, but I'm way too important for that"). 

boing...they go bouncing out and resent not having a job as being judged (what's usually going on is a new engineering manager mid-30s and working for half the cost replaces them. If the company is still in business, the cycle repeats). 

My opinion of that is that anyone who bases their entire self worth on their work and being seen as valuable owes it to themselves to work on their own and have customers and go the extra mile. You'll hear it from customers and clients far more than you'll hear it from your bosses.


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## Shytot (19 May 2021)

Dr Bob , I think 60 is my target . I’m 56 at the moment. I’m subby carpenter to a developer in high end houses in Hale -South Manchester. I finish my mortgage in July . I’ve paid into my personal pension since I was 22 yr old , is nothing massive but I did get a bit of good advice 25 years ago was to have a increasing waiver of 2.5% on my contributions. I’m paying in £300 a month at the moment. My wife has a small pension having only worked 3 days a week for the 25 yrs to look after kids ... I mainly still enjoy my job but starting to find it quite physically demanding. I struggle with my knees & back and start to get tired around 3 clock . My dad was a carpenter, still alive at nearly 90 , still doing well although his knees are totally goosed. In summary , no absolute concrete plans , health , grand kids , enjoyment of work will probably decide when the time to hang my hammer up . Great thread this with lots of food for thought


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## Blackswanwood (19 May 2021)

Lons said:


> I absolutely agree with all that Roy but it doesn't change what I said in response to your comment that it would take _17 years to get your £100k back _as that £100k is invested in the property and would be returned if you sell it so rental is income just as much as if you got interest by investing the lump sum.
> Nobody with any sense would do that if their only income would be the rental. Of course there's a risk in buying property just as there is if investing in the stock market and if you put your £100k in the bank it would have lost money in real terms. Quite right about location, I live in Northumberland and my house would be a kings ransom in the South East but the flip side is that the £100k would have bought 2 properties and probably a higher rental yield.
> As I said, I researched it and didn't do it in the end though looking back I regret not doing so at the time, too old now for it to make sense.
> 
> Why would you want to move back to the south btw?



I agree - another issue with rental properties is the risk - you only need one dodgy tenant and it goes from being an income to a disproportionately large expense even before you factor in the stress.


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## Daniel2 (19 May 2021)

Blackswanwood said:


> I agree - another issue with rental properties is the risk - you only need one dodgy tenant and it goes from being an income to a disproportionately large expense even before you factor in the stress.



Yep....
We finally got shot of a tenant who still owes us €11000.
The courts decided he should pay €100 per month to us.


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## Lons (19 May 2021)

Blackswanwood said:


> I agree - another issue with rental properties is the risk - you only need one dodgy tenant and it goes from being an income to a disproportionately large expense even before you factor in the stress.


Yeah I should have said that was one of the factors that worried me at the time and one of the reasons I didn't do it. 
A mate had 7 properties at the time with mortgages on 4 of them and had 2 problem tenants which seriously stressed him out. They were low end properties and while 2 of his tenants were lovely genuine salt of the earth working people, some of the others were of the type I wouldn't touch with a barge pole, If he hadn't needed to pay the mortgages he wouldn't have let them in.

He sold them all on in the end and did make a very healthy profit however which along with his fireman's pension allowed him to retire early.


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## bryan267 (19 May 2021)

doctor Bob said:


> This is mainly aimed at business owners and the self employed.
> Question is when do you know you have enough to retire.


Your pension could buy you an annuity, thats the income contract of over a century. Annuity rates are linked to fixed interest rates and which are linked to interest rates, which are very low. Annuity rates are even lower if you want an income for Mrs, and lower still if you want an income that increases in line with rpi or a fixed percentage. Expect annuity rates to fluctuate, depending on you option choices by between 3% and 4.5%.
rubbish annuity rates are not a reason to keep working, and also your pension may have a guaranteed annuity rate, seen them up as high as 13%. But in the mean time you could use income drawdown, where you take income directly from the pension fund, either part tax free cash and part taxed, or all tax free cash withdrawals perhaps if your still working part time and used you income tax allowance. Using a drawdown means you are still exposed to investment risk, but does not remove the option of annuity if rates improve in the future. Some pensions use lifestyling where they sell out of volatile but higher returning assets in the lead up to an expected retirement date, these strategies are harmful if you wish to use drawdown, so worth checking.
Drawdown has better death benefits and many use it almost solely because they can still pass the pension on to children instead of the loss to the annuity provider on death. In a drawdown you can select the level of income, up to 100%, but a sustainable level could be equivalent to that of a single life annuity paid on a level, not increasing, basis. Annual reviews are required on drawdown, investment risk, but better options flexibility vs annuity which is simple and when its done its done. 
however to answer your question, how much do you need? I would say that is governed by how much income you need. Old rule of thumb is 1/2 to 2/3 of working income. Dont forget state pension is about £9,000 per year. Income you need times by 25 is a good start. If you can get by on £19,000 per year then you need the state pension plus £250,000, excluding tax free cash. Alternatively you can always burn part of you pension faster to allow you to retire before state pension age. But specifically, if your asking this question go and have a free chat with an independent financial adviser with good google reviews and who is mentioned on the FCA register, never answer a cold call on pensions their illegal. Good luck


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## Bazjay (19 May 2021)

Hi all

New to this so bear with me,I have a just read most of the posts on retirement very interesting,I have a question for you all on my present situation.

I started my sole trader re-upholstery business 30 yes ago,my main reason to start the business was to work for my self,not to make loads of money,just to make a decent living for hopefully many years,this I have achieved,but now at 70 it's time to retire,problem

over my time I have obtained many contracts some are gone ,but I still have two remaining contracts NHS and National Museums,very good contacts problem is when I retire both contracts will be given to the respective maintenance management companies ,both these contracts have big potential but I have no idea how to best use the position I find myself in,seems a great shame to just walk away

my question is , with all the experience showed in these post does anyone have any advise .

Note: there are no family members in a position to take over,and being a sole trader their is only a certain amount of work you can do so the turn over of the business although steady and reliable ,it's not very attractive to a potential buyer.

Thanks


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## Spectric (19 May 2021)

Lons said:


> I absolutely agree with all that Roy but it doesn't change what I said in response to your comment that it would take _17 years to get your £100k back _as that £100k is invested in the property and would be returned if you sell it so rental is income just as much as if you got interest by investing the lump sum.


I think what I was trying to say is that even if it takes 17 years before you get the money back and technically the property is also worth at least 100K will you still be around to benefit? When you are twenty, seventeen years is not that drastic and your body has changed only slightly, but at sixty waiting seventeen years is high risk as the body has already changed and is not capable of doing tyhings as it used to.


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## akirk (19 May 2021)

Bazjay said:


> Hi all
> 
> New to this so bear with me,I have a just read most of the posts on retirement very interesting,I have a question for you all on my present situation.
> 
> ...



If you are a sole trader, the contract will be directly with you... so if you retire, the contract is gone - therefore it has no value outside you...
potentially if the contract were with a ltd company then it would be different - you could sell the company and the contract would stay with the company so if the contract has value, the company will have value...
key question will be whether you can transfer the contract to a limited company and that will depend on either the legal terms of the current contract (can you assign it), or the goodwill of the contracting companies - i.e. if you said that you had been advised to incorporate, can you transfer the contract, if initially the ltd company is still you then they might consider it...

but the terms of the contract will dictate the options...


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## Flynnwood (19 May 2021)

doctor Bob said:


> The manager would be the lowest paid man in the company by quite a bit.



But it would keep an income for you into and through retirement, (which was my point).

Take a peek below at Civil Service jobs today (I picked Hertford << change to suit). 

There are still five million on furlough, which is an indicator of driving down salaries of employed people imo.





__





Civil Service Jobs






www.civilservicejobs.service.gov.uk


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## doctor Bob (19 May 2021)

Flynnwood said:


> But it would keep an income for you into and through retirement, (which was my point).
> 
> Take a peek below at Civil Service jobs today (I picked Hertford << change to suit).
> 
> ...



Crikey, I can see why civil servants are miserable pippers now.

How would a manager who has no experience generate me an income.

I had a kitchen designer come to me 3 weeks ago, he's a bit fed up with the company he works for and would move for equivelent wage/commission £150,000, he's very good at what he does, it was a no from me.


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## Flynnwood (19 May 2021)

doctor Bob said:


> Crikey, I can see why civil servants are miserable pippers now.
> 
> How would a manager who has no experience generate me an income.
> 
> I had a kitchen designer come to me 3 weeks ago, he's a bit fed up with the company he works for and would move for equivelent wage/commission £150,000, he's very good at what he does, it was a no from me.



Why?


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## doctor Bob (19 May 2021)

Can we keep it on retirement, rather than why I won't employ a salesman for £150k or why CS's are miserable.

Just to reiterate, I'm talking about retirement, my business partner isn't, so the business will continue under his guidance.


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## Cabinetman (20 May 2021)

I’m presuming you’ve heard the one about herding cats Bob haha.


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## Terry - Somerset (20 May 2021)

The link above was set to find salaries between £25-30k. It found 152 jobs. 
Reset the filter to (say) £60-80k and there are 159 jobs.

Not so bad given that civil servants generally enjoy high job security, reasonable pension arrangements, decent working conditions etc. Unlike commerce and industry the public sector does not go bust in a recession.

For some, public sector jobs can be very frustrating. But for others the mix of security and job satisfaction makes it a good deal.

I was a civil servant for part of my working life. The sector in which I worked had a world class reputation for its scentific knowledge and output. It was able to recruit the best from the very best universities simply because of its reputation and the work it did.


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## Woodmatt (20 May 2021)

I retired at 50,having owned a kitchen manufacturer/retailer for 20 years.I sold the business and moved to Spain( big mistake)I now live in West Wales and love it.So I finished up with 200K approx and 20K a year rent on the commercial property I used for the business which I owned outright.,and no mortgages.
At 65 now my thought are,1) It was to soon as far a keeping my brain active even though I still have a workshop and make hobby bits and bobs,and I feel I have aged brain wise sooner than I would have done had I carried on working.2) Financially it has been ok,I dont have an expensive lifestyle and I am much happier with having gained more time at the expense of less money.


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## doctor Bob (20 May 2021)

I'd like to do an OU maths degree. That should keep the brain going.


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## Bazjay (20 May 2021)

akirk said:


> If you are a sole trader, the contract will be directly with you... so if you retire, the contract is gone - therefore it has no value outside you...
> potentially if the contract were with a ltd company then it would be different - you could sell the company and the contract would stay with the company so if the contract has value, the company will have value...
> key question will be whether you can transfer the contract to a limited company and that will depend on either the legal terms of the current contract (can you assign it), or the goodwill of the contracting companies - i.e. if you said that you had been advised to incorporate, can you transfer the contract, if initially the ltd company is still you then they might consider it...
> 
> but the terms of the contract will dictate the options...



Thanks for reply ,it slightly went over my head but,I see your reckoning,the business although not a Ltd company it does not use my name in the title,it was original registered as a company name.

The contracts are in the company name,I see the problem I have is convincing a potential buyer of the potential of these contracts and not look at turnover,and my route to do this without any marketing skills.
Thanks again


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## Terry - Somerset (20 May 2021)

This is not meant in a negative way, but ask yourself - why would anyone pay you? A few possibilities: 

can you influence who gets the contracts once you have retired
can you provide advice and/or support to whoever gets the contract
would your customer want to pay for your advice/input when selecting or managing a new supplier 
do you have materials, designs, supplier contacts etc that you could pass on to whoever gets the new contract
These may be some of the reasons why you may be able to "earn" something from your retirement, and help you focus on (a) who you need to be talking to, and (b) the arguments you should use to persuade them of your value.

Otherwise your customers may quite reasonably come to the conclusion they will find a new supplier, thanks for your help over the years, bye-bye!


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## NickM (20 May 2021)

doctor Bob said:


> I'd like to do an OU maths degree. That should keep the brain going.



Great idea. I could see myself doing something like that.


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## akirk (20 May 2021)

Bazjay said:


> Thanks for reply ,it slightly went over my head but,I see your reckoning,the business although not a Ltd company it does not use my name in the title,it was original registered as a company name.
> 
> The contracts are in the company name,I see the problem I have is convincing a potential buyer of the potential of these contracts and not look at turnover,and my route to do this without any marketing skills.
> Thanks again


it is irrelevant if the business is in another name - if you are a sole trader the contract is with you, even though that may be expressed as Joe Bloggs trading as The Square Pineapple - only a LTD company (or PLC, but that is another whole game!) is a legal entity of its own... and there the contract is with the LTD co. and that continues when staff (inc. owner) leave etc.

Conceptually very simple:
- set up LTD company
- have contracts transferred to the LTD company
- sell LTD company which now owns and fulfills the contracts - the LTD co. will have a value based on the contract value

otherwise, contract is with you - you retire, contract stops, no value.

the only issues are a) whether you can transfer the contract to a LTD co at your choice (right of assignment) - or b) whether the other party will redo the contracts... and you need grown up legal advice on that - if the contracts are valuable then it is worth considering as it could lead to a valuable sale for you...


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## NickM (20 May 2021)

Interesting discussion this.

I'm 46 and have been in a (frankly) overpaid but highly pressured and stressful (for me at least) career for nearly 24 years with the same employer. About 6 months ago I decided I simply can't do it anymore and agreed to do one more transition year and will finish in April 22. Nothing since then has made me regret my decision and I'm literally counting the days down.

The financial side of it should be fine (I've saved almost everything and, in comparison with most of my colleagues, have not lived an extravagant lifestyle - one house which is paid for and no expensive divorces/second families and that sort of thing), and I'm not remotely worried about loss of status or about how I will keep myself busy.

The one thing that bothers me a bit is whether I'm setting a bad example/false expectations for my kids by stopping working so early in life. Having said that, there's a fair chance I might get another job if the right opportunity came up, but it would have to be something I really want to do and which, as far as possible, is not stressful. Money should, I hope, not be a factor in what I choose to do which would open up more possibilities.


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## Sean33 (20 May 2021)

doctor Bob said:


> I think I'm probably good to go at 60. The trigger has been my father who was active till 80 ish then parkinson has struck him down quickly, he's now in a home (end of life) at 86. Retiring at 60, 20 years would be good; 15 or less sounds not very long.


So


Blackswanwood said:


> I agree - another issue with rental properties is the risk - you only need one dodgy tenant and it goes from being an income to a disproportionately large expense even before you factor in the stress.


No expert here by any means but i would stick to HMOs, especially in and around university campus. Do the work yourself, kitchen, painting etc saves on costs and you will be head and shoulders above most of what's out there to rent for students. You should be pleasantly surprised at 10% plus yields. Price appreciation is very small if at all but the yield more than makes up for that


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## Blackswanwood (20 May 2021)

Sean33 said:


> So
> 
> No expert here by any means but i would stick to HMOs, especially in and around university campus. Do the work yourself, kitchen, painting etc saves on costs and you will be head and shoulders above most of what's out there to rent for students. You should be pleasantly surprised at 10% plus yields. Price appreciation is very small if at all but the yield more than makes up for that


I'm not sure ... it depends what you want from your retirement - HMO's come with a whole host of extra (and increasing) regulation aka hassle.


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## Blackswanwood (20 May 2021)

NickM said:


> The one thing that bothers me a bit is whether I'm setting a bad example/false expectations for my kids by stopping working so early in life. Having said that, there's a fair chance I might get another job if the right opportunity came up, but it would have to be something I really want to do and which, as far as possible, is not stressful. Money should, I hope, not be a factor in what I choose to do which would open up more possibilities.



I'd say you are setting a good example Nick. You've worked hard to put yourself in the position where you have the choice. Good luck with it!


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## Spectric (20 May 2021)

doctor Bob said:


> Yes I want him to be prepared and happy.
> We have been great mates for nearly 25 years.
> He will carry on in some form or other.
> The idea is to bounce ideas around for a few years as to how we do a fair "split". I'm not greedy and more concerned he can carry on and earn a decent income.


How old is your partner, if also getting on then how do you know that he is not thinking along the same lines as yourself?


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## Spectric (20 May 2021)

doctor Bob said:


> I'd like to do an OU maths degree. That should keep the brain going.


You may find applied maths more interesting than pure, I have always struggled with numbers unless in the context of a problem but you may have a numerical brain.


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## doctor Bob (20 May 2021)

Spectric said:


> How old is your partner, if also getting on then how do you know that he is not thinking along the same lines as yourself?



Because he's my friend and we talk


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## gregmcateer (20 May 2021)

NickM said:


> Interesting discussion this.
> 
> The financial side of it should be fine (I've saved almost everything and, in comparison with most of my colleagues, have not lived an extravagant lifestyle - one house which is paid for and no expensive divorces/second families and that sort of thing), and I'm not remotely worried about loss of status or about how I will keep myself busy.
> 
> The one thing that bothers me a bit is whether I'm setting a bad example/false expectations for my kids by stopping working so early in life. Having said that, there's a fair chance I might get another job if the right opportunity came up, but it would have to be something I really want to do and which, as far as possible, is not stressful. Money should, I hope, not be a factor in what I choose to do which would open up more possibilities.



I'm 53, so a little bit 'ahead' of you. 2 kids. One at uni, second finished A levels today. (Currently in 'spoons, so OMG for later today).

I worked for my Dads biz for years, then my brother and I took over when the old man semi retired, then sadly died at 67. 
Lesson 1 learned - work hard as I can when young, then aim to ease off and enjoy more time with family.

We continued for a while, but local authority budget constraints meant our previously good, but not flash homecare business was being squeezed, so sold to a larger outfit. Not enough to retire on.
Lesson 2 learned - keep all your financials bang uptodate so you are prepped to sell when time is right!

Used most of the money to build a lovely house, which we sold and made a good profit. Then bought a few small 2 and 3 bed properties as rentals, which we maintain and manage ourselves.

So, short story, long, we have seen loads more of our kids, we haven't been flash and we use every opportunity to explain to them that we have been around coz we worked hard when we were younger and have been careful.

No way of knowing if the kids will take heed, but I've given them what I feel is the best example of a balanced life, with a work ethic. Both have and do work at weekends and holidays and don't expect any handouts, so finger crossed.


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## Spectric (20 May 2021)

NickM said:


> The one thing that bothers me a bit is whether I'm setting a bad example/false expectations for my kids by stopping working so early in life.


It could be seen as a good example of what can be achieved if you work hard when young, settle for easy job and work all your life or push hard and then the reward is a good retirement period which is all yours, the example they will see.


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## dzj (20 May 2021)

I remember reading The Lotus Eater, by W.S. Maugham. 
One of the most frightening stories I ever read.


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## chris watford (20 May 2021)

Marry a partner that is younger than yourself, with good pension prospects, sorted


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## simoncmason (21 May 2021)

At 47 I'm semi-retired, working between 2 and 3 days a week, with about 8 weeks completely off a year. The hardest part of this is actually turning down a lot of work I am offered.

I intend to remain like this until I am either dead or unable to work at all, but moving gradually towards more full weeks off a year and less days in a working week. Also earning from different sources - making furniture.

I recognise that I am very lucky in having no mortgage or debts and a nice home. We also have enough land to be somewhat self-sufficient in both food and wood for heating which keeps bills low. I work freelance as a software engineer, so I am well rewarded for my work and work from home in a totally flexible way.

From older friends and colleagues I have spoken to, those who have scaled back but continued to work seem to have been happier than those who retired young. Money is generally less of an issue and it is good to keep up with the world of work and have some level of intelectual challenge.

I realise this isn't possible for a lot of people, those in physical jobs or with inflexible employers - but I really do think it is a massive loss to everyone that people are in general expected to work full time until 65 or thereabouts, and then completely stop. The sudden loss of all that experience and knowledge, plus the financial reality of going from paid work to even a good pension seems like a real societal problem - and one with a very easy solution: give people more choice to scale down over time.

What ever you choose to do I hope it works out for you - too many people put too many hours into work and not enough hours into living.


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## houtslager (21 May 2021)

A very interesting topic this one, I retired from my first real job after 17 years - HM Army, left and learned a new trade of Antique restoration and retired from that trade when the buttocks fell out of antique trade and switched over to custom furniture and interiors. Like some of the old gaffers here  I never thought too much over retiurement as being a soldier life span was in my day pretty low , then I thought I would be lucky to see 30, and here I am knocking on 60's door, after being shot at,near bomb explosions, two major vehicle crashes, falling off a ladder [3m high] slipping on a roof access gangway, where the site foreman removed anti slip = me going buttocks over tit and falling 7m through the ladder access. How I did not go head first into the ladder rungs is beyond me. Survived all above, mum died 2 years now, dad very ill, so I am back in the UK to help him " retire " as at 88 his business needs culling for him to manage, not short of pennies so he has it sorted except his health issues. 
As for me, I got rid off my home, paid all debts off, present home debt free, no flashy vehicles I use a clapped out Ford Tranny, only fancy stuff I own are my Festool tools, and some fancy hand tools. Have no kids, so when I pop off it all goes to distant relatives in Ireland or in the pot for my wake.
So, work / life balance nearly sorted out how I want, just looking for a building project to restore somewhere in the Bourgogne area, found a cracking diused small " county " hospital for a €100K but not just yet


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## SammyQ (21 May 2021)

Bob, I put it to you, a lot of this talk of spreadsheets, rental properties, annuities is superfluous. None of that considers or puts a weighting on health and wellbeing.

I retired at mid-62, having put in my 40 years, plus 4 at uni (combined degree). What immediately preceded it - in terms of my wife's health, and lately mine - could not be converted to monetary value, was uninfluenced by interest rates, yet severely and permanently modified my lifestyle and wellbeing. *And it came as a total surprise.*

Three years later, I am now living 200 miles away from life-long friends, but nearer my children, in a paid-for house with sustainable overheads and a wee pot of leprechaun gold to fund my lignin addiction. My lifestyle has had to change, but I am still active and I derive considerable satisfaction from what I can do.

My point is, at 60, I had no idea what turmoil and distress disease was to wrought in my life, just a few short months later. So, take it while you can, Bob. Life, and particularly health, are unpredictable, utterly impervious to your wishes or plans and - significantly often - inexorable in their progression to their conclusion. You might deflect them temporarily, but you won't stop them. 

Enjoy it while you can. 

Sam


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## Spectric (21 May 2021)

It would have been much easier if we were born with an expiry date on our body, if you know the deadline then very easy to plan and spread the finance.


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## Phil Pascoe (21 May 2021)

When I was eighteen I had no intention of living this long.


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## Shytot (21 May 2021)

Got my annual pension review yesterday. £126 k in the pot and £165k estimated to be my total pot in 5 years . One example they gave me to expect was £44k lump some and £3.5 taxable yearly . Bit disappointed too be honest. I’m paying £300 ish per month . I finish my mortgage in 2 months and tempted to bang a extra £100 a month in my pension contributions or crypto


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## marcros (21 May 2021)

Shytot said:


> Got my annual pension review yesterday. £126 k in the pot and £165k estimated to be my total pot in 5 years . One example they gave me to expect was £44k lump some and £3.5 taxable yearly . Bit disappointed too be honest. I’m paying £300 ish per month . I finish my mortgage in 2 months and tempted to bang a extra £100 a month in my pension contributions or crypto



I find these statements quite unhelpful. that 126k will become 165k on their predictions, but that possibly ignores any contributions that you continue to make at the same level as now. That is how my annual statement works anyway, making it largely useless.


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## Shytot (21 May 2021)

My contributions increase every year by 2.5% every year . So glad I had this incorporated into my pension


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## Flynnwood (21 May 2021)

I remember when "financial experts" managed to lose 30% of a Company Pension in the recession of 2008/9. 

If I had the opportunity (which I didn't) to turn it into cash when the crash started, instead of having to staying "invested" I would be better off (even allowing for inflation).


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## mikej460 (21 May 2021)

Spectric said:


> It would have been much easier if we were born with an expiry date on our body, if you know the deadline then very easy to plan and spread the finance.


This reminded me of a sci-fi film where people have pre-determined lifespans and then 'terminated' anyone recall the name?


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## Bristol_Rob (21 May 2021)

mikej460 said:


> This reminded me of a sci-fi film where people have pre-determined lifespans and then 'terminated' anyone recall the name?



Logan's Run


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## Spectric (21 May 2021)

Shytot said:


> I finish my mortgage in 2 months


There are a lot of people out there who could pay off their mortgage earlier if they just made a few cuts each month and paid extra off that mortgage, it reduces the capital faster and reduces the interest. 

IE borrow 200K over 25 years at 3.5% you pay £99,768 interest or £4K a year.

Overpay £100 a month will save £15K interest and 3.5 years off term.

Overpay £300 a month will save £34.5K interest and 8 years off term.

Even if you only do this for the first few years it will make a difference, get the capital down and it reduces the remaining interest.

I worked this out because I hated giving money away to someone who was doing nothing apart from waiting, so I overpaid 20% min every month and lump sums every 6 months and saved 16 years off the term and a lot of interest.


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## Lons (22 May 2021)

That's exactly what I did Roy and having paid off my mortgage was a major factor in my decision to give up a well paid job, company car, holidays etc along with the stress of a job I hated to start my own business. I'd never have chanced that with a mortgage hanging over my head.


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## Phil Pascoe (22 May 2021)

My first mortgage was 14.7% when I took it out. Every time the rate went down I left the payments the same - it knocked years off quite quickly.


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## Sandyn (22 May 2021)

Shytot said:


> Bit disappointed too be honest. I’m paying £300 ish per month . I finish my mortgage in 2 months and tempted to bang a extra £100 a month in my pension contributions or crypto


How long have you been paying £300 a month and only 126k in your pot? 
A pension gets greatest value from the money you put in early on. It has years to grow. 
You get about 2% return from money you put in considering tax relief and only being taxed on 75% when you take it out. That's before any gain on the fund. You need to check the investment risk on the fund. If it is set to low, it will make very little. The level of risk is always a personal choice, I have all my pension pots split into different funds, normally 1/3 in low, medium and high, but select managed funds with a good track record over long term. As they say, funds go up and down in value, but they always recover. Pension funds are a long term investment, The risk is spread over many company shares, so it is actually quite difficult to 'lose your money' in reputable pension funds, but disasters do happen. I had two Equitable life pensions and the company got into trouble. Many people took their money out, but I held on right to the end and because of distribution of the with profits fund and some lucky timing, it worked out really well. I'm not normally that lucky. I did use the government investment advice site, but did all my research first so I could ask the right questions. I don't trust independent financial investors.


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## Sandyn (22 May 2021)

Phil Pascoe said:


> My first mortgage was 14.7% when I took it out. Every time the rate went down I left the payments the same - it knocked years off quite quickly.


That's what I did, it saved a fortune. Redemption day was wonderful, getting the title deeds passed to the solicitor


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## Spectric (22 May 2021)

Lons said:


> That's exactly what I did Roy and having paid off my mortgage was a major factor in my decision to give up a well paid job, company car, holidays etc along with the stress of a job I hated to start my own business. I'd never have chanced that with a mortgage hanging over my head.


Yes it is great once you have secured that roof over your head because it gives you more financial control and something does change, money is no longer as important.


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## NickM (22 May 2021)

Spectric said:


> There are a lot of people out there who could pay off their mortgage earlier if they just made a few cuts each month and paid extra off that mortgage, it reduces the capital faster and reduces the interest.
> 
> IE borrow 200K over 25 years at 3.5% you pay £99,768 interest or £4K a year.
> 
> ...



But I think many financial advisers will tell you that with interest rates so low it's better to put the money to work elsewhere. However, that doesn't factor in the psychological side of things. I paid my mortgage off ASAP (strictly, it's not paid off because it's an offset mortgage, but it's effectively the same thing).


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## Shytot (22 May 2021)

Sandyn said:


> How long have you been paying £300 a month and only 126k in your pot?
> A pension gets greatest value from the money you put in early on. It has years to grow.
> You get about 2% return from money you put in considering tax relief and only being taxed on 75% when you take it out. That's before any gain on the fund. You need to check the investment risk on the fund. If it is set to low, it will make very little. The level of risk is always a personal choice, I have all my pension pots split into different funds, normally 1/3 in low, medium and high, but select managed funds with a good track record over long term. As they say, funds go up and down in value, but they always recover. Pension funds are a long term investment, The risk is spread over many company shares, so it is actually quite difficult to 'lose your money' in reputable pension funds, but disasters do happen. I had two Equitable life pensions and the company got into trouble. Many people took their money out, but I held on right to the end and because of distribution of the with profits fund and some lucky timing, it worked out really well. I'm not normally that lucky. I did use the government investment advice site, but did all my research first so I could ask the right questions. I don't trust independent financial investors.


I took my pension out when I was 22 I’m 56 now . I can’t remember how much I paid originally into my pension but about 5 yrs after taking my pension out I was advised to have a 2.5% increasing payment waiver . So it’s worked it way up ( it’s actually £311 now having gone up again) .


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## Shytot (22 May 2021)

Forgot to say about my yearly statement, my pot has increased from £112,000 in 2019 to £126000 in 2020. I’m quite happy about that . £3300 paid in


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## Selwyn (22 May 2021)

Phil Pascoe said:


> My first mortgage was 14.7% when I took it out. Every time the rate went down I left the payments the same - it knocked years off quite quickly.



How long was is 14.7% for?


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## Phil Pascoe (22 May 2021)

It was mid '80s, I don't remember. I know when it started to fall it fell by 1/4% or 1/2% quite regularly. When it went from 10% back up to 15% on Black Wednesday my cousin, who had a massive bank loan, phoned his bank manager. What on earth do I do? he asked. A minute's thought and then came the answer - call your first born (he knew my cousin's wife was pregnant) Derek. What if it's a girl? Call her Derek. Fortunately it dropped again quickly.


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## Spectric (22 May 2021)

NickM said:


> But I think many financial advisers will tell you that with interest rates so low it's better to put the money to work elsewhere


But where can you get more returns than you are paying interest on a mortgage these days, it is because the rates are so low that is is even easier to hit it harder but this reduces the financial sectors returns. I never thought of it as a mortgage but a roof over my head that I wanted to own rather than leave it as debt.

The interest rates went through the roof under thatcher, great for savers but many people just gave their house keys back as it was not affordable, and this was after she allowed council tennants to buy their homes so they could not take part in union strikes without risking their home. I think she should have been burnt at the stake or put through a coal processing plant, I dare say there are many who would have partied for days. I recon that many would have retired earlier had she left them with a decent job rather than working till later in life.


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## Glitch (22 May 2021)

Interesting thread.

Sounds like Bob is in a very good position to 'retire' in 4 years time.
My advice is to take on board what people have said they are doing then make sure you get professional advice. Then you'll appreciate the mistakes and bad advice that people have shared, albeit in good faith.

A good IFA is not cheap but they'll help you avoid expensive mistakes, maximise tax efficiency and tailor your plans and investments to suit your specific requirements.

Some things to consider:

Understand where your money goes today
Work out what's essential and what is optional/luxury
Work out how much you need to fund lifestyle you want
Up to age 75 are the golden years (health dependent) when you are likely to need more money
Check your state pension forecast
Consider state pension top up to increase state pension if you have gaps in your contributions
Consider deferring taking state pension - they'll increase it.
Consider your health and risk of dying early, likewise for the wife/partner
Maximise your pension contribution allowance in the final years of accumulation
Make sure the pension money doesn't run out
What do you want to leave your family when you die
Keep the right amount in cash or 'cash type' products to ride out fluctuations in the markets
The value of investments may go down as well as up
There is a good pension forum on MSE with plenty of sensible advice but as stated earlier, engage an IFA


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## Spectric (22 May 2021)

Glitch said:


> Up to age 75 are the golden years (health dependent) when you are likely to need more money


You cannot beat getting good advice on both retirement and finance, I was lucky the company put on a retirement seminar to cover all aspects and that was an eye opener.

Hopefully upto 75 is when the body is still allowing you to do many things, but as you say the important factor is also not a certainty which is health, so in many ways what ever you do once retired is going to be a gamble. Once you go I believe you lose your state pension because we claim as individuals and not as a couple now so I will not defer my state pension at 67 because I want to use this before all personal assets so that if I drop they are there for my partner.


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## NickM (22 May 2021)

Spectric said:


> I never thought of it as a mortgage but a roof over my head that I wanted to own rather than leave it as debt.



I completely agree and have always viewed it in the same way.


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## doctor Bob (22 May 2021)

I cleared my mortgage by 42, best thing I ever did, over paid by the max.
When I built the new house I took out a big loan and paid it off over 2 years.

For me personally I dislike debt whether it's a morgage, car loans, etc. I think it's just thinking passed on to me from parents, Not sure it's the best way but I feel comfortable with debt free.


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## Glitch (22 May 2021)

doctor Bob said:


> I cleared my mortgage by 42, best thing I ever did, over paid by the max.
> When I built the new house I took out a big loan and paid it off over 2 years.
> 
> For me personally I dislike debt whether it's a morgage, car loans, etc. I think it's just thinking passed on to me from parents, Not sure it's the best way but I feel comfortable with debt free.


There’s good debt and bad debt.

Nice to pay it all off if you can still live the life you want to lead.

I was discussing with a friend today about her situation. She’s 65 owns her house without a mortgage. She had inherited her Mums house years ago and lets her son live there at a subsidised rent. The son and his girlfriend earn between them around £140k pa. and he wants his mum to extend the house (£100k) at her expense. 
She gets his rent which she saves. She earns £5k per year as a dressmaker and will soon be getting her state pension. Her partner is in a full time but low paid job as pays the bills for the house they live in

Asset rich but penny poor. Debt free property worth over £1.5m and an income of £17k - plus state pension later in the year and a son totally taking the pee.
She should be spending money on herself, not increasing the value of her son’s inheritance.


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## harryc (22 May 2021)

I have been lucky working in a major blue chip company all my working life where contributions have been 18% of earnings a year, which currently is £16K a year.

I know not all are that fortunate so only advice I would offer is rely on the magic of compound interest and start early plus diversify as much as you can admittedly I am relying on pension, personal ISA and dividends from shares.

I have been predicting the housing market to collapse for the last 15 years


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## doctor Bob (22 May 2021)

harryc said:


> I have been lucky working in a major blue chip company all my working life where contributions have been 18% of earnings a year, which currently is £16K a year.



Nice, wife had a similar pension with CAA, later NATS. Mine is totally private but I'm lucky to be able to chuck big sums into it each year.


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## Glitch (23 May 2021)

I was lucky to have a ‘Final Salary’ defined benefit pension, although sadly it had been capped years ago. I declined the 7 figure quote to transfer it out.

I ploughed as much as I could into salary sacrifice Additional Voluntary Contributions in the final few years.

It came out of my gross salary before tax and the company added another 5%.

There’s a £40k allowance per year and you can use unused allowance from previous two years.

I maxed mine out mine out in the last 2-3 years. I used savings and a two year interest free credit card to pay for living costs.

I could then take out the AVC contributions as the tax free lump sum without reducing my pension. It paid off the mortgage which I had changed to interest only to free up pension contribution money. I had to pay off the interest free credit card. 

Much more efficient use of the money than paying mortgage off early and a rare chance to legally avoid a shed load of tax. .

In my final year I was taking a salary and the pension and could still use the £40k allowance which I transferred out to a SIPP when I left.

Undoubtedly biased towards higher earners with a good pension scheme but anyone can use the available tax allowances and employers contributions to boost their pension.


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## Flynnwood (23 May 2021)

doctor Bob said:


> For me personally I dislike debt whether it's a morgage, car loans, etc. I think it's just thinking passed on to me from parents, Not sure it's the best way but I feel comfortable with debt free.


I hate debt. Always have.
I once worked for a UK PLC that seriously burned through shareholders over many Companies/Takeovers over 12 years. The former CEO is very well off and retired.

He was full of rhetoric and had high contacts to raise the money over and again, across many business failures.


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## Duncan A (23 May 2021)

I'm sure Dr Bob is financially sophisticated enough to do the sums for himself, especially as they are, in essence, blindingly simple: will my savings/pension scheme/investments produce the income I need to live the way I want in retirement?
This is not so much about money but about deciding what sort of life you really want to have - and a surprising number of people have rather vague and unrealistic dreams. Witness all those life-long city dwellers who have suddenly decided that country life is what they crave!
Dr Bob seems to be pretty clear on what he wants so I suspect he's pretty much made his decision. Good luck with the plan and make the best use of the fruits of your hard work!

Something that I have not seen much discussion of is "social care". Personally, I very much don't want to have to rely upon our local government worthies to look after us in our dotage and instead hope to have sufficient assets to choose our own care providers. There are too many horror stories of councils shutting down care homes and summarily moving everyone out to somewhere of a lower standard or miles away from family.
Budget £30k - £50k p.a. at today's prices - more to be sure of adequate cover. I read somewhere that the average stay in a nursing home (£50k p.a.) is 3 years so I reckon about £500k should do it for two people in most cases. This is a lot of money, and beyond many people but well within reach of many of those commenting in this thread.
Personally, I don't see why a young family struggling to pay student debt and a massive mortgage with uncertain job security should pay for my care if I have sufficient assets, so I have no difficulty with the house being used to pay for care. I realise that not everybody feels that way but we all have to make our own minds up on these sort of things.
BTW, retirement is great , go for it!
Duncan


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## Spectric (23 May 2021)

Duncan A said:


> Something that I have not seen much discussion of is "social care". Personally, I very much don't want to have to rely upon our local government worthies to look after us in our dotage and instead hope to have sufficient assets to choose our own care providers. There are too many horror stories of councils shutting down care homes and summarily moving everyone out to somewhere of a lower standard or miles away from family.


But what I dislike hear is that lets say there is this nice care home with glowing reports and in a great location, plus somewhat sought after and you love it so because of your financial situation achieved through a life of working it will cost you say £900 a week, no probs because your house can help pay it rather than leave it as family inheritance. Now in this care home could be a resident who pays nothing, because they have sponged off the state all their lives and own no property so get it free, same home and living standards as yourself but free. To me that is just unfair, it is just rewarding those who have already milked the state for years rather than work and contribute to the system.


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## Duncan A (23 May 2021)

Yebbut that's a whole separate subject and not really part of Dr Bob's retirement thread, so all I was doing was pointing out that my approach is to try and cover an estimated cost. No politics for me
Duncan


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## Glitch (23 May 2021)

My parents both worked all their adult lives. Never took benefits. Paid their NI and taxes.
Lived in council houses, paid their rent. Never exercised their right to buy. Saved a small amount for their retirement. Had small private pensions but relied on state pension to live on.

Dad had a stroke (a failed op to clear his carotid artery) and needed carers because he was bedridden.

Went to a couple of nursing homes. Horrible places. They took his pension to help pay for it.
Eventually Mum did the right thing and brought him home with support from carers. Nightmare getting and keeping good ones who were brilliant. Think they still had to pay a bit towards it. He lasted 18 months before dying of bowel cancer that hadn’t been diagnosed until it was too late.

Social care is means tested. Some people have very little and they’ll take that too if they can.

Labelling all those that can’t pay as spongers is such a stupid, narrow minded view and an insult to people like my hardworking parents.

We have a welfare state, get over it.

Plan well ahead if you want to protect your legacy/inheritance.


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## Glitch (23 May 2021)

Duncan A said:


> Yebbut that's a whole separate subject and not really part of Dr Bob's retirement thread, so all I was doing was pointing out that my approach is to try and cover an estimated cost. No politics for me
> Duncan


Yebbut you raised the subject of social care after a claim of how simple pension planning is.


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## D_W (24 May 2021)

Spectric said:


> But where can you get more returns than you are paying interest on a mortgage these days, it is because the rates are so low that is is even easier to hit it harder but this reduces the financial sectors returns. I never thought of it as a mortgage but a roof over my head that I wanted to own rather than leave it as debt.
> 
> The interest rates went through the roof under thatcher, great for savers but many people just gave their house keys back as it was not affordable, and this was after she allowed council tennants to buy their homes so they could not take part in union strikes without risking their home. I think she should have been burnt at the stake or put through a coal processing plant, I dare say there are many who would have partied for days. I recon that many would have retired earlier had she left them with a decent job rather than working till later in life.



You're thinking too hard about this. The financial advisors don't make anything if you pay down debt, but most of them get initial and annuity income on money you invest with them.


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## Blackswanwood (24 May 2021)

D_W said:


> You're thinking too hard about this. The financial advisors don't make anything if you pay down debt, but most of them get initial and annuity income on money you invest with them.


In the U.K. commission has been banned on investment products. Some advisers do have a fee structure that is based on a percentage of the fund - imho they are not the good ones. More often than not it is far better to pay for advice by the hour just as you would pay a solicitor or accountant.


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## Glitch (24 May 2021)

I can understand that people are uncomfortable with debt of any kind and prefer to pay it off as quickly as possible.

There is good debt such as mortgages (property historically increase in value) and business loans (builds business and creates more income/profit)

There is bad debt - Credit cards (ridiculous rates if you don't pay it off each month) Loans for unnecessary luxuries (expensive holidays, the unused hot tub)

The base rate has been incredibly low for years. There's little or no interest paid on cash products. Mortgages are cheap. Credit card rate crazily high.
The stockmarket always out performs cash if you smooth out the inevitable highs and lows.

If you have spare cash after paying your normal living costs what should you do with it?
No point putting it in the bank because inflation will make it worth less in real terms.

If you put money in a pension you can claim tax relief on it - up to £40k per year and you can use unused allowance from previous two years.

For a PAYE earner like me every £140 of contribution cost £100. Where else can you get returns like that?
Yes, you'll be liable for tax when you take it back out but I have personal tax allowance of £12k, 25% of the fund can be withdrawn tax free and I will try to keep under the 40% tax bracket. The pension gets invested in various funds, bonds, stock, etc If you're lucky this will increase in value quicker than cash only. 
If could go down but as you get nearer to retirement you shift a larger proportion into low risk products.

Self employed get the same tax breaks for pension contributions. Most of the contractors I worked with paid as little tax as possible but there is surely still some benefit in there.

Should I max my pensions savings or pay off a low interest mortgage? I did and used a proportion of the tax free lump sum to pay off what was left of my mortgage.

Sounds like Dr Bob is in an excellent position but far from typical. If you have so much spare money you can max out your pension contributions, pay extra towards your debt and still have some left.

Most people need to prioritise their disposable income more carefully. Just think about the best place to use the money. It can make a very big difference to the quality of your retirement.


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## doctor Bob (24 May 2021)

Thanks for all the replies and I appreciate I am in a very lucky situation compared to a lot of folks.
I've got a couple of years to ponder and then if I decide to go 3 years to impliment it.


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## Glitch (24 May 2021)

I really wouldn't ponder. You need to plan now. 
Probably boost your pension pot or fund other schemes that provide reliable income when you stop work. 
Extremely hard to catch up in the final 2-3 years


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## doctor Bob (24 May 2021)

Glitch said:


> I really wouldn't ponder. You need to plan now.
> Probably boost your pension pot or fund other schemes that provide reliable income when you stop work.
> Extremely hard to catch up in the final 2-3 years



as I said previously
I'm putting close to max in currently.
I have a second business which will fund retirement quite well.
I don't think I have to catch up, it's more about just knowing when to go.

The planning was more for how IU hand over the business and when.


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## Spectric (24 May 2021)

Just remember that the one thing you cannot buy even if you are the richest person on Earth is TIME, and our timelines are unfortunately unknown.


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## doctor Bob (24 May 2021)

I did think about writing a book, basic plot is the socialist working party infiltrate a woodworking forum, creating havoc and arguements about sharpening, brexit and Jeremy Corbyn, whist the KGB use bots as moderators, some militant members uncover all this but the KGB and socialist working party realise they have been found out and kill them all and pretend their was a big falling out and they left to form another forum.


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## Glitch (24 May 2021)

doctor Bob said:


> This is mainly aimed at business owners and the self employed.
> Question is when do you know you have enough to retire.



8 pages in it's finally clear this is a case of 'Give me what I need, not what I asked for'

What you really need is an exit strategy from your share of a business.

Sorry, I can't help you  

Best of luck though. I wish you a long, happy and healthy retirement.


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## Duncan A (24 May 2021)

doctor Bob said:


> I did think about writing a book, basic plot is the socialist working party infiltrate a woodworking forum, creating havoc and arguements about sharpening, brexit and Jeremy Corbyn, whist the KGB use bots as moderators, some militant members uncover all this but the KGB and socialist working party realise they have been found out and kill them all and pretend their was a big falling out and they left to form another forum.


Ridiculous!
Nobody would believe that people would bother to argue about sharpening
Would they??


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## doctor Bob (24 May 2021)

Glitch said:


> 8 pages in it's finally clear this is a case of 'Give me what I need, not what I asked for'
> 
> What you really need is an exit strategy from your share of a business.
> 
> ...



No, the question as clearly stated is when do you know enough is enough.
My previous response was because you hadn't read that my retirement planning was already progressing well, I.e. max contributions and a second income.
As for exit stratagy, we'll work that out but truthfully I'd happily give Michael the business free of charge no ties, he has been my mate, and immense support for 25 years, he knows more about me than anyone (including my wife), I would never want to lose that.


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## Glitch (24 May 2021)

doctor Bob said:


> No, the question as clearly stated is when do you know enough is enough.
> My previous response was because you hadn't read that my retirement planning was already progressing well, I.e. max contributions and a second income.
> As for exit stratagy, we'll work that out but truthfully I'd happily give Michael the business free of charge no ties, he has been my mate, and immense support for 25 years, he knows more about me than anyone (including my wife), I would never want to lose that.



The question was far from clear but we got there in the end.

My background is IT and I admit to being annoyingly pedantic about what is being asked.

When do you know you have enough to retire? 

When do you know you've had enough (of running a business) and it's time to retire?

Hopefully you can see the difference. Hopefully others might benefit from the discussion about what appears to be a rhetorical question.

Now you say you can leave the business to your partner which is very generous and makes your decision even simpler.

The answer is only going to come from within you. Little point asking others. You'll either get tired of the business, something will happen to reassess your priorities, or you'll reluctantly stop because time is running out to do the other things you enjoy.


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