Retirement

[Jim Dance]

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'

 

[D_W]

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.

 

[doctor Bob]

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.

 

[Trainee neophyte]

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 **** 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, ******-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?”

 

[clogs]

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.........

 

[Daniel2]

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

 

[doctor Bob]

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.

 

[Daniel2]

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

 

[Essex Barn Workshop]

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.

 

[D_W]

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.

 

[doctor Bob]

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.

 

[beech1948]

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.

 

[marcros]

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?

 

[Spectric]

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.

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.

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.

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.

 

[Trainee neophyte]

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.

 

[doctor Bob]

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.

 

[Flynnwood]

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.

 

[Lons]

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.

 

[Sean33]

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.

 

[doctor Bob]

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.