Retirement

[mikej460]

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.

 

[Lons]

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.

 

[Terry - Somerset]

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!

 

[Bristol_Rob]

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.

 

[Keith 66]

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 crap & 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 (crap 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!

 

[Daniel2]

...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.

 

[Cooper]

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.

 

[spanner48]

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.

 

[ian33a]

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.

 

[Terry - Somerset]

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

 

[Spectric]

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.

 

[Spectric]

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.

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.

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.

 

[doctor Bob]

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.

 

[doctor Bob]

Trouble with downsizing is I lose the house I love.

 

[Spectric]

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.

 

[mikej460]

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.

 

[BucksDad]

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.

 

[D_W]

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 crap 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.

 

[Sandyn]

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!!

 

[doctor Bob]

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.