Early retirement @55 maths

[TheStrangler]

Has anyone worked out how it's best to not retire at 55?
I realise all the stuff about losing 5% for every year etc but is it not the case that there are financial positives (aside from any possible lifestyle advantages).
First of all you would be getting your pension for several more years (in my case aged 55 approximately 5k a year) than if you waited till 60 or 65.
You also have the lump sum to top up your pension if you wish.
Also you get the pension supplement (approximately 1k a year in my case) which if you worked till pension age you wouldn't receive St all.
I also have looked at some quotes from people who have worked till 65 and to be honest it doesn't sound that impressive in view of those extra 10 or so years!
Every one has their own circumstances of course I'm just trying to make the case (to myself as much as anyone) for going early.
Any input on the above would be greatly appreciated of course.
Thanks.

[RobertT]

Has anyone worked out how it's best to not retire at 55?

I would have thought everyone thinking of taking their pension early would have done their maths!

I realise all the stuff about losing 5% for every year etc but is it not the case that there are financial positives (aside from any possible lifestyle advantages).
First of all you would be getting your pension for several more years (in my case aged 55 approximately 5k a year) than if you waited till 60 or 65.

The argument for taking it early is that you might be getting less, but you’re getting it for longer. But from a purely financial point of view and assuming you live to average age for a 55 year old, which is mid 80’s, it’s better to take it at NRA.

In practice you will have to make 2 calculations: One for taking your NRA60 early an another one for your NRA65, because you will obviously be reducing each pension by a different percentage.

For example and in simple terms, if your unreduced NRA60 is £10k per year and you live until 85(the average), you’ll get a total of £250k, and a higher monthly income. But if you take it at 55 with a 25% reduction, you’ll only have got £225k by 85.

You also have the lump sum to top up your pension if you wish.

If you’re in section C, which most current employee members of the RMPP are, you will obviously be giving up some pension to get that lump sum. However you would also need to decide what you’re going to do with that money.

Are you going to go on a spending spree, or use it to fund your retirement alongside your pension. In which case would you be better off taking a higher index linked pension instead? Which will be compounded each year and most probably bringing in a higher return than you’d be getting from any savings account.

Also you get the pension supplement (approximately 1k a year in my case) which if you worked till pension age you wouldn't receive St all.

Yes, do your maths properly and factor everything in.

I also have looked at some quotes from people who have worked till 65 and to be honest it doesn't sound that impressive in view of those extra 10 or so years!
Every one has their own circumstances of course I'm just trying to make the case (to myself as much as anyone) for going early.
Any input on the above would be greatly appreciated of course.
Thanks.

In your case, £5k is a very small income if that’s all you’re basing your calculations on. So:

Are you planning on getting another job to supplement that, part time perhaps?
If so, will tax be an issue?
Have you got a partner who’s going to be bringing money in?
And if so what happens if their income dries up – loses job, health problems, death(sorry to be morbid)?
Have you got a rainy day fund? boilers break down during retirement aswell!
Have you worked out how much you spend now and what you can economise on, bearing in mind you’ll have lots of free time to fill?
What happens financially when your partner wants to retire?
How much will you get from your state pension?


There’s probably lots more questions you need to ask yourself, but the basic one is, can you afford it?

You may find this CWU video on the matter worth watching!

[Fatboyslim]

I'm taking mine at 55. The loss I'm prepared for. And factored in.

Looking at some of the calculations, yes you will lose out. But, and this is a very big BUT. Retirement ages are based on 'normal' occupations. Walking 10-15 miles a day for 40 years. You think you are going to hit 85? Forget it. I left after 35 years. The job was killing me. I was wishing my life away until the weekend.

When I received my pension statement the other month. It actually says how many RM pensioners there are. I was horrified to how few. Pro-rata its alarming how few RM pensioners there are. Where are they all? Do I need to spell it out. Do you know any old staff in their 80's. I don't. They have all gone. The job is a killer. You can have all your pensions/top ups/avc's. Live like a king - for maybe 3-4 years? As for we all reaching 85. No chance. If you sat at a desk shuffling paper for 40 years - maybe. Working for RM. Never.

Believe me, I have seen far too many staff retire and die early. The worst was finishing on a Friday. Gone by Monday. He worked like a trojan hammering overtime/nights. I'd rather have health than wealth anyday. My missus took early retirement too. So, with our combined pensions we will be ok. And 50% will go to either on death. I took VR. Cleared the decks. Do not owe a penny. I'm planning max pension and minimum lump sum.

One last thing. I'll always remember reading this. From an old POSSS leaflet. The average age of staff who retire at 65 draw their pension for 3 years. Yes you read right. The average for retiring at 60 drew it for 12 years. Frightening. So, basically all your money will go in care fees, or disappear as you die early.

Hate to be morbid. There is only one certainty in life. I could weep when I recollect stories of staff I knew who passed away too early. I did 35+ years. I honestly do not know of any ex colleagues in their 80's. I jumped ship at 54. I'm gonna give it a good go though...!

[RobertT]

I accept that walking 10-15 miles 5 days a week isn’t necessarily normal, but the official life expectancy figures are based on averages! In practice many live longer and many don’t. Work life will play a part and so will lifestyle, diet, family health history, etc.

If you look at the most recent(2016/17) annual report for the RMPP, there are 14,974 pensioner members.
While the most recent(2015/16) RMSPS annual report, there are 188,906 pensioners.

Personally I do have AVC’s, a personal pension and ISA’s, and they’re all aimed at retiring early. Because I knew when I first took an interest in my pension over 20 years ago that the RM scheme wouldn’t be enough – and that’s before any of the changes that have taken place and reduced it.

My additional savings will enable me to retire nice and early at 55 or possibly earlier, and live reasonably comfortably for the rest of my life. If I hadn’t bothered paying extra, that would be 65 if not 67(state pension age).

And for the record I do virtually no overtime at all – I’m no 70 hour a week man I can assure you.

I don’t think it’s about getting as much money as possible, nor do I think it’s about retiring as soon as possible. Ultimately it’s up to the individual to do the right thing for them.

[Fatboyslim]

I'm 54. I had been mortgage free for seven years previous. Started to save hard should VR come along. Got offered - qualified for max. Sold a car/shares/tax back. Every little helps.

Missus took EVR from another company. Good pension. Should either of us die 50% goes other way.

Got a nice AVC due. That's a car and another motorbike. Do not want any lump sum from pension. Still got most of VR payment in bank - after clearing the decks with a loan. No point in blowing any of it - that's my plan to not work again. So, that's my pension lump sum in a way. So, I want max monthly payment.

And try to live as long as possible. Nurture some hobbies again.

I just had letter delivery 330pm. Poor bloke was carrying a limp... In his 40's. Shocking.

[foxyjarvis]

Fatboy, hope you make it to 55, don't want you to become another early statistic. I'm more worried about my mental health than physical. I promised myself I'd leave when I've paid off my mortgage and have 100k in the bank. I'm nearly there, I won't get VR and plan to take my pension as soon as I can. My heart goes out to anyone desperate to get out, I feel lucky because everyday I do this job I die a little bit more.

[anini]

If you look at the most recent(2016/17) annual report for the RMPP, there are 14,974 pensioner members.
While the most recent(2015/16) RMSPS annual report, there are 188,906 pensioners.

I wonder if they break it down by job type. I.e. delivery, driver,MC, etc.
Sadly quite a few delivery personnel I know have health issues due to the years of grinding work.

[Navalron]

Fatboyslim. On you go mate. Its good too see a bit of ( get it up them) on this forum. I did several years in the armed forces and joined the RM. Everyone told me to transfer Into the GPO (gold) pension. I thought about it and then thought knaw. Gimme the down. Like you say anything can happen at anytime. You and your partner enjoy. Good luck to your.

[Navalron]

Me t to say, give me the dosh, lol.

[General Mannerheim]

I'm off at 55.
Like Fatboy I've seen too many posties hang on till 65 and then snuff it within 5years , although an old boy lives round the corner from me who is well into his 80's now but he did night sorting and not delivery.
They keep saying people are living longer which I think is down to the pre war lot like my parents who both lived into their early 80's, but so far this year I've lost my oldest sister at 67 and my oldest brother at 65 and I already have a medical condition that has decreased my life expectancy.
I've done 30 years in March and apart from my medical condition my knees are f****d and I've arthritis in my knuckles which I put down to all the s**t winters I've delivered.

Oh and RobertT thanks for explaining these complex pension issues on here.
I've learnt a lot off you to help my members at work

[cloherty1976]

I'm off at 55.
Like Fatboy I've seen too many posties hang on till 65 and then snuff it within 5years , although an old boy lives round the corner from me who is well into his 80's now but he did night sorting and not delivery.
They keep saying people are living longer which I think is down to the pre war lot like my parents who both lived into their early 80's, but so far this year I've lost my oldest sister at 67 and my oldest brother at 65 and I already have a medical condition that has decreased my life expectancy.
I've done 30 years in March and apart from my medical condition my knees are f****d and I've arthritis in my knuckles which I put down to all the s**t winters I've delivered.

Oh and RobertT thanks for explaining these complex pension issues on here.
I've learnt a lot off you to help my members at work

Ill be following you but like you said you done 30 years like me. So when we started I am sure the idea was to retire at 60 and wait for your state pension at 65 and that was the plan.
So I know now we won't get your pension so at worst people you should be looking to go at 62
But in my office they are still going at 70 and are not planning to retire
It's your choice and as long as your happy it don't hurt anyone but I'm off at 55 to enjoy life

[crabstoes]

if you did retire between 55/60. could you eventually claim job seekers allowance. and show you were actively " ahem" looking for work ?