Early birds and nest eggs
Thinking of taking early retirement?
Wednesday 15 January 1997
This will mean far fewer teachers will be offered early retirement and, in some parts of the country, the option will cease to exist. This has led to a flood of early retirement applications from teachers hoping to beat the deadline.
Teaching unions have been inundated with calls from members seeking guidance on whether they should rush in and opt for early retirement if offered it by their employer.
Whether you are a teacher or in any other occupation faced with the early retirement option, it is essential to consider the financial implications of stopping work before any final decision is made.
First thoroughly check what your pension entitlements are. Don't be put off about asking for clarification of any jargon used in the statement, and compare the benefits on offer against the salary and then pension you would receive if you continued working until normal retirement age. Also consider the options carefully in respect of any Additional Voluntary Contributions you have built up.
Next draw up a personal budget. List your monthly income and outgoings now and compare this with your estimated position if you took early retirement. Will the pension be enough to meet your main monthly commitments such as the mortgage? Don't forget to allow for some future inflation if your pension is not index-linked.
This will enable you to see what surplus money you can expect to have in early retirement and whether this will be sufficient to achieve the lifestyle you want. There is little point retiring early if you cannot enjoy the extra time on your hands.
You may want to consider what part-time work opportunities there are to supplement your income and whether such work would really enable you to reap the benefits of early retirement more than staying in your current full-time employment
It is also important to consider how your tax position may be affected if you take early retirement, not just the impact on pension income, but also what it would mean for any existing savings you have built up.
Find out any state benefits you may be entitled to as this may help your income position. The state pension will not be payable until you are 60 (for women) and 65 (for men). However, it is useful to obtain a forecast from the DSS of what your state pension, including any Serps entitlement, will be when you get to these ages, even if they are some years off. This can be done by completing and sending form BRI9 (obtainable from local DSS offices) to the DSS information centre.
Your early retirement pension details will show whether you are entitled to a lump sum as part of your early retirement package. You may even be given the option to take a reduced pension in return for such a sum.
As this could be the last significant lump sum you receive, you will need to consider whether it is adequate to meet all your planned expenditure in the next few years - for example, a new car and home improvements.
Also consider whether the money could be best used to repay some or all of the outstanding mortgage early. If your mortgage is under pounds 30,000 and you are getting tax relief on all or most of the interest you are paying it may be better to keep it going.
You should find out whether any of the vast range of investment products available including PEPS and Tessas would realistically help you financially in retirement. There are some attractive packages on offer. But remember the old saying, "any investment that is too good to be true is".
Don't forget that if you take early retirement, you will no longer be covered by your employer's death-in-service scheme and a review of your life assurance requirements will be required. Check from the pension entitlement details what widow's / widower's pension would be payable in event of death in retirement.
The option of early retirement offers both opportunities and pitfalls, especially financially. It goes without saying that thinking through the issues before any final decision is made is absolutely imperative, particularly if the option is thrust in front of you by sudden changes, such as the one facing the teaching profession nown
The writer is marketing director of IFA Frizzell, a subsidiary of Liverpool Victoria
08 May 2015 10:30 PM
13 May 2015 07:34 AM
The Tories have appointed campaigner Ros Altmann to the post
30 April 2015 07:30 PM
06 May 2015 09:39 AM
One reader’s monthly direct debit charge has been increased by 62 per cent
05 May 2015 02:09 PM
Many Londoners who live in social housing estates are not allowed to switch because their landlord has ‘locked’ them in to buying from one supplier
24 April 2015 07:30 PM
01 May 2015 12:00 AM
More than £60m was paid out to more than 2 million prizewinners this month
28 April 2015 05:20 PM
Why can’t we just have open and honest charges, without all the cross-subsiding?
28 April 2015 03:50 PM
With the pound at a high against the euro, it pays to buy now before uncertainty post-election
17 April 2015 06:00 PM
23 April 2015 12:00 AM
Experts disagree about the 7% increase over the past year
22 April 2015 07:29 AM
Too many mortgages are being sold with misleading gimmicks
21 April 2015 09:54 AM
The firm’s revenues slumped by a third to £217 million in 2014
21 April 2015 12:00 AM
The average quote for a buildings and contents policy has fallen by 3.6 per cent
10 April 2015 07:00 PM
- 1 Crystal meth addict 'gouged out his eyes and ate them' while high on drug, Australian MP claims
- 2 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 3 The ten most unequal developed countries in the world
- 4 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 5 Toddler throws a tantrum at the White House – in front of Barack Obama
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
The day that Britain resigned as a global power
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof