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
13 September 2014 12:00 AM
30 August 2014 12:00 AM
05 September 2014 11:30 PM
30 August 2014 12:00 AM
The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options
22 August 2014 10:30 PM
Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator
22 August 2014 10:30 PM
16 August 2014 12:00 AM
16 August 2014 12:00 AM
- 1 Rihanna 'nude pictures' claims emerge on 4Chan as hacking scandal continues
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 4 What are your fingerprint words?
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Day In a Page
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green