I have been recently thinking about retirement. For me the state pension age is currently 67 but according to gov.uk may increase by up to another year.
I am intrigued by the growing movement called F. I. R. E. (Financial Independence Retire Early). This is basically where people work as hard as possible during their 20s and 30s, saving and investing enough money to enable them to retire (sometimes as early as 40) living off the returns from their investments.
For me this is not a reality as my 20s and 30s were not spent wisely with regards to saving or investing financially. However, retiring early is still a possibility.
My plan of action
1. Become debt free.
This is becoming a reality. I have spent the last two years massively overpaying my mortgage. I do not have any penalties for overpayment.
2. Check my state pension forecast.
This is a relatively simple process once you go through the faff of setting up an account on gov.uk and verifying identification via the Post Office. This surprised me. I have somehow received some national insurance credits dating back to when I was still at school and working part-time in the evenings and weekends. This means that providing I contribute for another few years I should receive maximum state pension.
Some of my friends who have worked in organisations that previously “opted out” have to make many more contributions. This is definitely something worth checking especially if you are in your 50s as it will tell you how many more years you need to contribute to in order to receive full state pension.
3. Check my work pension status
This is slightly more complex especially if you have more than one pension scheme or your pension scheme has changed over the years. This is something I am still trying to work out. There are penalties for retiring early but the closer you get to retirement age the penalties are less. I need to find the golden date where the benefits to me off retiring early outweigh the hit on the pension and it will also be a sufficient amount to survive on.
4. Boost my savings
Once I become debt free I intend to save and possibly invest at least the same amount as I have been overpaying the mortgage by. With current interest rates I cannot see myself being able to get much of an income from savings unless I am able to find a suitable investment such as a second rental property. Given the current house prices this is unlikely. I am not one to make risky investments therefore it is more likely that this will be an emergency fund to boost my work pension until I can get my state pension.
5. Sell everything I don’t need
This is something I have been working on over the last few months. However, the amount of time it takes to sort, assess and list, not to mention posting, is not necessarily a good earner in terms of hourly rate. It is something that is helping my mental health though because I do find it hard to throw things away. Having someone purchase something on eBay is allowing me to let go of things even if I am only making pence after postage and fees taken out. I have two thoughts on what to do with the money. I either use it to upgrade my house to being more efficient or it goes into the general retirement fund.
I have also lost a bit of interest in this more recently as other priorities have taken over. I am intending to start this up again in the near future.
6. Reduce my expenses
Again this is something that is ongoing and will be something I intend to do for the rest of my life. This is trying to account for every penny, reducing spending and increasing savings.
7. Improve my health and well-being
This is another ongoing task. I want to be well enough to enjoy my retirement. Being ill or suffering from chronic conditions becomes expensive.
Prescriptions and over the counter remedies are expensive. Even herbal remedies cost money to prepare if making tinctures. Treatments can be expensive if not covered by NHS such as chiropractors, counsellors, chiropodists etc.
Having to pay people to do things for you because you are unable to do it yourself is also expensive. Examples could’ve gardening, taxis, cleaning.
The longer I am well enough to care for myself the better.