Short of winning the lottery or earning a pile of cash, it is going to take a fair few years to think through, plan for and accomplish early retirement. During that time you need to be on your toes as Government policy can change at the flick of a ballot paper and then change again while you have your head in a spreadsheet and the clouds. Every Government whim can affect your financial situation both positively and negatively.
I started work back in the dark ages of the 1970s when I was just 16 years old. At that time, as a woman, I thought I would get my state pension when I was 60. This seemed an eternity away but this pension age had been the same since the 1940s and I didn’t imagine it would change. I worked in a small business with no occupational pension, I didn’t earn very much and naturally lived frugally and had nothing spare to save. I didn’t even consider that I might need any more money than the state would give me.
Apart from a brief period as a local authority employee I didn’t really find employment in a workplace that had an occupational pension until I got my first job in the NHS when I was in my late 30s. By that time being 60 seemed much nearer and in a more secure position with my partner and a child, I willingly began paying into the NHS Pension Scheme. I worked part-time and still expected my state pension to make up most of my income in retirement.
My working life has been varied [25 jobs] and I have moved in and out of the NHS Pension Scheme but having first enrolled in the 1990s I have always been in the old final salary scheme that begins to pay when I am 60 years old. This is generally considered the best scheme as most people earn the highest amount at the end of their career. There has been little that is normal in my working life and while my NHS pension was worth about £4,000/year back in 2004 when I was a Public Health Manager, after a few years working as an administrator it had reduced to £2,300/year, thanks to pay disparity and despite working more years. If I had my time over I would have frozen my NHS pension but unfortunately I couldn’t see into the future. After travelling full-time I returned to the NHS expecting to be there until I could afford to retire [at the time I thought this would be over ten years]. Little did I know that the first whim of history to confound my plans was about to appear. Andrew Lansley, the Health Secretary, was waiting in the wings with his back-of-a-fag-packet NHS reform that spit me out of my wonderful health service job and into a small charity.
In 1995 the government announced they were increasing the state pension age of women to 65. I knew this and I could see it was fair and was prepared for it. In 2007 they announced a further increase to 66 but I was unaffected by this change and my planning for early retirement continued. It wasn’t until 2011, when my planning was well underway, that this timetable was hastened and suddenly my state pension age was going to arrive one year later. The Government had taken a year’s worth of pension away from me and the spreadsheet had to be revised yet again and more money saved to provide enough to live on. The WASPI campaign is fighting for justice for all women, born in the 1950s, affected by the changes to the State Pension Age.
On the positive side, we will both benefit slightly from the new state pension introduced in 2016. This will be paid according to the years we have contributed.
Hopefully the state pension age will not change again for me, but who knows! My financial story will only really end when I die but for the moment I am happy that I did manage to retire when I was 57 years old. My experience does demonstrate how difficult it is to plan so far into the future when so much is out of our control and demonstrates how important a contingency fund is; if I had managed to take early retirement before 2011 my plans would have gone particularly awry.
As Governments come and go and policy changes, planning with certainty for more than a few years ahead is tough. I [and perhaps everyone saving for early retirement] move into the future hopefully rather than with certainty!