A PROSPEROUS RETIREMENT

I’ve decided to stop using the term ‘retirement’ as that sounds like the ill-awaited fate for knackered racehorses. Instead, I shall be referring to my golden years as the Period of Self Enlightenment or POSE for short seeing as everything is reduced to acronym form these days.

I plan to become a POSER before the end of the current tax year. But that’s no-where near the state retirement age I hear you gasp in amazement; how will you do it?

Indeed, how can I become a POSER without claiming a state pension? Simply by saving today so I can live for tomorrow. Not easy when I’m throwing cash around at the timber merchants like knickers at a Tom Jones concert but there are plenty of ways to build a POSER foundation without locking my purse away deep in the vaults of Fort Knox.

If I could re-wind the clock to give my younger self some good advice it would be this – if your company doesn’t offer a defined benefit (final salary) pension scheme, don’t enrol in a pension but save that money in a cash ISA instead.

Outrageous advice! Fund Managers out there are no doubt sharpening knives, lighting torches and grabbing pitchforks from their garden sheds ready to roast me on a skewer like a juicy kofta kebab over a nice hot flame. Pension Advisers would deride such foolhardy notions, citing guff about tax relief given on pension contributions by the Government but to my mind they are only keen on seducing workers into defined contribution schemes because it keeps them in jobs and extends our taxpayer lifespans.

What is a decently funded retirement anyway? Well, that depends on your perspective and aspirations. A study done at Loughborough University claims that a single person will need at least £31,300 a year for a moderate income in retirement according to a pensions industry body (who?). The least you’ll need is £14,400 per annum on which to live and the most around £43,100. What I’d like to know is what are these figures based on?

The key omission of Loughborough’s interesting reportage failed to mention whether these figures were pre-tax or after tax because the key to a prosperous retirement is knowing all about TAX, what you’ll pay, when you’ll pay it and how to ensure you pay as little as is legally possible.

Let’s take the figure mentioned above of £31,300 a year and break it down further. For my example I’m going to assume that this is pre-tax income made up of the current annual state pension of £11,973 plus a private pension of £19,327. (You’d need a massive private pension pot to generate an annual income of £19,327 per annum).

You would pay zero tax on the whole of your state pension BUT because the combined income is greater than the current personal income tax allowance of £12,570 then you would be liable for tax on £18,730 which at the basic rate of 20% means you’d have to give the Revenue £3,746 leaving a net annual income of £27,554.

Whilst the remainder of your pension pot continues to stay invested then in addition to tax on your future annual drawdowns, you’d also be paying fund management charges that would be eating into your capital. Remember too that monies invested in a pension fund are subject to the vagaries of the stock market which may go up or down depending on which way the wind is blowing and that will in turn affect the total value of your pot. In bad or volatile markets, the value of your pot may plummet thus potentially affecting how much you have available to draw down from your pension in any given year.

Now in my crazy retro scenario, I’ve gone back in time like a pirate Time Lord raided all my private pension schemes and placed the money into a cash ISA instead. OK so I may not have benefitted from potential market rises or tax relief but my invested capital has remained secure, safely weathered every conceivable political/financial crisis and steadily grown in its very own tax-free wrapper.

Supposing that I’ve managed to grow my cash ISA pot to the same value as a defined contribution pension pot then let’s revisit the above example to see if I would be better off. State pension £11,973 tax free as under the tax threshold and £18,730 drawn from the ISA also tax free so £3,746 pounds plus fund management charges better off.

What’s more I can continue to save into a cash ISA without fear of breaching any pension lifetime allowances and landing myself with a huge tax headache.

The pensions industry will try to emotionally blackmail us with crap about inflation and how money in a cash ISA is worth less over time. However, £20 is still £20 regardless of whether you get it from an ISA account or a pension fund. When I studied economics back in the 80’s, inflation measured the buying power of money NOT the rate at which prices rise, this now seems to be the popular definition used in the media. Inflation erodes the buying power of everyone’s money anyway you get it.

Clearly the University’s estimated pension figures must be skewed in favour of yuppy pensioners benefitting from generous civil service gold plated pensions since most of us will have failed to earn an annual salary of £31,300 or £43,100 in our career lifetimes. My best wage only topped £32,000 and that was after about 30 years of employment.

The key to a prosperous retirement is to manage expectations and live within your means. Don’t be seduced by mass consumerism or pension preachers. Sounds boring but not impossible. Most single POSERs could still get a lot out of the minimal amount quoted of £14,400 if they re-examined their outgoings and gave up fags, booze, subscription services, takeaways, online gambling, tattoos and expensive holidays/smartphones.

Don’t believe the hype – you can retire on a lot less than £31,300 and still have a bloody good life. After all, I’ve lived on a part-time salary much smaller than the state pension for the past 5 years and still found the cash to pay for food, festivals and McFlurries.

BYE BYE WORKPLACE

Although there’s still two months before I skip off into the early retirement sunset, I’ve already drawn up a letter announcing my departure intentions which I’ll present to my manager like an early Easter egg. Haven’t you bought yours yet? They’ve been in the shops since 5 January so no excuses.

Legally obliged to give only a months’ notice, I’m generously giving my employer two whole months in which to procrastinate as I’ve yet to experience a workplace where replacement staff are recruited in a timely manner that allows the current incumbent to train up their successor.

And that of course is assuming that there will be a successor because past experience also shows that many companies choose to leave posts vacant for a period in order to achieve headcount budget saves and don’t really care if your colleagues have to absorb your workload on top of their own in the meantime.

The more devious companies use early retirements as a good excuse for a complete departmental restructure that generally results in more work for the same pay on a permanent basis and also generates ongoing savings on employer on-costs which are then spaffed on director bonuses, client schmoosing or some nonsensical bit of office kit you didn’t know you needed.

I hope my replacement is the Usain Bolt of data input, has the patience of a saint, zero initiative, and enjoys being micro-managed because these are the key attributes required to fit into my role.

Whilst there is no career progression as such or guarantee of an annual pay rise, you can dress casually, listen to the radio all day long and enjoy the delights of a Turner’s pie delivered to your desk every Christmas. Even the chancellor can’t tax these perks which albeit small, add to a pleasant working environment.

The key to a good leaving letter in my view is to ensure you don’t burn bridges because if retirement becomes one long bore, you may wish to return to your old job. Are there any statistics out there to quantify how many people have done this? Keep it brief, free of personal gripes or company criticisms and thank them.

What???  Yes, thank your employer for giving you the opportunity to sit there and take shit. It’s polite and after all whatever you might think of them, they gave you a chance when perhaps no-one else would. Plus I’m sure that most people have given as much shit back to their employers as they’ve taken during their working lives so it’s only fair to show some degree of gratitude.

By all means throw in all those insincere platitudes – I’ll miss you (no I won’t), I’ve enjoyed working here (really?), I’ll pop in to say hello (come on, nobody ever goes back) and keep in touch (I never want to hear from you buggers ever, ever, ever again!).  Best to just keep it simple.

In the past I’ve always handed over my letters of resignation on a Friday. This is not a deliberate ploy on my part to ensure my manager has a stressful weekend but because as an ex-manager, office custom and practice is to deliver bad news on Fridays.

You’re sacked/redundant/being replaced by a robot or a 12 year old who knows how to use social media – all of these scenarios are communicated at the end of the week so as to cause the least disruption in the workplace. No tears, tantrums or toys thrown out of the pram for 5 days because all those human emotions that accompany bad news then take place on your own dime. By the time Monday rolls round, your resignation is old news and pragmatic plans can then be put in place so that office life can continue as before.

There’s always an element of both nervousness and sadness in handing over the missive but it should always be done in person. No cowardly leaving the letter on the desk when your boss has nipped out for a latte/slash or to chat up the totty in the team next door.

Experience shows that after the deed is done there’s generally an embarrassing silence, some well wishing but never a great deal of chat; both of you are just sat there hoping the moment will quickly pass so you can get back to your spreadsheets.

BACK TO BLIGHTY

Overseas business concluded, back home in dear old Blighty, a country of cold, complaining and crises. Who wouldn’t want to live in sunny Spain all winter? I for one would quite happily hibernate here from October to April each year given half the chance and a lottery win.

Something that’s hard to explain is that although British by birth and having lived pretty much all my life in the UK, there’s a part of me that always feels like I’ve returned home when visiting Spain. I just can’t put my finger on it. A switch flips in my head bringing out the Mediterranean in me. And when the locals accost me in the street to ask for directions then it becomes even more obvious that they think I’m one of them, not some gringo from foreign parts. Not that I can help them in any way as I’ve no idea where anything is but it’s really rather nice to be asked.

Alas, all good things come to an end and it’s probably no bad thing. There’s a reason why you leave home in your younger years; it doesn’t change as you get older. Everyone knows parents will drive you mad sooner or later, mine are no exception.  I now need a holiday to get over this holiday!

Besides which I have a long list of stuff to return to such as continuing the wood panelling project I started before Christmas plus getting my head round this new concept called retirement.

CONSUMER CONFIDENCE

The beauty of the internet is that whilst the fogeys take a post-lunch siesta in the Spanish sunshine, I can keep a beady on what’s going on at home.

Today’s BBC website featured an article on consumer confidence containing a statement that piqued my interest:

Older Britain is sat on its savings, despondent about the country and the economy, refusing to spend its money and weighing down GDP, even as pay rises for workers remain higher on average than the rate of inflation.

Seeing as I have nothing better to do in temperatures that today are above 20 degrees then let’s pick apart the various components of this statement.

Sat on Savings – Why is older Britain hoarding cash? Because most of us grew up with the mantra of saving for that proverbial ‘rainy day’. A mindset of ensuring you have enough money put by for potential emergencies or in case one day you have to pay for extortionate care homes, private medical treatments, vets fees, car repairs etc etc. I mean who doesn’t wince every time the garage drops a vehicular atom bomb during the annual MOT advising that your car needs a million and one replacement parts?

Boomers and the like also stash cash towards retirement, those extra pennies for comforts such as hobnobs, heating or holidays. Is this a bad thing? Not for you or I but certainly not good for the UK’s consumerist economy. However, now pensioners are about to fall into tax traps that could soon change.

Despondent about country and economy – Honestly, there’s little to be cheerful about these days. The tabloids are full of wars, hatred and hard luck stories. Bad news sells. Negativity spreads. What with the nation’s economy being pinged about in an economic pinball machine and more political U-turns than the magic roundabout, is it any wonder we’re not skipping round looking for unicorns?

Refusing to spend – Being a Super Scrimper I feel well qualified to tackle this one. If it ain’t broke, why replace it? It’s not that I’m refusing to spend my money, it’s just that the little money I have is spent WISELY. 

Not on frivolities, unnecessary gadgets, gizmos or generally pissed up against the wall on nothingness. I don’t need to keep up with the Joneses. Happy to drive an old banger, use a prehistoric brick phone, watch an ancient TV, keep my consumables in a dilapidated but functioning fridge or wear clothes that have survived decades of unfashionable trends. I paint my own nails, administer my own facials, shave my bits and get local college students to give me cheap haircuts stretching my part-time salary like one of those pilates exercise bands.

My one and only luxury is a monthly subscription to a local gym because us oldies need to keep fit to save the NHS the hassle of having to continually patch us up with cable ties and gaffer tape.

Yeah, I’m proud to be the consumerist economy’s worst nightmare because in doing so, I know I’m not contributing to the mountain of waste produced by those that feel the need to replace new things every 2-3 years regardless of whether they need to or not. A situation I might add that is deliberately engineered by those who prey on gullible suckers they know will succumb to consumerist FOMO. Not me, amigo.

Weighing down GDP – I know I need to shift a few kilos off the midriff but just how am I weighing down GDP? I think that accolade should be ascribed to the Treasury/current or previous Governments whose policies have resulted in zero productivity, high unemployment, rampant inflation, industry and wealth fleeing abroad. If anyone’s weighing down GDP then look to the FAT cats who take everything out but never put anything back in.

Pay rises higher than inflation – You’re having a laugh! Hands up who in the private sector received a pay rise this year or last? And pray tell us if it was more than 3.2% which was the UK's current inflation rate as measured by the Consumer Prices Index (CPI) in November 2025. 

I am still waiting for such a pay rise or in fact any pay rise, non-existent because our company pleaded poverty ever since the Chancellor clobbered businesses with higher NI costs and increases to the national living wage. Clearly this largely applies to PUBLIC sector pay rises and was conveniently overlooked by the Beeb.

And when you consider this last point, is it any wonder then that folks are hoarding cash, despondent, refusing to spend? I mean it’s bleeding obvious. Less pay, no jobs, less scope to do anything.

If you want to read this priceless piece of journalistic licence then here it is in all its glory:

https://www.bbc.co.uk/news/articles/c150leql9pgo