nun

If you live frugally it's perfectly possible to retire early, and it's easier in the UK because of the NHS. With children it's harder as it's more difficult to budget. But the key is to live below your means and save at least 30% of your income.

englishinfl

LoL Amen to that!
If ours isn't running 24/7 then there's either a power failure, or a cold snap that means we can actually have the windows open for a change... which incidentaly, we could last night

Dan725

lol, fair enough, I think I must've gotten acclimatized, don't feel like 74 or so is too hot at all.

englishinfl

Probably been here longer than me.

BristolUK

Well, for me, that's yes and no.

In England it was just me, a full time salary, moderate mortgage and equity of £123k.

I lived pretty much month to month, taking a couple of late deal holidays a year; about £300 each time, all in.

I now live in Canada with a wife and two step-teens.

The equity paid for a home and a rental property. Total net income is less than I had just for me back in England. We're mortgage free, so to compare properly I should adjust for that. When doing that our income for FOUR is only slightly more than my previous income for ONE. Plus I have a four bedroom house and a second property.

Granted it's Canada and not the USA, but it's far easier/cheaper than the UK where I'd be working full time and still unable to support the family.

Englishmum

My husband is in a final salary pension scheme (and the company has been trying to get people off it in the past few years - it's certainly closed to new employees).

We've always known that we wouldn't want to be in the States in our old age and want to be back home in the UK where we have our daughter, siblings and old friends and getting a green card wasn't important to us; however the company was going through a buy-out and the v. senior management wanted my spouse to stay on during the transitionary period to liaise with the incoming staff. Our L1/L2 visas were maxing out (7 years) so the company arranged for our green cards.

My spouse had to get special permission from the company's pension trustees to remain in the UK final salary pension scheme, but as the company's handover happened in April this year, they wanted him to then transfer to a US based pension scheme, with the UK pension being effectively frozen. He's been with the company for nearly 23 years. However, he is now 48 years old and certainly didn't want to start a new 401k over here at his age. We've not really talked about when he might want to retire - who knows with this economy what the future is going to bring? I guess he would probably want to work full-time until the age of 65 and then wind down and do part-time work for a couple of years or so...but his dad died of a heart attack at the age of 67 and my dad died of one at age 61...it does make you think.

I have a cousin and friends in the UK who are in their late 50s and they've all got the travel bug (why not with cheap flights with Easyjet and Ryanair?) and they've all recently done long-haul flights to Oz and New Zealand, plus numerous side-trips to places like Barcelona, Prague, Venice etc. They've all told me that their kids are grown-up but they want to travel before they're too old and infirm to do so. I just don't see many Americans doing this, they all seem to take on extra part-time jobs in my local area and I still can't get over seeing elderly people working in stores here.

Getting back to the original topic my husband's final salary pension scheme was the over-riding reason why he/we decided that he should transfer back to London and was going to move back there in late Summer; however in June he was offered a transfer back to Singapore (where we lived before coming to the States).

He decided to take it - massively encouraged by me - and is now seconded there by the London office on full expat benefits (much more generous T's & C's than being an expat in the US) and best of all, gets to keep his UK final salary pension. He will be giving up his green card, income tax in Singapore is just 22% and the company's tax accountants informed him that he would have to pay the IRS approx $50k per year, despite not living or working in the US!

As for me, well I'm paying UK voluntary National Insurance stamps and until the housing market stops going into freefall in our local area (New York metropolitan area...this town is full of investment bankers and traders..) I'm just going to spend a few weeks in the US then a few weeks in Singapore and see how it goes for a while....

nun

US expatriation, giving up US citizenship or a green card, can have some nasty consequences.

http://www.irs.gov/businesses/small/...June_3,%202004

I'm sure the company tax folks are aware of this, but you should also know that you'll have to be careful if you visit the US as if you stay too long the IRS will want to tax you again.

nun

The defined contribution plan is an enormous con deal played against the working woman/man. The defined benefit plan was once the standard, but it was expensive for employers so they introduced the defined contribution plan and said it was better because it had options and was portable. The big con was that the employee had to contribute to it and most didn't get pay raises equivalent to the value of their defined benefit pension being replaced.

Defined contribution plans take a lot of effort on the employees part. They SHOULD NOT be invested solely in the stock market, but in a mix of stocks, bonds and other fixed income. If you are ok with 5% growth each year and invest very conservatively they can be made to look very much like defined benefit plans. During the payout phase an annuity could be part of the asset mix, but there is also a place for other investments with growth potential.

Steerpike

I doubt many would argue with you that a defined benefit plan is preferred; but - how many companies are still offering such a plan? Just curious -what happens to a defined benefit plan if the company goes bust? Are companies that offer them required to set aside reserves for all such plans, and do those reserves take precedence over other debtors, etc? In this day and age of mergers, acquisitions, and such, I just can't imagine defined benefit plans ever coming back into play.

Steerpike

This is my BIG problem now. I'm almost 50, and have worked extremely hard all my life (and loved it, too - no complaints). I'd actually be able to retire now (*was true until my 401k took a nose-dive recently ... ), if it weren't for the concern of medical insurance. I can probably get a cheap policy at 50, but as I progress towards 65 the premiums will skyrocket, and, if ANYTHING more significant than a common cold happens to me, the insurance companies will likely drop my coverage (I've heard of this happening for the simplest of conditions). So unless Obama is successful with implementing some form of Universal Healthcare, I'm probably going to have to work for many more years. The current medical situation is definitely the nightmare component of the American Dream.

I wish your point would get more coverage from 'retirement advisers'; I have exactly the same situation (and opinion) - I put a huge amount of my income into retirement and savings. Another significant chunk goes towards the mortgage, which will be paid off in just a few years. Finally, there's taxes - since my income is high, my taxes are high (and rightly so!). My tax burden will fall significantly as I switch to drawing money from my IRAs/etc. My living costs outside of these major items is about 40% of my current annual salary, and I can't see why I should not plan on that amount. But I'd like to see a more definitive analysis from an 'expert'.... . However, the way I play it now is - I have a job I love so as long as I can do what I love and get paid a great salary, I'll keep at it ... And as I mentioned above, the recent stock market dive has absolutely killed me, so I'm probably another 5 years out at this point.

Giantaxe

In the US, there's the PBGC - a quasi government entity that "guarantees" the pensions of plans that have closed/gone bust etc. But there are limits to their guarantees and i know a couple of people who have lost $$$ through their employers going bust and taking their pension plans down with them.

http://www.pbgc.gov/workers-retirees...page13181.html

I have no idea what the current situation in the UK is. I think post-Maxwell's looting of his company's pension plan, some insurance provisions were put in place?

Bottom line is that though the risks of defined benefit pland are less, they also do have risks of one not receiving what was expected in retirement.

nun

It's only big companies and governments that offer DB plans anymore. I have one from United Technologies, and I work in state government now and there's a DB plan, but it's funded like a DC plan ie a mandatory 11% is taken out of the pay check and the state puts in 5%.

If a company goes bust the pension plan is part of the bankruptcy etc, but in the US the Pension Benefit Guaranty Corporation ensures you get a minimum amount, currently $54k/year. When United Airlines went bust a lot of the pilots had to take reduced pensions, but the PBGC ensured they got something.

nun

I completely agree. When people go on and one about taxes my reaction is that I'm glad I earn enough to worry about them.

Everyone's 401k is way down even the people who were conservative and didn't put it all in equity funds. When I see my IRA/401k etc balances I have to drink heavily , but I'm slightly heartened by my boring DB plan and a fixed annuity from the beginning of my career. Also I should get both UK and US state pensions in my 60s.

Health care is a real problem in the US, but I'm lucky as I have two options when I retire. At 55 I can retire and stay in the state employees plan at the same cost, currently $62/month, or I can go back to the UK and use the NHS.

scrubbedexpat099

We are probably coming to the end of the early retirement era where a significant number of people could consider it.

In the UK most of the people I kew in this sutuation were in final salary schemes, had maxed out the number of years, and were essentially bribed to leave.

The company I worked for, and the vast vast majority of others have closed their final salary schemes. Also the side benefits available to new employeees have been degraded.

I just do not see the possibility for most to consider this option.

In the US, similar situation, as has been said the add on complication is Medical. I do not actually know anybody who is not ex military whose employer provides medical cover to retirees. The ones you think about such as the Big 3 Car Employers are an example of its unaffordability.

The ones I know who are sort of in this position have passive investments, or a simple life!

I have a feeling that there will be a move back to the 'familia', younger generation can not afford housing/ child care, older generation do not have the income to pay for their needs, solution combine and save expenses.

Saw an article on the big expected shortage of Doctors etc with the aging poulation, not mentioned was how the system would pay for them. Something has to give....actually it has.

scrubbedexpat099

This is where it gets interesting, depends which bit of the State, but for example many of our local gov services are funded by Property/Permit/Sales tax.

I have had quite a few people talk about how they will at least benefit from reduced property taxes. Sales taxes are going down and permit fees, well enough said.

So you end up with liabilities to ex employees going up, income going down and a bigger and bigger percentage of what is raised not going to fund current needs.

More tears.