The summer holidays are approaching. You are delighted that it will soon be time for a long summer recuperating. However, for a long time now these six weeks feels more and more like six minutes. If returning to work in September fills you with dread in July, then you might want to consider retiring early. What happens to the Teachers’ Pension at 55?
The Teachers’ Pension at 55
If you are tired and need to change direction, retiring early is possible from the age of 55.
Therefore, if you are going to be 55 in the next academic year, it is a good idea to start thinking about retirement now, the July before you start retirement. Although you won’t begin retirement until next July, you will need to start negotiations with your employers early. They will need to agree with your early retirement and countersign your application. The Teacher Pensions’ Scheme will also encourage you to begin applications in February or March so that your pension is in place in good time.
Do your research
Before applying to retire early, it is essential to do some research. There will be significant consequences to the value of your pension for leaving the profession early. You need to consider if you can afford to retire without claiming your pension until the Normal Pension Age (NPA) or whether you are going to request your pension early too.
If you do claim your pension early, then it will be subject to Actuarily Adjusted Benefits (AAB). This reflects the additional money you will be paid from the time of retirement to your NPA. This could be a significant reduction and depends if you are in the final salary scheme, the career average scheme, or a mixture of the two. If you are in both schemes, you must take your benefits at the same time.
To assist with this research, the Teachers’ Pension scheme provide calculators that offer forecasts of your potential payments. The calculators are illustrative, and you may want to seek further financial advice before proceeding.
It is good to know that, when retiring early, the teachers’ pension at 55 offers regular income that could sustain you. This might be possible because your living expenses are likely to go down in your 50s. You may be lucky enough to have paid off your mortgage and the money spent dressing and journeying to work will be gone.
Yet, your role as a teacher is more than just a job. It will have given you a sense of identity and purpose for a significant amount of time. Therefore, if retiring early is possible, think carefully about how you are going to spend your time. Many people underestimate the boredom, the social isolation and other consequences of retiring early. Therefore, when you make your plans, don’t just consider if you are financially secure at 55. It would help if you also thought about how young you still are and how much you will always want to feel useful.
The content in this article was correct on 28th July 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.