As a school leader you’ve worked hard to get where you are in your career. And of late, it’s more than likely been a busy old time with all that’s been going on in the world.
It might even be that the last two years have got you thinking about life beyond the classroom, and what comes next. Could an early retirement even be on the cards?
You’re not alone if this is you. It seems the pandemic got a lot of school leaders thinking – research by us here at the NAHT found that 47% of people surveyed were less likely to stay in leadership for as long as they had planned.
Of course, the idea of retiring that little bit earlier is exciting stuff. But it’s also a big consideration and shouldn’t be a decision taken lightly – especially when it comes to funding your retirement lifestyle.
If you were to retire in your mid-sixties, there’s a possibility your retirement could last for around 30 years. So retiring even earlier than this could mean you need an income that lasts you for a period of 30-40 years.
There’s no doubt a long retirement is a great thing. But it also means your retirement savings would need to stretch that bit further – which is where some careful planning could come in really useful.
Put your thinking cap on
One of the first things you need to think about is your income for day-to-day living expenses, as well as any bigger ambitions you may have.
There’s no need to finalise every last detail, but you should at least have a rough idea of how you’d like to spend your days in retirement.
For the main part, it’s likely your basic living needs won’t change too much. Things like your weekly food shop, clothes, phone, and broadband provider may stay the same. Although if you’re spending more time at home, bills like your gas and electric may go up.
You’ll probably spend less on things like mortgage payments and other debt, as it’s wise to try and pay these off before retiring. You can also remove expenses that specifically relate to your career as a school leader – for example, travel costs to and from work.
Then comes the good stuff. Retirement should mean more time to do the things you love – meaning there’s a good chance you’ll spend more on hobbies, holidays or even that business venture you’ve always dreamed of starting. You’ll also need to factor in things like potential care costs for later down the line.
Is the future you want the future you’ll get?
In their report on retirement living standards in the UK (2021), The Pensions and Lifetime Savings Association paints a good picture of the amount a couple might need each year to achieve a certain lifestyle.
For a moderate retirement lifestyle, they estimate a couple would need an income of £30,600 a year. It’s expected this would provide a good level of financial security and some flexibility with your money. There would be scope for one foreign holiday a year and you’d be able to eat out a few times a month.
A comfortable lifestyle is likely to see a couple need £49,700 each year. This lifestyle would allow you to be more spontaneous with your money – not only would you have a greater level of financial security, but you’d have a good sense of freedom and some luxuries. For example, you could afford to go on two holidays per year.
Whatever it is you’re expecting from retirement, it’s important your plans are on track to help you get there.
There’s no doubt your pension scheme can be a great way to fund this period of your life, but there may be rules around when you can access it. That’s why it may be worth having other savings methods too – especially if an early retirement is part of the plan.
As long as you’re prepared to invest your money for at least five years and you’re comfortable with the risks involved, a Stocks and Shares ISA could be a great way to try and grow your money tax efficiently. Each tax year you can invest up to £20,000 into an ISA, and there’s no tax to pay on any gains you might make either. Over time, this could make a big difference to your wealth and be a great way to boost funding towards an early retirement.
Doing your homework could really pay off
The sooner you start putting plans in place for early retirement, the better. As a busy school leader it’s understandable to put things like this off – but that’s where speaking to a financial adviser could help lift some of the pressure.
An adviser will find out what it is you’d like to achieve from an early retirement. They’ll give you an idea of how much you might need each year based on the kind of lifestyle you’d like to live. Most importantly, they’ll look at whether you’re on track to get there early and – if not – the steps you could take to help you reach your goal.
A little expert advice could go a long way
NAHT Personal Financial Services – provided by Skipton Building Society – are here to help NAHT members like you. A meeting with one of our expert financial advisers could make all the difference to your retirement planning.
- We’ll find out what’s important to you and what you’d like to achieve with your money.
- If you have existing plans, we’ll check to see if these are working for your current circumstances.
- Together we’ll come up with a tailored plan that could help take you that one step closer to an early retirement.
NAHT Personal Financial Services are proud to offer a No Pressure Promise. You’ll have the time you need to think over our recommendations, with no obligation to act. There’s no upfront fee to hear our advice either – you’ll only pay a charge if you decide to go ahead with our recommendations.
Get in touch today to book your free initial consultation. This friendly chat is to find out if our financial advice might be right for you. Call 0800 121 4596 or request a call back.
Our recommendations are likely to include stock market-linked investments. These aren’t like bank and building society savings accounts as your capital is at risk and you might get back less than you originally invested. You will need to have a lump sum of £20,000 to invest or be happy to invest £500 a month. The tax treatment of your investments depends on your individual circumstances and prevailing legislation, both of which may change in the future.
NAHT Personal Financial Services is a trading name of Skipton Building Society, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, under registration number 153706, for accepting deposits, advising on and arranging mortgages and providing Restricted Financial advice. Principal Office, The Bailey Skipton. N. Yorks BD23 1DN