Chance of Early Retirement

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jogger
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Chance of Early Retirement

Postby jogger » Sat Nov 23, 2013 2:08 pm

What do we do? I've been offered he chance of Voluntary Severance at work due to a company re-org. Now this will mean clearing my mortgage and renting out our house to ad to the smallish pension. What we would do is rent in Spain and find an area (which we think we have already found but won't know for sure until we try living there).

The rentals in Spain are very good value compared to what we will get for this house although we also will have to take out med insurance, which we don't have here. I am 55 will be 56 when I can leave the company and my wife will be 53. The income per annum should be around the £22K total less tax. Will that be doable or should I hold on for a while, though I really want to retire while I'm able to do things like cycle (no longer jog) and walking etc. I don't drink and Mrs J don't drink much but we would like to come back and see the outlaws a couple of times a year. is it pie in the sky, you tell me.

Thanks
Last edited by jogger on Sat Nov 23, 2013 2:58 pm, edited 1 time in total.

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gerryh
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Re: Chance of Early Retirement

Postby gerryh » Sat Nov 23, 2013 2:22 pm

I was offered early retirement at 48. Didn't take me long to accept the offer.
So I have been retired for 21 years.
No regrets whatsoever.
Cheers
Gerry
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olive
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Re: Chance of Early Retirement

Postby olive » Sat Nov 23, 2013 2:28 pm

Go for it.

You will have more time on your hands to do "frugal living". More time to plan return trips and save money on flights.

As you will be renting , if it isn't for you you can always do something else.

Free at Last
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Re: Chance of Early Retirement

Postby Free at Last » Sat Nov 23, 2013 2:36 pm

Definitely go for it. We moved here when I was 50 and my OH 57 and haven't regretted it for a moment. Work is a vastly overrated pastime, IMO!

We live comfortably (well we think so) on considerably less income than you will have.

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Re: Chance of Early Retirement

Postby jogger » Sat Nov 23, 2013 2:56 pm

Thanks for the replies so far so good, I will being showing this thread to my good lady, the boss. The beauty about not leaving the company until spring 2015 is it will give us time to get organised and learn a bit of Spanish, I'm already on a course over here for it.

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IreneD
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Re: Chance of Early Retirement

Postby IreneD » Sat Nov 23, 2013 3:13 pm

Yes, take it while you are still (comparatively) young. Wish we'd been in a position to do it sooner than we did. Like FAL, we live on a much lower income than 22,000 and we are doing well.

mountainlass
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Re: Chance of Early Retirement

Postby mountainlass » Sat Nov 23, 2013 3:59 pm

We are doing exactly that/ Both 55 and taking early retirement on a sum significantly lower than the one you quote.

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Re: Chance of Early Retirement

Postby jogger » Sat Nov 23, 2013 9:32 pm

mountainlass wrote:We are doing exactly that/ Both 55 and taking early retirement on a sum significantly lower than the one you quote.


Hi mountainlass are you already retired and have you had to take out the med insurance?

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Re: Chance of Early Retirement

Postby jogger » Sun Nov 24, 2013 12:54 pm

Ok, now the can of worms has been opened we have been looking at Tax & Med Ins. So I'm reading it as we wouldn't pay tax in the UK but being registered in Spain that is the point at which the tax would be paid. Where would I find out how much tax I would pay on the figures and what sort of money would we be looking at for the med insurance, nothing major (touch wood) with either of us, just the usual aches and pains.

Thanks

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Re: Chance of Early Retirement

Postby Free at Last » Sun Nov 24, 2013 1:12 pm

jogger wrote:Ok, now the can of worms has been opened we have been looking at Tax & Med Ins. So I'm reading it as we wouldn't pay tax in the UK but being registered in Spain that is the point at which the tax would be paid. Where would I find out how much tax I would pay on the figures and what sort of money would we be looking at for the med insurance, nothing major (touch wood) with either of us, just the usual aches and pains.

Thanks


I will leave the question of how much tax would be payable to someone more knowledgeable - we haven't had to pay any to date as we haven't had any income, just using capital to fund our living expenses until our pensions become payable.

One thing to be wary of, though, if your voluntary severance/early retirement package includes a lump sum which would be tax free in the UK, is that such payments are taxable if you are resident in Spain in the tax year the payment is received, i.e. living here for 183 days or more. Therefore it makes sense to delay your move until after 1st July at least.

As for medical insurance, we are currently paying €106 per month for the two of us, aged 63 and 57. That will be going up to €110 per month from 1 January 2014, so €55 per month per person. We are insured with Prevision Medica, but they only cover Malaga province and part of Cordoba province. Another thing to note is that health insurance doesn't cover the cost of any medication you might be prescribed. Even pensioners in Spain now have to pay at least 10% of the cost of prescriptions, although there is a cap on the maximum amount payable per month.

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Re: Chance of Early Retirement

Postby jogger » Sun Nov 24, 2013 1:22 pm

Thanks FaL that is interesting and helpful about the lump sum and the timing of the move. There will be a LS but some will be used to pay off mortgage as will some of the VS. we are looking at the Malaga region close to Velez or Periana areas so that insurance will be worth looking at. If we did cop a condition or two before we left I wonder would that be excluded, it's a little minefield which we are determined to cross. Although Mrs J likes to cross all the t's and dot all the i's ......

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Re: Chance of Early Retirement

Postby Free at Last » Sun Nov 24, 2013 1:34 pm

jogger wrote:Thanks FaL that is interesting and helpful about the lump sum and the timing of the move. There will be a LS but some will be used to pay off mortgage as will some of the VS. we are looking at the Malaga region close to Velez or Periana areas so that insurance will be worth looking at. If we did cop a condition or two before we left I wonder would that be excluded, it's a little minefield which we are determined to cross. Although Mrs J likes to cross all the t's and dot all the i's ......


It doesn't matter if you have spent some of the lump sum before you arrive here - if you are here for 183 days in that Spanish tax year (1 January to 31 December) then it would still have to be declared on your Spanish tax return (which would not need to be made until May/June of the following year).

With any application for private health insurance you do need to declare any pre-existing conditions or recent treatment - neither of us had anything like that, luckily, so I'm not sure what happens if you do. As of this year there is now an arrangement where non-working early retirees can pay a monthly sum (around €60 per person, I think) to receive cover under the Spanish state health system. This is good for anyone with pre-existing conditions as they would not be excluded, but the snag is that you have to be officially resident in Spain for one year before you can apply.

Your wife is quite right to want the i's dotted and the t's crossed - I am that way myself!

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Re: Chance of Early Retirement

Postby mountainlass » Sun Nov 24, 2013 7:52 pm

jogger wrote:
mountainlass wrote:We are doing exactly that/ Both 55 and taking early retirement on a sum significantly lower than the one you quote.


Hi mountainlass are you already retired and have you had to take out the med insurance?


Hi

Sorry just seen this. I officially retire at 55 and one month on February 14th 2014 :clap: and we travel to Extremadura on February 19th.

Because we are moving before March 31st 2014 we are entitled to the UK S1 health care form, which in theory gives us 2 years health cover in Spain, because Spain has now also introduced its new policy of being able to pay into the system after a year we will take advantage of that, because it covers pre existing conditions, however, this is Spain, you never know, we have budgeted for private health care after that 2 years.

Tax

I have a lump sum on my pension, and because we are going to be tax resident in 2014, we are aware that we will pay tax on it in Spain in 2015. Our house sale here in the UK is Ok because it takes place this year so not an issue there (CGT) We are not "happy" to pay the tax on the lump sum, but we have figured that with the S1 being stopped, the tax we would pay is nothing compared to the benefits of having full health care cover. Some may disagree, but the health cover for us is the most important factor, as it is the one thing, that you cannot really control who knows what is around the corner. and anyway when in Rome

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Re: Chance of Early Retirement

Postby Mowser » Sun Nov 24, 2013 8:14 pm

My wife and I came out here when we were about 52 (nearly 10 years ago). Wife's pension kicked in immediately (re-structuring school). My pension didn't kick in till I was 55. Go for it.
Re medical insurance, you can now pay into the Spanish system (around €60 each per month). If you go privately you may get it for less. Try Prevision Medica and key in your details for a quote.
http://www.previsionmedica.com/
Dave

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Re: Chance of Early Retirement

Postby Mowser » Sun Nov 24, 2013 8:19 pm

I have just filled in the form giving our ages and we got a reply immediately. They quoted €100 a month for both of us. However ... there was this message ...
At present we have an offer valid until September 30 , 2013 for new contracts of Salud and Base policies with prices of 42€/person/month and 28€/person/month, respectively.*


Might be an idea to fill in the form.
btw - I asked for a quote for their base policy only.

Missed a bit! It also says at the bottom ...
We take this opportunity to also inform you that, should you prefer to break your payment into four three-monthly instalments, you would benefit from a discount of 1,25% on your premium. However, should you prefer to break your payment into two six-monthly instalments, you would benefit from a discount of 2,50% on your premium. Finally, should you choose to make your payment on a yearly basis, the discount applicable would be 4%.
Dave

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Re: Chance of Early Retirement

Postby jogger » Sun Nov 24, 2013 8:33 pm

Thanks ML your timing for this is brilliant, lucky you.

Dave I put in for a quote with two years added to our current age and was quoted 143e per month joint cover and they didn't even ask any medical questions but I would imagine that would be the next stage of the application. Just did it to get an idea. Thanks all for the info it is very handy.

Roy

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Re: Chance of Early Retirement

Postby Free at Last » Sun Nov 24, 2013 8:40 pm

There is a very helpful guide to Spanish income tax here, written by El Cid:-

viewtopic.php?f=42&t=27576

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Re: Chance of Early Retirement

Postby Lavanda » Thu Nov 28, 2013 7:24 am

Lump sums can be used to purchase annuities. Annuities are taxed very favourably in Spain. We have saved €2800 a year on our tax bill by using some pension pot money to buy an annuity. :D

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Re: Chance of Early Retirement

Postby scampicat » Thu Nov 28, 2013 10:03 am

We came to Spain in 2004 when we were 54 and 55, living on my husband's Teachers' Pension of less than £10k a year. We had already bought our house in 2003, and also had a house in the UK which our son lived in with a couple of lodgers.

I was covered on the S1 because I had worked and paid enough NI at the right time. My husband was covered because he was on Incapacity Benefit from the UK,; he ws treated as a Pensioner for medical purposes. When my S1 cover ran out,after about two years, I was able to be added as a dependent onto my husband's as I had no income of my own. In 2010 I became 60 and could take my State Pension from the UK (one of the last to be able to take it at that age), and was therefore covered on an S1 in my own right again.

We managed OK on the money (less than £10k) until about 2008, when the cost of living in Spain rose and the exchange rate dropped - we were scraping the barrel a bit until my State Pension arrived in 2010.

We returned to the UK in December 2011, having sold our house, purely because we felt the time was right to return.

Hope this helps :)

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Re: Chance of Early Retirement

Postby jogger » Sat Nov 30, 2013 11:59 am

Thanks for that all these posts they have been very helpful. As we are keeping the house in the UK, we will try out the area we like most near Velez-Malaga but if we want to move we can try another area, which we quite like the idea of.

Yesterday at work I booked myself on a retirement seminar and last night was out with a few ex colleagues that took early retirement three years ago. They said the seminar is really informative and if I can afford it, go for the retirement. I have until Jan 21st to let the company know but I am almost certain we will, just a bit more research needed.

Roy


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