Offered a voluntary package with a decent lump sum and the option to come back as a contractor at a day rate, two days a week, starting after a gap. Portfolio would cover about seventy percent of spending on its own. My worry is that the working part quietly undoes something in the pension or the health cover that I only find out about in year three.
The one that bites people is returning to the same employer. Plenty of schemes have rules about how long you must be genuinely separated before you can do paid work for them again, and some suspend payments if you go back in any capacity inside that window, contractor status included. I did the two days a week thing for a different company entirely and nothing broke at all. Before you sign the package, ask the scheme administrator in writing what happens if you contract back to them, and do not accept a verbal from your manager who wants you to say yes.
Contracting back to the same employer is exactly the plan on the table, so this is the question I needed. Asking the administrator directly.
Get it in an email from the scheme, not from HR. They are different departments and only one of them administers the rules.
I will be the dissenting voice. I consulted two days a week after leaving and it was psychologically the worst version of both lives, because I never got the clean break and my brain treated every week as a work week with two work days in it. Clients also do not respect the two day boundary, and inside six months I was answering messages on the other three days for free. If you do it, do fixed projects with a defined end rather than an open retainer.
From the money side it was better than I expected. Two days a week covered a bit over seventy percent of our spending, so the portfolio was essentially untouched for the first three years, which took the sequence risk that everyone worries about and removed it almost entirely. Those three years of not selling anything during a bad stretch are worth more to me now than the extra I would have earned by staying full time.
Ask the scheme about return to work rules, model the income effect on your health cover, and put the consulting on a contract with an end date. In that order.
@exdiv_eli · 3mo ago · 2 replies
The second thing that moves is your income figure, and a lot of what you buy in the years before Medicare is priced off that figure. Two days a week of consulting income is not neutral, it changes what you pay for cover and it can change how much room you have for tax efficient moves like conversions in those years. I am not going to give you a number because the rules move and my situation is not yours, but I would model three scenarios with an accountant before you commit to a day count. Deciding you will work two days and discovering later that one and a half would have been much cheaper is a bad way to learn it.
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@wanderport · 3mo ago
Modelling the day count against what it costs me in cover rather than just what it pays is the calculation I would not have run. Booking an hour with an accountant first.
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