Early-retirement wannabe

peterg1965

Marine life, we are similar ages, I am 48 and my retirement target is 55, so just under 7 years. At that point I want to have moved into a new home, our idilic property to retire to, village life and all that. My career will be finished and I harbour no desire for another at 55, but do want to work part time, no stress job, just to keep me active and to provide me pocket money for hobbies.

I have a mountain to climb though, a financial one, but I am driven to achieve it. £250k+ IO mortgage to pay off and I want to be earning £50k+ in pension income. Am I on track? It's debatable but I am saving like crazy! Like you I am going to savour the day I write a cheque to pay off the mortgage, hopefully I (we) will also be free of all other debts so life could be very comfortable.

I agree that there is no set formula for early retirement and I also don't use retirement and pension calculators apart from compound interest ones. I too am a fan of spreadsheets and have many variations and iterations saved on my laptop! Fortunately I do not have to factor in the state pension to my calculations, good job as I have to wait until 67 for mine - that's if I still get it in 2032!

All the best with your decision making, you are even luckier than me to be able to retire fully at 50/51.

silverwhistle

Marine_life wrote: »

In Germany (where we live) the pension is viewed as a reward for a lifetime of hard work!

Can we take it that the ski property was in Germany or Austria? :-)
I've just returned from 7 years in the Italian Alps (renting...) and buying there is a long drawn out affair, although I can think of a few qualifying places for your description.. Switzerland is _never_ cheap, although I suppose it could be France.. Either way, properties will still become available in years to come, and although you'll miss a few powder days they'll be more of them too (although don't you just hate people who say "you should have been here last week"!:D )

silverwhistle

FatherAbraham wrote: »

Well, you've maxed out the UK basic state pension, once you got to 30 years. If you want to up that, you should consider moving to a job in another EU (actually, another EEA country might do) country, to start accumulating state pension bennies in that country.

Warmest regards,
FA

Bear in mind that the NI in other countries can be _very_ high. I'm already in receipt of a private (early) UK pension, but even without Italian pension rights accrueing I was paying over 20% on my local earnings (in addition to tax). I trust the Italian system less than ours and have already accrued full UK rights, so didn't bother paying the extra 7% (from memory) for theirs.

Marine_life

Yes, we were / are looking at properties in Germany and Austria. At the end of the day staying in Germany may be the preferred option for a number of reasons including health insurance (German health insurance is expensive but there is an element of protection built in against inflation). We still have our appartment in Austria and we currently use that as a base for skiing so there is no rush to buy, we will continue to look for the right property.

Looking back at our savings over the last five years, we have been saving like crazy. Paying off the mortgage was a big goal for us, not just because we like the idea of actually owning our home but because we arranged a mortage before interest rates started to fall so with a rate of over 4.5% we were paying huge amounts in interest. I hate paying that money to the bank! Now that we have achieved that the next challenge is to find a home for the spare cash. I have a direct debit into 7 investment funds each month and I'm not sure i want any more exposure to the stock market at this point but with savings rates so low its difficult to know what to do for the best (any ideas and thoughts welcome ;-)

kidmugsy

Gold, lad. Dubloons and Jimmy O'Goblins. Aar.

itm2

Marine_life wrote: »

I have a direct debit into 7 investment funds each month and I'm not sure i want any more exposure to the stock market at this point but with savings rates so low its difficult to know what to do for the best (any ideas and thoughts welcome ;-)

I also have concerns about stock market exposure - US stocks in particular seem to be massively overpriced and I'm unsure what ripple effect a major correction there might have on global markets. With QE tapering also hanging over the markets it generally feels pretty unstable to me.

I'm 5 months into early retirement (aged 53), so am depending on my investment returns for drawdown income (I have a SIPP, but don't plan to purchase an annuity until I'm 60). After initially going for a portfolio with a blend of equities/bonds/gilts/gold I decided that I wanted to try to limit volatility, so replaced the equity and bond elements with selected hedge funds and absolute return funds - e.g. funds where the manager has the flexibility to go long or short, or to shelter in cash when necessary.

This theoretically gives the better fund managers the opportunity to maintain returns even when the markets get choppy. Obviously the main issue with this approach is finding the right funds/managers, but I've had quite good advice in this area and have back-tested my chosen portfolio to 2005 to see how it would have survived the turbulence of the last 8 years. Now it's fingers crossed. Basically I'd be happy with returns that plod along below the market indices provided they meet my own required targets.

Savings accounts aren't an option for me, as they guarantee a loss in value over time while savings rates are so much lower than inflation.

Marine_life

I've got two topics on my mind today.

The first is the value of defined benefit pension schemes and the second is ......... what the hell will I do in retirement.

So first topic.

I am absolutely stunned by the amount of money you need to get a decent index linked pension. Of course I probably knew that but I was amazed. I was playing around with some annuity calculators and it seems that in order to get a £40,000 a year indexed annuity, someone would need about £1.5 million. Seriously? It's just absurd. The pension industry needs to come up with something which looks and feels like it has more value. On the other side of the coin I am happy about my frozen defined benefit scheme. The fund is valued at about £50,000 but the benefit is over £10,000 (or 20% return!). No wonder so many such schemes are in trouble but there has to be a middle way.

Second topic.

I think the thing that is giving me more thought than anything is what will we do in retirement? I have been reading various blogs and they talk about doing the hobbies you do now but more of them. Well that does not work for me as my main hobby is running and I definitely will find it difficult to run more without getting injured - a problem which is likely to increases as I get older.

I think the main problem is that we (or at least I) spend most of our lives working towards something whether it be something work related (the next job or the next promotion), paying off the mortgage or even getting the children up and running. By the time you get to retirement most of those things have either ceased to be relevant or have been achieved.

So how to deal with that loss of a goal? or are there new goals in retirement that take on a new importance? Or is that just a mental adjustment that people need to make? I see a lot of people talking about voluntary or community work ...but, don't take this the wrong way - it's just not for me.

With 312 days to go until my potential retirement I am pretty happy with the financials we have in place and it is the latter stuff that we need to figure out.

Here is some stuff I could see myself doing:

- 40 to 50 days skiing.
- month off in the ski season (to somewhere warm!)
- Explore one country a year (1-2 months travelling)
- Play golf (!) used to play when I was younger.
- Play poker (1-2 days a week, online, make some pocket money)
- Running (every other day)
- Cycling (every other day)
- Day trading shares (1 day a week)

As always, thoughts appreciated - I will need to fill 365 days a year!

gallygirl

Marine Life you obviously enjoy being active and outdoors - how about hiking or Nordic walking? You'll be in a great area for it. Personally I'm looking forward to joining a walking group where I want to retire. Two walks a week 6-7 months of the year, anything from 4 miles to 13 miles and quite arduous. Then OH and I will go for long walks as well - 12 mile round trip with a lovely meal and bottle of wine in the middle and maybe a cheeky beer on the way home .

Do you read? We were talking about this last night, OH 'can't read' if you know what I mean, whereas I could read all day .

Marine_life

gallygirl wrote: »

Do you read? We were talking about this last night, OH 'can't read' if you know what I mean, whereas I could read all day .

I know what you mean when you say he can't read. I am not a big fan of reading and have probably read less than 10 books in the last 10 years. I suppose because my job involves a lot of reading that I ot get a lot of pleasure from it.

But maybe with more time on my hands......

ozzage

Learn a language? A musical instrument? Spend an hour every morning with a newspaper and a good coffee. Learn to bake! Spend time cooking amazing dishes? You don't want to "volunteer" but it there nothing you're interested in, where volunteering is actually more about you (e.g. I like history so I'd like to "volunteer" in a museum just for my own benefit )


I have a list, which I add to when I think of things that I'd like to do one day. It's getting slowly longer and I'm no longer worried about having enough to do when I retire.