Early-retirement wannabe

ermine

Marine_life wrote: »

What I really don't like is the cult like approach that seems to envelop around some early retirement proponents including the people over at mrmoneymustache.com/. I actually like the man himself but his followers are like zealots who seek to analyse each blog post as if it were something moses had brought down from the mount.

I think it's inherent in the nature of the beast, particularly for ERE as opposed to the sort that I did and you will. It involves a large leap of faith and trying to make a decision in the face of serious uncertainty, running against the general tide. The prophet may be cool, but the adherents, having to take some of it on faith, can be tiresome, because they need others to believe in the same creed - safety in numbers reduces the apparent risk.

It's a risk-management exercise - someone retiring at 50 now might have another 40 years on earth at a long shot. Who knows what the next decade may hold, never mind four? Look back 40 years to the early 1970s. Not so long ago, the states had just put a man on the moon, we'd nearly all been killed in '62 in the missile crisis, the first oil crisis was in full swing. And yet we made it - these are the historical facts that underpin the financial history that your retirement planning and mine are based on. Look forward 40 years - we may be well into peak oil, the first hits of climate change may or may not be with us. People will be busy in companies inventing all sorts of amazing stuff we haven't even thought about yet. There will be social changes too - the current shift of power from labour to capital will take us further than the Gilded Age in 20 years.

That's a lot of uncertainty to wrangle. It's much more comforting to outsource the thinking part to someone else and pretend the risk isn't there. Humans are suckers for a great story, and some of us love nothing better than to gather round and listen to the story that you don't have to put up with the Man any more.

I had the advantage that I had little choice, so making the decision was easier for me, but I do like to think that at least I did engage enough brain to understand the assumptions and roughly qualify the risks. I realised I was too young to save for retirement, I'd have to invest for it. Not everybody is happy with the proposition of investment, which is a real shame because to make any DC pension work at all you have to be okay with investment to work very late or eat a high drop in retirement income.

But without the understanding, people have to take the principles on faith. Faith is a fragile thing, psychologically, because it isn't underpinned by Reason. To me it's better to know what I'm doing, and accept the finite and to some extent unknowable risk of it not panning out right, but each to their own.

There's absolutely nothing wrong with a bit of consumerism. As long as you can afford to pay cash I bought a camper van recently - arrant consumerism, and to some extent a static drain too. I paid cash. If it disappears tomorrow, I won't be chuffed, but I won't have to suck up to The Man to pay it off. If we all did our consumerism on a cash basis - or even on the old hire-purchase basis where the claim is on the goods not your finances, Britain would be a happier place IMO.

You will be absolutely fine. The cubicle slave in his last year of work is a fearful creature, because he's about to buy a one-way ticket. But each of us is already on a one-way journey, and it's called Life. And you are soon to embark on a great adventure.

Put it like this - because I paid down my mortgage* in the cubicle slave mode I have an income suckout now - I am quite a bit poorer now than I will be when I draw my pension savings particularly as I am still maxing my ISAs. Do I wish that I'd stayed at work longer so I had more to spend now? Do I heck. There are birds singing, there's stuff to do, problems to solve, books to read, people to see. Sure, more money would be nice, but at the cost of not hearing those birds and filling in stupid forms and ticking boxes? To hell with that. Owning your own time is the ultimate consumer good!

* early retirees, particularly those wanting to retire before 55 really shouldn't do that, particularly at low-interest-rate times like now, for technical tax reasons usually

115K

We are wondering what to do now the property prices have gone crazy in London. We were thinking of moving to a slightly bigger house a few years ago and we realise now that we would have been in a far better position if we had moved. I'm thinking whether we should think about moving next year and trying to get a longer mortgage term or wait to move until my husband retires at 55 which is in 11 years time.

I'm dreading to think in 11 years time we will look back and think we should have moved while we had the chance to get a better house for less money. I just hate the idea of adding another £80k or so to our mortgage debt.

Marine_life wrote: »

What I really don't like is the cult like approach that seems to envelop around some early retirement proponents including the people over at mrmoneymustache.com/. I actually like the man himself but his followers are like zealots who seek to analyse each blog post as if it were something moses had brought down from the mount.

I have to agree with this, some of the people on the MMM forum are so blinkered in their views. Some of the members can get quite aggressive if you dare to disagree with them too!

Linton

115K wrote: »

We are wondering what to do now the property prices have gone crazy in London. We were thinking of moving to a slightly bigger house a few years ago and we realise now that we would have been in a far better position if we had moved. I'm thinking whether we should think about moving next year and trying to get a longer mortgage term or wait to move until my husband retires at 55 which is in 11 years time.

I'm dreading to think in 11 years time we will look back and think we should have moved while we had the chance to get a better house for less money. I just hate the idea of adding another £80k or so to our mortgage debt.

I think that is the wrong way to look at things. The point is that you cant predict the future. In an alternative universe you could have stretched yourselves to the limit to buy your big house and then be faced with the house price crash so many people were predicting.

The answer is to diversify your assets so that no failure in any one would have catastrophic consequences. So if a large part of your total wealth is already invested in your home you could look to putting excess money into other assets - shares/funds are an obvious option.

115K

Linton wrote: »

I think that is the wrong way to look at things. The point is that you cant predict the future. In an alternative universe you could have stretched yourselves to the limit to buy your big house and then be faced with the house price crash so many people were predicting.

The answer is to diversify your assets so that no failure in any one would have catastrophic consequences. So if a large part of your total wealth is already invested in your home you could look to putting excess money into other assets - shares/funds are an obvious option.

Sorry, I meant to say we do want to move house again anyway so just wondering whether it would be better in the next couple of years or just around retirement age. I keep reading that there might be a house price crash but people have been saying this for years! One other option could be to move to a very slightly bigger house (bigger garden for the dogs really) and just add a little to the mortgage debt.

We don't need to move now honestly, we could wait.

If we don't move now then I am trying to build up around £15k in a cash ISA and then move to putting money in S&S ISA's instead. The more cautious side of me thinks that would be better than moving house now. We worked out that after my husband is 60 we should be okay for money as he has a final salary scheme so it's just really thinking about the years between now and then.

kidmugsy

People who predict a house price crash are going to be right eventually. The question is when. No-one knows. I wouldn't be surprised if it were soon, but the universe is indifferent to my capacity for surprise.

Given the cost of house purchase and house-moving, my own rule is "Don't do it unless the case is overwhelmingly strong". My wife's is simpler: "Don't".

Marine_life

115K wrote: »

We are wondering what to do now the property prices have gone crazy in London. We were thinking of moving to a slightly bigger house a few years ago and we realise now that we would have been in a far better position if we had moved. I'm thinking whether we should think about moving next year and trying to get a longer mortgage term or wait to move until my husband retires at 55 which is in 11 years time.

I'm dreading to think in 11 years time we will look back and think we should have moved while we had the chance to get a better house for less money. I just hate the idea of adding another £80k or so to our mortgage debt.

I remember a long time ago when I lived in London someone said to me you should take on the maximum mortgage you can afford which I did ...and prices promptly tanked.

I think you can spend a lot of time trying to second guess what will happen and sometimes you will get it right and sometimes you will get it wrong.

For most people getting an investment decision right or wrong probably won't be one of the things you will look back on in your life when the great day comes - its be the moments you had enjoying things with people who are close to you.

That doesn't mean to say thinking about investing shouldn't take up part of your time, it means that if you are happy where you are then why move?

jamesd

One good time to move is when you can use pension money to fund it. You'll have received tax relief on the money going in. Possibly at a higher rate than when taking it out. The tax free lump sum is great for this if you will move anyway and pay more into the pension to allow for this spending.

If you don't pay in more to allow for the extra spending it's just the usual spending of the lump sum that would normally receive negative comments. Pre-planning is the key to the difference.

Another significant consideration is where to move to. Moving to a lower cost part of the country can free up a lot of capital that can be used to produce ongoing income that can fund regular trips to places.

115K

Marine_life wrote: »

I remember a long time ago when I lived in London someone said to me you should take on the maximum mortgage you can afford which I did ...and prices promptly tanked.

I think you can spend a lot of time trying to second guess what will happen and sometimes you will get it right and sometimes you will get it wrong.

Yes, that is exactly what worries me about moving now. Also the interest rates are so low that they must go up soon and we wouldn't want to be lumbered with a huge mortgage debt if/when that happens.

jamesd wrote: »

One good time to move is when you can use pension money to fund it. You'll have received tax relief on the money going in. Possibly at a higher rate than when taking it out. The tax free lump sum is great for this if you will move anyway and pay more into the pension to allow for this spending.

If you don't pay in more to allow for the extra spending it's just the usual spending of the lump sum that would normally receive negative comments. Pre-planning is the key to the difference.

Another significant consideration is where to move to. Moving to a lower cost part of the country can free up a lot of capital that can be used to produce ongoing income that can fund regular trips to places.

That is true and we could move away from London when he retires which would hopefully mean a larger and cheaper house.

I think it's just the hysteria about the London market is affecting me at the moment! It seems like nearly every person on my street is putting their house up for sale.

mark55man

Ah sweet - its just like the 90s


So that's all right then :-)

Teeonethousand

Iwill be a free man come September:-). Just turned 59 and decided the corporate slog was not worth it so i quit. Can afford to do nothing but i am definately not going to do that so will pick up something here and there. Whatver i do i have decided that it will be for passion and whatever the money is, if any, is irrelevant.

I have found that their comes a tipping point where you have everything paid off, all the stuff you need or want and you wake up to the fact that the only valuable thing is time.....and peace of mind

Mrs T fully supportive :-)