Early-retirement wannabe

mothernerd

Marine_life wrote: »

Chewing it over might be stretching it a bit - in my mind (which admitedly is a very disturbing place to be), certainty plays a big role and therefore while 50% of our retirement savings depends on the sale of our house I want to maintain some flexibility on the rationale that I don't want to be lumbered with the expense of having two houses on the go and potentially having to look at a knock down sale price. I want this to be an orderly retreat.

Tick, tock, tick, tock - I'm very conscious of that. Being back at work the first week after two months off was an uncomfortable and tiring experience. In my non-work self I fell asleep at night within 5 minutes, at home I can never sleep on sunday evenings.

Definitely not but I'm interested in those who've take an alternate route to early retirement or in their case stepping off the hampster wheel. However, I could easily see myself spending three months of the year in Asia.

So....in my mind this is a short delay....;-)

I'm very tired today so I may be excused for reading the end of your third paragraph as wanting to spend 3 months of the year in a large chain supermarket - !!!!!!?

I have a tiny pittance compared to you, earnings well below the tax threshold in a good year and due to health problems non-existant last year (I do have two houses though - that's my savings, pension, everything). Once the big house is sold (currently up for sale but may need a different Estate Agent, poor choice made days before I moved back into the little house and 10 days before major surgery) I am hoping to buy 2 student 'pods' (demand always outstrips supply and guaranteed 9% return) which will provide more than my modest needs so my self-employment will be more of a hobby to allow me to coast through to State Retirement Pension age in 9 years and 9 days.

Unlike you I have kept myself and three sons (all to university level) for years doing hard physical low-paid work whilst my well-paid ex (who precipitated the divorce by gambling away any money he could lay his hands on) refused to pay a penny maintenance. I've worked 70 hour weeks, 11 different jobs in a year, multiple jobs at a time (and well below my ability and educational/ professional qualifications).

Even I recognise that I have choices. Your money gives you choices - perhaps too many? There is never going to be a perfect time, the odd spanner is always going to get thrown in the works. Your years of working and life experience should have taught you to deal with this. If not please retain me on a contract basis for the princely sum of £10,000 a year and I will sort it out for you.

I quite enjoy this thread even when our problems are at opposite ends of the spectrum but you are really starting to get like Hamlet ML and even at 13 I thought he needed a slap round the head and to be told to get on with it.

kangoora

mothernerd wrote: »

<snip> I am hoping to buy 2 student 'pods' (demand always outstrips supply and guaranteed 9% return) which will provide more than my modest needs so my self-employment will be more of a hobby to allow me to coast through to State Retirement Pension age in 9 years and 9 days.
<snip>.

My initial thoughts, also secondary and tertiary are just NO to student pods. I would be extremely wary of anything that 'guarantees' a 9% return in these days of low interest rates.

atush

I seem to recall a number of threads about one student pod company where people are not getting the returns, and the value of the investment going down as well. Fresh start, Fresh Living or something?

I suggest you read these threads

Marine_life

mothernerd wrote: »

I'm very tired today so I may be excused for reading the end of your third paragraph as wanting to spend 3 months of the year in a large chain supermarket - !!!!!!?

Asia not Asda

mothernerd wrote: »

I am hoping to buy 2 student 'pods' (demand always outstrips supply and guaranteed 9% return)

Caveat emptor, you know what they say if it sounds too good to be true....

blizeH

We're getting somewhat close to hitting the 4% SWR - girlfriend is totally on board with the early retirement thing and we're doing a great job of cutting our living costs on an almost daily basis (this week we've cancelled Sky, I've decided it's warm enough to start cycling into work again, and we've just downgraded our broadband for example) but she's been researching the 4% rule herself and there are lots of results on Google saying that it is far from safe.

I know it's based on being in the US so what I'm wondering is what kind of target should we apply for in the UK? We have free healthcare and decent pensions (for now, at least) but our living costs are generally slightly higher and our stock market doesn't perform so well (though we have lots of US stocks anyway)

The trinity study also seems to be aimed at a 30 year time frame but we're hoping it'll be 60+ years for us (fingers crossed!) so would aiming for even a 3% SWR be enough?

Thanks

jamesd

For the UK you could probably use at least 4% and if you use some of the rules I've been mentioning, 5-6%.

You can cheat compared to those in the US. We have the option of deferring the state pension and getting 5.8% inflation-linked income for life. At least we do today. If you use that option it's paying something similar to equity investing but without the investment risk. I'm not keen on annuities because of their low payouts but 5.8% inflation-linked is not at all bad.

You can also factor in reduced spending later in life to boost spending earlier in life. Not sure how well the US finding that spending drops gradually until age 75 then stabilises applies here but it seems reasonable.

You also know that the early years are the highest risk ones so you can do things to reduce that risk, from changing the investment mixture to buying covered warrants or options.

Your biggest advantage is paying attention and being willing to vary spending. Compared to many, who will just ignore things after setting up an initial rate. At least that means that they may not increase with inflation each year so they won't really be drawing close to the limits...

This article has a pretty good overview of assorted risks, I think. But it still doesn't cover things like the state pension deferral effect.

The biggest risk to you, me and others reading this is probably going to be spending too little by pushing the safety margins far into the very unlikely end of the scale when compensating with lower income would deal with the issue.

atush

You've decided it is warm enough? Geez where do you live> I've decided it is too cold to go out of the house

Triumph13

atush wrote: »

You've decided it is warm enough? Geez where do you live> I've decided it is too cold to go out of the house

When I read that my reaction was 'You mean you STOPPED cycling when the winter came? What a wuss!'
Thermal underwear may not be glamorous, but at this time of year it is truly the secret of happiness.

gadgetmind

Yes, I commute by bike no matter what the weather. I'm finding it hard to keep my hands warm, but have found that wrapping up my "core" helps more than thick gloves do.

People usually talk about retiring somewhere warm, but I don't care for hot weather TBH as I find it makes me lethargic.

Triumph13

blizeH wrote: »

We're getting somewhat close to hitting the 4% SWR - girlfriend is totally on board with the early retirement thing and we're doing a great job of cutting our living costs on an almost daily basis (this week we've cancelled Sky, I've decided it's warm enough to start cycling into work again, and we've just downgraded our broadband for example) but she's been researching the 4% rule herself and there are lots of results on Google saying that it is far from safe.

I know it's based on being in the US so what I'm wondering is what kind of target should we apply for in the UK? We have free healthcare and decent pensions (for now, at least) but our living costs are generally slightly higher and our stock market doesn't perform so well (though we have lots of US stocks anyway)

The trinity study also seems to be aimed at a 30 year time frame but we're hoping it'll be 60+ years for us (fingers crossed!) so would aiming for even a 3% SWR be enough?

Thanks

One of the biggest factors in determining how safe your withdrawal rate is is how much flexibility you have in your spending. If a 4% rate will only just cover what you consider to be essential spending then no, it isn't that safe as if a slump hits you might have no option but to sell an unsustainable proportion of your investments at a low price.
On the other hand, if you can respond to a slump by significantly cutting back on your expenditure for a while then your portfolio will be able to recover and you should be able to average well over the 4%.
A cash buffer can help deal with short slumps, but if we get a Japanese style 'lost decade' then without the flexibility to cut back your spending you could be in big trouble.