Early-retirement wannabe

PipPip

Glad I found this thread, some very inspiring people on here!
My story is that I am 40 years old and earning good money, but really really starting to be fed up with being a corporate slave. I have two young kids aged 2 and 4 and I miss them a lot Monday to Friday. Not because I work away, but because my working hours mean I just don't get to see them until weekends.
So money stuff. I currently have a smallish pot of company pension scheme funds, around £200k. We have equity in a property in France of £150k and a mortgage on the property of £150k which is covered by rent and will be fully repaid in 12 years. We will have the mortgage on our UK home, which is valued at £400k, fully paid off next year. So total assets of around £750k including our home.
I don't feel at all like retiring and don't believe that I have enough capital to do so yet. However, once the mortgage is paid off on our UK home I no longer need such a well paid (£120k pa) and stressful job so I plan to do something different. I have skills which lend themselves to contracting so I plan to give that a go. I have had a look at jobs out there and there are many contracting roles which I could do paying £600 to £700 per day, some even more, which under company umbrella would be say £500 per day after tax. In 6 months of work I believe I could earn plenty to live on for the year whilst continuing to save for ultimate retirement.
So that's my plan, probably 2 more years of well paid corporate work to get the mortgage paid off next year and to save around £50k buffer the year after and then semi-retire to work as a contractor for 6 months of the year. Undecided what I will do with the rest of my time but my wife is starting a photography business and I may well help her with that.
I know we don't have enough yet to retire fully but I feel that once the UK mortgage is paid off I can accommodate the more variable income stream, lower pressure and better work-life balance that contracting will allow.

Marine_life

PipPip wrote: »

Glad I found this thread, some very inspiring people on here!
My story is that I am 40 years old and earning good money, but really really starting to be fed up with being a corporate slave. I have two young kids aged 2 and 4 and I miss them a lot Monday to Friday. Not because I work away, but because my working hours mean I just don't get to see them until weekends.
So money stuff. I currently have a smallish pot of company pension scheme funds, around £200k. We have equity in a property in France of £150k and a mortgage on the property of £150k which is covered by rent and will be fully repaid in 12 years. We will have the mortgage on our UK home, which is valued at £400k, fully paid off next year. So total assets of around £750k including our home.
I don't feel at all like retiring and don't believe that I have enough capital to do so yet. However, once the mortgage is paid off on our UK home I no longer need such a well paid (£120k pa) and stressful job so I plan to do something different. I have skills which lend themselves to contracting so I plan to give that a go. I have had a look at jobs out there and there are many contracting roles which I could do paying £600 to £700 per day, some even more, which under company umbrella would be say £500 per day after tax. In 6 months of work I believe I could earn plenty to live on for the year whilst continuing to save for ultimate retirement.
So that's my plan, probably 2 more years of well paid corporate work to get the mortgage paid off next year and to save around £50k buffer the year after and then semi-retire to work as a contractor for 6 months of the year. Undecided what I will do with the rest of my time but my wife is starting a photography business and I may well help her with that.
I know we don't have enough yet to retire fully but I feel that once the UK mortgage is paid off I can accommodate the more variable income stream, lower pressure and better work-life balance that contracting will allow.

Good for you!

It sounds like you have a good plan but I just want to check on your maths!

So you have 750 at the moment which breaks down as:

Your UK home - 400
Equity in French Home - 150
Pension pot - 200

Do you not have any cash balances on top of that or is everything being poured into paying off the mortgage?

Not wanting to be a Kiljoy but your plan seems to have some risk!

Under your contracting plan you are looking at about 60-70,000 for six months work. How recession proof is that work? and how regular?

With two young kids to look after, have you any plans regarding either their schooling or university (they will hit university age when you are in your late 50's and who knows what the costs will be like then).

Is the company paying into the pension fund as well? I assume it is a contribution based scheme (as opposed to final salary).

You may be able to balance the downside risk (or there being no work available) with upside enjoyment (of spending more time with the kids and being free from the drudgery) but personally I would want more of a safety net.

PipPip

Marine_life wrote: »

Good for you!

It sounds like you have a good plan but I just want to check on your maths!

So you have 750 at the moment which breaks down as:

Your UK home - 400
Equity in French Home - 150
Pension pot - 200

Do you not have any cash balances on top of that or is everything being poured into paying off the mortgage?

Not wanting to be a Kiljoy but your plan seems to have some risk!

Under your contracting plan you are looking at about 60-70,000 for six months work. How recession proof is that work? and how regular?

With two young kids to look after, have you any plans regarding either their schooling or university (they will hit university age when you are in your late 50's and who knows what the costs will be like then).

Is the company paying into the pension fund as well? I assume it is a contribution based scheme (as opposed to final salary).

You may be able to balance the downside risk (or there being no work available) with upside enjoyment (of spending more time with the kids and being free from the drudgery) but personally I would want more of a safety net.

Thanks for the response and the challenge, its what I'm looking for. We actually have an offset mortgage on our home of around £200k and by next year will have cash in the offset account of the same amount which of course I can draw on if we need any immediate liquidity. I will probably keep the offset cash balance at a level to exactly offset the mortgage account and run it down over time to repay the mortgage capital, although I'm a bit undecided. We will not pay for private schooling as there are good state schools where we live and I'm not a believer in the benefits vs the costs of private schools. We will however need to provide for university fees. In terms of the work, yes there is some risk to switching to contracting and I am going research very carefully before making such a move. However, I am a chartered accountant with a good range of experience and specialism in financial services. I've never known a period in my lifetime where demand has not outstripped supply for chartered accountants, especially in financial services, so even if contracting does not work out exactly as planned I will always be able to find work. The contracting roles should pay around £500 per day after tax, so in 6 months of that I could earn around £65k after tax. We are a quite frugal and with no mortgage to pay I would think we could live on £1500 per month (currently we only spend around £1000 per month over and above our mortgage cost but our kids are still young). I may decide to build up more of a buffer until I'm 45 to do this to ride out the current depression, but I may not as my kids are growing up fast and I'm starting to value time more than money.

Gatser

PipPip wrote: »

I may decide to build up more of a buffer until I'm 45 to do this to ride out the current depression, but I may not as my kids are growing up fast and I'm starting to value time more than money.

Good for you!
I now appreciate that I should have (at 40) spent more time with the little 'uns... instead of devoting all those hours to the company that would spit me out some 10 years later, just as recession hit and the "children" were at their most expensive... Oh thanks!
so....go for it! :T

Marine_life

I am reviving this thread for a quick update!

Yesterday a milestone was passed - it was my 47th birthday and therefore potentially only 3 years to go until the early retirement option really opens up.

I also reached the point where I would realistically "go" although it would be quiter messy and a little uncomfortable!

Would be good to hear from those who have contributed to this thread so far to understand how their plans have changed over the last 6 months.

Gatser

Marine_life wrote: »

Would be good to hear from those who have contributed to this thread so far to understand how their plans have changed over the last 6 months.

I tend to review my PLAN each year... based on tax years.

The economic situation has certainly meant my pensions/savings have not performed as well as expected but overall I am only expecting 3% growth so I do not intend to make big changes to the MASTER PLAN.

If things continue (depressed) however, I will probably increase my working hours in Semi-Retirement from age 55. I did plan to work 8 days per month... but I could increase this to 12 days to increase my employment income by 50%!

I prefer to PLAN on a modest basis.... and leave myself scope to improve on it if the going gets tough.

cyclonebri1

Marine_life wrote: »

I am reviving this thread for a quick update!

Yesterday a milestone was passed - it was my 47th birthday and therefore potentially only 3 years to go until the early retirement option really opens up.

I also reached the point where I would realistically "go" although it would be quiter messy and a little uncomfortable!

Would be good to hear from those who have contributed to this thread so far to understand how their plans have changed over the last 6 months.

Well I'd survived almost 4 years into retirement at 55 without touching savings, but with interest returns cut quite badly.

Then I said to myself ok, time to spend a bit on getting the house and garden updated, new granite worktops, new conservatory etc etc.

Then I got all "tight" again when both daughters anounced their wedding plans for next year, :eek::eek:,

I should have remembered the bottom line of my signature

molerat

Always expect the unexpected:eek:and then you won't be dissapointed

Very true. I am at stage 2, retired at 55 2 years ago (was thinking about it anyway but due to "things happening" with 1 month notice :eek:) and now waiting for the government to give me my pay rise. This date keeps moving but my plan is robust enough to weather this out. The amount of moaning in other posts on this board who have plans that seem set in stone and the slightest hiccup throws them completely.

cyclonebri1

molerat wrote: »

Very true. I am at stage 2, retired at 55 2 years ago (was thinking about it anyway but due to "things happening" with 1 month notice :eek:) and now waiting for the government to give me my pay rise. This date keeps moving but my plan is robust enough to weather this out. The amount of moaning in other posts on this board who have plans that seem set in stone and the slightest hiccup throws them completely.

My situation was similar, planning for retirement at 55, (I would never have done it, just 1 more year at work etc etc).

I went in for a serious but routine operation. 1% chance of things going wrong/making matters worse and hey ho. I joined the 1 percenters club, unable to work again.

You have to look on the bright side, it made my mind up for me and at least I got my quite small company pension on unreduced terms through the ill heath concession.

As said, always exp........:eek:

Marine_life

A couple of weeks ago a colleague at work dropped dead - at 46 years of age. Its things like that which really make you think. I wouldn't call it a wake up call but more a reaffirmation that at my age its time to start being careful about diet, exercise etc.

Most people in retirement see themselves there in the postion they are today (with good health, active etc) but I suspect the reality is far from that. Similarly, whilst a reasonable budget may be to look at todays expenditure and deduct of the things that will clearly fall away - I suspect the majority will not take into account the additional costs of getting old.

I agree with the previous posts - best bet is to plan for uncertainty and allow a buffer which allows for the unexpected. Whilst day to day expenses are easiest to estimate - it is the size of the buffer that is the biggest uncertainty in my calculations.