Early-retirement wannabe

Marine_life

saver861 wrote: »

Is FI not predominantly a state of mind?

There are some maths behind most of the calculations e.g. the oft quoted 25x annual expenses which is where the 4% SWF also comes into play. However, you could play with those figures by either upping the assumed return or reducing the expenses...but at the end of the day you will end up with a number.

The 'state of mind' is probably your attitude to risk.....but you could also go completely off-grid start whittling your own spoons and adopt a purely barter existence - which would be very much a state of mind

ex-pat_scot

edinburgher wrote: »

I think a reasonably broad definition of FI would be having enough money to meet all anticipated future expenses without having to continue working.

So no, I don't think it's a state of mind, the money is either there, or it isn't

It's not quite so binary to me.
There's quite a range of outcomes that "FI" encompasses.
For example:


1. I can define "my FI" to be an absolute income requirement (£2,000 per month, as an example) or I can define it in threshold terms (£1,800 per month minimum; £2,000 per month OK; £2,500 per month comfortable)
2. I can have "stepped FI" - with two levels of overall pot. One would be to achieve the above (1) and the other would be to do the same but through downsizing (to make up a shortfall)
3. I have "my FI" as a range of certainties. Eg my Base Case FI is the £2,000 pm but with a pot that will give that with a 50% probability of success. By Best Case FI would be the same £2,000 pm but with a 95% /99% chance of success.


For me, this translates into FI in a broad envelope: something like a nice £750,000 to £1,000,000 window at the entry point.
I'm not too hung up about what that number needs to be, or how specific it is, as it's quite a way off and there's a minimum entry criteria of getting to 55.

saver861

Marine_life wrote: »

There are some maths behind most of the calculations e.g. the oft quoted 25x annual expenses which is where the 4% SWF also comes into play. However, you could play with those figures by either upping the assumed return or reducing the expenses...but at the end of the day you will end up with a number.

Sure that is true. You need a 'number' to exist at whatever level you choose. So there will be a minimum number for all levels of existence.

Marine_life wrote: »

The 'state of mind' is probably your attitude to risk.....

To a degree but I would say more so to emotional contentment. For some, that will never be a product of a financial number.

On the other hand, some would never reach it, no matter how big their existing number is.

I recall a guy whose wife got run over by a wagon. She was badly injured and spent some time in hospital. He visited daily but bemoaned the cost of petrol for travelling! She did die sometime later. Within a few years he died also, and left a considerable sum.

Marine_life wrote: »

but you could also go completely off-grid start whittling your own spoons and adopt a purely barter existence - which would be very much a state of mind

hmmm .... now, as it happens, I have a coffee table that I can exchange .....

edinburgher

saver861 wrote: »

Yes but that's the point. Joe and Bill. Joe has a £400k mortgage Bill has £40k mortgage i.e. everything is relative.

Joe could probably have FI today and live like Bill but chooses not to, to maintain the standard that he has become accustomed too.

Bill might have FI today but may choose to carry on working to get closer to Joes's status.

Thus, theoretically, both may have FI but are not prepared to compromise status.

I'm not proffering a view that either is right or wrong - just that maybe FI might be present but not on the conditions that some are prepared to accept - thus material possessiveness tends to dictate, and the ensuing mindset determines FI.

I got your point, I was being a bit glib, but ultimately it's all about the numbers. Probably the reason engineers seem to dominate these sorts of discussions

gadgetmind

edinburgher wrote: »

Probably the reason engineers seem to dominate these sorts of discussions

My company pays for 1-2hr sessions with an IFA for senior staff just to make sure they're on the right track. I showed the guy my spreadsheets and models, and he said in summary, 1) you don't need an IFA, 2) why are you still working? I told him that while implementation might be complete, I was now at an optimisation phase.

saver861

gadgetmind wrote: »

My company pays for 1-2hr sessions with an IFA for senior staff

Why not all staff?

Perhaps less senior staff would be more in need of guidance than the senior members.

edinburgher

saver861 wrote: »

Why not all staff?

Perhaps less senior staff would be more in need of guidance than the senior members.

Because the world is an unfair place!

ex-pat_scot

gadgetmind wrote: »

My company pays for 1-2hr sessions with an IFA for senior staff just to make sure they're on the right track. I showed the guy my spreadsheets and models, and he said in summary, 1) you don't need an IFA, 2) why are you still working? I told him that while implementation might be complete, I was now at an optimisation phase.

I've had similar discussion with IFA that was provided by previous employer. He was similarly candid that he could add nothing to my approach, except for beefing up life / CI protection.


As to "why are you still working?" - that possibly depends on whether you can access your pot (eg <55 and with the pot in pension rather than ISA).


I like the "optimisation phase" but be careful that you don't over-polish the plan.
Whilst I am some way off reaching the "optimisation phase", I expect that the decision to stop will not be simple. (MarineLife is an example of some of the protracted thoughts and issues here). I'm expecting some soul-searching on "One More Year Syndrome", and possibly some thoughts on charity. I am intrigued by the notion of "giving your last year to charity".

edinburgher

That's a nice idea if you can afford to do it. Charities would probably benefit a lot more from money than your time (mentioned as volunteer work is often mentioned in FI blogs/forums). I find myself thinking 'just stay for a month or two and write them a big cheque!'

jamesd

gadgetmind wrote: »

1) you don't need an IFA, 2) why are you still working?

LOL, nice complement there in 1. I suspect that I might get a similar response, as would many posters in this thread.