Early-retirement wannabe

Marine_life

Linton wrote: »

The first step is to get to the financial position that you know that you could retire whenever you want to. From my experience that in itself leads to a major reduction in stress - if you know you can stop work any time things get too much so the hassles of work become much less important.

I think that's probably right. Once the stress goes away (the need to work) it's likely that I will enjoy it a lot more (because I will be able to be a lot more choosy). The maximum I would go to in any event is likely to be 56 as we have an early retirement scheme that kicks in then

Linton wrote: »

You talk about more extensive travel - yes very nice, but is it something that will take up a significant part of every year for the next 30 years? Retirement isnt like a very long holiday, for example eating out every day in interesting restaurants is enjoyable for 2 weeks but after 2 months it might begin to pall.

I think that's also very true. I spend a lot of time anyway travelling so the act itself has no real novelty. However, doing something like a 6 month motot home trek across New Zealand does have its appeal. But I will need something more than that - and that's a big concern as I don't know what that is yet!

gadgetmind

Marine_life wrote: »

And what about the children? So far they are fully funded and we have paid all their school and university fees and bought cars etc. Now what happens if they need a house deposit – I expect we will want to help with that as well.

I think you'll find "The Millionaire Next Door" interesting and in particular which means of financial support do benefit children versus those that have to opposite effect.

It really is very easy to get things very wrong even while trying hard to do the right thing.

jamesd

Marine_life wrote: »

Which means €1.3 million to last 10 years

It seems that with a reasonable prospect of no loss of capital you might take 6% income from that and end up with €78,000 income a year. If you''re willing to spend all of the capital and using a more cautious 4% income/growth figure it comes to €154,000 a year.

Assuming €300,000 set aside for gifts to children and other unknowns the possible income level would be €118,000 a year. I've assumed neither income nor capital use from the €300,000, in reality you'll probably have that money for some of the time and it'll increase your safety margin.

Delaying to 56 would hugely improve your income position. But maybe not your ability to enjoy it if you're unfortunate with the cancer or other misfortune.

Whether you should retire at an earlier age is a harder decision.

Marine_life

gadgetmind wrote: »

I think you'll find "The Millionaire Next Door" interesting and in particular which means of financial support do benefit children versus those that have to opposite effect.

It really is very easy to get things very wrong even while trying hard to do the right thing.

I am aware that both are a bit spoilt - but child 1 is now on a sandwich year before final year at Uni and is in full time employment and pretty much self funded . Child 2 is still at school (16) but off to uni in 2 years hopefully. He will have a shock. Its a difficult one but I certainly would rather they did not borrow from a bank! They are both aware that the gravy train is nearing its final station!

Marine_life

jamesd wrote: »

It seems that with a reasonable prospect of no loss of capital you might take 6% income from that and end up with €78,000 income a year. If you''re willing to spend all of the capital and using a more cautious 4% income/growth figure it comes to €154,000 a year.

Assuming €300,000 set aside for gifts to children and other unknowns the possible income level would be €118,000 a year. I've assumed neither income nor capital use from the €300,000, in reality you'll probably have that money for some of the time and it'll increase your safety margin.

Delaying to 56 would hugely improve your income position. But maybe not your ability to enjoy it if you're unfortunate with the cancer or other misfortune.

Whether you should retire at an earlier age is a harder decision.

If I can get 6% I will be very happy - I assume you mean pre-inflation? Are you thinking a mixture of equities bonds and cash?

gadgetmind

Marine_life wrote: »

If I can get 6% I will be very happy - I assume you mean pre-inflation? Are you thinking a mixture of equities bonds and cash?

The long term real (after inflation) return from bonds is about 2.5% whereas it's closer to 7% for equities.

However, the standard deviations vary greatly over shorter terms -

1yr - Equities: 19%, Bonds: 7%
2yr - Equities: 13%, Bonds: 5%
5yr - Equities: 8%, Bonds: 4%
10yr - Equities: 5%, Bonds: 3%
15yr+ - Equities: 3%, Bonds: 3%

So, for longer periods, equities give better return, but they are a wild ride in the process so you need a mix.

"Smarter Investing" by Tim Hale has loads of tables showing the spread of returns for different portfolios over different periods.

jamesd

I'm thinking of a mixture of bonds, commercial property and equity funds that would have a fair chance on average of getting enough growth to keep up with inflation.

Fortunately the income levels tend to vary much less than the capital values. It's also easy enough to protect against income variation by paying the investment and possibly capital taken as income into a savings account and having the regular income come out of the savings account. Pre-load the savings account with say a year of the investment income and that'll probably be sufficient buffer to keep the income stable.

Debt_Free_Chick

I've never heard of insurance to protect ill-health pensions.

The ill-health pension payable to a deferred member is usually less generous than that payable to an "active" member.

I rather suspect that any complaint you have is with the company, rather than the trustees. The company closed the scheme and therefore made you a deferred member, with the (lower) benefits that usually result from that. However, I doubt any complaint against the company will succeed.

racing_blue

Marine_life wrote: »

They are both aware that the gravy train is nearing its final station!

Fantastic! I'm going to save that one

cyclonebri1

I left this topic way back, but a reply today bounced it up in front of me.

It came after I had a fantastic day out fishing, and met a couple of guys in exactly the same position as me.

I'm going to ramble a little as the conversations we had were so similar in their case to mine, I could hardly believe it, (yes I am turning into Victor Meldrew).

I had a good morning and so did they, I watched them across the other side of the river.
I was inquisitive as they were doing well in an area I had done poorly.
So, after packing up, I drove the half mile to get over the bridge and went for a chat.
They were my age, all three of us where between 59 and 63 years old, all had been retired between 3 and 4 years, all married with grandkids.

So average 60 year olds.

All 3 of us came from fairly similar working backgrounds, ex mech eng, ex local authority white collar guy, and ex long distance/heavy haulage driver.
What I'm trying to say is that none of us had amassed huge or even large pension pots.

I had to get out after injury, so did 1 of the others, the last guy took a generous redundancy package under the recent government chops.

These guys, like me were partially living off their savings, their income covered the bills, the jollies were from spend down.
I am in exactly the same position, other than in spending in other areas.

They had, over the last 3 or 4 years, fished in Spain, Vietnam, Florida and had just returned from a 4 man charter fishing trip to Alaska.
I was envious to say the least.

BUT, and this is THE but, our reasons for using out retirement were exactly the same.
We were all feeling our age, had accumulated more ills than we could cover in an hours chat, but we had all lost many friends of similar age and younger, and had realised our mortality.

I don't want to put a downer on this thread, but once again have to say you can spreadsheet to the Nth degree, but when the grim reaper pulls your name out of the hat, (yes it is that simple), money in the bank isn't even part of the equation.

Sorry for that, it was pure coincidence that this thread was revitalised at the same time I simply bumped into a couple of cool old gits:T:T:T:T:T:T:T