Early-retirement wannabe

gadgetmind

peterg1965 wrote: »

My 'life changing'/semi retirement date (or whetever i wish to call it) is targetted at late 2020 (my 55 birthday)

Age 55 and 2018 for me.

My wife and I both have FS pensions

My wife doesn't work and neither of us have any kind of FS pension. If we want money later then we invest it rather than spending it.

I have spreadsheets up the ying yang and a compound interest calculator in my internet favourites! I also have some very high risk investments which could put the spanner in the works! I also am DIY all the way, prefering to be in the financial driving seat, that must be why I am going grey!

All of this (and I do mean all) describes me!

Linton

rosy wrote: »

......

I'd be interested to hear how those who have been there & done it have felt about swapping from being a saver to a spender once they stop work.

I retired in 2005 at 55 +1 month on the basis of a detailed financial plan built around an annual inflation adjusted annual budget and assumptions on inflation and investment return. The viability of the plan is judged on the estimated wealth left over when I am 90.

Over 7 years later, in most years I have spent much less than the budget, inflation has been similar to that predicted, and investment returns significantly higher with the result that the Plan now shows a lump sum at 90 about 6 times that predicted when I retired.

But its 7 years less of my life remaining so I need to work on spending the money. On the small scale, the average price of a bottle of wine has increased significantly and I cease to worry about the price when ordering food in a restaurant. An expensive holiday is planned. My long term intention is to move to somewhere more appropriate for real old age. With spare cash available I can consider trading-up and with a possible boost from some sort of lifetime mortgage can consider houses twice the price of my current one.

The lesson is that one must have a Plan. Once you have a way of assessing how much you can safely spend, spending ceases to be stressful and is almost a duty.

rosy

Linton wrote: »

spending ceases to be stressful and is almost a duty.

That was the other thing I was concerned about - almost being too scared to spend the money just "in case" and then those hard earned savings ending up as inheritance tax payments. I like that way of thinking about it - spending becoming a duty. I'm going to remember that!

Marine_life

Hopelessly_Hopeful wrote: »

Hi

Good luck with your journey. I have been watching this thread for a while. My plan once my debt is paid off is to invest in my pension plan. I propose to do this first by paying off my mortgage through overpayments. As alluded to recently, my strategy is about having the ability to maximise the options for choice. For me that will mean hitting the 50 year mark, then it's a question of every day I work longer will be a bonus in terms of adding choice for luxuries in life.

In the interim I will keep reading and learning.

HHx

I think that's where my thinking is as well.

My goal has always been to pay off the mortgage at the end of my current five year fixed rate. That fixed rate expires in December this year and I will be writing out a very big cheque indeed!

The two big unanswered questions are:

1. Where will we live (seriously I have no idea - we will definitely move but to where I am not sure).

2. What luxuries do we want / need in life. Will be mostly travel related.

Our current plan is to take a big trip to celebrate my 50th birthday (I want to take 5-6 weeks to go to New Zealand with maybe a stop off along the way). We will use that time to reflect on what we want to do with the rest of our lives.

Marine_life

peterg1965 wrote: »

One of the conundrums I continually juggle with is, how much do I give up and forfeit now(in order to save/invest) at the expense of a very good lifestyle today to ensure I meet my longer term goals. I dont think I have this right at the moment.

You know that's a very interesting point and one that I have a clear view on.

I will tend to economise on the things that make sense to economise on e.g. I very rarely buy lunch but will rather bring either sandwiches from home or leftovers. Also, I will buy "own brand" stuff from supermarkets / shop at Aldi to keep grocery costs down. In addition I don't really mind wearing cheap "work shirts" etc.

However, if i want a gadget I will buy it and we both run new and reasonably expensive cars. Similarly, we will take a decent holiday each year but rarely have meals out.

So I would classify my philosophy as a "selective" luxury lifestyle. I won't waste money on things I consider non essentials but will have the occasional big expense.

marathonic

As has been stated before, the key is to minimise expenses and, also, not following the herd. After all, if you do the same as everyone else, you are destined to be nothing but average.

My plan now, and I wish I realised this at 21 rather than 30, is:

• Pay the minimum required to a pension to receive my employer contributions;
• Buy as expensive a house as I can afford (that meets your potential housing needs for at least 10 years);
  Moving costs are estimated at £5,000 (solicitors, estate agents, removals, stuff for new house, etc.). By jumping a couple of rungs on the ladder, you do away with one or two batches of these charges. Also, a more expensive house with more bedrooms will allow you to take advatage of the rent-a-room scheme.
• Save an emergency fund of 6-months living expenses in a cash ISA
• Pay down the mortgage as quickly as possible
• When the mortgage is down to a level that would allow me to buy an investment property by remortgages as opposed to a BTL mortgage, purchase an investment property
  Residential mortgages are cheaper than BTL mortgages but can still be used for tax relief where the proceeds are used to buy a BTL property
• Pay down the mortgage again, but quicker - given the additional rental income
• Repeat once more, potentially with a commercial property
  This time, keep the mortgage term as long as possible. The rental incomes will more than cover your mortgage secured on your home leaving your entire salary to focus elsewhere
• Increase Pension Contributions to max allowable
• Contribute max allowable to S&S ISA

Kids and a partner will obviously slow down the above plans - unless, of course, the partner is also working (which could result in speeding it up).

Marine_life

rosy wrote: »

This is actually what concerns me most - even though you know that this is exactly why you have been squirrelling away every spare penny all this time, I wonder if all those years of ingrained effort and the resulting satisfaction of seeing the savings mount up could make it psychologically difficult when you see the balance constantly decreasing.

There is a huge safety net/comfort blanket when you are still earning and able to save the vast majority of it. Once you stop work you can't guarantee that you would be able to get back into paid employment if you had to; even if all the calculations have been done to death hundreds of times and you have allowed some leeway for the unexpected in your figures, if some major and unforeseen financial event does happen down the line there isn't anything like the same scope to make up the difference later that you had before early retirement.

I'd be interested to hear how those who have been there & done it have felt about swapping from being a saver to a spender once they stop work.

I think this is the one that concerns us all!

We will have pension income from age 62 and will have access to some other funds from age 60, so we are looking to cover the period between whenever we retire and when that money starts kicking in. The real question is how much is that - recognising that in the age between 50-60 is when we expect to still have very good health and will likely want to do things. Having said that, we are not extravagent but I want to have considerable headroom in my calculations.

We have been saving like mad to have enough funds to pay off our mortgage this year (and we now have that money sitting in the bank waiting for the due date). Once we have done that we really need to sit down and work through the numbers to see where we are. We should have done it sooner!

Gatser

rosy wrote: »

There is a huge safety net/comfort blanket when you are still earning ... Once you stop work you can't guarantee that you would be able to get back into paid employment if you had to; even if all the calculations have been done to death hundreds of times and you have allowed some leeway for the unexpected in your figures, if some major and unforeseen financial event does happen down the line there isn't anything like the same scope to make up the difference later that you had before early retirement.

This is one reason why Semi-Retirement has to be a safer option.
I think I would quickly lose touch with work culture if I totally retired as well as useful contacts to get work in the first place.
One guy that reports to me is 78 ... he says just working 2 short days each week keeps his mind (and body, he walks to work) active. AND he avoids some household chores!

The move away from the comfort blanket of paid employment is certainly a challenge... but I am thankfully reminded by friends how LITTLE you need to have a happy & fulfilled existence...
(excluding Ferrari's in the garage!)

Gatser

dlorde wrote: »

I was expecting to be spending more than previously on hobbies and activities, but this hasn't panned out, mainly because the hobbies and activities I actually do are very low-cost, and now I find I'm not really that interested in the more costly activities I had visualised myself being involved with.

I am curious... what cheap hobbies do you recommend please?

I am developing my "Retirement Tree" and exploring all possible things to do, try, experience in my "Freedom Years"
I don't want to be in that deathbed and think..."Doh...I wish I'd tried THAT!" :eek:

Gatser

Marine_life wrote: »

The two big unanswered questions are:
1. Where will we live (seriously I have no idea - we will definitely move but to where I am not sure).
2. What luxuries do we want / need in life. Will be mostly travel related.

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DITTO

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Moving house is a big question for us too.
We KNOW we want to move in the next 2-3 years but do not want
to be moving again in a hurry... we want to keep open minds.
One minute the idea of a quality apartment appeals... then we sit in our garden and feel we would miss that!
We need to think this one out over YEARS!!

We ponder over what treats we want to enjoy ...as you say... the usual "Where to go before you die" question...