Early-retirement wannabe

silverwhistle

I think I dipped in to this thread about 235 pages ago, but the thought occurs that there are advantages in having always lived alone and paid for everything myself



That said, I'm going skiing with my GF again this winter and in doing my budget realise how much easier it is with someone else - half the cost for the ferry/motorway/fuel/overnight enroute stay etc. (We're getting free accommodation!) . I've offered to help with snow tyres for her van, which has cruise control and a lot more space in the back for skis and er.. wine so I'd better go and add that in.



Whatever arrangement financially people arrive at together it really has to be mutually acceptable, and in my experience of others' arrangements this isn't always the case, as perhaps this thread shows.

atush

Do load up on wine.

I didnt bring home enough this summer, taking into account how much more it will cost with Duty after March.

I must have convinced myself we werent going to have a hard brexit on my trip home from my little french gite. I'll just have to spend mroe time there and drink it in situ lol.

hugheskevi

Whilst I'd normally respond to every comment in the normal course of events, I thought it best to duck out of the thread for a while as the way it was going risked it getting locked by MSE.

The anecdote that started all this, back in post 4671, dates back to about 2013. As it was an anecdote, the language used was far more casual than most of my posts, which are normally factual and precise. Hence the use of words such as 'squirrel' and use of emojis. I think several have read far too much into that.

As it is quite hard to judge financial decision making on the strength of a few lines of anecdote, I'll elaborate in some detail on our financial handling (sorry it is rather a wall of text). The first level of decision making was the big-ticket items which we agreed before buying first property:

(1) Children - easy to agree neither of us want children
(2) House - minor differences in preference, nothing major, easy to agree on the property we bought in 2010 and still live in today. We also agreed that we didn't want anything amazing and were happy with a moderately sized semi-detached house within comfortable cycling distance of central London.
(3) Car(s) - easy agreement neither of us wanted expensive cars, and that one small basic car is sufficient for both of us.
(4) Travel - bit of disagreeement here. I had travelled far more than my wife. She would have liked more and different types of travel. More difficult to reach agreement to focus on cold weather holidays, awaiting good travel opportunities to places she wanted to go at a later date. In particular, she wanted to go to Africa, and we have visited there twice in recent times - later than she would have preferred, but both trips were unique (one being a one-off trip that will not be repeated, the other only happens a couple of times a year).

Then there is the general lifeplan to agree on:

(1) We both agreed we wanted to retire early, and both agree that we want to err on side of caution financially and only retire when comfortable
(2) Type of retirement property and location - we have spent a lot of time looking at houses online to agree what we both value, and how much a perfect property would cost, our ideal location and how much an adequate one would cost. We have done enough research and discussion that it will be easy to decide on an appropriate property in the future.
(3) Travel - I want to travel before buying retirement property. My wife is very happy with this plan.
(4) Retirement interests - these are largely separate for each of us to decide, but nonetheless very important. We both want animals though, and detailed consideration of that is necessary, eg, it will require one of us to be at home all the time so both of us having holidays at the same time will not be possible. We are both happy with this, although it does mean the years of travel pre-retirement are an especially important part of the plan.

I doubt many couples have agreed in such detail any or all of the above by just after the age of 30 (we are now 40). This leads to the financial strategy to deliver this:

(1) My wife had little interest in things like the balance between mortage, ISAs and pensions, so I developed, manage and change that as necessary. Initially the plan was based around a pension mortgage, but has changed several times since.
(2) Initially I consulted my wife about investment decisions relating to her accounts, but it rapidly became apparant she had little thirst or knowledge for such conversations and decisions, so we agreed I would manage all our financial affairs jointly (important, as the sort of asset allocation I would choose managing things jointly is very different to what I would choose managing things separately).
(3) Due to the above, I do all the day-to-day financial management, and also track and manage our strategy. But the really big decisions must to be jointly decided or they just won't work out if we have different views. As an example, last year we had a lot of discussion about retiring a lot earlier if we used a mortgage to effectively access our pensions early (ie borrow money pre age 55 and repay from pension). But combining this with travel would be very risky, as it would require renting out our property whilst travelling and then porting a mortgage for which there would be no guarantees. Hence we needed to decide whether this was a risk we were willing to take, or would prefer to work a bit longer to avoid the hassle of renting out property from afar and additional risk. There was also a question about whether we decided not to travel, as that would enable the mortgage option without any hassle or risk. We both agreed travel, although expensive and inconvenient from an efficiency perspective, should remain part of the plan, and that we did not want the hassle of renting out our house.

With all the big things above agreed upon and sorted, there is then the day-to-day management of financial affairs to handle:

(1) In addition the c7K net monthly income, we also both use our full pension Annual Allowance (£40K each) from pre-tax income and employer pension contributions. Within reason, money is not an issue. It is also important to view our financial decision making in context - we spend around £30K p/a excl debt repayment and saving, which is more than many people, even those not trying to be frugal. It is not the case that we are living a ridiculously low expenditure lifetstyle.
(2) Lifestyle today determines future required lifestyle, as you will not want to suffer a deteroriation in living standards. It is therefore important not to get into wasteful habits today, as that just leads to higher future income needs to fund those wasteful habits, and hence delays early retirement which is our primary goal - plus there are the environmental consequences of waste. Several years ago I adopted a vegan diet, and my wife followed suit a couple of years later. We are both careful that our spending does not support destructive practices, with a lot of our entertainment and holiday budgets spent visiting and supporting conservation projects.
(3) There was a big potential risk of resentment. I am sure I will get a lot of criticism for this and subsequent paras, but I think they are valid and important points to consider and mitigate. I brought a lot more money into the relationship, and for the last decade have earned a decent (though not enormous) amount more than my wife (both working full-time). My wife would naturally spend a lot more than me, the consequence of which would be to delay early retirement and hence delay our long period of travel, which is one of my key priorities. I decided there would be a key risk of discontent further down the line if our spending diverged wildly, with me having far greater financial resources but my wife spending a lot more than me. Obviously that was my concern, I have no idea what my wife thought.
(4) We discuss all major purchases, although I will usually have the final say (again, I am sure this will be criticised, but it is the way we do things and it works to ensure expenditure is both controlled and more equal between us, as I am more prudent and reserved than my wife in expenditure considerations). If the purchase is justified and value, then it is fine. For example, I spent 5 figures on the 3 month trip across Africa, whilst my wife has spent a similar amount on a piano (she is very into music). Conversely, my wife wanted to purchase a second clarinet - having one already this was wasteful/unnecessary, I did not think it justified and it did not happen. On occasion, my wife will have such strong views that she will overrule me and buy something anyway even if I disagree. This is rare, but happens.
(5) I monitor all finances carefully, which has been interpreted as somewhere between micro-management and spying. It would be more correct to say I micro-manage flows of spending (to take advantage of things like stoozing, account rewards, and such-like), than the actual spending itself. For example, in our shopping this week I rather sheepishly had to return a toaster which we had put in the delivery initially to bump the amount up to the minimum to check-out the shopping, and which we had both forgotten to remove as the week progressed and more items were added to the basket. When any individual flow of spending starts to drift upwards (eg cash withdrawals) that attracts interest to understand why, and whether any action is needed.
(6) There has only been 1 major exception to the above - last year my wife and I went to Africa, she spent 1 month there and came home (as planned) whilst I stayed for 3 months along a much more arduous route she had no interest in travelling. Given I was in extremely remote areas, she was obviously in charge of everything, so I left about £20K in her bank account which was plenty for 2 months no matter what happened.

Going back to post 4671, I have no idea why my wife decided to try and covertly purchase a smart watch. She would have known I wouldn't think it justified, but I'd expect it to come under the discuss and potentially overrule in category (3) above. I asked her, and she cannot recall. My best guess is that it was some sort of behaviour akin to secretly eating whilst on a diet.

To make it easy for those who want to indulge in personal insults, here is a list of things I think you will find abhorrent and chastise me about. When doing so, bear in mind I put out far more detail than almost any other poster about our financial affairs and planning, and am 100% honest and open about everything. More than happy to take criticism, but preferably without the personal abuse which could cause the thread to be locked.

(1) We have multiple different current accounts to take advantage of various offers. By historical accident, her main account is a joint account (Nationwide, for free travel insurance for us both) whilst my main account is an individual account (Santander, for interest on cash). All spare funds are swept into the Santander account, meaning that each month I transfer most of her earnings from a joint account to my account (most day-to-day spending being done on credit cards, paid from my account).

(2) I scan all credit card transactions twice a week, and would discuss anything which seems excessive and/or unnecessary. This is largely a one-way process, as I buy very little. I would discuss the occasional large unusual purchase I might make, eg, this month I paid £135 for some running coaching, which works out quite reasonably given I spend about 20 hours a month running. I liked the coach and thought she was good, so suggested my wife goes to some group running sessions the coach offers, which she is now going to.

(3) Ownership of financial resources is heavily skewed. Our house is in my name only, partly because I put all the funds into the original purchase, and partly as I thought the Govt. would offer incentives to first-time buyers. I plan to have our retirement house purchased solely in my wife's name to take advantage of lower stamp duty for first-time buyers. Pension wealth is heavily skewed in my favour, reflecting the larger amount of higher rate tax I have pensioned off over the years. ISA wealth is similarly skewed, as I preferred to only pay one set of charges for several years. In recent years I've started putting maximum ISA contributions in both our ISAs. Even cash is mostly in my name, as most ends up in my Santander current account whilst waiting for enough to build up to go into whatever investment it is heading toward.

(4) There is a well known list of things we disagree about, and which my wife knows very well I don't think are justified. This is things like regular wine delivery and ad hoc Waitrose deliveries. Over time she will tend to cancel these, although new things crop up.

gfplux

This is a thought I have posted before but recent postings make it relevant to post again.

Many on Here post some spontaneous thoughts and then perhaps develope a strategy for early retirement that effects the way they live WITHOUT having a detailed conversation with their partner.
Obviously if you say to your partner I am making long term plans for an early and productive retirement for us both, the answer will be yes.

Perhaps a more detailed and JOINT look at the objective and the route to be taken needs a LOT of discussion.

Slinky

hugheskevi wrote: »

(3) Ownership of financial resources is heavily skewed. Our house is in my name only, partly because I put all the funds into the original purchase, and partly as I thought the Govt. would offer incentives to first-time buyers. I plan to have our retirement house purchased solely in my wife's name to take advantage of lower stamp duty for first-time buyers.

For all your planning, this one is an own goal. If your 'wife' is your legal wife as in married, you are viewed as a single unit and your wife will not be seen as a first time buyer.

Bravepants

A friend told me recently that a female friend of his had told him that she was paying half her husband's pension payment! She said she did this because her husband had told her that when he dies she will recieve half his pension for the rest of her life, so it was "only fair" that she pays half towards it! We were both gob-smacked!



I told my friend that she should set up a SIPP and pay into it, leaving the SIPP 100% to her husband if she died. This implies, by her husband's own argument that, since he would be getting 100% of the SIPP in the event of her death, he should be paying her full SIPP contribution!

Spreadsheetman

Slinky wrote: »

For all your planning, this one is an own goal. If your 'wife' is your legal wife as in married, you are viewed as a single unit and your wife will not be seen as a first time buyer.

Correct - a work colleague of mine thought he could do this last year - fail.

OldMusicGuy

This whole discussion shows how challenging it can be to plan for early retirement, and also make the transition into it. Agreeing how to manage finances and financial priorities can be challenging at the best of times, let alone when you are making long term plans or trying to look 30 years into the future.

hugheskevi wrote: »

I doubt many couples have agreed in such detail any or all of the above by just after the age of 30 (we are now 40).

I applaud your foresight. We were very different, because we did have a child so that was our focus rather than retirement planning. It was always something to worry about later. And as we had our son later in life (we were both 38), we were focused on him all through the years that many would start planning for early retirement. I made the mistake of assuming I would just carry on working until I could afford to stop, which turned out to be a bad plan as work was killing me and I didn't have a goal of affordability for stopping.

However, I do hope you are able to sustain your relationship and the plan. It does sound like you and your wife have slightly different priorities financially (she's a spender and you aren't), but hopefully that won't become a big issue if you can manage it together.

This does emphasize something that I have found - it's important to make plans together and agree a lifeplan. Retiring early affects your partner (if you are in a relationship). FWIW our plan and attitudes are very similar to yours.

hugheskevi

For all your planning, this one is an own goal. If your 'wife' is your legal wife as in married, you are viewed as a single unit and your wife will not be seen as a first time buyer.

Drat (and thanks for confirmation Spreadsheetman). Oh well, at least it is not gaining, rather than losing something.

I had also hoped for my wife to use a LISA for the purchase to benefit from the tax advantages. Unfortuanately I didn't realise the requirements to open an ISA were not just to open one before age 40 but also to fund it (I left funding to end of tax year). So that didn't work either.

It isn't a big deal, just a bit of extra cost somewhere in the thousands, so something like another month of work. Whilst unwelcome, it does has the very positive benefit of not having to jump through the HMRC loops and restrictions (eg purchasing a property with a mortgage for LISA benefit).

I've found over the years it is beneficial to try to put yourself in a position where you might benefit from policy change, if you can do so at little or no cost to yourself.

A friend told me recently that a female friend of his had told him that she was paying half her husband's pension payment! She said she did this because her husband had told her that when he dies she will recieve half his pension for the rest of her life, so it was "only fair" that she pays half towards it! We were both gob-smacked!

Very odd arrangement, and I think main scheme benefits will be worth a lot more than 50% compared to the cost of survivor benefits.

More generally, I think it a bad idea to rely on any uncertain resource stream. Keep them in mind, but I don't think they should be part of the plan. I view redundancy offer and inheritance as potentially beneficial financial shocks, but they are not part of the plan despite inheritance being highly likely at some point. But if relatives need residential care or whatever, those resources are theirs, and would quite rightly be used to fund their final years in comfort.

Perhaps a more detailed and JOINT look at the objective and the route to be taken needs a LOT of discussion.

Very much agree.

It is somewhat hard to envisage life in retirement without having actually experienced it, but it is important to think it through as much as possible. The destination is very likely to influence the journey, and the other way around too - I very much look forward to spending a lot more time being involved in the organisation of some of my current interests - for example, volunteering at conservation projects, and being part of a core volunteer team for a parkrun.

I see it all as a single period, rather than distinct 'working' and 'retirement' phases. Whilst it won't be for everyone, I think the plan to wind-down into retirement can also be important for a smooth transition. That doesn't necessary mean part-time work (although I think that is a very option if feasible), it can mean not pursuing promotions to keep a job with a good lifestyle for example. That is what I've been doing for the last decade - I prefer the extra time and lack of stress much more than I would enjoy working harder just to be able to save faster.

However, I do hope you are able to sustain your relationship and the plan. It does sound like you and your wife have slightly different priorities financially (she's a spender and you aren't), but hopefully that won't become a big issue if you can manage it together.

I don't especially see it as a significant problem. In any complex project there will be issues to manage. As long as they are identified, considered and acted upon they shouldn't derail the project. I see this as a fairly simple issue that needs to be kept in mind but isn't a problem as we put in place processes to mitigate the risk.

If we hadn't addressed the issue pre-emptively, I think it would have the potential to cause serious issues down the line and would have been far more difficult to sort out at that stage.

Although having said all the above, my target income is very much higher than many would consider necessary for our current spending levels(current spend c30K, target income post tax 50K). That is almost exclusively because it is much easier to make sacrifices voluntarily than it is becuase of lack of resources. So I never want to be in the position of not being able to trivially afford something either of us want.

Triumph13

hugheskevi wrote: »

Whilst I'd normally respond to every comment in the normal course of events, I thought it best to duck out of the thread for a while as the way it was going risked it getting locked by MSE.

The anecdote that started all this, back in post 4671, dates back to about 2013. As it was an anecdote, the language used was far more casual than most of my posts, which are normally factual and precise. Hence the use of words such as 'squirrel' and use of emojis. I think several have read far too much into that.

Hi hugheskevi. I suppose the key thing which would set everyone's minds at rest is how did your wife respond when you told her that, based on what you'd posted about how you manage the family finances, a bunch of random strangers on the internet got really worried that your financial relationship with her was overly controlling, possibly to the point of being abusive? Did she:

1. Become full of righteous indignation on your behalf?
2. Laugh her socks off?
3. Say well you can be a bit but I think it's worth it to help meet our goals?
4. Say you can be sometimes, can we talk about it?
5. Plead with you not to make her sleep in the cellar again?

Fingers crossed that it was one of the top 3