Early-retirement wannabe

DairyQueen

westv wrote: »

Most of the volunteering jobs near me are in charity shops. Not my bag at all.

Try scratching the surface...

Magistrate, school/college governor, parish councillor, advocate. All social and charity events in our local communities are organised and run by volunteers, as is the community shop and village hall. Volunteers transport people, teach leisure activities, assist the housebound and very elderly with finances and IT. Volunteers run the food bank, and they initiated and run the project which provides our community woods and lake. Wildlife Trust, National Trust, English Heritage, animal rescue, first aider.

We also have a dementia project, regular get-togethers for the elderly, fetes plus an emergency team that rolls into action when we suffer extreme weather conditions.

Every charity is supremely grateful for all volunteer assistance.

That's just for starters.

atush

Linton wrote: »

There should be a Social Car scheme in your area. It involves volunteers a few hours a week driving mainly old ladies to hospitals, doctors, shops etc etc. You meet a very wide range of people who you would never have met any other way. They are often lonely and very happy to chat. I find it very rewarding.

I was thinking of that. Is it a problem with your car insurance? Or not because you dont receive payment?

atush

‘you do what you want, where you want to do it’ which sounds like it might work.

Sounds intriguing. Let us know what develops.

JoeEngland

Well, it's two months into my early retirement. I've restarted my writing hobby which is going better than expected, joined the U3A and have been doing work on the house and garden in preparation for it going on the market next March. I'm missing FT work in IT like I would miss the proverbial hole in the head!

AnotherJoe

atush wrote: »

I was thinking of that. Is it a problem with your car insurance? Or not because you dont receive payment?

I would ask the scheme how that works. And then confirm with your insurer.

hugheskevi

Mid-year update from me...wife just reached age 42 and I'll reach there in a few months.

I've been thinking a lot more about priorities now we are somewhere between "just about feasible to retire" and "it would be okay, but it is less than I'd like, compromises would be needed" stages.

We could already afford a decent standard of living if we retired now, but it wouldn't be viable to go on a very long traveling trip, which we both want. If we retired immediately the position would be

• Travel:n/a [ideally £70,000 p/a for 3 years]
• House costing £380,000 [ideally £500,000]
• £30,000 income after tax between age 42-58 [ideally £50,000]
• income of £45,000 after tax from age 58 [ideally £50,000]

There are a few different income streams and capital requirements I consider, along with how they will be funded. We are fortunate in both having Defined Benefit pensions with protected minimum pension ages of 50. We have been augmenting these as much as possible, as taking them at 50 will significantly reduce the annual pension due to actuarial reduction, but the tax advantages of the extra pension saving make this worthwhile. It was luck more than judgement that the total amount appears to be about perfect, as I have simply augmented the pensions to the maximum level possible over the last decade.

The judgement was more around the amount of Defined Contribution saving needed, which due to the favourable investing environment over the last decade is now more than we need, even with very cautious growth assumptions (CPI, after costs).

The plans and funding sources are:

• 3 years of travel immediately at retirement: Funds from sale of house before travel
• Retirement house purchase: Funds from sale of house and ISA
• Income for remaining years to age 50: ISA
• Income from age 50-58: Defined Benefit pension and ISA.
• Income from age 58 to State Pension age: Defined Benefit and Defined Contribution pension
• Long-term income: Defined Benefit Pension plus State Pension

After lots of modelling, I've concluded that we have enough Defined Contribution pension, unless Minimum Pension age remains at age 55. There is a problem with this however, as we plan to retire in 2022 or 2023 so we will be retiring before it is likely that there is any clarity about minimum pension age. Hence contributing more to DC would be a significant risk of moving money from where it is needed (pre age 58 period) to where it is not (post age 58). Hopefully very prudent growth assumptions combined with putting £7,200 into a DC pension each year in the event MPA is 55 would be sufficient. In any event, this would just be a missed opportunity, not an actual loss.

I think we have about enough DB and State Pension already, but an additional £6,500 of DB income would be nice as that would meet the highest of my target incomes under every scenario modeled. That would produce an annual income of a little over £50,000 after tax from age 58 from our pensions (DB, DC and State). We should be able to get about that in our remaining time to retirement (3 to 4 years), perhaps not quite but that isn't a concern as I think as little as £30,000 after tax would probably be okay. Due to the large employer contribution, tax efficiency, early access age and lack of risk, this is a very nice investment anyhow, even if it is already probably already sufficient.

I'm increasingly minded to be cautious on long-term income, as that comes from pensions which once out of employment cannot be substantially increased (although voluntary NICs to complete State Pension will be made). In the event that trade-offs are required, my wife prefers to compromise on annual income rather than our target house price fund. So that all points toward compromising on income between when we leave work and age 58, if any compromise is necessary. Compromise is only likely to be considered if we want to leave work a bit earlier than the point when no compromise is required.

k6chris

Marine_life wrote: »

How time flies when you’re having fun!

A recap on where we are.

Hung up my suit for the last time (ahem…) at the end of May and have been enjoying the summer both at home and abroad. We’ve had three trips away and I can see being a big chunk of our retirement spend. It's in the plan so not a drama.

Gradually settling into a bit of a routine which originally involved getting up a bit earlier than when I was working (about 7:00 am) although that has gradually drifted out to 7:45 ish and will probably stay there.
As you can imagine, I am getting a lot more exercise not only in terms of ‘formal’ exercise (i.e. running, cycling etc.) but also generally walking a lot more. Consequently, have lost about 3 kg to bring my BMI into the ‘ideal’ range. I feel that I probably need to do some more mobility work and have a session with a physio planned to work through some issue.

We’ve spent a little time working through some money things, namely transferring one of my DB pensions into cash and sorting out our tax position with regard to overseas income. I discussed the DB transfer in another thread and while there were some naysayers there, in reality I couldn’t see any way in which the very worst I could do would be to break even. The tax piece is complicated but it’s nice to be able to use my qualifications for something that benefits me/us rather than other people.

I’ve joined the local library and taken up some new hobbies / returned to old ones but haven’t really found a ‘purpose’ as such. But no sure I really need one and I may indeed have underestimated my capacity for sitting on the couch and doing nothing….and not feeling guilty about it!

Nevertheless, I’m still not sure that being fully retired is where I want to be. I have looked around at a few things, mostly paid roles but also a few volunteering positions. Given that I am only looking for part-time work its incredibly hard to find something other than minimum wage work which is a bit frustrating. I really sympathise with those who really need to find a job The ‘gig’ economy sounds very hip and ‘digital’ but in reality, the only beneficiaries are employers! I could waffle on about that but I’ve had some interesting discussions which may lead somewhere and one very interesting offer along the lines of ‘you do what you want, where you want to do it’ which sounds like it might work.

More to follow….

This is exactly me too! 'Finding purpose' is the next item on my list. I'm not sure that post-children I ever had purpose, but never had the time to worry about it! Good luck...

michaels

hugheskevi wrote: »

Mid-year update from me...wife just reached age 42 and I'll reach there in a few months.

I've been thinking a lot more about priorities now we are somewhere between "just about feasible to retire" and "it would be okay, but it is less than I'd like, compromises would be needed" stages.

We could already afford a decent standard of living if we retired now, but it wouldn't be viable to go on a very long traveling trip, which we both want. If we retired immediately the position would be

• Travel:n/a [ideally £70,000 p/a for 3 years]
• House costing £380,000 [ideally £500,000]
• £30,000 income after tax between age 42-58 [ideally £50,000]
• income of £45,000 after tax from age 58 [ideally £50,000]

There are a few different income streams and capital requirements I consider, along with how they will be funded. We are fortunate in both having Defined Benefit pensions with protected minimum pension ages of 50. We have been augmenting these as much as possible, as taking them at 50 will significantly reduce the annual pension due to actuarial reduction, but the tax advantages of the extra pension saving make this worthwhile. It was luck more than judgement that the total amount appears to be about perfect, as I have simply augmented the pensions to the maximum level possible over the last decade.

The judgement was more around the amount of Defined Contribution saving needed, which due to the favourable investing environment over the last decade is now more than we need, even with very cautious growth assumptions (CPI, after costs).

The plans and funding sources are:

• 3 years of travel immediately at retirement: Funds from sale of house before travel
• Retirement house purchase: Funds from sale of house and ISA
• Income for remaining years to age 50: ISA
• Income from age 50-58: Defined Benefit pension and ISA.
• Income from age 58 to State Pension age: Defined Benefit and Defined Contribution pension
• Long-term income: Defined Benefit Pension plus State Pension

After lots of modelling, I've concluded that we have enough Defined Contribution pension, unless Minimum Pension age remains at age 55. There is a problem with this however, as we plan to retire in 2022 or 2023 so we will be retiring before it is likely that there is any clarity about minimum pension age. Hence contributing more to DC would be a significant risk of moving money from where it is needed (pre age 58 period) to where it is not (post age 58). Hopefully very prudent growth assumptions combined with putting £7,200 into a DC pension each year in the event MPA is 55 would be sufficient. In any event, this would just be a missed opportunity, not an actual loss.

I think we have about enough DB and State Pension already, but an additional £6,500 of DB income would be nice as that would meet the highest of my target incomes under every scenario modeled. That would produce an annual income of a little over £50,000 after tax from age 58 from our pensions (DB, DC and State). We should be able to get about that in our remaining time to retirement (3 to 4 years), perhaps not quite but that isn't a concern as I think as little as £30,000 after tax would probably be okay. Due to the large employer contribution, tax efficiency, early access age and lack of risk, this is a very nice investment anyhow, even if it is already probably already sufficient.

I'm increasingly minded to be cautious on long-term income, as that comes from pensions which once out of employment cannot be substantially increased (although voluntary NICs to complete State Pension will be made). In the event that trade-offs are required, my wife prefers to compromise on annual income rather than our target house price fund. So that all points toward compromising on income between when we leave work and age 58, if any compromise is necessary. Compromise is only likely to be considered if we want to leave work a bit earlier than the point when no compromise is required.

Three years out of the housing market obviously means you are subject to house price risk?

Marine_life

hugheskevi wrote: »

• Travel:n/a [ideally £70,000 p/a for 3 years]
• House costing £380,000 [ideally £500,000]
• £30,000 income after tax between age 42-58 [ideally £50,000]
• income of £45,000 after tax from age 58 [ideally £50,000]

Why does your income requirement go up after 58 (but your "ideal" number remains unchanged)?

hugheskevi

Three years out of the housing market obviously means you are subject to house price risk?

Yes, something I have pondered at length. There would be two ways to mitigate the risk. First, I could retain my current house and rent it out whilst traveling. That is a very imperfect risk mitigation though, as I live in London now and plan to retire to Wales. I also do not at all like the idea of being a very long distance from my property and relying on agents to manage it. Whether sensible or not, I know I would fret about it when traveling and be worried whenever I was out of internet connection areas (which will be quite frequent in remote areas), and do not want to have that stress.

I could buy my Welsh property before travel, but I think it would be very hard to rent out as we plan to live in a very remote area. I also would not like being miles away from the property, as above. So on balance, running house price inflation risk for the 3 year period away seems the best of bad options. However, 3 years is probably an upper-estimate of the time we will spend traveling - I think it will be at least a year, but 3 years is optimistic, so the risk probably isn't as severe as it could be.

Why does your income requirement go up after 58 (but your "ideal" number remains unchanged)?

The income requirement doesn't increase, just the income available. Ideally I would like £50,000 p/a, and my accrued pension to date would provide £45,000 p/a, but being pension I assume it is only accessible from age 58 (my current State Pension age is just below 68, so I assume that increases to age 68 and minimum pension age is 10 years below state pension age).

My minimum acceptable income is £30,000 p/a, so that is the first priority I allocate funds against for the period before pensions are fully available (our DB pensions will pay £31,500 after tax from age 50, so funding will be from ISAs for the period to age 50). After achieving an income of £30,000+, additional funds go firstly toward house purchase (wife's preference). As time passes and we save more, the house purchase fund will increase to £500,000 after which point additional funds will be put toward increasing the £30,000 p/a of income provision, hopefully up to £50,000 p/a.

However, that would be getting into the 'one more year' sort of territory - living in a £500K house with £50K p/a income and having traveled for 3 years with a budget of £70K p/a would be top-end of all my needs estimates, so I think it very likely I would be tempted to go a bit before all of that is achieved. That would probably be due to either a 'pull' factor of a great travel trip coming up, or more likely a 'push' factor of not enjoying work and just wanting to walk away.

I expect to have to leave my DB pension in February 2022 (as due to the way final pay is defined and my historic salary record I would get more leaving than if I stayed). That may well be the prompt to go part-time to avoid higher rate income tax, and be the beginning of the end in terms of leaving.