Early-retirement wannabe

Pat38493

SarahB16 said:

hugheskevi said:

How has returning to 'real life' after travelling worked?  Seems you are very adaptable as I suspect many would struggle to return to the norm after such an amazing trip.

Returning to real life has been fine. For me it was the third time returning to work after a year or so away travelling, but it was the first time for my wife. It was all very easy to slot back into the old routines, especially for me as I returned to the same sort of things I was doing before leaving whereas my wife took a new role.

The hardest thing was probably returning to our house, which we had lived in for 12 years before travelling. After 18 months rented out, it took a while before it felt like our house again and that was a bit disconcerting.

I think it definitely helps that we were only ever coming back for a short period or 1-2 years. If I was back and looking at another 10 years then I would want to be doing something different.

Any reason for the NW England location choice, are there family commitments as otherwise you could probably chose somewhere with better weather!

I do have family there, and it the region I grew up in, but that is a very minor consideration.

I don't want to be anywhere in the south of England, partly due to the volume of people and traffic, and partly because of house prices - we can get what we want anywhere in the country, so happy to go to areas with fewer people and cheaper house prices and lower cost of living in general. Despite being able to afford it, I have an intense dislike of spending insane amounts on a meal out. I think this is in part due to travel - I've eaten out at great places in countries such as Argentina for under £10 per person, so just don't see the value in spending £50+ on a meal that isn't as good in the UK. Lower cost of living helps with that resentment!

There is also proximity to a big city. I certainly don't want that to be London, so the obvious choices after that are Birmingham and Manchester. The northwest is convenient for both of those, as well as great transport connections whether that is road or rail, or even air from Manchester (airports were a bit of a consideration when we were thinking about living deeper into north Wales).

We also plan to have two snow dogs, probably an Alaskan Malamute and a husky. For those animals, the colder and more miserable the weather, the better! I find the summers in London a little too warm for my liking, so happy with north-west weather.

Do you have any fears regarding potential government curve balls for example on access to pension dates or even the TFLS?  

Not really.

Almost all of our pensions have protected minimum pension age, and there is next to no chance of those being retrospectively removed. Our DC pension is £283K in total, of which £232K is mine, so even a lower cap on TFLS is unlikely to hurt unless it is slashed from £268,275 to under about £75,000 which seems unlikely in the next 9 years.

The biggest risk would probably be around State Pension, mainly as that is over 20 years away for us, so plenty of scope for tinkering with a long lead in time. But there are no signs of that under the current Govt. yet, so that should fall to 15 years under the next administration - still a bit too long to be comfortable, but feels a little safer.

Is there nothing you can do to better balance your pension provision between the pre and post DB dates as at the moment if you go large on the house you are looking at quite a big jump in income at 55?

It should mostly look after itself. The figures increase very rapidly, as we spend less than than even the c£45K we would have if we were to buy a house and quit work today. So we are 'saving' some of that available income, plus all of our earnings, and every day the 8 year period the funds have to cover is decreasing. Add in returns from investments, and the figures increase rapidly.

Also, I am conservative in estimates about things like what I will sell our current house for. So as the process proceeds, additional funds should be realised as actual figures are better than the estimates.

Nonetheless, I still plan to get an offset mortgage, so that if we were to want to spend more pre-55 we could do so. In practice, that would be just before age 55 as other funds ran out, and even borrowing at, say, 6% p/a, would be an excellent deal to repay it from pension income which has benefited from a 42% increase when putting it into a pension (40% relief on way in, 15% tax on way out). So I plan for this year to put all my wife's higher rate income into a pension, and I will take a view late in the tax year on whether I do the same for me. The benefits are less clear cut for me, as I could struggle to extract all my DC pension without paying higher rate, and am more vulnerable to political change. However, if come March 2025 we are buying or have bought a house with an offset mortgage, then I would dump all my higher rate income into a pension anyhow, as the return is too great to ignore. That means having a lower pre-55 income on paper is actually beneficial, as long as I have the option to borrow and repay from pension income.

george_jetson said:

I have always thought NW England would be an ideal region to retire - easy access to major cities and countryside, and Merseyrail meaning you needn’t be reliant on a car. Somewhere on the Wirral near a railway station and a beach would be perfect I think. 

I am told the NW is becoming the area of choice for younger retirees, replacing coastal towns which are now regarded as being heavily populated by what have now become very old pensioners after years of being a popular retirement place.

I haven't entirely discounted the Wirral peninsula, perhaps just to the east of Bromborough near a country park. But to date I haven't seen a property I particularly like and my target areas are quite limited so I don't expect to end up there. The area is blighted by Birkenhead at the north-end of the peninsula which is a place to avoid, but the areas on the west of the peninsula are very nice too.

@hugheskevi  My thoughts regarding living in the north west.  It truly would be an excellent choice.  I live in the north west and have family scattered around too. 

My thoughts - there are some very nice areas on the Wirral (a good choice but avoid the areas where there are mosquitoes due to the marshlands).  

Manchester - south Manchester and some areas of Cheshire would be a wonderful choice (and very near to the airport and the Peak District for walks with your dogs).  Also well placed for the culture of Manchester and the excellent hospitals. 

Frodsham - a beautiful place and just going to throw that in there as somewhere to consider but not as well connected as you may want to have. 

North Wales - I can't comment too much on north Wales however do consider how near you are to a well respected hospital.  As you get older, you will realise the benefit of this. 

Best wishes with your house hunting. 

There is a pretty big hostpital in Wrexham I think, and another in Chester just across the border.

Frodsham is right next to the M56 motorway and is also on the train line - we were looking at Frodsham as an option partly due to the train station being there and ease of getting to Manchester and/or Liverpool.

Lymm is also a lovely place and has featured on several lists of the best places to live in UK over the years (but at a premium).

Generally, house prices start to go down as you go further from Manchester especially if you are south of the estuary and ship canal from Liverpool.  We are just south of Warrington right now which is also a really nice area and extremely well connected, but we are thinking of moving more out towards North Wales / Wrexham to get more for our money, or maybe Frodsham.

One thing to be aware of is to take a look at the local plan for the areas you are looking at, and find out about where there are plans for large new build housing - some areas may be earmarked for development over the next 10 years, but they won't necessarily show up through your solicitor unless there is already a planning permission and they are right next to the house you are looking at.  

SarahB16

Pat38493 said:

SarahB16 said:

hugheskevi said:

How has returning to 'real life' after travelling worked?  Seems you are very adaptable as I suspect many would struggle to return to the norm after such an amazing trip.

Returning to real life has been fine. For me it was the third time returning to work after a year or so away travelling, but it was the first time for my wife. It was all very easy to slot back into the old routines, especially for me as I returned to the same sort of things I was doing before leaving whereas my wife took a new role.

The hardest thing was probably returning to our house, which we had lived in for 12 years before travelling. After 18 months rented out, it took a while before it felt like our house again and that was a bit disconcerting.

I think it definitely helps that we were only ever coming back for a short period or 1-2 years. If I was back and looking at another 10 years then I would want to be doing something different.

Any reason for the NW England location choice, are there family commitments as otherwise you could probably chose somewhere with better weather!

I do have family there, and it the region I grew up in, but that is a very minor consideration.

I don't want to be anywhere in the south of England, partly due to the volume of people and traffic, and partly because of house prices - we can get what we want anywhere in the country, so happy to go to areas with fewer people and cheaper house prices and lower cost of living in general. Despite being able to afford it, I have an intense dislike of spending insane amounts on a meal out. I think this is in part due to travel - I've eaten out at great places in countries such as Argentina for under £10 per person, so just don't see the value in spending £50+ on a meal that isn't as good in the UK. Lower cost of living helps with that resentment!

There is also proximity to a big city. I certainly don't want that to be London, so the obvious choices after that are Birmingham and Manchester. The northwest is convenient for both of those, as well as great transport connections whether that is road or rail, or even air from Manchester (airports were a bit of a consideration when we were thinking about living deeper into north Wales).

We also plan to have two snow dogs, probably an Alaskan Malamute and a husky. For those animals, the colder and more miserable the weather, the better! I find the summers in London a little too warm for my liking, so happy with north-west weather.

Do you have any fears regarding potential government curve balls for example on access to pension dates or even the TFLS?  

Not really.

Almost all of our pensions have protected minimum pension age, and there is next to no chance of those being retrospectively removed. Our DC pension is £283K in total, of which £232K is mine, so even a lower cap on TFLS is unlikely to hurt unless it is slashed from £268,275 to under about £75,000 which seems unlikely in the next 9 years.

The biggest risk would probably be around State Pension, mainly as that is over 20 years away for us, so plenty of scope for tinkering with a long lead in time. But there are no signs of that under the current Govt. yet, so that should fall to 15 years under the next administration - still a bit too long to be comfortable, but feels a little safer.

Is there nothing you can do to better balance your pension provision between the pre and post DB dates as at the moment if you go large on the house you are looking at quite a big jump in income at 55?

It should mostly look after itself. The figures increase very rapidly, as we spend less than than even the c£45K we would have if we were to buy a house and quit work today. So we are 'saving' some of that available income, plus all of our earnings, and every day the 8 year period the funds have to cover is decreasing. Add in returns from investments, and the figures increase rapidly.

Also, I am conservative in estimates about things like what I will sell our current house for. So as the process proceeds, additional funds should be realised as actual figures are better than the estimates.

Nonetheless, I still plan to get an offset mortgage, so that if we were to want to spend more pre-55 we could do so. In practice, that would be just before age 55 as other funds ran out, and even borrowing at, say, 6% p/a, would be an excellent deal to repay it from pension income which has benefited from a 42% increase when putting it into a pension (40% relief on way in, 15% tax on way out). So I plan for this year to put all my wife's higher rate income into a pension, and I will take a view late in the tax year on whether I do the same for me. The benefits are less clear cut for me, as I could struggle to extract all my DC pension without paying higher rate, and am more vulnerable to political change. However, if come March 2025 we are buying or have bought a house with an offset mortgage, then I would dump all my higher rate income into a pension anyhow, as the return is too great to ignore. That means having a lower pre-55 income on paper is actually beneficial, as long as I have the option to borrow and repay from pension income.

george_jetson said:

I have always thought NW England would be an ideal region to retire - easy access to major cities and countryside, and Merseyrail meaning you needn’t be reliant on a car. Somewhere on the Wirral near a railway station and a beach would be perfect I think. 

I am told the NW is becoming the area of choice for younger retirees, replacing coastal towns which are now regarded as being heavily populated by what have now become very old pensioners after years of being a popular retirement place.

I haven't entirely discounted the Wirral peninsula, perhaps just to the east of Bromborough near a country park. But to date I haven't seen a property I particularly like and my target areas are quite limited so I don't expect to end up there. The area is blighted by Birkenhead at the north-end of the peninsula which is a place to avoid, but the areas on the west of the peninsula are very nice too.

@hugheskevi  My thoughts regarding living in the north west.  It truly would be an excellent choice.  I live in the north west and have family scattered around too. 

My thoughts - there are some very nice areas on the Wirral (a good choice but avoid the areas where there are mosquitoes due to the marshlands).  

Manchester - south Manchester and some areas of Cheshire would be a wonderful choice (and very near to the airport and the Peak District for walks with your dogs).  Also well placed for the culture of Manchester and the excellent hospitals. 

Frodsham - a beautiful place and just going to throw that in there as somewhere to consider but not as well connected as you may want to have. 

North Wales - I can't comment too much on north Wales however do consider how near you are to a well respected hospital.  As you get older, you will realise the benefit of this. 

Best wishes with your house hunting. 

There is a pretty big hostpital in Wrexham I think, and another in Chester just across the border.

Frodsham is right next to the M56 motorway and is also on the train line - we were looking at Frodsham as an option partly due to the train station being there and ease of getting to Manchester and/or Liverpool.

Lymm is also a lovely place and has featured on several lists of the best places to live in UK over the years (but at a premium).

Generally, house prices start to go down as you go further from Manchester especially if you are south of the estuary and ship canal from Liverpool.  We are just south of Warrington right now which is also a really nice area and extremely well connected, but we are thinking of moving more out towards North Wales / Wrexham to get more for our money, or maybe Frodsham.

One thing to be aware of is to take a look at the local plan for the areas you are looking at, and find out about where there are plans for large new build housing - some areas may be earmarked for development over the next 10 years, but they won't necessarily show up through your solicitor unless there is already a planning permission and they are right next to the house you are looking at.  

The hospital in Chester is the Countess of Chester.  I'm just mentioning hospitals because I have family dispersed across the north west and without wishing to say where they all live my opinion is of the hospitals in the north west the ones in Manchester and Liverpool/Wirral are the better ones.  I know from where they live/have lived and which hospitals they've been to (including initially referred to and then moved to better, more specialist hospitals).  I only mentioned it as the quality of the hospitals is sometimes a factor that is overlooked when moving and is more important as you get older.  

All very good points from Pat38493 and yes Lymm is lovely too.  

Sarahspangles

SarahB16 said:

Lymm is lovely too.  

Yes but that toll on the Warburton Bridge….

Frugaliza

Does it count as early retirement if I go at 59 and a half?!  That is the current plan when the mortgage will be paid off.   I think I'm on track with a DB pension which should give me £28.5K, scope for letting out the spare room up to the £7.5K rent a room allowance and a bit saved up in the biscuit tin in case the roof falls in.  I've another smaller DB pension which I'll defer to mid 60s then the state pension at 67.   Colleagues are hanging in there saying they need more than that.  I don't get it because £2K per month at the moment seems to cover all my non-mortgage needs and most of my wants.   Does this sound reasonable to you guys? 

MallyGirl

of course it counts. Anything earlier than SPA or your DB pension NRA is early in my book

hugheskevi

My wife and I have now found our next home! It will be almost exactly 15 years of living in London when we move, other than the 18-month trip across the Americas, and a 3-month trip for me across Africa, which my wife accompanied me on for the first month.

We had planned to spend about £450-600K on a new house, but found somewhere for around £700,000 which is insanely big for our needs, but ticks every box we could imagine, so we decided it was worth it. So in the new year we should be moving to Cheshire, a bit south of Manchester. The sale is not yet complete, but there is no reason to think it will not proceed through to completion in January or maybe February.

Our London house is on the market, and it should sell for about £550-575K. The additional house cost and Stamp Duty put a bit of a dent in the financial plans, but nothing that a bit more work cannot smooth out. We plan to have fully moved (both bought and sold) by April, and then work until about Christmas 2025. I will review the financial position once we have moved and make more definite plans. There may be offers of redundancy at work, which either or both of us would take without hesitation, putting any payment subject to higher rate tax into our pensions.

As things stand, we have an income (after tax) of around £6,000 p/m from age 55 from a combination of DB, DC and State Pension. Once all the moving costs are sorted, I should have about 3-4 years of that level of income in SSISAs. We will both be 47, which is a shortfall of about 4 years.

We already have enough DC pension to fully smooth our post-55 income. However, we also will have an offset mortgage. That will be used effectively as a bridging loan initially, then 100% offset as soon as we sell our London home. It will then serve its second purpose in about 6 years, as I reduce the offset prior to age 55, and then either fully offset or repay the mortgage at age 55 using DC pension. That will effectively mean we can access pension prior to age 55. That is enabling me to be in the unusual position of contributing slightly more than 100% of salary (including employer contribution) into a DC pension between November and March this year. My wife is similarly piling into DC. Between us we will put a bit over £60,000 into DC pension this year all with higher rate relief, and my wife also is accruing a DB pension.

If we were to quit work immediately, we would either have about £35,000 p/a between age 47-55, or if we used the offset mortgage to spread the shortfall over the period 47-68 we would have about £58,000 p/a (after tax) increasing to £72,000 from age 68. I think with another year of work we should have something like £50,000 p/a between age 48-55 which should be sufficient, especially with the offset mortgage and pension standing ready. Working another year will also reduce the risk of unforeseen expenditure during and shortly after moving.

I think that after buying and selling, assets and liabilities (excluding property and pensions) our balance sheet will be something like:

Assets

Cash ISA	£36,354
SSISA	£344,635
Net proceeds from house sale	£560,000
Stamp Duty refund (2nd home)	£35,000
	£975,989

Liabilities

Total non-mortgage debt (mostly 0% credit cards)	£63,714
Mortgage	£587,000
New car	£20,000
National Trust lifetime membership	£2,735
Furnishing, new electronics, etc	£25,000
	£698,449

I have put under liabilities things I would plan to purchase during or after moving, but are not time-critical. The proceeds from the house sale plus Stamp Duty refund will be used to 100% offset the mortgage. I do not want to touch our SSISA, so earnings and/or cash ISA will fund the non-time-critical items, perhaps taking advantage of flexible ISA rules to use the cash ISA on those items and then use earnings to return the funds later in the year.

I was pleased that the £54K of nil-fee, 0% interest credit card debt we have didn't cause any mortgage application problems. The only question that was asked was whether they would be repaid or not, and either answer was fine, it just impacted the total lending limit.

It will be interesting to see if I can roll-over the credit card debt with a mortgage. I rather suspect I won't, in which case the cash ISA will initially go toward credit card repayments as some offers expire in April and May.

So all a bit of an awkward balancing act for the next 6 months or so between liquidity and tax efficiency, but I think I have every contingency covered now. The SSISA stands as a back-up if necessary, but ideally, it will go untouched.

Lifematters

I would’ve thought a house move from London to Northwest would bag you a bigger but much cheaper home. I can only imagine the new home must be amazing. Best of luck for the move.

hugheskevi

Lifematters said:

I would’ve thought a house move from London to Northwest would bag you a bigger but much cheaper home. I can only imagine the new home must be amazing. Best of luck for the move.

My house in London is only a very typical 3-bed 1930s semi-detached house, with a shared driveway at the side of the house leading to our garage and our neighbour's garage. About 100 square metres in total. It is in zone 3 in south London, not near Tube but quite close to a rail station that is 20 minutes into central London. It is ideal for cycling, being about 30 minutes cycle to the centre, and that has given extremely cheap commuting down the years, but doesn't affect house price. We never moved as there was never really any need to, just being the two of us, and so while a lot of our friends moved further out for bigger places, we remained as we did not want rail commutes into the centre.

The house I am buying is close to 300 square metres, and although the garden is not huge, it is still a decent size. Plus the location is much more desirable, being next to a country park, at the end of a very quiet cul-de-sac (compared to a non-descript semi in a typical 1930s urban sprawl). It is also much newer, being built in the 1990s.

There are several frustrating financial things about the change:

• we will be paying a huge amount more council tax despite there not being an especially big price difference between our old and new properties
• whereas our London house is 'cheap' for London and the decor reflects that, our north-west house is expensive for the area and the decor reflects that - it will cost a lot more to do things like replace kitchens and bathrooms to the expected standard. Despite being 15 years old, our kitchen and bathroom in London still compare favourably to similar houses, perhaps as many on the market may have been rented out for a lot of the last decade or so.
• the chance of getting an NHS dentist is nil
• in London people don't blink at my wreck of an old car that lives out on the street (we barely use it, so no point replacing it until it fails), but it will be very out of character in the new place so we will update it relatively soon after moving with something new or nearly new, that will live in a garage.
• it doesn't apply to the property I am buying, but quite a few of the places I was considering have unadopted roads or utility adoption issues - it is a big drawback given the problems faced in so many places with charges over which residents have little control.

DT2001

hugheskevi said:

Lifematters said:

I would’ve thought a house move from London to Northwest would bag you a bigger but much cheaper home. I can only imagine the new home must be amazing. Best of luck for the move.

My house in London is only a very typical 3-bed 1930s semi-detached house, with a shared driveway at the side of the house leading to our garage and our neighbour's garage. About 100 square metres in total. It is in zone 3 in south London, not near Tube but quite close to a rail station that is 20 minutes into central London. It is ideal for cycling, being about 30 minutes cycle to the centre, and that has given extremely cheap commuting down the years, but doesn't affect house price. We never moved as there was never really any need to, just being the two of us, and so while a lot of our friends moved further out for bigger places, we remained as we did not want rail commutes into the centre.

The house I am buying is close to 300 square metres, and although the garden is not huge, it is still a decent size. Plus the location is much more desirable, being next to a country park, at the end of a very quiet cul-de-sac (compared to a non-descript semi in a typical 1930s urban sprawl). It is also much newer, being built in the 1990s.

There are several frustrating financial things about the change:

• we will be paying a huge amount more council tax despite there not being an especially big price difference between our old and new properties
• whereas our London house is 'cheap' for London and the decor reflects that, our north-west house is expensive for the area and the decor reflects that - it will cost a lot more to do things like replace kitchens and bathrooms to the expected standard. Despite being 15 years old, our kitchen and bathroom in London still compare favourably to similar houses, perhaps as many on the market may have been rented out for a lot of the last decade or so.
• the chance of getting an NHS dentist is nil
• in London people don't blink at my wreck of an old car that lives out on the street (we barely use it, so no point replacing it until it fails), but it will be very out of character in the new place so we will update it relatively soon after moving with something new or nearly new, that will live in a garage.
• it doesn't apply to the property I am buying, but quite a few of the places I was considering have unadopted roads or utility adoption issues - it is a big drawback given the problems faced in so many places with charges over which residents have little control.

Thanks so much for your posts covering your plans for retirement/relocation. The detail of your planning is impressive.

It goes to show you can achieve FIRE whilst having holidays of lifetime (I reckon our paths crossed in Vegas as you went north to south and we went west to east (but only away for 2 months)). We are in a similar income generating position but more from investments than DB’s so not as guaranteed. The big difference is we are 15+ years older (in part due to 4 children).

Council tax is linked to relative value of houses in the area, I think.

You will have more free time? So sourcing new kitchen/bathrooms at bargain prices should be achievable - ex display (we bought a £30k kitchen for £7k off of EBay after keeping an eye on ads for 6+ plus. It cost extra to dismantle/install but looks great) or auction (like John Pye).

If you have a garage put your old car in there until it gives up the ghost. Our older car sits mainly out of sight of our neighbours mostly more deluxe cars.

We have an unadopted lane but have not had any major issues in 25 years. Between 6 properties we organise hedge cutting and drain clearance. Maybe we are lucky. Also have a shared Klargester with costs about 1/4 of normal water rates. Even having to replace the main tank means we are ahead of the game.

Good luck and thanks again for your many informative posts.

FIREDreamer

@hugheskevi

Are you sure you can access your DC at age 55? The access age goes up to 57 in 2018.