Early-retirement wannabe

hugheskevi

There has been lots of progress on our house move from London to east Cheshire, and we exchanged contracts today on both our purchase and our sale.

We purchased our next property and sold our property separately to avoid the hassles of chains. The house we are purchasing is currently vacant, and we sold our house to first-time buyers so there was no chain on either property. It only took 58 days from marketing our property to exchange, and that included the Christmas period. Nonetheless, we have been extremely fortunate to exchange on both properties on the same day, and will also complete on the same day. That is very helpful as it means we do not have to pay a 2nd home Stamp Duty charge and then claim it back. I had expected to complete our sale a month or so after our purchase.

That means I will have a mortgage for exactly 1 day before it is 100% offset

However, liquidity is a key concern at the moment, made worse by this being near the end of the tax year and so for the last few months the vast majority of our income has been directed to pensions to avoid higher rate tax.

Currently, the money we are putting into the property is in savings and cash ISAs. Once the funds have all moved around, the non-pension balance sheet should look something like (all assets and debts are our combined position, our finances are totally merged):

• Property - £700,000
• S+S ISA - £350,000
• Offset savings account - £587,000
• Cash - £40,000

And in the liabilities column:

• Mortgage - £587,000 (nets to zero with the offset savings account)
• Other debt (mostly 0% credit cards, all at 0%) - 65,000

I hope to be able to obtain at least some more 0% debt on credit cards once we have mortgage funds in place, and maybe a decent amount more. Although I wonder what effect the mortgage will have.

As we head into April I will briefly draw down from the offset account to refill my flexible cash ISA shortly before the end of the tax year, and move the funds back in the new tax year so as to effectively increase my annual ISA contribution allowance for 2025/26. 

Then in April we will dramatically reduce pension contributions and have a decent monthly income again.

In a great piece of timing, our employer (we work at the same place) has just announced a voluntary exit scheme, so we will both be putting in for that. If either or both get a paid exit our higher ISA allowances due to using the flexible functionality will be very useful, although we would put all income subject to higher rate tax into a pension. Due to not making any pension savings when we went travelling across the Americas we have good amounts of carry-forward available.

We are both now aged 47. From age 55 our pensions will give us a bit over £72,000 p/a after tax, so the challenge is funding 47-55. The offset mortgage is a key piece of that puzzle, as I plan to fund 47-55 using the following order:

• 0% borrowing
• Earnings
• Exit payment(s)
• SSISA funds
• Drawing down the offset savings, to be replenished from pension at age 55

We have already started to build up DC pension in excess of what we need for the period 55-68 in order to replenish mortgage offset. Once we have moved into the new place and got into the new tax year I will build a more detailed model to determine exactly when to quit work, if paid exits don't make the decision for us.

Lifematters

@hugheskevi do you have links to the new area you are moving to - family, friends? Such a bold move. 

I wonder how many retirees decide to move to a new area to start their retirement and how that works out. I would love to myself, a coastal area maybe, but I imagine a huge amount of research would need to go into it unless it’s an area you grew up in.

Will your employer let you both work remotely or will you have additional expenses to cover commuting costs?

It would be perfect if you got the VR, good luck for that 🤞

hugheskevi

do you have links to the new area you are moving to - family, friends? Such a bold move. 

No, but I am not concerned by that. I've spent many years wandering around the world on long trips, and on all except of those I was on my own at the start and met people along the way. This also helps avoiding making strong ties with a particular area, as they get broken when traveling and things are different upon return.

The new area was chosen based on our interests, so there will be plenty of people around with similar hobbies and interests we will meet.

The biggest adjustment is likely to be in demographics. The area I am moving to is 99% white British, which is very different to London. That will feel a little strange for a while.

I wonder how many retirees decide to move to a new area to start their retirement and how that works out. I would love to myself, a coastal area maybe, but I imagine a huge amount of research would need to go into it unless it’s an area you grew up in.

We did a lot of research, and totally changed our views of what we wanted along the way.

Initially, I preferred somewhere very rural with lots of land. Over time that changed to somewhere that had facilities nearby, semi-rural edge-of-town sort of places, and has immediate access to lots of land (eg country parks, etc) but not much land itself.

This is all part of a wider plan formed in 2009, so there has been plenty of time for planning.

I also view it is as a great opportunity to experience something different - I think the more things you expose yourself to in life the more enjoyable it is. Although I have traveled a lot, and lived in London a lot, I have never lived in a smallish town before. I very much view it as another life phase, just like school, university, travel, work and London were different life phases. All were good while they lasted, but it is also good that they come to an end and something new takes their place.

Will your employer let you both work remotely or will you have additional expenses to cover commuting costs?

It would be perfect if you got the VR, good luck for that 🤞

I will work from home, not so clear for my wife, but as she is very likely to be offered a paid exit it probably won't be an issue and she will work entirely or mostly from home until she leaves.

Getting paid exits would be perfect, no decision to take about when to leave, and finances would then all line up perfectly If we were to both leave, we would get exit payments totaling about £200,000 before tax. £60,000 of that would be tax free, so that would be a nice bump of almost £10,000 p/a for the critical age 47-55 period.

cloud_dog

@hugheskevi I see you mention retained early access age (55) as part of your plans / financial schedule.

I'm posting because I came across a post on Reddit regarding the Fidelity SIPP and their protected access age (55, for accounts open prior to 4 November 2021); which is of interest to me, and then I came across this thread.

Anyway the Reddit poster had contacted Fidelity to verify / confirm they could access their Fidelity SIPP at age 55 after 2028, and they were informed that Fidelity are still in discussions with HMRC over the scheme's unqualified access rights.

Obviously this may very well be just related to the Fidelity scheme, but I thought I'd mention it as I thought the legislation and even the Gov / HMRC webpage is fairly black and white regarding the eligibility requirements/ legislative 'eligibility conditions'.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062215#protected

hugheskevi

cloud_dog said:

@hugheskevi I see you mention retained early access age (55) as part of your plans / financial schedule.

I'm posting because I came across a post on Reddit regarding the Fidelity SIPP and their protected access age (55, for accounts open prior to 4 November 2021); which is of interest to me, and then I came across this thread.

Anyway the Reddit poster had contacted Fidelity to verify / confirm they could access their Fidelity SIPP at age 55 after 2028, and they were informed that Fidelity are still in discussions with HMRC over the scheme's unqualified access rights.

I do think the uncertainty over protected minimum pension age is a disgrace - we are only 3 years away, and yet several bits of key information is either unavailable or very difficult to access in many schemes and even from HMRC themselves.

Instead, FAQs seem to cover utterly banal information aimed at those with zero knowledge of pensions without any effort to try to provide useful information on topics members are not able to research themselves.

Fortunately, my DC scheme is very clear that it has a protected minimum pension age, so there is no uncertainty for me in that regard. It came as a very pleasant surprise, as I had expected that it would not be protected.

SarahB16

hugheskevi said:

The biggest adjustment is likely to be in demographics. The area I am moving to is 99% white British, which is very different to London. That will feel a little strange for a while.

I have followed your move with interest and contributed where I think I can be of help.  I genuinely think you will be very happy in your new location.  

I know you haven't said the exact location where you are moving to (and I am definitely not asking as it's better that you can continue to be open on here with your financial circumstances).  

I do know the approximate area where you are moving to and it is a big step moving to a completely new location.  I enjoy living in a diverse, liberal minded and (dare I say) middle class area which is not a million miles away from where you are moving to.  

When you said the area you are moving to is 99% white British I do hope the area you move to is neither racist nor homophobic.   

I think people say, you tend to 'find your tribe' in life and I'm sure with your dogs you will meet fellow dog walkers and have a lovely new community that you feel part of and some will become close friends of yours.  Even if you don't drink regularly I'm sure you will go to nearby pubs to get to know more people and will even know which pubs your prefer the clientele of.  

You are not that far away from some of the very affluent areas where the Premiership footballers live but neither that far away from some very traditional working class areas too.  I'm not going to write out the full name of the place but one area just to be careful of is a place with:  .a...e..iel. in its name.  You will see a range of 'characters' there...     

Cornish_mum

Hi hugheskevi wonderful plans.

I moved from area of very low diversity and extreme localism (without any proximal diverse urban centres) to live in places with much higher diversity, and I really value the social & cultural benefits.

I am pretty sure your new place will be nearish to a couple of big diverse cities.

For example, I know Manchester/Stockport v. well and it’s cultural offering IMO matches London; often at a much more accessible price point. Although obviously at any one time there are less individual events.  

Totally not relevant to you but for others thinking of relocating to the far Southwest or similar. Do consider this aspect. Ever year three or four couples relocate to my home village after a nice summer holiday & on the local Facebook group many more post about dreaming of moving there. Many of them leave again after a couple of years or even just one wet winter.

FIREDreamer

SarahB16 said:

hugheskevi said:

The biggest adjustment is likely to be in demographics. The area I am moving to is 99% white British, which is very different to London. That will feel a little strange for a while.

You are not that far away from some of the very affluent areas where the Premiership footballers live but neither that far away from some very traditional working class areas too.  I'm not going to write out the full name of the place but one area just to be careful of is a place with:  .a...e..iel. in its name.  You will see a range of 'characters' there...     

Does this place begin with a M? 😂😂😂

SarahB16

FIREDreamer said:

SarahB16 said:

hugheskevi said:

The biggest adjustment is likely to be in demographics. The area I am moving to is 99% white British, which is very different to London. That will feel a little strange for a while.

You are not that far away from some of the very affluent areas where the Premiership footballers live but neither that far away from some very traditional working class areas too.  I'm not going to write out the full name of the place but one area just to be careful of is a place with:  .a...e..iel. in its name.  You will see a range of 'characters' there...     

Does this place begin with a M? 😂😂😂

You might very well think that; but I couldn't possibly comment ;-)   

BrilliantButScary

SarahB16 said:

hugheskevi said:

The biggest adjustment is likely to be in demographics. The area I am moving to is 99% white British, which is very different to London. That will feel a little strange for a while.

I have followed your move with interest and contributed where I think I can be of help.  I genuinely think you will be very happy in your new location.  

I know you haven't said the exact location where you are moving to (and I am definitely not asking as it's better that you can continue to be open on here with your financial circumstances).  

I do know the approximate area where you are moving to and it is a big step moving to a completely new location.  I enjoy living in a diverse, liberal minded and (dare I say) middle class area which is not a million miles away from where you are moving to.  

When you said the area you are moving to is 99% white British I do hope the area you move to is neither racist nor homophobic.   

I think people say, you tend to 'find your tribe' in life and I'm sure with your dogs you will meet fellow dog walkers and have a lovely new community that you feel part of and some will become close friends of yours.  Even if you don't drink regularly I'm sure you will go to nearby pubs to get to know more people and will even know which pubs your prefer the clientele of.  

You are not that far away from some of the very affluent areas where the Premiership footballers live but neither that far away from some very traditional working class areas too.  I'm not going to write out the full name of the place but one area just to be careful of is a place with:  .a...e..iel. in its name.  You will see a range of 'characters' there...     

I think I'd prefer the 'characters', rather than the 'Premiership footballers' brigade. Each to their own.