Early-retirement wannabe

SarahB16

BrilliantButScary 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.

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.

I think I'd prefer somewhere inbetween, i.e. neither of the two extremes but each to their own.  

My observation was made when hugheskevi said the area he is moving to is 99% white British and I expressed my reservations hoping that it wouldn't be a racist nor a homophobic area (hence my comment about 'characters' who can sometimes be racist and homophobic).     

hugheskevi

End of another financial year, and another one involving huge change for us.

My original early retirement plan first started in 2009 and was to live in London for at least 10 years, after which I would sell the house and go traveling. In practice, I lived in London until 2022 (Covid delayed things - it just wasn't the time to embark on a multi-country trip!), went traveling for 18 months, returned to London for one year and sold my house. So the plan pretty much came together.

We are now both aged 47 and recently moved from London to East Cheshire. We chose the location for being close to the Peak District as well as not being very far from Manchester. It is also useful to be near good train links from Crewe and Stoke-on-Trent. We live in a reasonably sized town so all regularly used facilities (supermarkets, gym, swimming pool, running club, etc) are nearby, with everything within about a mile and a half of our house, with countryside very close by.

The new house has no traffic nearby, and almost all of the noise I hear comes from wood pigeons and squirrels. The air quality is also noticeably better than London - we live surrounded by trees, water and green space with no cars very close-by, whereas in London we lived in an area with poor air quality that was only about 500 metres from an A road, so there was always pollution from traffic. There is also very little light pollution, so the stars look amazing on a clear night. The quietness of the new place is especially striking - you get used to the regular background noise living in London of cars, planes, people nearby, alarms, etc. There is always light too due to so many streetlights and house lights, whereas in our new place, it is pitch black at night and silent aside from wildlife. The only human noise is occasionally from trees and foliage being cut back in a nearby country park.

We spent more on the new house than we initially planned, and as we will be staying here for a long time we are now spending more on refurbishments which is expensive as the new house is absurdly large. Fortunately, both my wife and I have been offered a paid exit from work. We will continue in work until autumn 2025 and then receive a combined £190,000 (£60,000 tax free) to leave.

Following all April 2025 pension uprating, our financial situation as at close of markets today is set out in the table below. This excludes State Pension, and uses CETV values for DB pensions, although I include State Pension when looking at future income. The negative cash figure is due to borrowing on 0% credit cards.

Based on our current accrued pension, our annual income from DB pensions at age 55 will be £62K, or £55K after tax. That will increase in line with uncapped CPI. Once State Pensions come into payment that would be £86K pre-tax, £74K post-tax. Note we have a protected  minimum pension age on almost all of our pensions.

We also have £338K of DC pension, which we will use between 55 and State Pension age to effectively replace State Pension, including funding Voluntary Class 3 NICs to ensure we both have a full State Pension (it made more sense to budget for paying these using DC pension rather than immediately from cash so that we could effectively get tax relief on the Class 3 contributions). Hence we should have a post-tax income of £74K in all years from age 55. Our gross assets are distributed as follows:

The cost of our new house and refurbishment has bitten into the funds available for the period between when we leave work and age 55. Based solely on those funds, we would have an annual post-tax income of about £34,000 between 47-55 based on our current position.

However, working another 6 months or so along with the cash exit payment will improve our position. I will put all income above basic rate threshold into a pension for both of us (a bit over £100,000), and taking into account the cost of all refurbishment planned, a new car, earnings, tax-free part of exit payment, and any small additional amount from exit payment that falls within basic rate threshold that should all result in an annual income between age 48 (as we will be then) to age 55 of about £40,000 p/a after tax.

We also now have an offset mortgage. That is going to be fully offset for several years. Even if our DC pension increases only in line with CPI, we should have more than we need for our post age 55 income. The surplus would be something like £125,000. So we could withdraw from the offset saving account prior to age 55 and repay it at age 55 using pension income. Adding the net amount we would draw from the DC surplus funds to the amount available for 48-55 increases that to about £53,000 p/a after tax.

If we were to further withdraw from the offset savings account, with a view to smoothing our net income over the period 48-68 then the amount available each year would be about £67,000 p/a after tax, increasing to £74K at age 68.

Given we will have an effectively mortgage-free house that has been recently refurbished with a new kitchen, boiler, roof, and a new car, I doubt we will need a great deal in the years between age 48 and 55 so in practice even the £40,000 p/a available from non-pension sources may well be sufficient.

Another small perk of the offset mortgage is that I have temporarily dug into the offset savings account to replenish my flexible cash ISA. Funds will be moved back to fully offset the account on Monday, but that means we will have a combined ISA allowance of around £150,000 for 2025/26 taking into account the new £40,000 of allowance plus the flexible feature. That will be more than plenty for all new cash received from earnings and exit payments so there will be no future concerns about tax on savings interest, dividend taxation, or capital gains.

I am very glad to have effectively moved several years of early retirement from later in life to earlier in life when I took several years out of work to travel. That included a 1-year Working Holiday in Australia, a 10-month Trans-Africa trip, 18 months traveling around Asia, New Zealand, and Central America, and 18 months Trans-Americas trip. The map below shows the places visited (most of Europe is omitted). It all adds up to nearly 5 years of travel outside Europe (with about 2 of those in a tent), and choosing to take that earlier in life rather than at the end of working life was a great decision I have no regret about at all. Ultimately when you look back at life, it is about what you did and experienced rather than the resources you accumulated that matter.

I'll still travel a bit in the future, although nothing like those huge trips. The main aim will be to have visited 100 countries, and I am currently up to 90 so only need another 10 for that goal. The main area I am interested in is traveling across Sumatra in Malaysia, down to Bali, which has some stunning landscapes I haven't yet seen. I'd also like to visit Sudan and southern India, as well as perhaps traveling through the 'Stans.

Although it is vaguely tempting to work on a bit more as it rapidly increases resources and it seems a shame to not use tax allowances, I can't really justify it. We do not have any children, so the value of our house could always be used one way or another if necessary (mortgage, equity release, downsizing, etc). We plan to move from this house around the age of 75 as it is far too big for us now, and I wouldn't want to be living here as we go into very old age. Given I think we already have plenty without even thinking of the house, taking the exit payments is a very easy decision. We would have worked longer if they hadn't come along. My wife will leave in the autumn, but there is a chance I will stay a bit longer, although that would only be a matter of months. 

Our regular expenses are set out below - I exclude food, holidays, entertainment and petrol as these are very variable. Medical costs are based on private dentistry as no  NHS dentists are taking new patients in the area. The cost of water, gas, and electricity is a bit speculative as I have no data to base calculations on, but the margin of error is not going to be material in wider finances.

I am looking forward to quite a bit of time doing not very much. Normal life came to an abrupt halt for us when COVID hit and we started working from home. We never really went back into the office, and all through COVID we were planning what turned into an 18-month trans-Americas trip and renting out our house. Then we returned from travel in early 2024 and we soon were into preparations to sell our house and move, so for several years now there has been a lot going on. By the time I leave work all the house refurbishments will have been done aside from minor decorating work, and I plan to do at least some of that myself given I will have plenty of time.

The future will involve a lot of running, walking with dogs, gym, swimming, traveling, a return to playing the card game bridge which I quit many years ago, computer games, and watching events such as the Snooker World Championship, Masters Golf, and Tour de France in a lot more detail than past years, and getting a couple of dogs. And freshly brewed coffee over a leisurely breakfast.

That of course means this thread will finally come to an end later this year after 15 years, as all the regular posters will have retired

Yorkie1

Wow, what an update! 

Congratulations on the move and starting to acclimatise to the change in environment. 

How long did it take you to identify the noises squirrels make? I was cursing the Merlin bird app for months as it was dismally failing to identify these weird noises ... until I saw a squirrel and googled for the noise one made lol.

westv

SarahB16 said:

BrilliantButScary 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.

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.

I think I'd prefer somewhere inbetween, i.e. neither of the two extremes but each to their own.  

My observation was made when hugheskevi said the area he is moving to is 99% white British and I expressed my reservations hoping that it wouldn't be a racist nor a homophobic area (hence my comment about 'characters' who can sometimes be racist and homophobic).     

I would imagine "99% white British" would cover large areas if the country outside of the major cities but maybe I'm wrong on that.

crv1963

Well done Hugheskevi! I have enjoyed dipping in and out of this thread over the years. I am pleased that plans have come to bear fruit. Enjoy your new home, new life and I hope it is a long, happy and health one, along with the same wishes for everyone else. 

saucer

Thank you Hugheskevi for a wonderfully candid and insightful update. Lots of food for thought there. It must be a great feeling to have done a lot of harder travelling when you were younger, and be able to savour the memories. We did a lot of backpacking in Asia when we were young. Now as we approach retirement (older than you and stopping work next year) the plan is to combine motorhoming in warmer months in Europe, and longer trips to further afield especially in our winter months. We have also been able to travel quite a lot with our children over our working lives, but short (expensive) holidays.  South America is a big target for a much longer trip. We don’t make any assumptions about how long we’ll live or how our health will be but we’ve done our best to keep the odds in our favour and feel very fortunate to be in the position we are. 

hugheskevi

Yorkie1 said:

How long did it take you to identify the noises squirrels make? I was cursing the Merlin bird app for months as it was dismally failing to identify these weird noises ... until I saw a squirrel and googled for the noise one made lol.

We had plenty of squirrels in London so I was very used to them. Here it is more that I hear them scrabbling about on the conservatory roof and hear wood pigeons up there too.

saucer said:

It must be a great feeling to have done a lot of harder travelling when you were younger, and be able to savour the memories.

Very much, I found travel very different back then, being young and single compared to our recent trans-Americas trip now I am older and married. Even traveling in my late 20s was quite different to early 20s.

One thing that surprises a lot of people is when I say that one of the things I am most looking forward to is just living a pleasant, unremarkable life for a while. We have never been able to get dogs for example, as we always had travel plans. Due to not having children we didn't bother with the standard move out to the Home Counties in our 30s. So now I am looking forward to not planning the next big thing, and just enjoying day-to-day life for a while!

saucer said:

We have also been able to travel quite a lot with our children over our working lives, but short (expensive) holidays.  South America is a big target for a much longer trip.

It is amazing how much more expensive doing short long-haul holidays is compared to going on a single huge trip. Comparing the costs of doing something like going to the Galapagos or into the Amazon, due to not having air fares and also having income from UK property, the cost of doing those things as part of a long trip was about 20-30% of the cost of doing them as a short-trip from the UK. Our average daily cost (for the two of us combined, taking into account every single cost) was £113 per day on our trans-America 16-month trip and could have been much lower if we economised more.

Dizee123

Thank you for the update Hugheskevi.  I am so glad your early retirement plans have come to fruition as you have both worked very hard towards that goal.  On top of all your own planning you have been very generous with your support and guidance to others on this forum and helped me, in particular, navigate the ramifications of the McCloud judgement that impacted my own early retirement (albeit a lot later than yours at 58!)....

I wish you and your other half a very long, happy and well traveled retirement.
You are an inspiration to us all