Early-retirement wannabe

jamesd

Marine_life wrote: »

We could actually remortgage at 1,35% and whilst we are tempted to arbitrage, i like the idea of being completely debt free so we will settle it.

Arbitrage in that situation would be so very tempting. Doesn't take much risk to beat that cost of money.

But I don't mind having debt, provided it's inexpensive enough for me to be making money overall in some way on my use of the money.

shireknight

When I was 16 I had an operation on one of my hips after which my doctor warned me to make sure I was in a desk job by the age of 50 because I would be crippled by arthritis (odd thing to say to a 16 year old I guess lol) and this kind of shaped my life I suppose as it's always been lingering in my mind.

I never intended to fully retire but because of the doctors warning I did make it my mission in life to put myself in a position where I would be able to semi-retire by the age of 50 and be pretty much self-sufficient without having to work should things come to the crunch.

Anyhow spin forward 26 years, I'm in a nice house and thanks to careful planning I'm now just two years away from being mortgage free.

I'm showing no signs of ill health yet so it may never even happen but regardless I'm already in a nice warm office job and am going to keep working full time until my 47th birthday then drop down to a four day working week and then on my 50th birthday drop to my goal of a three day working week and that will do me until I reach my official retirement age of 67.

Obviously things can change but this is my plan :-)

Monkey_Master

Hi,

I have actively started planning for early retirement this year. I am currently 33 and we plan with my wife to retire at 35. That's a very aggressive timeline but I've been doing the maths and it should work out.

I even started writing a blog to share our new way of thinking (search for Monkeyism). I define it as a life changing perspective because we can't keep the same lifestyle if we stop working for a salary. But we can keep the same quality of life. The difference being moving to a cheaper place with no dependency on distance from work, growing some of our food, taking care of our own children instead of paying for childcare, etc...

It is always dauting to think this way because we always worry about whether we'll have enough money to live off. But currently, we spend around A$ 1000 a month on all expenses except housing costs. So if we own our house, we could live off A$ 500,000 until we pass away. At the moment, the savings rate in Australia is 5% (we live in Sydney). So if we have that amount of capital, the interests are pretty much paying for our expenses without us touching the initial capital.

There are always risks to the plan (rates going down, cost of living going up etc...) and we'll adjust accordingly with some contingency. But overall, it is achievable. And we are not die-hard thrifters or millionaire for that matter. I personally think it is just a matter of realising when we have enough rather than looking for more.

Marine_life

Monkey_Master wrote: »

Hi,

I have actively started planning for early retirement this year. I am currently 33 and we plan with my wife to retire at 35. That's a very aggressive timeline but I've been doing the maths and it should work out.

I even started writing a blog to share our new way of thinking (search for Monkeyism). I define it as a life changing perspective because we can't keep the same lifestyle if we stop working for a salary. But we can keep the same quality of life. The difference being moving to a cheaper place with no dependency on distance from work, growing some of our food, taking care of our own children instead of paying for childcare, etc...

It is always dauting to think this way because we always worry about whether we'll have enough money to live off. But currently, we spend around A$ 1000 a month on all expenses except housing costs. So if we own our house, we could live off A$ 500,000 until we pass away. At the moment, the savings rate in Australia is 5% (we live in Sydney). So if we have that amount of capital, the interests are pretty much paying for our expenses without us touching the initial capital.

There are always risks to the plan (rates going down, cost of living going up etc...) and we'll adjust accordingly with some contingency. But overall, it is achievable. And we are not die-hard thrifters or millionaire for that matter. I personally think it is just a matter of realising when we have enough rather than looking for more.

I lived in Sydney for a while - where about's are you?

A$500k is not a lot especially as your 5% interest rate does not take into account inflation. I guess Aussie interest rates are at 5% for a reason?

I will take a look at your blog!

gadgetmind

jamesd wrote: »

Though I suspect that gadgetmind pays more attention to the purpose or rebalancing: buy low, sell high, with rebalancing a tool to do some selling of risers and buying of fallers.

Not so much risers and fallers, but definitely reducing exposure to anything that's over-priced (using a variety of metrics!) and increasing exposure to what's currently out of favour.

Of course, this needs to be done sensibly to avoid ever having a portfolio that's "a bit mad", and you also need to ensure your rebalancing frequency is at most annual and/or driven by asset allocations straying too far from your target.

gadgetmind

Triffid wrote: »

its depressing for the rest of us!

I'd hope that a few would find it inspirational but I do apologise if I strayed away from the key message and towards autohagiography..

However, this thread is always going to attract those who'd like to retire early, with a decent buffer against the future, and who are prepared to make sacrifices along the way to achieve this.

Some of these sacrifices will be working harder/smarter for long hours, and living the job during every waking hour, and some living well within your means to salt away a few bob.

its too late now!

I don't think it's ever too late but it's obviously easier to achieve your goals if you establish them, and start working towards them, sooner rather than later.

jamesd

Not so sure about modest and I'm not retired yet but I do have a pot of money that started at about zero in March 2005 and is now enough to live on, though not with as big a safety margin as I like. Courtesy of very keen saving and investing it's now worth around 97% of my combined gross pension contributions plus net pay for those years.

My income level isn't modest any more, though. Changed to around and above higher rate tax sort of level back in 2008. Before 2006 I'd spent years on quite low income levels, often not much above benefit level, followed by a couple of years as a full time unpaid volunteer that led to me getting my current job.

But the income wouldn't matter if I was just spending all of the money. What makes the difference is what I and others choose to do with the part of the money that is higher than basic living expenses.

For some income levels it just isn't practical to retire more than a little early. If you're on benefit level incomes you probably can't accumulate enough to live on for more than a few years before you reach state pension age. So you end up compelled to retire around then if you can't or don't change job.

For most other income levels there are choices that can be made. How often and where to go out, how much food should be takeaway and delivery vs cooked at home, and how expensive those options should be. Holiday numbers, locations and costs. Children, and how many, given their high cost. Whether those who can afford it should pay for private education for them or not. Where to live and what sort of place can save or cost a huge amount. Smoke or drink or not and how much - cigarettes are a great ender of early retirement and also shortener of life, so you end up with a significantly shorter and poorer retirement, for example.

Beyond spending decisions, there are saving or investing choices. Investing has more ups and downs but long term has and is likely to do better than saving. Overpaying on a mortgage is safe and predictable but investing and paying it off via interest only and a pension lump sum or S&S ISA is more efficient and likely to leave you better off. Substantially so.

All of those things are choices for individuals to make based on what they want to learn about and do. Choose not to invest, to smoke, to go on expensive holidays and you're choosing to retire later or poorer. That's a completely fine choice to make, so long as you know you're making it and don't just drift into it by not considering your choices.

This particular discussion is doubly filtered. People interested in pensions, which excludes most, and then those who are interested in finding out what it takes to retire early and maybe do something about it.

There's a similar sort of concentration over in the Mortgage-Free Wannabe section, with it mostly being people who want to be mortgage free by overpaying, even though that's the least efficient way of becoming mortgage free.

gadgetmind

Triffid wrote: »

Are there examples out there of people who have achieved retirement happiness with more 'modest' resources. For me its only inspirational if its achievable!

http://simple-living-in-suffolk.co.uk/about/

http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

And many more.

atush

Personally, I find Gadget and Marine to be inspirational and not depressing.

I've been called all sorts here, and been condemned at times because I was born american (but have lived here for many decades now). I am never so envious of others that i find them depressing. But then again, I have no class axes to grind like some.

I also have a portion of my portfolios for themes (aka "it seemed like a good idea at the time") and this has also tended to do well.

I sometimes think all of my portfolio as based on themes. But in general it has gone well, and no worse than most do.

cyclonebri1

jamesd wrote: »

cyclonebri1, different people, different income levels and needs and expectations. Nothing wrong with lower income and retirement income levels, or plans to retire later based on what income will allow. Perhaps a relative lack of people early in the process or with smaller pot sizes here, though.

It's well worth remembering that only ten percent or so of people are earning enough to be higher rate tax payers and that median pensioner income was £18,000 a few years ago. That's quite respectable and plenty to live on.

James, I think that's why I'm seeing this thread the way I am at present, you're right there are way too few low income wanabees taking part in this thread, which I have to say is superb.

That fact alone is sad, I know some that are now in the position of acting far too late based on there saving options from here in.
It's just the balance that is weighted purely within this thread due to that lack of foresight that gives the impression of reversed polarities regarding only 5% earning over £75k

I've added what I earned before retirement a few posts back, it wasn't an awful lot compared with the majority I read of on here, but I'm well happy with my situation financially, I'm able to do all I want within the constraints of my health, something that can't be planned on a spreadsheet;);)

But you know what makes me feel the happiest of all?, and this is absolutely true, both my daughters have partners that do earn over £75K