Onwards to freedom!

SuperSecretSquirrel

Happy New Year! I hope everyone had a great Christmas

I've continued with what is now a new year tradition in our home - setting up a fresh spreadsheet for the year ahead, and spending some time looking over our recent (and not quite so recent) history.

Not posted detailed figures for some time, so thought I'd post the totals for 1st January 2020, plus the equivalent values for the previous six years (as I happen to have them on hand)... I'm definitely happy with the direction of travel

             01/01/2020  01/01/2019  01/01/2018  01/01/2017  01/01/2016  01/01/2015  01/01/2014
House         125000.00   125000.00   125000.00   125000.00   125000.00   125000.00   125000.00
Pensions      108995.12    81848.33    78458.66    61324.05    41170.41    31113.46    23737.91
S&S            56018.64    36823.05    26607.27    13313.37     6488.53     3052.50      510.96
Cash           26906.74    24858.94    39576.36    47225.02    49581.61    59482.43    44326.80
Cars           13137.50    17015.00    14715.00     8900.00    10700.00     9000.00    10000.00
SLC                0.00        0.00     -314.95    -2138.37    -3116.23    -6905.75    -7455.96
HMRC               0.00     -152.15     -513.23     -380.26    -2483.20   -14088.23    -6374.55
Mortgage           0.00        0.00   -14140.28   -25662.72   -37716.04   -50546.60   -63931.64
Total         330058.00   285393.17   269388.83   227581.09   189625.08   156107.81   125813.52

LiquidYears(Self)   8.8         6.4         4.3         3.8         3.0         2.7         1.9
LiquidYears(Team)   4.6         3.4         2.3         2.1         1.7         1.6         1.2

FI(WR4%-Self)     76.3%       56.4%       33.8%       25.0%       15.0%        8.9%        1.9%
FI(WR4%-Team)     42.6%       31.9%       18.0%       13.0%        6.9%        2.8%       -1.2%

Total net worth now a smidge under one third of a million, enough liquid savings to see me through nearly nine years without an income, or to see us all through four and a half years without any household income, more than three quarters of the way to selfishly FI (cover my half of spending at 4%WR), more than two fifths of the way to truly FI (cover all our spending at 4%WR). I love the progress shown in the figures, nice leaps forward from one year to the next.

Plans for the new year/decade... Initially - keep earning, keep saving, keep investing, keep living. Simplify anything that can be simplified. Shed some material goods, try not to acquire too many new ones. Enjoy life. Eventually leave the traditional workforce (or maybe go very part time) and start doing something a bit different with my time, ideally something that does good.

Best of luck to you all in the upcoming year! :cool:

Karmacat

Sounds wonderful SSS, as you say, the direction of travel is great.


One tiny query ... in the table at the bottom, you've got a heading "LiqYrs" and I just can't imagine what it might be! I know it will be something sensible, but can you please put me out of my misery and tell me?

edinburgher

Assume liquid (I.e. non-pension) years of available money?

SuperSecretSquirrel

Thanks for posting KC and Ed

Yep LiqYrs is the number of years we could manage without income by drawing down liquid assets.

I have enough accessible cash and S&S to my name to cover half our spending for 8.8 years. We have enough in total to cover all household spending for 4.6 years. No intention to start drawing down yet, but just knowing it's there helps in terms of peace of mind

Karmacat

Thanks for that - intermediate goals are important. I'm setting up for today to be a finance day, given myself till 10.45, the papers are ready to lay out on a clean table

VDOT47

Another great year SSS!

It must be nice to think that there is enough cash/S&S ISA to cover that many years if absolutely necessary!

As mentioned above, we’re a few years behind you (largely as a result of such a whopping mortgage - which may increase in the next 6 months as we hope to move house!) but it would be great to use the 2020s as a real engine room for building net worth and FI ��

Look forward to your next update in a few months ��

SuperSecretSquirrel

Hi KC and VDOT :wave:

KC, I'd be lost without short and medium term goals... An ultimate aim is nice, but without those up close targets I'd never get there!

Hope you got all your paperwork done. I've been on something of a mission recently myself - four loads of shredding done, a meticulously organised filing cabinet, and I've even sorted my work bag, car boot, sock drawer, wardrobe, and offloaded some children's toys! :cool: Just the small matter of two massive cupboards, a bookcase, a cd and dvd unit, four drawers, the garage, and the loft remaining on my hitlist... It will take some time to get through that little lot!

VDOT, it sure helps me sleep soundly at night! Love the sound of your 2020 - powering on ahead We've decided to stay put for the foreseeable rather than have any more money tied up in our home. Not sure it's the most lucrative move, but it sits well with us in terms of emergency funds and housing needs for now. Maybe we'll move a few years down the line and regret not going for it sooner, but only time will tell on that. Hope it all works out nicely for you
_____

So, I've been doing some thinking... Warning: Huge wall of text incoming!

I've written in the past about needing to structure early retirement funds in such a way that there's always enough money on hand at each stage of the process. First there's the pre-57 stage - ISAs and savings accounts only. Then there's the 57 to 67 stage - personal pension plus any residual from the previous stage. Then there's the 67+ stage - state pension plus any residual from the previous stages. All stages can be boosted by working a little (I think of "retirement" in fuzzier terms than most). This work could be for an employer, freelance, earnings from a lucrative hobby, btl, etc.

During the accumulation phase, salary sacrifice pensions are damn near irresistible... A 32% uplift for a basic rate tax payer thanks to tax and ni relief. Add employer contributions for a cherry on top of an already unbeatable cake. This is why I've been sacrificing 25% (+5% employer) to my pension each month. It's a ridiculously good deal that can't be beaten on cold hard numbers alone.

However... I mustn't forget that personal pensions are heavily restricted. The earliest I can withdraw a penny from my pension is at age 55. Chances are that age could be pushed further out. 57 mooted as fairly likely, further out a possibility.

Right now I have enough in my personal pension to cover more than 10 years (i.e. 57 to 67) of my share of our expenses. That assumes inflation matching returns only, no further payments in, and steady household spending.

I have enough in accessible accounts to cover almost 9 years (i.e. 37 to 46) of my share of our expenses.

Between OH intending to earn at least 9kpa up until state pension age, and me thinking I might earn something from whatever I end up doing during early retirement, there won't ever be a need to cover anywhere near our total expenditure between 57 and 67 from personal pensions. We're sat at around 60% now, will each continue to pay something into pensions as long as we're working, and should hopefully see inflation beating returns over time... Chances are good that we'll eventually hit 100% without trying.

It seems to me that now might be a good time to scale back the pension contributions in favour of more accessible accounts and start closing that gap between age 46 and 57. I'll lose out on a whole lot of uplift, but it still seems like a sensible move.

So, yeah, I think there may be a big change in strategy coming soon - reduce pension contributions, increase S&S balance. Overall pace will slow a little due to the loss of "free money", but I'm convinced it's the right move.

It would be quite nice to get the top three lines of our financial overview table (house, pensions, s&s) into six figures at some point. Not going to happen anytime soon, but it could be a nice aim for some unspecified point in the future Not going to even think about attaching a date to that goal just yet, but I know it'll niggle away at me over time

crv1963

SuperSecretSquirrel wrote: »

Hi KC and VDOT :wave:

KC, I'd be lost without short and medium term goals... An ultimate aim is nice, but without those up close targets I'd never get there!


So, I've been doing some thinking... Warning: Huge wall of text incoming!

Hi SSS- You're absolutely right about the short and medium term goals!

Well done for where you have got so far. I was ready to pull the trigger in May or June this year, but a joint review and hard look at our finances mean we have had to change goals and push back the final "sit back and enjoy the fruits of our labour" by about 3 years.

We should be able to finally retire before I'm 60 but a lot of saving to do over the next 3 years! In preparing to retire we've started to spend money on the house and garden from savings- biting the bullet while still earning. We plan to take my DB Pension to cover bills and use wages to fill pensions and savings, TFLS from DC pensions to provide a cash sum to cover any market downturn prior to SP kicking at 67.

edinburgher

SSS - saw this and thought of you :beer:

https://monevator.com/how-to-maximise-your-isas-and-sipps-to-reach-financial-independence/

VDOT47

It’s certainly a tricky balance between pension contributions (pros- tax relief, cons - lack of access before c57) and ISAs, and one that I have not yet got my head fully around!

I too am hoping to retire (or at least retire from working for someone else to allow me to explore other options) by 55 at the latest. This means I probably need to think about having an ISA pot built up to tide me over until pension can be drawn down.

Obviously there are options to work part time or as a consultant, and my wife runs her own business which she loves and has no intention of packing up in her early 50s so she will bring money into the household in those interim years too, but some additional funds in an ISA would help.

At present I put a small amount each month into a S&S ISA, and am lumping the larger sums into the pension but that split may change in the future.