Early retirement advice - how would those who have done it do it today?

bigadaj

Good post there and all looks well planned.

The one thing I'd suggest could be improved is the dividend allowance strategy, trackers often don't perform well for equity income. I'd be tempted to utilise this in a range of investment trusts, many have been operating for decades, and some back to the middle of the century before last, and often concentrate on maintaining or increasing a steady dividend stream.

cns06

Another MMM cohort here!

The MMM site has helped me a lot. I would read it as much as possible! Join the forum and join in with the gauntlets.

Work your "number" and then try and track how you can get there as quickly as possible whilst still having a good quality of life. If you read on MMM a lot you will see people talking about "HCOL" or "LCOL". That means high cost of living or low cost of living. Its a big factor.

Also have a play with firecalc.com

Pensions are great but to FIRE at a young age you need something which will generate an income probably many years before you can access here in the UK. Something to watch as I think in the US you can access pensions earlier and MMM is very US based.

The situation you want to get yourself in is to get your money working hard for you and growing without much contribution. Once you get a big enough pot its all about being lucky and smart at the same time but if you read a lot of the threads on MMM you will quickly see that people generally have to work really hard to hit 500k NW, the next 500k can actually come up pretty quickly and that's the key getting from that "not quite enough" number to well into the "FU money" range. The average FIRE number on MMM tends to be IRO 1m. ($) A lot of people report once they hit 1m the next million is already a done deal.

That all said you have to be very careful how you report your NW as a lot of people include home equity but in reality its best to exclude that unless you intend to sell and downsize, in which case exclude that % of equity.

Your liquid net worth is key for FIRE as I am sure you know.

Don't forget to look at firecalc

Good luck

ex-pat_scot

Future proofing against children.


It's a bit like battle plans - never survive past first contact with the enemy.


Children are more expensive than you could possibly dream.
That's not to put you off them - far from it - I have a bus full - but I could have retired long ago had we not had them.


My main plan is to keep nimble and try to minimise the hard cash commitments. That means steering clear of monthly loans wherever possible, and trying to build flexibility (such as interest only mortgage that you can choose to repay / overpay).

marco_79

cns06 wrote: »

Another MMM cohort here!

The MMM site has helped me a lot. I would read it as much as possible! Join the forum and join in with the gauntlets.

Work your "number" and then try and track how you can get there as quickly as possible whilst still having a good quality of life. If you read on MMM a lot you will see people talking about "HCOL" or "LCOL". That means high cost of living or low cost of living. Its a big factor.

Also have a play with firecalc.com

Pensions are great but to FIRE at a young age you need something which will generate an income probably many years before you can access here in the UK. Something to watch as I think in the US you can access pensions earlier and MMM is very US based.

The situation you want to get yourself in is to get your money working hard for you and growing without much contribution. Once you get a big enough pot its all about being lucky and smart at the same time but if you read a lot of the threads on MMM you will quickly see that people generally have to work really hard to hit 500k NW, the next 500k can actually come up pretty quickly and that's the key getting from that "not quite enough" number to well into the "FU money" range. The average FIRE number on MMM tends to be IRO 1m. ($) A lot of people report once they hit 1m the next million is already a done deal.

That all said you have to be very careful how you report your NW as a lot of people include home equity but in reality its best to exclude that unless you intend to sell and downsize, in which case exclude that % of equity.

Your liquid net worth is key for FIRE as I am sure you know.

Don't forget to look at firecalc

Good luck

What's MMM ?

AnotherJoe

Mr Money Mustache

OldMusicGuy

Website here: http://www.mrmoneymustache.com/

atush

ex-pat_scot wrote: »

Future proofing against children.


It's a bit like battle plans - never survive past first contact with the enemy.


Children are more expensive than you could possibly dream.
That's not to put you off them - far from it - I have a bus full - but I could have retired long ago had we not had them.


My main plan is to keep nimble and try to minimise the hard cash commitments. That means steering clear of monthly loans wherever possible, and trying to build flexibility (such as interest only mortgage that you can choose to repay / overpay).

This.

Our 3 have delayed our retirement a bit. I suggest for you, future proofing could include investment trusts, held out of your S&S isas if they are full.

Your wife is risk averse, but have her look into ones that have grown their dividend every single year for 40+ years. There are a number of them. Doesnt matter so much if the share price moves up and down (esp as when down you are buying more units with your monthly subscription) if the income is ever increasing. And using that income to buy more units.

Some of the providers have individual savings plans.

jamesd

Not retired quite yet but a mistake I made was not taking the time to learn more about venture capital trusts sooner. Cost me a fair bit of avoidable tax and I'm now getting some nice tax exempt income from the ones I've been buying. Advantages they have over pensions include:

1. You can sell and buy again with a time gap after five years and get another chunk of 30% tax relief on the purchase. Repeat as often as desired, though this relief is limited to income tax due in the year of purchase.
2. Tax exempt dividends, don't count towards the dividend allowance.
3. No CGT, though most look to pay out returns as dividends instead of capital growth.
4. Capital and income available at any age.

Disadvantages include:

A. Available at any age, so they count as capital for means tests and legal judgements at any age as well.
B. More limited range of investments, only smaller companies. Wide risk range within that, from very high risk speculative startups to late stage new businesses with the whole investment value backed by property. But nowhere near the breadth you can get inside an ISA or pension.
C. Not available at all times, there's an investment season that starts around November and the more popular options sell out quickly.

In general I prefer the lower risk end for the ongoing income and effective ability to just defer income for a few years before getting it out tax free.