Early retirement sense check

crv1963

I always get my boys cast off i-phones! They want to have the latest version and pay for it then I'm not complaining! I think I underestimated the draw of having the latest technology until I worked in my current office where nearly all staff of all ages vie to have the latest this or that!


I think that they (in the office) view me as an oddity- I drive an old car (to them- it was bought as a 3 year old, low miles car, a bargain given my 36k pa mileage now 6year old), don't buy new phones, tv, or latest anything and prefer to wear a tie!

PipPip

kinger101 wrote: »

Many would argue 4% is too much, particular for early retirement. But at the same time, you've probably been cautious in assuming there will be no growth in your pension funds (only additional capital input).

We don't have a crystal ball, but if it crashed 40% in two years, you'd have another five years of buying relatively cheap funds/shares.

The key is probably building a reserve to ride out stock market crashes in cash/bonds (say 5-7 years), and having some flexibility in your drawdown. That way, you don't have to cash-out in a trough, or can adjust the drawdown rate if you're eroding capital too quickly.

Depending on interest rates at the time, you might want to weigh up the pros and cons of using the tax-free lump sump as a reserve rather than paying off what is a sub-inflation mortgage rate.

Thanks. The mortgage is a tricky one. I just want it gone when I stop working but you are right it is a sub-inflation tracker. I think I’ll chip away at it with any pay rises over the next 7 years and will have a think nearer the time. It’s been very cheap money.
I recently rebalanced my SIPP to be a bit more cautious. I had 40% in a US Equity tracker that did really well but was making me nervous. I left my exposure at 10% US equity and moved the other 30% into gilt and fixed interest funds. My portfolio now is 10% US equity, 10% property fund, 30% UK equity tracker, 10% Japanes equity tracker, 30% gilts and fixed income funds, 5% gold fund and 5% sundry/individual shares.

kinger101

crv1963 wrote: »

I think that they (in the office) view me as an oddity- I drive an old car (to them- it was bought as a 3 year old, low miles car, a bargain given my 36k pa mileage now 6year old), don't buy new phones, tv, or latest anything and prefer to wear a tie!

That's a new car by my standards. Lowest mileage I bought was 79K. Last two have all been over 100K. Have to love Fords for their durability and low maintenance costs.

tigerspill

The best thing I ever did was start recording every penny we spend each day. I started this on 1/1/17 so have around 18 months worth of data.
I track against 15 different pots - Groceries, Home, Life insurance, Electric etc. etc.
I am tracking month spend, pot spend and cumulative each month.
I did track in a similar way before from CC bills etc, but it isn't the same or as accurate as doing it day by day.
This has been an eye opener.
Only takes 60 seconds per day. Well worth the time investment.
And it is starting to build real confidence in my retirement plans from a spent perspective.

PipPip

atush wrote: »

I would aim to get rid of Both mtgs by retirment. So using your TFL sums or other investments could do that for you.

This will lower your costs when doing the 'number'.

How much does the chalet cost to run? Do you rent it out now when not using it? Seems if you arent it would be good to do this. Even when retired you wont be spending all of ski season there, will you?

How old will your kids be when you are 55? We had ours late to had to delay retirement til they were out of Uni/law school.

It’s an apartment. Currently we rent it out for part of the ski season and use it for other weeks. It’s mostly rented to people we know. This brings in about €5,000 per season which is used on French property taxes, apartment management fees, maintenance, French accountants fees and a bit left for our holiday spending money when we are there. We do plan to spend the majority of the ski season there, in the early years of retirement at least.
When I’m 55 my kids will be 16 and 18 so just at the start if those costly uni years, hence my nervousness about whether I will really be able to stop work at 55.

Sea_Shell

tigerspill wrote: »

The best thing I ever did was start recording every penny we spend each day. I started this on 1/1/17 so have around 18 months worth of data.
I track against 15 different pots - Groceries, Home, Life insurance, Electric etc. etc.
I am tracking month spend, pot spend and cumulative each month.
I did track in a similar way before from CC bills etc, but it isn't the same or as accurate as doing it day by day.
This has been an eye opener.
Only takes 60 seconds per day. Well worth the time investment.
And it is starting to build real confidence in my retirement plans from a spent perspective.

Are we twins??!!!! This is exactly what we've been doing, again for about 18 months. I know where every penny goes too.

PipPip

ColdIron wrote: »

Seriously, blow a few hundred quid and get a new telly A lot has happened in 10 years, is it even HD?

When it breaks! It’s HD, a 37 inch Toshiba LED. Did look at TVs recently and couldn’t see much of a step up unless you spend £££s on an OLED.

kidmugsy

PipPip wrote: »

Main worries I have are whether £40k is enough for someone earning over £100k today, although as noted a massive chunk of my earnings just disappears on mortgages, pensions and train fares which will stop in retirement.

You'll also stop paying National Insurance and 40% income tax. You'll presumably swipe part of your wife's Personal Allowance ("marriage allowance" I think it's called). If she draws from her pension then a further part of your joint income will avoid income tax. She can make another £720 p.a. using the SIPP money-go-round.

You'll have time to fanny around using high interest current accounts and regular savers. Your holidays won't coincide with school holidays = greater pleasure, lower cost.

You'll be fine, in all probability.

If I were you I'd worry that only £50k of each SIPP is protected in the event of fraud and whatnot. Several recent threads have discussed this. You could diversify across multiple providers. Or you could move big chunks to personal pensions which - saith dunstonh - get 100% protection, being insurance products.

PipPip

kidmugsy wrote: »

You'll also stop paying National Insurance and 40% income tax. You'll presumably swipe part of your wife's Personal Allowance ("marriage allowance" I think it's called). If she draws from her pension then a further part of your joint income will avoid income tax. She can make another £720 p.a. using the SIPP money-go-round.

You'll have time to fanny around using high interest current accounts and regular savers. Your holidays won't coincide with school holidays = greater pleasure, lower cost.

You'll be fine, in all probability.

If I were you I'd worry that only £50k of each SIPP is protected in the event of fraud and whatnot. Several recent threads have discussed this. You could diversify across multiple providers. Or you could move big chunks to personal pensions which - saith dunstonh - get 100% protection, being insurance products.

My SIPP is with HL and invested in big name funds. I find it very hard to believe that fraud risk at one of the UKs biggest institutions is worth the hassle and cost of spreading it across multiple platforms.

caronoel

Have you looked at VCTs to provide tax free income and a healthy tax rebate?

I am likely to substantially exceed the lifetime cap, so am looking into this to mitigate some of the punitive taxes for exceeding the cap.