Early Retirement - (nearly) one year on

Lomcevak

Great series of posts - like others, i'm near the top of the tree in the IT world, mid-40s and earnings into six figures, coupled with various perks that make it a good place to work, although tiring and stressful too as the expectations are very high. I'm reasonably secure in my role for the next few years, but agree that i'd be pretty exposed beyond that - although i'm a technical architect rather than a management role, it would be very hard to downshift into a different role (e.g. development positions are readily available but i've not written software for ten years, and the requisite skills have changed) and comparable jobs at my level of seniority are in short supply.

My father was in a similar position, and lost his well-paid IT manager job aged 51 in the early-1990s recession (when I was in my mid-teens), which made our over-indebted lifestyle come crashing down (loans, credit cards, large mortgage by 1990s standards, no savings). We pretty much lost everything and he never worked at anything like that level again, so I've always wanted to make sure that i'm effectively ok before I'm 50. Anything after that's a bonus.

Fortunately i'm pretty much on track for that (mortgage will be gone next year, savings and pensions at a level where I could survive in a fairly frugal way from 50 onwards). Current plan is to keep going to 55 - 57, but the idea of downshifting to a lower-pay, lower-stress job post-50 does seem quite attractive, even if i'm not too sure how i'd do it.

akh43

JoeEngland wrote: »

That's interesting what you say about being tired all the time. I'm 52 and have noticed in the last couple of years that I feel more tired. Is this something many people in their 50s and working FT experience? In my case it doesn't help that my body clock is late to bed and late to rise, so the weekday alarm has always been a major thorn in my side!

I am a night owl too, definitely not an early bird and struggle to get up at 7am which is one reason I am always so tired. Yet on a day off with no alarms I am up earlier than when I work which is frustrating !! I am hoping once retired my body clock will sort itself out and I will have more energy.

swindiff wrote: »

All of you guys that mention high levels of stress in your previous employment which caused health issues. Were you particularly well paid and was it worth it at the time? Did high earnings enable you to retire 10 years earlier than would have otherwise been possible? I dont earn a fortune, but not on the poverty line either at just over £40k with a decent DB pension, but my job causes me no stress whatsoever.

Had I still been in my original job with the same company I did for over 20 years I would have left at 55, not because stressful or I could afford it, but because of the job gave me health issues. Luckily I changed departments approx 13 years ago, now like my job and its not really stressful, hence why I did a few more years to improve my pension. When I see some of the wages quoted in the threads in this forum mine does not seem a particularly good wage, just increased to £27k, but I have always been fine with it. I suppose it depends on what you are used to and what your outgoings are. I was never going to have a massive pension on my wage but I am now at the stage where it is enough for my needs.

ukdw wrote: »

I was considering limiting my lump sum to my AVC level due to my 15:1 lump sum commutation ratio.

Is taking a smaller lump sum or making a one off AVC contribution to bring your AVCs up to the max lump sum level an option for you?

Whether it is worth doing depends on whether you need the extra £37k lump sum (or £29,600 net extra AVC contribution) and what your pension commutation ratio/payback period is.

I have no dependants as such as my children are both grown up and i'm divorced so taking the maximum lump sum as my kids would not get anything from my pension if anything happened to me so at least my kids would have a chance of some money from my savings.

The AVC's over past 4 years (I wish I had started these a few years earlier as didnt understand the tax and NI savings) have just enabled my monthly pension to be higher while still taking the maximum lump sum.

shinytop

bsolutely. I've just turned 57 and over the last 5 years or so work has just got increasingly mentally draining. It's not the workload that has changed, it's my resilience / enthusiasm / energy not being what it was.

Snap. Another IT worker here. It's not so much that I can't do it any more it's just that I (excuse the language) can't be *rsed to. Fortunately this attitude has more or less co-incided with my ability to leave at a time of my choice.

The work, the hours and the stress are bad enough but the endless performance reviews, restructures, re-launches and other 'initiatives' that make no difference whatsoever really grate after a while and it's becoming harder to pretend. Having said that my industry and employer has been very good to me and I'll leave with no hard feelings.

DairyQueen

OMG: Thanks for sharing your first year's experience. It's good to hear from those who have successfully made the transition from high-stress work into a relaxed retirement.

OH and I seem to be in the opposite situation to many here.

At almost 62, Mr DQ is still completely absorbed by his career and has recently returned to FT work as a self-employed consultant after a couple of years on a 3-day week. Consultancy suits him so well that he has now deferred retirement until age 65. I think he will continue to defer until he is forced into retirement by lack of clients and/or by the financial consequences of failing to draw on pensions.

We are well-prepared for retirement financially despite some big drains on our cash over the last few years. However, our annual costs are high as we run two small homes in order to facilitate OH's proximity to clients and my responsibility for disabled/elderly parents.

I was forced abruptly into retirement in my early 50s following a family crisis and it has taken several years to adjust to this new lifestyle. Now I cherish the day-to-day freedom it offers. My list of retirement positives:
- avoiding rush-hour travel (I gleefully sit with a cuppa and watch the daily dash).
- attending appointments and shopping mid week. No parking issues, no queues.
- week day leisure activities that begin at 10, or noon, or 2.
- walking whenever the mood takes.
- spontaneous outings on fine-weather days.
- no compulsion to brave the roads on adverse-weather days,
- procrastinating on chores (my personal favourite).
- retirement is a great social leveller. Retirees never ask each other the question: "what do you do?" (i.e. "how do you earn a crust"). There are no social judgements and pigeon holes in the post-work world.

The negatives:
- The assumption that I am always 'free' to do this-and-that on behalf of others.
- The related assumption that my time is less valuable than others. Service providers and family are equally guilty of this.
- The loss of identity that the working population uses as a signifier of credibility and competence.

OldMusicGuy

There seem to be quite a lot of IT folks on here that I suspect are spending time during boring conference calls on MSE rather than paying attention to the boring conference call.....;) I know I used to.....:D

However, the kind of stress we are talking about isn't limited to those in IT. I had a chat with a GP that retired at 55 and he sounded just like me - fed up with ever more stressful performance targets, demanding clients (patients) and lots of management BS!

DairyQueen wrote: »

- retirement is a great social leveller. Retirees never ask each other the question: "what do you do?" (i.e. "how do you earn a crust"). There are no social judgements and pigeon holes in the post-work world.

This is an interesting point. In my youth I was into music and the punk/goth scene. I did not set out to be a corporate wonk, but ended up there. I enjoyed my work and was proud of what I (and the companies I worked for) achieved but increasingly I was becoming too convinced of my own brilliance and entitlement to high pay and perks.

Since retiring I have a much more laid back attitude and in many ways am getting back to my "alternative" roots. And it's nice to mix with a wide range of people rather than spend a lot of time just with people from the IT world.

enthusiasticsaver

Thanks for sharing your experience OMG. I retired about the same time as you and I think we posted on many of the early retirement threads then. I am 58 and like you have just closed down my spreadsheet for 2018 and done a plan for 2019. Our normal income for a year is around £35k gross and £33.5k net.

The things we have done over the last year is I have transferred part of my tax allowance to my DH as his pension is much bigger than mine and he pays tax at the moment and I am a non tax payer until my state pension kicks in. I have another GMP pension which pays out in 2020 but I don't think that will take me over the threshold but with £2000 of investment income from an income portfolio it may be tight.


We replaced our kitchen from savings so our first year was quite hard on our budget. We did not really scrimp at all and if we take the kitchen out of the spending equation we would have been able to manage on a lot less than the £33.5k annual income. We also had a holiday and this year is the first year we are going to try to live within budget without drawing on savings or investments. 75% of our assets (except for our house) are in investments in multi asset funds with a general spread of 60% equities and 40% bonds. 25% is in cash accounts, high interest current accounts and internet savers.


Our expenditure broke down as around the following monthly


We can cover our utilities with around £500 per month. Our gas and electricity is higher than when working as we are home more.


We spend around £500 per month on groceries, household stuff and fuel.


We save around £1000 a month to cover home improvements, repairs of white goods etc, car maintenance and service, gifts and holidays and short breaks.


We save £100 a month to cover yearly insurances, telephone line rental, tv licence, gas fire and boiler services and car tax.


That leaves us around £700 disposable income. We have changed our leisure club membership to off peak so that is £66 a month. We have kept Sky and negotiated a discount so that is £20 and we have a National Trust membership at £9.50 a month. We each have £200 to cover hobbies, clothes, personal entertainment. My husband has an expensive hobby which involves paying out for odds and ends but I love the theatre so go with a friend or one of my daughters mainly. The remaining £200 or so covers meals out for the two of us or the occasional matinee or cinema trip.


I have found the mentality of not saving each month with the object of providing wealth for our retirement has been quite a mindset change. We love the less stressful and hectic pace of life though and quite honestly have now got to the stage of saying how did we find time to work. I have spent more time doing things I enjoy and things which need doing like housework, laundry and shopping are more spread out than when working.


I have not suffered any loss of identity as a lot of our friends have now taken early retirement so we are in the same boat. We love not having to go out early morning in the bad weather. I also love the fact I can spend all day doing things I want to do and that the need to rush things has gone.


We have grandchildren and we do get asked to babysit but our daughter is very respectful of our time and we offered to do one day a week childcare to save them money on nursery costs. Occasionally we stand in if they are ill but it is always allowed that we can say no. My mum who is elderly but lives 200 miles away has also been very respectful of our time and not made additional demands although I do visit her more often now I have more free time so people asking me to do things has not been an issue. I will not volunteer for things though figuring I did my share of secretary and treasurers jobs when my kids were growing up and I don't want to go back there.


The main resolve I had when retiring was I determined not to fill every day with activities like some people rush to do. We like to be able to look at the weather and say that how about a drive to the coast for lunch out and a walk? Filling my day with activities would interfere with that.

AnotherJoe

JoeEngland wrote: »

I work in IT and know how difficult it can be if you want to downshift you're role. Because of the nature of IT, technical skills can quickly become out of date if you've not been programming for a while. If you have more generic skills like project management or business analysis those skills don't erode as fast, but probably still have a sell by date.

Nah. Agile is a reset back to the 1970's so you just start again

k6chris

Yup - ex (large American corporate) IT employee here - left 5 1/2 years ago as the 350+ mile a day commute was proving 'sub-optimal'. Complete change of role into a local university, take home salary fell to less tha 50% but the change was well worth it, even if the politics is mind blowing! Right on the cusp of retiring at 55, though pulling the trigger is harder than I expected. Like MallyGirl, I lack the 'passion' and can't be bothered to play the pretending game anymore.

uk1

OMG,

It has been lovely to have followed you through your journey and your planning stage through the years and to read of the fruits.

FWIW, to add my experience to the pot, I'll choose a slightly different perspective and just post what were my “moments of truth” ie what with the benefit and wisdom of hindsight from today turned out to be be greater or lessor degrees pivotal moments that have made a difference to our financial and health wellbeing balance sheets. We're both currently 68 and drifted into retirement at around 52 or 53 – it is for reasons I'll explain later difficult to be precise. Our income needs are around £55k net annually – we run two homes – don't rent out the second - and two cars one of them “decent” and travel quite a lot and our income is in sync with that. In simple terms my sinking balance sheet is actually a bit more at the end of each year than when we started, so we're not currently spending capital. We think of the second home as being an asset that can be sold if things go wrong but is essentially a seaside holiday home.

I'd say the first moment of truth was when I joined a large corporation and I started to contribute around 16% of my earning in pensions including AVC. I joined in my mid-twenties and stayed for around 17 years. My background before then had also been in the music industry but I had started a family unexpectedly and felt I needed a “proper job”.

The next moment of truth was realising that the pressure and boredom of working for a corporation where my future wasn't in my control and might end up killing me and with my wife's support decided to leave and start a business from scratch the motivation being that it would actually be less stressful to work for myself than for the corporation and that turned out to be right. My wife and I had a wonderful time working together each day and it was the best time of our lives. We started with a struggle and worry but ended up securing our future and enjoying it.

A pivotal moment during that time was the decision that we were building a business to generate income and not a business to be sold. That meant that I concentrated on billing and not building. The consequence of that was I never said no to any requests but instead quoted prices to do work I didn't want to do that I thought would result in us not being asked to do it. Instead what happened was we were asked to do some projects that were enormously profitable and as an example one of the projects invoices paid for a second home.

Another pivotal moment during that time was receiving advice to cash in the DB pension. In fact I had been offered advice for “free” in exchange for handling the transfers but I insisted on paying for it. I felt that paying for advice offered better protection. As it happened this turned out to be astute. We eventually realised that the advice was poor, and we applied under misselling to have it bought back into the ex-employers DB scheme. At first it was refused on the basis that the value of my scheme was then greater than the cost of buying back in and therefore I hadn't suffered a loss. So a sub-pivotal moment was asking for the data and figures they had used and on checking them realised that they had miscalculated because they had ignored the AVC element. So on recalculation they agreed and added around £150k to my pot and it was bought back into the DB which resulted in an improvement to my pension. For some reason I do not understand I think I made a profit out of this but do not have the skill to find out why. I ended up with more than I started with.

The next pivotal moment was when at around 52 or 53 that we had ridden a wave and milked our business and that we'd either need to start a new business or retire and the calculation showed that we had probably “saved” enough to retire which we did.

The next pivotal moment was ensuring that I had paid NI payments for my wife throughout our marriage and then getting to grips with how beneficial deferral was. This gained me around 30% and my wife 74% uplifts.

I'd say that another pivotal moment during this period was getting to grips early on in our lives with the travel loyalty programmes. This has effectively changed our lives and enabled us to travel up to three times a year in First for long-haul travel and all our European travel in Business. We stay at first class hotels where we have “made friends” and are offered extraordinary rates and extraordinary special treatment. I think it would be more difficult now to replicate what we did but we simply seized the moment. We have travelled in extraordinary style for a very long time in a way that we couldn't have otherwise afforded.

Downsides. So now we're roughly 15 or 16 years into it and I'd say our main challenge is that we are bored. We've managed to do most of the travelling we wanted to do and now simply return to places we love. I'm not a particularly naturally gregarious person and so tend not to mix with people – and we enjoy our own company and routines. Also because of the unusual nature of our lives we find very little in common with others and rarely meet people who are sort of similar if you get my drift. So we sometimes seem to engender envy that has had at times hurtful repercussions with people we thought were friends but turned out not to be - and therefore find genuine friendships difficult to establish. However we are extremely fortunate in how things panned out and at the moment are healthy and safe and for that we are really greatful.:)

JoeEngland

shinytop wrote: »

Snap. Another IT worker here. It's not so much that I can't do it any more it's just that I (excuse the language) can't be *rsed to. Fortunately this attitude has more or less co-incided with my ability to leave at a time of my choice.

The work, the hours and the stress are bad enough but the endless performance reviews, restructures, re-launches and other 'initiatives' that make no difference whatsoever really grate after a while and it's becoming harder to pretend. Having said that my industry and employer has been very good to me and I'll leave with no hard feelings.

In the past I've had little tellings off at work for avoiding monthly or yearly comms events where you go and sit in a room for an hour or two listening to senior managers. But not attending them never made the slightest difference to my day job as we'd all find out if something affected us anyway. It's that kind of boring corporate stuff that I'll be glad to leave behind when I give up work, especially as the can't be a***d factor has got worse in the last couple of years I'm the sort of person who doesn't care much about what's going on in the company unless it affects me. That's one reason why I've never been the high flyer type, but am happy with what I've been able to earn in my career.