This is not a mid-life crisis

inflationbuster

I'm looking to leave my job as well OP to enjoy a career break and refresh my skill set.

One focus i've had over the years is to increase my passive returns via the stock market (dividends) and rental property. The yearly return amounts to about 45% of my basic salary more than enough to live on and enjoy life. Plus a pot of cash on the side in case l need some emergency cash.

slapup wrote: »

200k divided by 14 years = £14k a year.

I wouldn't be leaving my job if that's all l had to pension age. Your age is such that you may no longer find another job a few years down the line and you want to think about that.

HardCoreProgrammer

OP, I am in a somewhat similar situation, and thought that it may be of reference to you.

I am also in my mid forties. Although not hating every minute of the job as you seem to be, I am starting to find it difficult to keep up (long hours, need to constantly learn new technologies outside of working hours, impossible management targets, constant threat of offshoring, etc.).

No expensive hobbies and not a big spender, not married, no dependents hence no one to leave anything to. My parents are getting on a bit, so wanting to quit work, take on less demanding jobs and spend more time with them while they are still in reasonable health.

Accommodation wise I am sorted, and I have also saved enough to have a basic existence until about 80, even if I do not get state pension .

Most of my savings and pensions are invested, but I have been scaling down for the last 2 years. At one point I was fully invested in stocks and shares, but now down to 60% and will continue to reduce the ratio. Just like you, my main focus is capital preservation rather than capital growth - I do not want to get wiped out in a market crash.

When scaling down, I considereded various options. Gold does not pay income, so called "absolute return" funds (which claim to minimise the downside) have high charges and poor performance, long term bond funds are risky if interest rate increases in future, peer to peer lending sites pay higher interest but carry risk of capital loss.

The only thing which seems to do what I want is index (inflation) linked bond funds. These bonds pay out according to inflation rate, thus mitigating against the risk of high inflation during the drawdown period. Perhaps this is something you may consider - it may work out fine if you leave it for more than 5 years.

HardCoreProgrammer

One more thing which I forgot to mention:

At the present time my 200k is sat in a bank accounts earning around 2%.

Do you mean a bank account or bank accounts? Hopefully you are aware that protection for savings with a single financial institution is limited to 85k? If you have 200k in a bank and it goes belly up, you will probably lose 115k of it.

tin586

Hello. I've lurked on these boards for years and have finally signed up to respond to you as I am in a smilar situation.

I've been going through a midlife "awakening" as well, although I might be getting over it!

I am 48, have no chldren, own my property (am mortgage free), have around £160k in free capital and am thinking of early retirement by the time I'm 50. I will get a defined benefit pension at 60, which is index-linked.

My aims are:
- I need to have £200k free capital by the time I'm 50, so that I can indulge my fantasy of being a full time investor and also pursue other hobbies.
- I currently have about £100k in stocks and shares ISAs (a mix of index trackers, investment trusts and individual company shares).
- I intend to boost that to around £180k within the next two years by moving money across from my cash ISA and making new ISA contributions.
- I intend to keep £20k available in cash for the first year of my 'retirement' at 50.

My 'risk considerations' are:
- What if there is a stock market crash and my stocks and shares holdings fall by 50%?
- Will I be able to hold my nerve and not panic? How long might it take for my portfolio to recover? 2 years? Longer?
- Noting also that I will be making withdrawals from a diminished pot.
- Is it really wise to quit work totally? If I get bored and want to go back to work how easy will that be? In my 50s I might never get another job again (age discrimination is the reality).
- So, should I not have a reduced hours job lined up before I retire? So that I earn enough to meet my living expenses (including holidays), but still have time to pursue hobbies and interests and am not panicked by the gyrations of the stock market?

My additional comments (not advice!) on your situation would be:
- Are you sure £14k a year will be enough? I'm budgeting £20k (I live in London, but am mortgage free). Will you be able to enjoy life? I want holidays, for example, and not live a basic existence.
- When you say housing is not an issue, presumably you mean you will always have somewhere to live (no rent or mortgage). If this is not the case, then housing shoud be a very big issue in your financial calculations.
- Have you properly taken inflation into account when doing your sums?
- You will definitely need to invest some (most) of the money in a stocks and shares ISA.
- A single global index tracker (or a number of trackers) and possibly some investment trusts could well do it. Beware of high charges and steer clear of absolute return (absolute rubbish) funds.
- Hopefully most of your cash is already in cash ISAs so that you can transfer it into a stocks and shares ISA; otherwise you are starting from scratch (£20k per year ISA limit). A non-ISA portfolio is not optimal.
- If share price falls and stock market gyrations will make you sweat, then I am afraid your plans are unrealistic. You cannot get a 5-6% return on cash.
- Can the pension you get at 60 sustain you for the rest of your life? (In my calculations, I have totally written off the state pension; in my view, the state pension age will keep on going up and in any case the state pension may well become totally means-tested.)

I hope this helps.

[Deleted User]

tin586 wrote: »

Hello. I've lurked on these boards for years and have finally signed up to respond to you as I am in a smilar situation.

I've been going through a midlife "awakening" as well, although I might be getting over it!

I am 48, have no chldren, own my property (am mortgage free), have around £160k in free capital and am thinking of early retirement by the time I'm 50. I will get a defined benefit pension at 60, which is index-linked.

My aims are:
- I need to have £200k free capital by the time I'm 50, so that I can indulge my fantasy of being a full time investor and also pursue other hobbies.
- I currently have about £100k in stocks and shares ISAs (a mix of index trackers, investment trusts and individual company shares).
- I intend to boost that to around £180k within the next two years by moving money across from my cash ISA and making new ISA contributions.
- I intend to keep £20k available in cash for the first year of my 'retirement' at 50.

My 'risk considerations' are:
- What if there is a stock market crash and my stocks and shares holdings fall by 50%?
- Will I be able to hold my nerve and not panic? How long might it take for my portfolio to recover? 2 years? Longer?
- Noting also that I will be making withdrawals from a diminished pot.
- Is it really wise to quit work totally? If I get bored and want to go back to work how easy will that be? In my 50s I might never get another job again (age discrimination is the reality).
- So, should I not have a reduced hours job lined up before I retire? So that I earn enough to meet my living expenses (including holidays), but still have time to pursue hobbies and interests and am not panicked by the gyrations of the stock market?

My additional comments (not advice!) on your situation would be:
- Are you sure £14k a year will be enough? I'm budgeting £20k (I live in London, but am mortgage free). Will you be able to enjoy life? I want holidays, for example, and not live a basic existence.
- When you say housing is not an issue, presumably you mean you will always have somewhere to live (no rent or mortgage). If this is not the case, then housing shoud be a very big issue in your financial calculations.
- Have you properly taken inflation into account when doing your sums?
- You will definitely need to invest some (most) of the money in a stocks and shares ISA.
- A single global index tracker (or a number of trackers) and possibly some investment trusts could well do it. Beware of high charges and steer clear of absolute return (absolute rubbish) funds.
- Hopefully most of your cash is already in cash ISAs so that you can transfer it into a stocks and shares ISA; otherwise you are starting from scratch (£20k per year ISA limit). A non-ISA portfolio is not optimal.
- If share price falls and stock market gyrations will make you sweat, then I am afraid your plans are unrealistic. You cannot get a 5-6% return on cash.
- Can the pension you get at 60 sustain you for the rest of your life? (In my calculations, I have totally written off the state pension; in my view, the state pension age will keep on going up and in any case the state pension may well become totally means-tested.)

I hope this helps.

tin586

If you can realistically escape at 50, I would recommend that you do it.

I managed it at age 55, now 62. I have enjoyed the last 7 years tremendously. Looking back, I would not have enjoyed these years nearly so much if I had still been on the treadmill of a full-time career. Also gave me the time to deal with various family problems without undue stress, including the illness and death of one parent and providing assistance to the surviving parent who is now 91 but living independently.

I am too house paid off, no dependents. However I was able to draw defined benefit pension at 55, without actuarial reduction but without the final 5 years of contributions. It gives me a decent income, albeit less than if I had continued to 60. I do have the benefit of added years purchased and a substantial AVC fund (not yet drawn on). I realise that I was very lucky not to have to rely on investments to tide me over to age 60.

So far as work is concerned, I have picked up some freelance work in my field over the last few years. At the moment the problem is finding the time for this as I am very busy with other activities. Never bored for a second.

Go for it.

AnotherJoe

tin586 wrote: »

Hello. I've lurked on these boards for years and have finally signed up to respond to you as I am in a smilar situation.

I've been going through a midlife "awakening" as well, although I might be getting over it!

I am 48, have no chldren, own my property (am mortgage free), have around £160k in free capital and am thinking of early retirement by the time I'm 50. I will get a defined benefit pension at 60, which is index-linked.

My aims are:
- I need to have £200k free capital by the time I'm 50, so that I can indulge my fantasy of being a full time investor and also pursue other hobbies.
- I currently have about £100k in stocks and shares ISAs (a mix of index trackers, investment trusts and individual company shares).
- I intend to boost that to around £180k within the next two years by moving money across from my cash ISA and making new ISA contributions.
- I intend to keep £20k available in cash for the first year of my 'retirement' at 50.

My 'risk considerations' are:
- What if there is a stock market crash and my stocks and shares holdings fall by 50%?
- Will I be able to hold my nerve and not panic? How long might it take for my portfolio to recover? 2 years? Longer?
- Noting also that I will be making withdrawals from a diminished pot.
- Is it really wise to quit work totally? If I get bored and want to go back to work how easy will that be? In my 50s I might never get another job again (age discrimination is the reality).
- So, should I not have a reduced hours job lined up before I retire? So that I earn enough to meet my living expenses (including holidays), but still have time to pursue hobbies and interests and am not panicked by the gyrations of the stock market?

My additional comments (not advice!) on your situation would be:
- Are you sure £14k a year will be enough? I'm budgeting £20k (I live in London, but am mortgage free). Will you be able to enjoy life? I want holidays, for example, and not live a basic existence.
- When you say housing is not an issue, presumably you mean you will always have somewhere to live (no rent or mortgage). If this is not the case, then housing shoud be a very big issue in your financial calculations.
- Have you properly taken inflation into account when doing your sums?
- You will definitely need to invest some (most) of the money in a stocks and shares ISA.
- A single global index tracker (or a number of trackers) and possibly some investment trusts could well do it. Beware of high charges and steer clear of absolute return (absolute rubbish) funds.
- Hopefully most of your cash is already in cash ISAs so that you can transfer it into a stocks and shares ISA; otherwise you are starting from scratch (£20k per year ISA limit). A non-ISA portfolio is not optimal.
- If share price falls and stock market gyrations will make you sweat, then I am afraid your plans are unrealistic. You cannot get a 5-6% return on cash.
- Can the pension you get at 60 sustain you for the rest of your life? (In my calculations, I have totally written off the state pension; in my view, the state pension age will keep on going up and in any case the state pension may well become totally means-tested.)

I hope this helps.

The big difference between you and OP seems to be, you own your own house.

AFAICS, OP doesnt.