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We are now on day 102 of our overland trip through the Americas which I am taking with my wife. We started in Alaska back on September 9th we have now reached the Yucatan Peninsula, and are in Merida. We will spend Christmas in Playa del Carmen and New Year at Caye Caulker in Belize.
I think trips like this are far more viable than many would imagine once early retirement is reached. Whereas a normal short holiday overseas is expensive, when you can rent your house out and take more time traveling, the cost of the holiday is similar to or even cheaper than living in the UK. Typically we spend about £40 per night on accommodation and £30 per day on food plus whatever we then spend on travel and activities. Our average daily spend is now below £170 per day and reducing further each day as the initial fixed costs and time in the USA are reduced by the lower costs of traveling in Mexico. We get about £60 per day rental income from our UK house, so the reduction to savings is only about what we would spend living in the UK - probably less with the cost of energy and inflation nowadays. We could definitely spend less on traveling, especially on food, although we are not extravagant either.
It is really interesting viewing the troubles in the UK from afar - the cost of utilities in Mexico is about £30 per month and the main concern is that you don't leave air-con on when out of the apartment, travel is all by bus and not very expensive (eg a 9 hour bus trip covering 330 miles today cost £40 each) and taxis are cheap - a short taxi ride (just over a mile) to the bus station this morning with all our luggage cost less than £2. Obviously, it is very warm here, so heating is not a concern even in the higher areas.
I still plan to go back to work briefly when we decide to return to the UK, whilst we sell our house and move to our retirement home. That is a very nice option too, as any shortfall in long-term savings can easily be made good with a bit of extra work so budgeting isn't essential, so I think this is a great way to launch early retirement (although I guess some would say it isn't really early retirement given we will be going back to work for a short time). From a purely financial perspective, we don't need to work again, but I think a short spell will be very beneficial, given the tax incentives of working two part-years and the additional funds to use to increase our resources until pensions all kick in at age 57.
I've always viewed time out of work traveling as just moving around retirement a bit, crudely viewing it as a straightforward relationship as a year traveling in my 20s equalling an extra year of work at the end of my career. I still view it like that now, with the added advantage of lower risk when I finally fully retire as I will be closer to getting pensions. The period between full retirement and our DB pensions being available at age 55 is the most difficult to manage as that is all from savings/investments. I expect that to be about 8-9 years when we retire, which makes things easier as that means the necessary funds will be largely held in savings due to the fairly short investment horizon.
Detailed expenditure log of the trip (link here) and trip map (link here).
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Is anyone else holding their head in their hands as a result of the year's S&S / pensions investments being so dire this year?I know that the sensible thing to do is ignore it all and trust in a recovery happening at some point in the next few years, but do you ever start to wonder if there's one coming??Has anyone switched their strategy now that saving rates are increasing a bit? I know savings rates are less than inflation but they are still better than the "on paper" loss. How do you all stay sane during the bumpy ride?ElmoR xx1
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ElmoR said:Is anyone else holding their head in their hands as a result of the year's S&S / pensions investments being so dire this year?I know that the sensible thing to do is ignore it all and trust in a recovery happening at some point in the next few years, but do you ever start to wonder if there's one coming??Has anyone switched their strategy now that saving rates are increasing a bit? I know savings rates are less than inflation but they are still better than the "on paper" loss. How do you all stay sane during the bumpy ride?
Having a very solid DB base which forms the majority of our retirement provision is extremely helpful, but we still have around £550-£600K in investments which will be used over the next 23 years (until we are both at State Pension age) so have incurred losses. We were fortunate that the downturn occurred after we ended our leveraged investment - we had previously used 0% credit cards and mortgage borrowing to accelerate investment but as we entered the first stage of our early retirement we ended all of that, so had been repaying all debts and building up cash savings in advance of going traveling. Hence downturn hit at around the best time for us, compared to a few years ago.
For me, I don't really care about the downturn - I can go back to work for a while to make good losses, and the impact of that is huge (ie a year working and saving compared to a year drawing down resources). It would be much worse if this occurred after I had fully left work, I would have a much higher cash component, and that would be badly hurt by inflation. Hence I'm very happy to see higher interest rates, I haven't changed strategy, but will be moving more into cash in a couple of years, so hopefully, there will be returns on cash equal to at least inflation by then.2 -
In contrast, the timing for us was rubbish. We are no longer working and are gradually drawing down a DC pot that depleted by over a third at the exact time we were in the process of removing this year's portion. This was in addition to the hit over the year that it had just taken and was as a direct result of the nonsense with Truss and Kwateng.
The rest of our investments are doing better, although the managed ISA pot has done really badly too. The self invested ones are doing much better.Save £12k in 2025 #2 I am at £4863.32 out of £6000 after May (81.05%)
OS Grocery Challenge in 2025 I am at £1286.68/£3000 or 42.89% of my annual spend so far
I also Reverse Meal Plan on that thread and grow much of our own premium price fruit and veg, joining in on the Grow your own thread
My new diary is here4 -
@Suffolk_lass - Vanguard have just introduced a managed ISA - can't say I'm tempted...2
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I'm lucky most of my pensions are DB. I think anyone who went through 08 had an inkling of what could happen.Achieve FIRE/Mortgage Neutrality in 2030
1) MFW Nov 21 £202K now £174.8K Equity 32.77%
2) £3K Net savings after CCs 6/7/25
3) Mortgage neutral by 06/30 (AVC £22.5K + Lump Sums DB £4.6K + (25% of SIPP 1.1K) = 28.2/£127.5K target 22;12% updated 6/7
4) FI Age 60 income target £16.5/30K 55.1%
5) SIPP £4.6K updated 6/7/252 -
I am sticking to our plan, luckily we are ~15-20 years out from draw-down, so I am in the fortunate position of treating this as a learning experience of how to handle SWR risk. I am expecting at least 2 cycles before we enter retirement.I am also downshifting when I can to maintain our savings rate as far as possible but it’s only possible to trim so much. I feel incredibly lucky to have started our MFW journey a few years ago and not too be living like we used to (without budget wiggle room). CM5
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@Suffolk_lass @hugheskevi Timing seems to be a somewhat unfair factor in one way. I know that the passive funds and our work pension fund try to reduce risk as you near your target retirement year, but there still seems to be a bumpy ride of sorts.@savingholmes I remember 2008 and also the episode in the late 1980/1990s when the mortgage rate went up to something mad like 15%, one month of that and we were using a credit card to pay ours, very, very scary stuff at the time. For some reason, 2008 didn't bother me so much, probably because like @Cornish_mum we were 15-20 years away from a sniff of any retirement.Timing. I feel some additional research and reading coming on...3
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@ElmoR - a wee Monevator article on sequence of returns risk https://monevator.com/is-your-early-retirement-under-threat-from-an-unlucky-sequence-of-returns/
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I still have 24 years til state retirement but hoping to go in 16 if I can.It's been a bit sobering this year to see how much pension pots and ISA values have dropped. Altough mine will have time to recover, the same thing could happen closer to my retirement age and have a much more serious impact. No access to DB schemes, so really need to increase my contributionsnext year.MFW 2024 £27500/7500 Mortgage £129,500 Jan 22 Final payment June 38 Now £68489.08 FP May 36 Emergency Fund £20,000 100% Added to ISA 24 £8,060 Save 12k in 24 #31 £20,034.76/20,000 Debt Free 31.07.142
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