FIREside Chats

Retireinten

It is the last bit that's key, particularly as you are potentially leaving work in your 40's - there is a long way to go before your DB and then state pensions kick in - meaning a heavy reliance on ISA savings and DC pensions, all of which are exposed to the whims of the stock market. Sounds like you're on track to save enough and at a very early age, the question is a cash flow one...will you have enough in the right pots at the right time to fund each stage of retirement? 

But I think you need to keep reminding yourself you have options here too, this is not just a financial decision but an emotional/health/family/'keeping your marbles' intact one! Ten years ago I felt trapped in my job because I was paid well, got decent benefits but most importantly worked for an employer who allowed me to work flexibly around my kids - so I stuck it out! Now, I could allow myself to feel trapped in this level of job because I need another five years before I can pack it all in. But I'm not trapped at all, I'm here entirely by choice. My five year timeline exists only because I hate my job! I actually enjoy working and I like some structure to my week. It is perfectly feasible for me to retire now from my profession and semi retire hours wise...and it sounds like this is an option for you too. Yes I'd (we'd) have to work longer but it will be a far more pleasurable route to retirement.  

Lot's to think about...

chile_paul2

Retireinten said:

But I think you need to keep reminding yourself you have options here too, this is not just a financial decision but an emotional/health/family/'keeping your marbles' intact one! Ten years ago I felt trapped in my job because I was paid well, got decent benefits but most importantly worked for an employer who allowed me to work flexibly around my kids - so I stuck it out! Now, I could allow myself to feel trapped in this level of job because I need another five years before I can pack it all in. But I'm not trapped at all, I'm here entirely by choice. My five year timeline exists only because I hate my job! I actually enjoy working and I like some structure to my week. It is perfectly feasible for me to retire now from my profession and semi retire hours wise...and it sounds like this is an option for you too. Yes I'd (we'd) have to work longer but it will be a far more pleasurable route to retirement.  

Lot's to think about...

You are absolutely right - whilst the work situation is really challenging there is a lot that's good about it.

I've got a catch up with a senior manager next week that I trust a lot and I'm going to infomally test out the possibility of reducing my hours and moving to 4 days a week or 9 days out of 10.

Lots of potential pitfalls, both for me (the workload doesn't go down) and the business, but am going to see if I can sell the prospect of trying it on a trial basis.

I'm keeping looking for other options in the background in case the response is not positive.

Suffolk_lass

@chile_paul2"I've got a catch up with a senior manager next week that I trust a lot and I'm going to infomally test out the possibility of reducing my hours and moving to 4 days a week or 9 days out of 10."

Two things from me. 

1. I compressed my hours into 9 from 10 then (taking every Friday out of office) I worked from home on the working Friday, doing all the admin and management tasks that otherwise got neglected. It was a really good way of organising my time and taking time to stop and think (a luxury much undervalued while everyone must be seen to be busy
2. Don't forget that in your forties/early fifties you need to consider maintaining or topping up your state pension contributions (especially if you were in an occupational pension scheme before 2015). The best way to do this is to receive credits, if you were a carer for an adult or child

hugheskevi

Update from me...my wife and I have now reached southern Guatemala, traveling south from Alaska down to Tierra del Fuego. We are now almost 5 months into the journey, which should last between about 12-24 months in total. Trip map is at this link and a summary of it is:

• A week hiring a car to drive around Alaska
• A week on a cruise ship to get from Anchorage to Vancouver
• Bus across the border to Seattle
• Hire car for 6 weeks to drive in a huge clockwise circle around western USA, going as far south as Phoenix, then returning to Seattle and flying back to Phoenix to resume the overland trip. This and the above were the first 2 months of the trip.
• Buses from Phoenix onwards, all through Mexico, Belize and Guatemala - this has been the last 3 months of travel.

It is very interesting looking at the finances of the trip. In 2021/22, the last full year of living in London, we spent £32,419 on living costs. Importantly, that was based on a cost of gas and electric at a cheap fixed tariff from before the big price increases, and before a lot of the recent inflation, so would be much higher now.

The daily cost of travel after 145 days is £151.14 and falling - the fall is due to the first 2 months of the trip being in the USA, as well as fixed costs such as flights and insurance getting averaged over a longer period. That equates to an annualised cost of just over £55,000. The daily cost of USA was £170.65, Mexico was £111.29 and Belize was £128.39. For anyone who likes spreadsheets, the trip travel and expenditure data is at this link. Note that whilst I wouldn't swear the figures are 100% accurate to accountancy standards, I have made a big effort to record everything accurately on a basis of recording as costs occur (ie if I book and pay for accommodation, I record the cost at the point of payment, not at the point of using the accomodation, so costs on a country-by-country basis are not quite accurate, but the variance shouldn't be too significant).

However, living in London we benefit from essentially free accommodation (ie living in a mortgage-free home). So a like-for-like comparison is to deduct the rental income we get from our London house whilst traveling from the cost of travel. The rental income net of estate agent costs is about £22,500, leaving a cost of travel of £32,650 (and falling).

So it is actually quite a lot cheaper for us to travel, staying in hotels, eating out and seeing sights every day in Central America than it would be for us to live our normal lives in London. I'd describe our travel-style as mid-range - we could spend a lot more on accommodation and food so it can't be described as luxury travel in any way, but equally, we don't stay in dorm rooms or such-like as many budget travelers would. This was a pleasant surprise to me - of course, we don't have earnings, but we would not have those if we were retired in the UK. So I'd say that a period of travel between leaving work and full retirement should be quite easy to fund with a bit of planning for anyone who wanted to do it.

Since we left London to go traveling in August, inflation and investment returns have been a little frustrating - I'd hoped for better real terms performance. We have enough to not need to work again based on our past expenditure, but our income between age 45 to 57 (ie age now to age when pensions become available) would be a lot lower than our post-age 57 income if we do not work again. I suspect the answer will be to pursue the most cost-efficient approach, which will be to return to UK (whenever that might be), and market our house the following February as that is apparently the best time to market our type of house, and continue to work until such time as it is sold and we have purchased a new place, then quit work and retire fully - that should also be nicely tax efficient as income should fall into part of 2 financial years. That will still leave an income that isn't fully smoothed, but there seems to be no point working when we already have what we need, but it would also be a waste not to work when we may as well do so just whilst selling our house and benefitting from the tax position.

powerspowers

Thanks for the update Hugheskevi - enjoy yourselves 🙂

Moneyfordreams

I really enjoy these updates thanks Hugheskevi

remote_control

I really enjoy the updates Hugheskevi, please keep posting

hugheskevi

remote_control said:

I really enjoy the updates Hugheskevi, please keep posting

Thank you!

We have now reached southern Nicaragua, and are at Ometepe Island which is a great little place formed by two iconic volcanoes deep inside Lake Cocibolca. The best volcano by some margin however was Volcan Acatenango in Guatemala, which you hike up and spend the night near the summit.  You get a great view out over Volcan Fuego, which is an active volcano that erupts with molten lava about every 20 minutes. 

The cost per day for myself and wife combined on our travels is in the quoted text below. The cost now is considerably below what the cost of our everyday normal life living in London would be (taking into account the rental income we receive), and we could reduce costs a lot by cooking our own food rather than eating out for all meals, as well as staying in more basic accommodation than double rooms with air con and economising more on day trips (eg, doing more ourselves rather than taking guided tours).

USA/Canada: £171 (Staying in AirBnb rooms, driving a rental car, cooking our own food - public transport just isn't viable for visiting all the National Parks and other sights)
Mexico: £111 (Staying in apartments or hotel rooms, taking public transport or tourist shuttles, and eating out for most meals - same for the rest of Central America)
Belize: £128
Guatemala: £103
El Salvador: £81
Honduras: £105
Nicaragua: £96

We are now up to Day 181 of the trip, so almost at the six-month point. It is the fourth trip over six months I've done, but the first since 2007. I would say that previous experience with long-term travel is a huge advantage to doing such a long trip independently, but not essential. 

As well as the links in my post a few posts above this one, there is also this link that has an exact log of where we have been (a bit dodgy north of Vancouver, but very accurate from there).

If anyone is thinking of visiting Central America, Cancun is a great airport with links to UK, other airports are much more expensive. A circular trip, Cancun to Cancun going through some combination of Playa del Carmen, Caye Caulker, San Ignacio, Flores, Copan, Antigua, Lake Atitlan, San Cristobel, Palenque, Merida and Tulum would be a good itinerary. Ideally about 6 weeks, but shorter loops are of course possible.

A few pictures from recent weeks:

View of Volcan Fuego from Acatenango in Guatemala:

A wild Scarlet Macaw came to help itself to my cake at Macaw Mountain, Copan, Honduras

Perfectly clear and warm water at Water Cay, off Utila Island in Honduras

hugheskevi

Another update from me...

We have now reached the end of North America, and will take the short 1 hour flight over the Darien Gap to Cartagena in Columbia to start across South America tomorrow.

We spent exactly 7 months (212 days) crossing North America, with just under 2 months in both USA and Mexico. The interactive trip map is at this link, screenshotted below.



There were 3 'cheats' on the traditional overland route:

1. We didn't do the 500-mile drive between Prudhoe Bay (the traditional start point of a trans-Americas overland trip) to Fairbanks. We thought there was little to see, and it was difficult and expensive. 
2. We took a cruise between Anchorage and Vancouver rather than travel overland - the overland route was difficult without our own transport whereas the 8-day cruise was surprisingly cheap.
3. We didn't do the 3-5 day sail between Panama City and Columbia (overland travel is not possible due to Darien Gap), taking a short flight instead. My wife doesn't like boats, so sailing wasn't very attractive, and it is also quite expensive.

We traveled about 19-20,000 miles overland, at a total cost of £28,500. We rented cars in the USA and mostly took public buses through Central America, along with a few tourist shuttles in Guatemala.

The current annualised cost of the trip is £49,350 but we also receive around £22,500 in rent and £3,300 in interest, so the depletion of savings is around £23,500 p/a. The average daily cost is still falling, as initial costs and the much higher cost of travel in the USA are averaged out with the lower cost of travel in Central America. Interestingly, I'd expect to spend about £35,000 just living our normal lives in London, so our net spend is now considerably lower traveling than it would be living in the UK.

Costs are a key difference between short and long-term travel - we spend less per day on a long trip as the pace is slower and also don't have any expenses back home and even get income from our home. If we were on a short trip the cost is usually about £200 per day for everything compared to the £135 average cost per day that we are currently spending, we wouldn't have rental income and would still have expenses such as Council Tax and other bills to pay. Hence long-term travel is a fraction of the daily cost of short-term travel. If anyone wants to see detailed stats on the costs, a spreadsheet is at this link.

Our current plan remains to return to UK and our former work sometime during Spring/Summer 2024, working for a while whilst selling our London home and moving elsewhere and retiring fully. Although we already have sufficient income to meet our likely needs, if we work for another 6 months we would have an income prior to age 55 equal to our pension at age 55 (£49,000 after tax), and if we worked another 2.5 years we would have an income equal to our income at age 57 (£66,000 after tax), once DC pensions are available. In practice, I expect to work for about a year whilst we settle back into the UK, then sell home and move - it is very tax efficient as that would be working two part-years and so we wouldn't pay as much income tax as if we worked a full year.

It is very good being on unpaid leave and knowing we can easily go back to work. That makes money management much easier, as any shortfall (primarily that is adverse investment movements) can easily be made good. I think this is much preferable to quitting job and going traveling.

powerspowers

Thanks @hugheskevi! I love that you’ve shared all the financial details but not told us whether you are enjoying yourself, it’s the opposite of an insta post. I’m going to assume you are and wish you safe travels for the remainder of the trip