Can I , Should I..board the FIRE train

AlphaKappa

Hello

I'd appreciate the benefit of your wisdom to go over my plans to see if I'm ready to go. Figures are best estimates + real terms following years of expense tracking and projection.

I'm not after an Armageddon/bullet proof plan. I'll be happy with anything over a 90% chance of success (crystal ball anyone).

OK, to the brief details- I have worked a few many years and need a break. It could be temporary or permanent (so plan is based on not returning to work). I may re-train or pursue other things.

Age = 42. Plan to leave next year (if I don't panic or get bitten by OMY). Married, 3 kids, moderate lifestyle.

I intend to fund the future as follows over the coming years:

Age 43-53 (11 yrs)

Expenses £50k/yr [30k to run the home. ALL IN. 20k to cover school/uni fees contribution. Been paying for many yrs now].

Funded by : £15k from 2x BTL (after tax, repairs, money put away for major repairs, voids etc. Long term fix @~2%. Owned >15yrs so reasonable degree of confidence)

Then I need 35k x11 yrs = 385k. I have S&S ISA, VLS80: £285K , Cash = 100k

[Contingencies: Can return to work, another ~60k cash available]

Towards the end of this period, sell 1xBTL. Equity today, less tax ~150k. Assume it retains buying power in future

Age 54-56 (3 yrs)

Expenses £50k/yr. Funded by liquidated BTL

[Contingency: 7.5k/yr rent from remaining BTL. Can cut down expenses, less support required for kids]

Age 57 (DC pot access) - SPA (68?) = 12yrs.

DC Pension pot, Todays value = 960K, invested in VLS 80 equivalent. No longer contributing (employer contributions now paid as cash) . I'm aware  there are LTA issues, but I max'd contributions to take advantage of COVID drop, mitigate against sequence of returns risk, and IHT planning.

Expenses, still assume 50k/yr (more travel, help kids, etc).

TFLS will/may be used to pay off mortgage (interest only, long term fix/portable, value £220k @ 2%), TFLS balance held as cash.

After TFLS, I suppose value of pot will still be of excess of £1m (inf adj) - could be lower- who knows

Plan is to drawdown up to BR - 50K/yr + 7.5K form BTL. Unspent amount will be put in ISA (mix of cash + shares).

Towards end of period, sell 2nd BTL, Equity today =150k. This will be held as cash for next phase

[Contingency:  Can cut down expenses, less support required for kids, unspent cash in prev yrs]

Age 69 onwards

Expenses, say 40k/yr

2 x SP = 19K + Wifes NHS DB = 6k (likely to be more)= 25K

Drawdown requirement = £15k (will be able to draw more as required, keeping LTA and IHT in mind)

[We both need 6yrs more for full SPA. This will be covered by future work , bought or Class 2NI. Wife has no interest in stopping work (yet . Her DB is currently ~3k, and increases by ~900/yr]

Contingency: Cash held- 150k. Drawdown rate is low anyway, so comfortable. Fixed income is sufficient

Additional info

Focus was on contributing to my pension as I am higher rate (and caught by 60% marginal rate). Wife is BR. Contributing more to her pension will mean less is available for spending now.

On balance, took the decision to pay into pension than pay mortgage early

Excess money would find its way to good causes/ helping kids/family

We have recently replaced all big ticket items (car, kitchen, house renovation, etc) so nothing major expected soon. Saving for 1x major upgrade which may be 8 , 10 yrs away. Post DC access, sufficient funds available to do this as reqd.

Wife's income is spent on her pension contribution, building a cash/rainy day fund/future big ticket items, discretionary spends 

When I leave work, we'd be able to reclaim child benefit

In addition to all the above, I have a small separate stash to fund a business idea, leisure travel and hobbies 

Whilst numbers may work, the psychological/emotional/family dynamics part would be fun

Interested in ways to optimise that would result in meaty benefits. Thought about VCT, but not sure at the moment

(Yikes..post is longer than I expected. Sorry..and thanks for reading thus far)

tacpot12

I think your plan is viable. I retired at 53, and am following a very similar plan to you own. I lived on savings for a couple of years, and then started to draw down from my SIPP. I've already sold one rental property and have one left. I have a full state pension entitlement at 67 and a couple of small DB pensions still to draw on at 62 and 65.  

I have enjoyed the freedom from work, but have also been doing some volunteering. I would suggest you make sure you have enough money to spend on the things you want to be doing with your time.  

AlphaKappa

Thanks tacpot for your input. Pinning down what is enough is a bit tricky. Would I be enticed into spending more than I have planned? Should I do OMY to add more buffer to the buffer, etc 

sheslookinhot

I believe under  55-57 is too young to retire. There will be exceptions of course. Unless you have no money worries and a clear plan to spend your vocational freedom, you could be drawn back to a few years more employment.

AlphaKappa

Having the option to retire is more the goal, rather than retiring in itself. There are some things one would enjoy more at a younger age that you'd like to indulge in, without the pesky FT job casting a shadow. In my 20's staying out late was a doodle..not so much now.
Thought experiment: Assuming you are in a secure job that you enjoy(ish), and are given the opportunity to have a 5-10yr PAID carrier break. When will you take it - 30's , 40's ,50's, 70's...or perhaps pass on the opportunity?

barnstar2077

You have the kind of assets now that most could only dream of at pension age.  If you can afford to go now, then what is stopping you?

Your outgoings are eye watering though(to the likes of me anyway :  ). So you could look at ways to reduce that without affecting your quality of life too much.

If you decide to go in your forties, then I would spend sometime beforehand working out a new life schedule.  Have the first few weeks at least planned.  Not just activities and hobbies, but regular social interaction with friends and family. I speak from experience, having gone stir crazy from a long work break in my twenties.  I would happily retire today, but only because I have given much thought to the psychological impact of not working. 

Albermarle

Thought experiment: Assuming you are in a secure job that you enjoy(ish), and are given the opportunity to have a 5-10yr PAID carrier break. When will you take it - 30's , 40's ,50's, 70's...or perhaps pass on the opportunity?

This might work with certain lower level jobs , where there is usually a shortage . Cleaners, agricultural workers, carers , drivers etc 

It also might work if you have a very specific skill that did not easily get outdated.

However I think for most office/manager jobs , it could well be a career ending move . By the time you returned , technology would have moved on , as would most of your previous colleagues .

LV_426

Albermarle said:

Thought experiment: Assuming you are in a secure job that you enjoy(ish), and are given the opportunity to have a 5-10yr PAID carrier break. When will you take it - 30's , 40's ,50's, 70's...or perhaps pass on the opportunity?

This might work with certain lower level jobs , where there is usually a shortage . Cleaners, agricultural workers, carers , drivers etc 

It also might work if you have a very specific skill that did not easily get outdated.

However I think for most office/manager jobs , it could well be a career ending move . By the time you returned , technology would have moved on , as would most of your previous colleagues .

Would almost certainly be a death sentence on my career. I find it extremely hard to stay up to date with technology as it is, and I've had no career break. Makes me laugh, I've worked through massive technology landscape changes. I can adapt, learn. 90% of the stuff I use now wasn't even invented when I graduated.
I really despair when recruiters reject me because I don't have experience with the latest web framework, or trendy programming language. 

JamTomorrow

Depending on the age of your kids you may find that your taxable income in the years they are at uni may mean there is no parental contribution required.  This could save you ~£5k/year per child.  Something I am also considering as a hidden tax if I continue to work whilst they are at Uni.

Workerdrone

ajfielden said:

Albermarle said:

Thought experiment: Assuming you are in a secure job that you enjoy(ish), and are given the opportunity to have a 5-10yr PAID carrier break. When will you take it - 30's , 40's ,50's, 70's...or perhaps pass on the opportunity?

This might work with certain lower level jobs , where there is usually a shortage . Cleaners, agricultural workers, carers , drivers etc 

It also might work if you have a very specific skill that did not easily get outdated.

However I think for most office/manager jobs , it could well be a career ending move . By the time you returned , technology would have moved on , as would most of your previous colleagues .

Would almost certainly be a death sentence on my career. I find it extremely hard to stay up to date with technology as it is, and I've had no career break. Makes me laugh, I've worked through massive technology landscape changes. I can adapt, learn. 90% of the stuff I use now wasn't even invented when I graduated.
I really despair when recruiters reject me because I don't have experience with the latest web framework, or trendy programming language. 

I despair at most of todays youths approach to technology. Quite happy to smear the glass on a fondleslab watching Cardi B, but absolutely no interest or understanding in what's going on beneath the surface. It's a far stretch from typing in listings from C&VG magazine then either having to debug it yourself or wait until next weeks issue for the correction :-) Ladies and gentlemen, I give you the captains of industry of tomorrow. Sorry just in a curmudgeonly mood this morning. Got a shed full of servos, microcontrollers, components etc and a son whose only interest is worshipping those who kick an inflated pigs bladder around a field for employment.

k6chris

Workerdrone said:

ajfielden said:

Albermarle said:

Thought experiment: Assuming you are in a secure job that you enjoy(ish), and are given the opportunity to have a 5-10yr PAID carrier break. When will you take it - 30's , 40's ,50's, 70's...or perhaps pass on the opportunity?

This might work with certain lower level jobs , where there is usually a shortage . Cleaners, agricultural workers, carers , drivers etc 

It also might work if you have a very specific skill that did not easily get outdated.

However I think for most office/manager jobs , it could well be a career ending move . By the time you returned , technology would have moved on , as would most of your previous colleagues .

Would almost certainly be a death sentence on my career. I find it extremely hard to stay up to date with technology as it is, and I've had no career break. Makes me laugh, I've worked through massive technology landscape changes. I can adapt, learn. 90% of the stuff I use now wasn't even invented when I graduated.
I really despair when recruiters reject me because I don't have experience with the latest web framework, or trendy programming language. 

I despair at most of todays youths approach to technology. Quite happy to smear the glass on a fondleslab watching Cardi B, but absolutely no interest or understanding in what's going on beneath the surface. It's a far stretch from typing in listings from C&VG magazine then either having to debug it yourself or wait until next weeks issue for the correction :-) Ladies and gentlemen, I give you the captains of industry of tomorrow. Sorry just in a curmudgeonly mood this morning. Got a shed full of servos, microcontrollers, components etc and a son whose only interest is worshipping those who kick an inflated pigs bladder around a field for employment.

I had one of my programs published in C&VG.  Very proud!