Ideas for retiring early (at age 40ish)

[Deleted User]

No, but I have a very sophisticated spreadsheet which models my financial situation (including interest rates, inflation, tax rates etc) in intricate detail until the age of 90. It has tracked pretty accurately over the past 5 years, though I have had much  bigger salary increases than I expected, so the model has been pessimistic.

I find predictive spreadsheets counterproductive. 50 years is a long time to model.  You have no basis for modelling either.  Market return models are often based on ~100 years worth of data which is too short when comparing vs 50. And these models use the period when the US has powered from an emerging economy to No 1, which does not happen every 100 years.  And many of the monetary and fiscal mechanisms used today are unique. Who is to say what will happen in 30 or 40 years? 

Such predictions tend to give an impression of accuracy but its misleading. Older people retiring on investment income also take a risk but over a shorter period of time and with state support kicking in so their risks are more manageable. 

Brie

How old is the child?  What is her/his expectation for their life?  What is your expectation for his/her life?  Uni?  Car?  Happy to live frugally?

And how about your spouse??

Maybe you should quit the job now and be the stay at home parent to allow your spouse to expand in their work life?  Part timing it while the child is in school and picking up DIY jobs?

TallGirl

You have done really well I totally get your feeling of wanting to get off and as you say if your industry doesn’t support part time working it’s quite hard. Would they allow you to take a sabbatical even if it was 3 months could give you an idea and allow you to try writing and not having work pressures. 

Good luck with your decisions there are loads of volunteering opportunities so I’m sure there will be something for you should you need it.  You could even volunteer your handyman skills (Age UK). 

Ibrahim5

It sounds to me as though you can have an expensive house or retire early but not both. I think if you think carefully about what you really need from the house you could probably find something that meets your needs without spending more. Assuming there are only 3 of you how many bedrooms do you really need?  If you want a big garden could you find a small house with a big garden? Do you want views or isolation? Could you find cheaper in a less popular location? The extra space only really comes in when entertaining guests. We have 6 bedrooms but we only use them all at Christmas. We could book them rooms at the local premier inn and have a cheaper house.

MallyGirl

ent_moot said:

If I bought something with ~5 acres, would it be possible to make a small farming incoming, or would this likely be a lot more than 1-2 hours per day average? I'm interested in brainstorming ideas for a low-effort semi-retirement business, I guess.

No, I'm keen to move to Devon as it's a lot cheaper than where I live, whilst also being more beautiful (albeit, not the cheapest place to buy).

You should watch Clarkson's Farm if you haven't already. I think he made about 27p profit a day - but that was with him taking no salary. Run a small holding if you fancy it but I wouldn't expect it to make much/any money.
Devon is lovely, at times, but you will definitely need plenty for the heating bill. My Mum retired there from Harpenden and it seems to be the wettest place in the UK. They make lots of jokes about developing webbed feet!

SouthCoastBoy

You have obviously been a great success in your career to date, so well done for that. I also work in IT and have been thinking about retirement since about 45+, I'm soon to be 58, I've done the spreadsheets, modelling etc. but I have continued to work even though I loathe it. However I did make the decision to move out of the South East and live on the coast for a better quality of life for me (at weekends) and for my wife and family. the move has worked out well, we love where we live, I carried on contracting for a few years and then found a relatively local job. 

So I sort of compromised moved to a place I wanted to live in and accepted I would have to commute 40+ miles if I wanted a decent job, but no more than my Kent to London commute was previously. We also only bought a modest 3 bed house, this has given greater flexibility as kids are expensive as they get older, it's meant we could help them through uni, paid for driving lessons car insurance, cars, been on decent holidays, and also support them in other endeavours, my youngest is currently working in research at Sydney Uni, without my support that wouldn't have been possible.

I'm saying this as you are still relatively young, and therefore lots of things can change over the years and you may be grateful for the extra cash, so don't be hasty in cashing it all in, look at the options and come up with a plan that works for you and your family.

Grumpy_chap

ent_moot said:

My current situation is as follows:

Age: late 30s
Family: we have one child
Private pension: 300k
Personal savings: ~200k
House: ~550k
My salary: 170k (with 50% bonus)
Spouse's salary: ~20k
Debts: none (I have paid off all my mortgage)

Spending(*):

We tend to be very frugal, hence the large savings at an early age (the crazy salary helps too, though you'd be amazed at home much tax I pay!).We live pretty comfortably on around 25k per year, given that we have no mortgage or debts. We go on regular holidays, but have never spent more than 3k on a single holiday, and not more than 5k on holidays in a year. My hobbies are all inexpensive, and I have zero desire to drive an expensive car. I would like a nice house with a large garden.

ent_moot said:

If I bought something with ~5 acres, would it be possible to make a small farming incoming, or would this likely be a lot more than 1-2 hours per day average? I'm interested in brainstorming ideas for a low-effort semi-retirement business, I guess.

While you live frugally on £25k, what are your expectations in retirement? Would £25k indexed do, or do you intend to relax the purse strings and spend a bit more? Would your spouse continue working? Any plans to have more children? They can be a huge financial commitment, with expensive hobbies, before you get to things like private education.

1. I feel like 30-35k (indexed) would be ideal 
2. My wife wants to keep working, hence me wanting to earn 10-15k on top of her ~20k to make things comfortable. 
3. No more children

Is it £170k plus bonus, or have you included bonus in that?

That's base salary. I also get 8% employer pension contributions, plus up to a 50% bonus (with a number of strings attached). I don't really count on the latter, though it's a pretty safe bet to say that I'll get ~20k+ from it.

ent_moot said:

I have a million and one things I love doing outside of work. I'm not really capable of being bored. Most of them cost very little. Maybe tennis is the most expensive at about £250 per year for the club membership, and then maybe £150 on balls, rackets, shoes on average per year.

Something doesn't really seem to add up here.

All credit to the OP for having a very comfortable position for someone in their late-30's, both the mortgage free house and the income level but, the OP & wife have joint income over £200k (£10k per month take-home) and life on £25k per year.
Yet, the assets accrued are rather low given that level of excess income per year and assume both the house and pension fund have accumulated since acquisition.

The idea of the OP retiring age 40 yet the OP's wife continues working could risk substantial disharmony as there will be significant imbalances in the time choices each is able to make.  Unequal time could be more difficult to manage than unequal finances as finances are easier to swap.

It is perfectly good to not be materialistic, but the OP seems to take not being materialistic to the point of sacrifice. 
Is there any possibility that the OP / wife / child will ever develop a desire for any of the finer things in life?
Consider the OP's hobby <£500 per year playing tennis, but (if they can secure tickets) a day out to Wimbledon would easily come to that much for OP & wife.

As an aside, running a small farming freehold is going to take rather more time than the OP imagines.

artyboy

Looking at your numbers OP, I was in a pretty similar situation at the end of my 30s, (apart from having 1 more child), but I personally wouldn't have seen that as anywhere close to enough to support retirement. Principally because of the children - we wanted to ensure they were set up to be very comfortably able to get on the housing ladder, pay for Uni, and max out their JISAs.

Obviously I wish you luck, but I guess we all have our own lens on what is 'enough' - for me, 10 painful years later, I've hit my 'enough'...

[Deleted User]

If I bought something with ~5 acres, would it be possible to make a small farming incoming, or would this likely be a lot more than 1-2 hours per day average? 

I have 33 acres. The farm does bring income.  Some of it is passive; we try to minimize labour and do not hire anyone.  But certain days its a lot of effort. It can be done, for sure. Enough to get by but if its your sole source of income then it could mean a lot of work. 

uk1

ent-moot,

Does your skill lend itself to specialist consultancy?  I use to limit my hours by quoting high rates for projects I didn’t want to annoy by refusing but I’d say 90% of them asked me to go ahead.  I retired at 50’ish having worked that way fro around 10 years. It allowed me to travel and it was exceptional fun.