Reporting In - 5.5 Years post-FIRE

Triumph13

Hi All, I've been off this forum for a while, good to see all the old regulars still here   I retired back in October 2018, but ended up staying on one day a week.  I thought it might be instructive to relate the impact of that.

We had an 11 to 15 year gap before DB (£25k between us) and SP came on line, which would be enough for our basic needs, and DC funds to provide jam on top..  My investment plans were pretty simple - a 90%+ global equities drawdown fund to provide income in perpetuity, and bridging funds largely in cash to bridge the gap until the pensions started to come on line.  The plan was to burn through roughly 40% of our capital in the bridging period.

Year 1 I ended up working more than the planned one day and not having to touch the bridging funds.  This allowed me to add nearly double the amount of the unspent bridging funds to the drawdown pot, because the bigger drawdown income reduced my need for bridging funds.

Years 2 and 3 the work was more down to the desired level, but the pandemic crashed our spending and again we didn't touch the bridging funds and more got shunted to the drawdown fund.

Years 4 and 5 were more as planned, but I've now hit the point where the main issue is the higher rate tax band.  When I retired, I never thought that would be an issue.  The combination of my PT work, good market returns and freezing of tax threshholds have changed that!  I know I'll struggle to make myself withdraw money that's taxed at 40%, and I really won't need to as, with my wife's SP and  DB, plus drawdown from the 20% of our portfolio that's now in ISA's etc, we should have more than enough.  Indeed I'm confident that, if I stopped working PT, I could just withdraw the full basic rate band every year until the pensions kick in, and still have plenty left for a sustainable withdrawal of the difference between the pensions and the HRT threshold.  That means that, if I do keep working, the only impact my salary will have is to increase the amount of pension my kids eventually inherit.  Crazy.  I'm enjoying the job, so probably will keep on.  Lucky kids.

Well that's the financial roundup, but, more importantly, at least once every week my wife and I will look at each other when we are out having fun, smile and say 'Guess what?  We're retired!'

hugheskevi

I was recently musing about the merits of staying on 1 or even 2 days a week at work after my wife and I retire in late 2025, aged about 48. For a while, I had almost decided that would be the best decision.

However, upon further reflection, it came down to two key things. The first was money - working 1 day a week would use up my income tax and NI allowances, which would otherwise be unused as we would be using cash and ISAs until age 55. That would be equivalent to an hourly pay increase of around 25% compared to full-time work. It would also keep options open.

The second, and most important, reason was that I like many aspects of my job.

The financial argument for working 1 day a week is unconvincing as we don't need the money. It appeals to my desire for tax efficiency and having options, but that is all. Given we have plenty of resources, the income would just be going into an ISA whilst cash reserves were burnt down. Assuming fiscal drag continues, I'll be incentivised to take out up to higher rate tax out of DC each year and put it into an ISA after age 55. So the income would just end up in an ever increasing ISA that I either won't need or would just spend frivolously in one way or another. 

With further thought, I realised a key part of the things I like about my job is that I know a lot about a lot of areas (not everything, but everything I have any interest in). Working one day a week would change that - I'd still have all the historic knowledge, but fairly rapidly I wouldn't be up to date with all the latest developments. After a fairly short period work colleagues would move on and that would significantly reduce the enjoyment of work too.

On balance, I've concluded the best thing is to fully retire and move on to a new chapter of life. I wouldn't entirely rule out continuing to work part-time, but if I do I think it would be heavily related to existing work projects and when they conclude, so I would expect to leave within at most a couple of years.

Triumph13

That all sounds a lot like my position was hugheskevi, so a few observations based on my own experience:

• The key factor that made me do it was to make the handover easier.  I too was "the man who knows where they keep the coal" in a whole lot of areas.  Agreeing to stay on for a year at one day a week was a great deal for everyone as it meant my replacements could ask me questions and I didn't have the horrible stress of trying to hand everything over before I left, allowing a much more gentle wind down.  It was such a great deal that they agreed to my request for a 15% payrise   I would definitely recommend doing this for one year.

• I too was sure that my knowledge would rapidly become out of date and worthless.  I now know that after 5 years I am still hugely valued.  The FD described me as the institutional memory of the department.  It's taken me a while to come to terms with not always having enough work for my 7 hours, but several times every month I'm able to sort something out that gives me a buzz and more than justifies my salary.  If that stopped I'd leave, but it shows no sign of doing so.  All this despite a complete new accounting and reporting system since I left.

• Flexibility is key.  I haven't been to the office in years and do a half day once a week, plus keeping on top of emails.  I'll occasionally do meetings on other days, but not if it conflicts with my other plans.  And if the half day looks like being the only sunny day of the week, I move it.

In summary, if it's on offer I'd be very tempted to try it for a year just to make everything less stressful for all concerned.  Then take it from there.

kempiejon

I wanted to drop down to 2 or 3 days a week. It was something others have done where I worked, in fact it was encouraged. About a year ago I discussed it with my manager at the appraisal and he and I made a plan as to how it could probably work. I could facilitate a good handover and the department could handle the slight change.
The plan failed when I was made redundant. A bit of a shock but financially better for me than a gradual wind down with part time hours. I have no problem filling my time, I often wake up and then grin when I realise the day is all my own. I like to say I'm not currently looking for permanent full time employment. I'm not committing to saying I've FIREd, I am FI, I probably have RE but I have been interested enough to apply for a couple of short term roles recently.

michaels

For me the problem with 1/2 days a week is that you lose the flexibility/spontaneity of retirement - for example you can no longer just book that last minute ski week because it is looking like champagne powder days or those cheap flights to Thailand appear or (more likely) the kids suddenly need child care support.  Part of the point to retiring must be to not have any commitments?!

Sea_Shell

michaels said:

For me the problem with 1/2 days a week is that you lose the flexibility/spontaneity of retirement - for example you can no longer just book that last minute ski week because it is looking like champagne powder days or those cheap flights to Thailand appear or (more likely) the kids suddenly need child care support.  Part of the point to retiring must be to not have any commitments?!

That was the conclusion I came to with part time work.

Even on 20 hours, I was still beholden to the "holiday chart", as I couldn't be off at the same time as the other member of the team.

So I "bought" 365 days holiday 😉

Nothing much better than sitting in the garden, with a cold glass of something on a Wednesday...hard work this retirement lark 😁

Triumph13

My youngest finishes school this summer, so until then I couldn't just take off anyway.  I had intended this to be my definite quit date for precisely the reasons you list - until I discovered how easy it was to keep up my 7 hours whilst on holiday.  Lots of FT people end up doing 3 or 4 hours a week keeping on top of emails whilst on holiday.  Making that up to 7 just means spending one morning working, whilst the job is paying for the rental on the holiday cottage.  

I'm going to try it for a year.  If it's annoying I'll quit, but I suspect I'll end up holidaying more rather than less. I'll turn my five weeks of vacation into ten by spending half an hour a day keeping up with emails and use that for longer distance / more expensive trips where I don't want to be tied to the computer for even half a day.  There may well be another 10 to 20 weeks though where we go away but I still work.

Any more than 7 hours a week would definitely be too much though.

squirrelpie

I'm older and retired a while ago now. But I'd just like to thank @Triumph13 for starting this thread - it's very interesting, and most likely useful to a lot of people.

FWIW, I had an understanding employer. I took a year off as a sabbatical whilst building a house, went back afterwards and then was made redundant a year later. The job had become less interesting anyway. It all worked out well.

daveshep26

squirrelpie said:

I'm older and retired a while ago now. But I'd just like to thank @Triumph13 for starting this thread - it's very interesting, and most likely useful to a lot of people.

FWIW, I had an understanding employer. I took a year off as a sabbatical whilst building a house, went back afterwards and then was made redundant a year later. The job had become less interesting anyway. It all worked out well.

Yes, a good call & thanks to @Triumph13 -very interesting topic;

I’m in camp of generally good provision all-round -and post 67 we (as couple) are on track to have too much income;

I’m55 (OH is 56) and youngest nearly at his final Uni year and we could reasonably comfortably be tied over if we completely stopped now – I have frequently mused on question of “Who would I be working for?” if I carried on either full- or part-time for the next 7 years till my final DB kicks in.

I’d pretty much concluded <100% fairly soon was needed – but similar to others upthread I do really like quite a lot around the job – great colleagues plus interesting projects. I was (& remain) uncertain on how to go about this – I do think it’ll be an experiment of some sort; (My OH is self employed, so happy to flex in whatever way).  

I also have a good, understanding employer -so something around part-time or career break was definitely most likely (with latter currently my favourite).  This thread has been thought provoking on that front, so again thanks for kicking this off and comments by others.
 

barnstar2077

I know it is very pedantic of me, but... :  )   a quick google states the definition of retired is "having left one's job and ceased to work!"  :  ) 

Triumph13

barnstar2077 said:

I know it is very pedantic of me, but... :  )   a quick google states the definition of retired is "having left one's job and ceased to work!"  :  ) 

Sigh.  I should have known it wouldn't take long for the IRP to arrive.