earlyish retirement plan

ha-pajama

hi there, 

My partner and I are looking at our retirement options.  We are 51 and 53 years old. 
Currently have approx 400K - 50% in btc and 50% in pension/isas that follow the stock market. 

What I'm thinking is, we could stop working so hard and not focus on accumulation/saving of money and move into working to pay for our current lifestyle (still have 2 kids we pay for) and use appox 45K over the year, with a fairly loose approach to spending where we don't really look for deals hugely hard or watch too closely what we're spending.   

So both of us would need to continue to bring in around 20K each but could then reduce our hours to us doing 2-3 day working weeks each. 

Letting compound interest work it's miraculous effects and we are working on easy street for the next 5 years or so.

Has anyone else done a gradual shift into retirement like this, and how did it work out.  Any one got any suggestions/critics of our plan - I'm keen to hear  

Thanks, 

Pajama

tacpot12

£400K is not that much between two of you, and 50% is in bitcoin which might be quite volatile (or might do even better with President Trump in the White House!).

If you can reduce your hours, but still cover your bills, then your investments can just grow until you decide to stop work all together. In reality, they won't do much more than keep pace with inflation, unless you continue to add to them. 

I would advise being careful about reducing your work. It's much easier to make more money by staying in a field where you have experience (and ideally a job), plus employers contributions to your pensions are likely to be be more valuable. It's very hard to slow down and then have to increase the amount of work you do. Much easier to reduce the amout you are doing very gradually, only making small changes until you can see how these are working out. 

I'm interested to hear what others say about this...

ha-pajama

Thanks Tacpot, I do appreciate your points. 
I should have added, the house we are in, we could downsize in approx 5 years once the kids are more independent.  That would add approx 120-150K to the retirement pot at that point in time.

michaels

I did this - I thought of it as taking some of my retirement in advance by instalments.  EG option 1 work full time, maximise savings, retire in say 5 years, option 2, work 4 days a week a retire in 6 years - same amount of total work done but just a different mix.  My employer was flexible over when I worked the 4 days worth of hours so I for example worked 3 full days and 2 half days and went to watch my daughter's school football etc matches on the two afternoons off.

kempiejon

.ha-pajama said:

My partner and I are looking at our retirement options.  We are 51 and 53 years old. ...

Has anyone else done a gradual shift into retirement like this, and how did it work out.  Any one got any suggestions/critics of our plan - I'm keen to hear  

What will you doing with your newly acquired hours of leisure? Do you love work so much you can't give it up completely?
As my pot grew and I weighed up the option of reducing my hours. I had a few chats with friends who all said if I could afford to why not drop down to a 3 day week. I wasn't really sold on the idea so pressed with a few more years full time. As I built the pot and saw the regular growth and income flowing such with financial independance work was an optional choice for me. Covid scuppered all my plans, the world reverted to mean so I re-thought and had a chat with my boss about dropping a couple of days to drift into early retirement. It was good to hear to firm was ameniable.

ha-pajama

Thanks both for your posts.  
The thing that puzzles me, is when I ask AI - they tell me the typical person retires with approx 100K net wealth excluding property.  when i read this forum, my 400K seems really low.   I'd love to know if anyone has successfully retired with between 400 - 600K wise?   
 
That's where I'm thinking, let compound interest carry on building it, but reduce mine and my partners hours to free up time.   I@ve always been pretty good at side hussels, so I'd also like to build these out, to support living costs. 

It's just a bit nerve inducing to change our current past few years, money style, of accumulating all we can and to just work to live.    But life is short and work is annoying (well mine is) so I really feel ready for a change. 

I have tons of interests in answer to your question Kempiejon, and I'd like to do something volunteer wise that's positve for the community I live in.  So I'm sure I won't rot in front of daytime TV or anything. 

ha-pajama

Also, in answer to: Do you love work so much you can't give it up completely?
I'd love to give up work completely, but realistically we don't have enough money to do that.

eskbanker

ha-pajama said:

Currently have approx 400K - 50% in btc and 50% in pension/isas that follow the stock market. 

[...]

Letting compound interest work it's miraculous effects and we are working on easy street for the next 5 years or so.

ha-pajama said:

...let compound interest carry on building it, but reduce mine and my partners hours to free up time.

Just to be clear, are you referring to investment growth or do you literally have low-risk (and low-return) products that pay interest?

In terms of the overall plan, it doesn't really matter what others do - the key thing is to model your required income in retirement (allowing for inflation) and ensure that you have enough to fund that.  Stepping down gradually from full time incomes may help adjust, but much will depend on the gap between what you currently earn/spend and the equivalent figures post-retirement, i.e. how close is your £45K figure to what you're currently earning, and how much do you anticipate needing in retirement?

ha-pajama

i currently earn 50K, partner earns 30K. 
we have been spending around 40K to run the family and banking the rest all of which is invested into stocks/shares managed funds - via pension and some in 2 x isas 
also bitcoin

we are both self employed, not that, that probably makes a difference.

we have a small amount of cash in a fixed interest saving account (university living costs for one kid) 


i think we need around 40-45K to live/maintain lifestyle while paying for the kids. 
Then in retirement I would imagine around 33K.   happy to work part time for a good few years though...

kempiejon

ha-pajama said:

Also, in answer to: Do you love work so much you can't give it up completely?
I'd love to give up work completely, but realistically we don't have enough money to do that.

Ah well if that's really the plan knuckle down, ramp up your investment amounts, live frugally, exploit those side hustles and you could be totally out of the rat race. Dropping a few days is still being a wage slave. That was always my annoyance with reducing and gradual retirement. Better to be right out than staying dragging it out. But what suits me isn't for everyone.

ha-pajama

Thanks Kempiejon.   Food for thought, I must admit even jsut doing 2-3 days a week doesn't fill me with joy.  YOu might be right - to just focus on a final push for a couple of years and to see where I am then.  

Our plan is to really look closely at options at the end of this tax year.