Can I retire now? (age 40)

kimwp

ent_moot said:

Super interested in your career trajectory. I started as an engineering grad on 26k 17 years ago, I currently work as a systems integration engineer with software engineers - none of the software engineers will be earning over 70k. It's known that the company doesn't match pay in the software industry (because they are lumped in with the rest of us aerospace engineers), but that seems like a huge gap to £200k. 

Even within my company, my salary is extremely unusual for a SE (top 0.05%).  The average salary for an SE is closer to 70k at the company.  

This is why it's a big decision for me:  I have zero expectation of being able to achieve anything like the same salary (unless I respond to those head-hunters at Meta who have been contacting me every 6 months for the past 5 years - something I have no intention of doing).

>Bring the house move forward and kill those costs before reviewing and considering again? 

Probably a wise move, excusing the pun.

Nice! (And thank you for indulging my question)

If your company values you so highly, is there an opportunity to shape how you work for them? Fewer hours or on only/mostly the projects that interest you for a pay cut maybe? I like the idea of a shorter hours contract with the option to increase hours if the company needs it (and I'm willing- during the winter when there's less light for example).

Thinking back to reading (one of) Feynman's autobiography, he found that steady work was often what inspired him with ideas and problems to solve. I know in my case, I will need to be committed for a certain amount of hours a week to avoid dropping into a depressive funk. Everyone is different of course, but it's worth considering if/what you get out of work other than a salary and making sure you continue to get those things.

Aylesbury_Duck

I must say thank you to the OP here.  This has been a most interesting thread, and while I am sceptical that your plan will work (because as I said earlier, I think it relies upon everything falling into place over several decades with no significant geopolitical or life-events catching you out, which I think is very unlikely), the back-and-forth testing from other posters has been fascinating.  It's scooped up a number of topics that will be helpful to people in all sorts of situations, and I've certainly learned things that help me stress-test my modelling.

Cheers, ent_moot.

phlebas192

I've read most of this thread and I have to say that I think the OP is being more than a little optimistic in their assumptions. Not least the idea of remortgaging - if they do end up needing this then it is likely to be as a result of an economic downturn which would mean both a tightening of credit and a downturn in the job market. No matter what a bank may say now or how employable you might be, it would be folly to assume these would both apply at some point 10 years down the line. I get that they might be super-employable right now but applying for lower status jobs after years out of paid employment when up against people 25 years younger, a reluctance to employ people over-qualified for a role and the general threat of AI to more junior IT roles makes it all seem very optimistic. 

But my biggest takeaway is that by remaining in work for just another year or two would turn this plan into one that seems (to me) somewhat reckless into one that would almost be trivially doable. Even if it were possible to become part-time it would change the outcomes drastically. One more year in full time employment or two working just 2 days a week would make a huge difference. Given the OP says that they enjoy the work (albeit not so much when doing it to someone else's plan rather than to fulfill their own desires) I would counsel to stay in at least some form of employment for now. If nothing else, they have a child who is still dependant on them. We are all free to make our own mistakes, but we should not risk impacting the future of others in the process.

jimi_man

phlebas192 said:

I've read most of this thread and I have to say that I think the OP is being more than a little optimistic in their assumptions. Not least the idea of remortgaging - if they do end up needing this then it is likely to be as a result of an economic downturn which would mean both a tightening of credit and a downturn in the job market. No matter what a bank may say now or how employable you might be, it would be folly to assume these would both apply at some point 10 years down the line. I get that they might be super-employable right now but applying for lower status jobs after years out of paid employment when up against people 25 years younger, a reluctance to employ people over-qualified for a role and the general threat of AI to more junior IT roles makes it all seem very optimistic. 

But my biggest takeaway is that by remaining in work for just another year or two would turn this plan into one that seems (to me) somewhat reckless into one that would almost be trivially doable. Even if it were possible to become part-time it would change the outcomes drastically. One more year in full time employment or two working just 2 days a week would make a huge difference. Given the OP says that they enjoy the work (albeit not so much when doing it to someone else's plan rather than to fulfill their own desires) I would counsel to stay in at least some form of employment for now. If nothing else, they have a child who is still dependant on them. We are all free to make our own mistakes, but we should not risk impacting the future of others in the process.

This is a good point. At the salary the OP is on, with the amount they can survive on, an extra year or maybe two will be 1-2 years they don't have to provide £32k for and they can save probably another three years. So five years extra. 

Mrs_Z

Interesting thread.  From my perspective, the figures look too tight. If I were in your situation I would play it as follows:
1) buy your dream house now whilst you are in very well paid employment and future proof it.  This is such a big expense and it may cost you more than you think.  Only saying as when we last moved, it took us a year to find the house AND it cost us £100k more than what we thought we'd spend. 

2) once you've moved, lived and settled in your dream house, you will have a better idea what the maintenance costs are etc, whether you need to do any renovations, new kitchen/bathrooms, loft conversion etc. You may start looking for a property thinking you don't want to do any refurb, but sometimes you'll find a perfect house in a perfect location, except that it needs everything doing to it and it's expensive. Bigger house & garden will cost more to run.

3) Regarding as a back up plan to take a lesser paid job: all very well on paper, BUT how would you really feel - working in the same/similar job (or even cutting that grass for neighbours at minimum wage) and getting paid much, much less for the same hours that your previous job? I say this because I've 'retired' early - around 10 yrs before retirement - from a very well paid job (for me), which made it possible and I have to say that I would absolutely resent working again because I know that i'd be comparing it to the job & salary I had.  It sounds that what you are craving for, is time & freedom to do what you want (and this was the reason for me as well 'retiring' early) so if you are then having to spend some of it recouping at a much lesser rate, it's not so palatable.

4) if you make the move to your dream house, this could also serve as a plan C - somewhere to downsize from - if it came to it, it's a good option to have.

I'm probably being ultra conservative, but in your shoes I'd hang on to your job until you had enough in ISAs/Cash x no of years to retirement / divided by yearly expenditure - so say you had 10yrs to fund until retirement, that makes £320k in the bank

My musings, hopefully of some help. I'm now almost half way to bridging my way to retirement - 5 years in, 5 more to go. I've always modelled my finances based on 'todays' numbers', so did not factor in inflation nor any growth in investments. I'm pleased to say that the figures have held up nicely.  I've also taken on a part-time job, which is so part time that even I can manage it (flexible 1 day per month  ) - mainly so that it pays my NI contributions (for state pension).

You are in a very good position to make your dream reality, and very nearly there.

Wishing you a best of luck and do keep us update whatever you decide - always interesting following people's journeys!

d6fs1l

ent_moot said:

d6fs1l said:

Apologies if I am wrong, but I think your online model does not deduct any lump sum taken from the starting private pension, whereas you suggested in an earlier post you would use that to repay the mortgage you intend to draw to bridge the gap until the pension is available?

Yes, you're right-  the model I posted was just something I created in 10 minutes to demonstrate the theoretical point that constant rates are not inherently more optimistic (at least in average terms) than fluctuating rates. I'm not basing any decisions on this model, just illustrating a point. And also to illustrate that statements such as "you need understand that X "  where X is potentially untrue is going to be met with robust challenge from me.  

My actual model is vastly more sophisticated.

Without seeing more of what you're modelling it is hard to comment further (quantitatively).

My instinctive reaction is to wonder if you are underestimating the possibility of unfavourable events (e.g. abolition of tax-free lump sum, further increases in state pension age, impact of senescence on your attractiveness to employers [and perhaps your motivation to work], possibility of sudden unforeseen health problems [which also affect your ability to return to employment to mitigate their financial impact] and so on). I don't know what kind of contingency you are building into your assumptions to allow for that kind of thing (sorry if I've just missed it in the thread).

HHarry

ent_moot said:

ljayljay said:

Just trying to understand the statement you made in an earlier post..

'I'm super-lucky in that my hobby is what makes me employable, so, whilst I certainly don't expect to go straight back into a £200k+ salary, I can be fairly confident of 50k (adjusted upwards for inflation), regardless of how long the break is.'

Unless I've missed it you haven't stated what your current employment is or if it is in any way related to your hobby. However, presumably you enjoy your hobby so what is stopping you from earning? 

Very good question. 

The answer is nothing, except that I don't want my hobby to be polluted by a pressure/need to actually make money out of it. 

90% of start-ups fail, and this is despite most start-ups having a strong focus on commercial success.

I would like to pursue things for their beauty and merit, without feeling like I need to compromise my work in order to achieve commercial success.

Another analogy that might help: suppose someone wants to quit their day-job to become an author. One year in, they realise their literary masterpiece is years away from completion and, if they're honest with themselves, unlikely to be a commercial success even when complete. Low on cash, the author is forced by necessity to try something safer: genre fiction.  However, 1 year later, this fails too, and so they're forced to go back to their day-job as a copy-writer (which, twist, no longer exists because LLMs now write all the copy).

I think this story is almost inevitable.  For every Rowling, there are probably a million total failures, and a thousand "success" stories where people just barely make enough to survive. 

So the Writer can’t go back to being a Copy-writer due to AI, but the Software Engineer is safe?

I think you’re both screwed, but the Carpenter is pretty comfortable.

Pat38493

ent_moot said:

£1 a day but porridge and lentils are boring.

The thing is that I really like porridge. It's healthy too, if you get the chonky type with >=12% protein. It's just a case of adding enough cinnamon.  I have literally had nothing but porridge for breakfast for the past decade (apart from the very occasional English Breakfast when travelling). 

I think the reason most households might struggle on an average/low income (let's say 32k) is because of housing costs (rent/mortgage) and repayments on things like car loans, expensive phone contracts etc. 

Personally, I think 32k is very comfortable, as I'm lucky enough to have no housing costs, no loans, and can pretty much DIY anything (apart from boiler / gas).   I suspect we spend a lot more than the average family on groceries, as we like to eat healthily. 

There are 2 aspects here.  Firstly, when you say you have been living, or can live, on £32K per year (still not sure if that’s net or gross), is that really true?  Financial advisers (I am not one but I listen to quite a few podcasts etc from them) say that they often encounter people who say “I only need £20K per year to live on” but then when questioned, it turns out that they spent £20K on a car 3 years ago that’s not included, and they might need to replace all their roof tiles in the next 5 years which will cost £15K or so etc, oh and there was that special anniversary where they did the one off holiday that cost £15K 2 years ago etc.  When you say you can DIY everything does it include those kind of big ticket items that only come up very irregularly?  Others may say that they would like to be in a postition to help their kids with house deposit or suchlike down the line.

Secondly, at age 40 it may be that you can do it all yourself, but do you want to?  Do you enjoy DIY etc.  I worked in IT and I have no desire to spend my retirement painting walls or wallpapering hence I planned some of these expenses into my long term planning.

Also - keep in mind that as you get (much) older, you may find that large DIY jobs become more difficult to do yourself.  This is very much dependent on the individual person as some people could still do this at age 80, others not so much.

As a few others pointed out - working for an extra 1or 2 years on 200K will build up a slush fund that could be invested to cover these kind of unforeseen or irregular items.

PropertyGuru_Wannabe

@ent_moot

I can see that a lot of posters are concerned with your retirement age based on your needs and wants, however I feel that your basic plan works.  With a full state pension for you and your other half, that's already £24k on today's money and probably £34k inflation adjusted by the time you get to state pension age.  Most importantly is that I feel that you need to optimise your investments and ensure they are growing at a rate that is greater than or equal to your expenditure.  If it is not, then you could always lower your budget or re-consider the upsizing of your home.  

If you really don't want to continue in your current job, then I would say go for it.  Hope your hobby works out for you in the end.  Enjoy life and cherish the good moments with family and friends.  Good luck!

DT2001

A most interesting thread. At the beginning my answer to your question would have been no partly because of where so many people say the market is (and sentiment drives the market) and partly because it is a higher withdrawal rate than I would be willing to use. Having then read on I think that you would adapt your plan as circumstances needed. If you get a poor start to your plan you will be much more likely to be able to return to a very well paying position and if the plan is going well the gap in your CV is irrelevant. So as long as you are flexible I think you can retire now with the caveat that you will almost certainly need to adjust.

I used to work in domestic banking (and have checked with someone much more recently retired) and am not convinced that taking on a mortgage reliant on future pension income/TFLS is assured. If credit is tight at the time you apply the answer would almost certainly be no however if it were a period when banks were ‘free’ with their funds maybe yes. Your proposal is a pawn broking deal, (after banking I was involved in such a business for a while) lending against an asset rather than income (in your case this would be dependent on the performance of your investments). Maybe you could get an offset mortgage now on your existing property ensuring it was portable to your next purchase.