Can I retire now? (age 40)

kimwp

ent_moot said:

GunJack said:

The remortgage plan is flawed - you cannot get a 200k mortgage without being on probably 50k-ish salary, and most lenders will only do it up to SP age, which even if someone will go over that age will massively increase outgoings. 

I think you might be wrong on this. I literally spoke to my bank about it and was told it wouldn't be a problem, given proof of future income (i.e. private pension) and equity. 

Worst case, I could get a job, get the mortgage, than resign on day 1.  

 

Wish I had the confidence to think I could walk into a £50k job after 13 years not working!

ent_moot

>>Wish I had the confidence to think I could walk into a £50k job after 13 years not working!

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.

I think it's a moot point though - it would be trivial to prove that I have the cash flow to pay back the mortgage, with 3x value in my house as a guarantee, so there's no reason why a bank wouldn't lend me the money.  If anything, I would be a much safer bet than someone buying a home who is dependent upon a salary.

Smudgeismydog

QrizB said:

Aylesbury_Duck said:

ent_moot said:

True, I've not factored this in. I imagine she'll get a student loan to cover tuition fees, and then accommodation would be <10k? 

Highly unlikely unless she lives at home.  Even cheaper student accommodation is around £160 p.w. now, for 40 weeks.  Much of it is over £200 p.w.

Not wishing to get bogged down in details, but I've got two spawn at university right now.

One's in university-owned accommodation in south Wales and is paying £135 a week including bills, which is about £5400 for 40weeks. The other is in private accommodation in the west Midlands and is paying £75 a week plus bills, which comes to about £5k for 52 weeks.

My daughter is currently in her first year in Halls in the South West of England. Accommodation for this year is @£6,800, and she’s already paid the deposit for her accommodation for next year, which is £179 per week, excluding bills on a 52 week contract.

Aylesbury_Duck

In your situation, I'd consider a career break for a few years and see how the land lies, rather than commit to a one-way ticket that might need a reluctant reversal should circumstances not fall as you project them to.

Pat38493

ent_moot said:

You don't reach retirement at age 40 by wasting money on financial advisors, trust me.

>Neither of those will be a constant, you need to understand the effects of sequence of returns and sequence of inflation.  Modelling constant values for investment returns and inflation will give you a much more optimistic picture than the likely reality.

Interesting hypothesis, but also incorrect.  

I've modelled £600k with 32k annual drawdowns , on a monthly time-step, with constant rates of 5% interest and 2% inflation, versus fluctuating rates.

As one would intuitively expect, fluctuating rates are as likely to be beneficial as detrimental. 

I published the simulation here, if you want to play with it yourself. https://ent-moot.github.io/ 

So constant returns are not inherently "more optimistic" than fluctuating returns.  Though it would be true to say that the worst-case scenario for fluctuating returns is worse.


 

The numbers you quoted in your first post are not completely outlandish except for the part about upsizing your house and still having the plan working fine in all market scenarios.

However your later replies seem to show that you have overlooked some large items that someone contemplating retirement would normally consider, like having a full state pension entitlement, university fees, costs of moving home, and potentially other large future costs that nobody has mentioned yet.

Can you afford to stop working for a while - of course.  Can't say more than that without really understanding more about you and your motivations, how you got to this point etc.

Marcon

ent_moot said:

You don't reach retirement at age 40 by wasting money on financial advisors, trust me.

Indeed. You need to ensure they are fully and correctly instructed to get proper value from them - and have the humility to accept they might then be in a position to give you considerable help. Given the number of times you've dismissed answers on this site, I'm not sure why you think free 'advice' from a bunch of random strangers could possibly help you reach a decision.

ent_moot

However your later replies seem to show that you have overlooked some large items that someone contemplating retirement would normally consider, like having a full state pension entitlement, university fees, costs of moving home, and potentially other large future costs that nobody has mentioned yet.

The cost of moving was built into my original numbers, so I've not missed that. Achieving full state pension should be an almost negligible cost, if my understanding of the system is correct.  University accommodation was a good shout, so I appreciate that, but it's not going to have a material impact upon the plan. 

Given the number of times you've dismissed answers on this site, I'm not sure why you think free 'advice' from a bunch of random strangers could possibly help you reach a decision.

I only dismiss the poor advice which doesn't stand up to challenge. There are, very rarely, a few useful gems in there, so I wouldn't tar everyone with the same brush.  

kimwp

ent_moot said:

>>Wish I had the confidence to think I could walk into a £50k job after 13 years not working!

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.

I think it's a moot point though - it would be trivial to prove that I have the cash flow to pay back the mortgage, with 3x value in my house as a guarantee, so there's no reason why a bank wouldn't lend me the money.  If anything, I would be a much safer bet than someone buying a home who is dependent upon a salary.

Goodness me. My hobbies are volunteering with kids and dogs (separately), definitely wouldn't be making £200k from that! (And it has zero relation to my job)

Cus

QrizB said:

coyrls said:

ent_moot said:

>Is that 5% real (above inflation) or nominal?

I assume 5% nominal.  I model for inflation by increasing my outgoings by 2% a year.

Neither of those will be a constant, you need to understand the effects of sequence of returns and sequence of inflation.  Modelling constant values for investment returns and inflation will give you a much more optimistic picture than the likely reality.

For the benefit of the OP and the interest of everyone else, I plugged his numbers into cFIREsim. It uses US numbers (which are typically more optimistic than UK ones). Links take you to the models.

If £900k (savings plus pension less house move) were accessible from day 1, we see 100% success to age 100 and no failures.

With £500k (savings, no house move) accessible, we see 80% success in getting to 2053 without running out of money.

With £300k (savings less house move) accessible, we see 18% success.

(If OP were 50, those 80% and 18% become 100% and 96% respectively.)

Which withdrawal method did you use in cfiresim?  £900k at start, needed to cover 60 years, 32k a year, so that's approx a 3.5% SWR?

QrizB

Cus said:

QrizB said:

coyrls said:

ent_moot said:

>Is that 5% real (above inflation) or nominal?

I assume 5% nominal.  I model for inflation by increasing my outgoings by 2% a year.

Neither of those will be a constant, you need to understand the effects of sequence of returns and sequence of inflation.  Modelling constant values for investment returns and inflation will give you a much more optimistic picture than the likely reality.

For the benefit of the OP and the interest of everyone else, I plugged his numbers into cFIREsim. It uses US numbers (which are typically more optimistic than UK ones). Links take you to the models.

If £900k (savings plus pension less house move) were accessible from day 1, we see 100% success to age 100 and no failures.

With £500k (savings, no house move) accessible, we see 80% success in getting to 2053 without running out of money.

With £300k (savings less house move) accessible, we see 18% success.

(If OP were 50, those 80% and 18% become 100% and 96% respectively.)

Which withdrawal method did you use in cfiresim?  £900k at start, needed to cover 60 years, 32k a year, so that's approx a 3.5% SWR?

The default one   If you click throuh to the links you can see exactly what parameters I fed it, and can tweak to suit.

Edit to add: "spending plan - inflation adjusted" and "inflation type - CPI historical".