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  • FIRST POST
    • Marine_life
    • By Marine_life 5th Nov 10, 9:46 AM
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    Marine_life
    Early-retirement wannabe
    • #1
    • 5th Nov 10, 9:46 AM
    Early-retirement wannabe 5th Nov 10 at 9:46 AM
    I would like to create a topic (don't see it at the moment - other than the NUMBER thread).

    Who is aiming for early retirement (or who has retired early already)?
    When did you begin planning and what drove the decision?
    What is the strategy for getting there?
    How much of a relative decline in income are you prepared to take / did you take?
    What are your main concerns?
    For those already in early retirement - how is it progressing? What have been the good and bad surprises (financial and otherwise)?

    I will post my strategy but wanted to get some thoughts
Page 2
    • Gatser
    • By Gatser 15th Nov 10, 12:27 PM
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    Gatser
    Gatsa
    In this thread I am going to call wasting money "leaking" as that is what seems to happen - it just leaks away.
    One of this years biggest leaks has been holidays - as a family of four holidays are very expensive.
    As we move towards retirement I actually think we may want to travel less or at least travel more within Europe which I think will materially reduce outgoings.
    So whilst holidays will stay an important part of my retirement plan, the spend will be significantly reduced.

    Just thinking on that - is it still fair to call a holiday a holiday in retirement?
    Originally posted by Marine_life
    I have a "leaking" problem too ... nothing to do with old age or plumbing! The expenditure labelled as "Cash" seems to get bigger!

    Agree on the holidays: getting holidays to fit in with school/college has cost 000's but looking forward to cheaper breaks... I keep saying that some of our best holidays have not been the most expensive.
    I can see the desire to travel distances diminishing...infact in retirement we would like to fuly explore the UK and Europe.

    A holiday in retirement? "Leisure Travel" ?
    So retirement means the end of "HOLIDAYS"??? ...but the start of ONE BIG HOLIDAY!
    THE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is 26k pa)
    My Other NUMBER: ZERO Working Days to SEMI-retirement: Achieved!
    • Marine_life
    • By Marine_life 15th Nov 10, 8:45 PM
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    Marine_life
    A couple of posters have made comments as to the reasons why they retired early and I would like to hear from others as to what drove them.

    From where I stand today the reasons are really not yet completely clear. I need to get those ideas straight over the next four years but they are not fully clear yet.

    Part of the planning is driven by fear. That fear comes from a) The fear of redundancy - I am in a relatively high paid job and you always feel vulnerable combined with the fact that I would never get into a similarly paid job b) Pressure, Stress - partially driven by a. but also the pressure has increased over the last few years. Therefore I have always wanted to be in a position where if I am to go into retirement I want it to be my choice and not something I am pushed into.

    The real blocker (if you can call it that) is I want to continue to support the children through school / university and my son will be in university in four years.

    So whether to go at 50 or not depends on a lot of factors - but I don't want finances to be one of them!
  • LGH29
    posted previously in the forum under - early retirement offer

    Fed up with the rat race we have the chance to retired early at 56 and 55 -in total both pensions give us 1500 net pm index linked yearly - 40k saving - full sp at 66 - mortgage and dept free.

    We think we will manage until the sp kicks in - wondered if anybody had similar experiences with a big cut in salary for the years until 66.



    Well decided to go for it I finish on the 1st dec oh in feb .

    Just do not want the stress any more and as we live a modest lifestyle and have done all the spreadsheets etc we are sure we can manage on the pensions we get until sp kicks in.
    I know the 40k could be larger ideally but with bumping the mortgage off in the last five years and both children through university restricted our saving potential.
    • chris_m
    • By chris_m 16th Nov 10, 5:02 AM
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    chris_m
    My decision to aim for retiring early was when, a couple of years ago, there were proposals to change our work pension scheme. They gave us so much information that I was able to build it into my forecasting spreadsheet, initially to just compare old vs new. The spreadsheet ran out at age 65 so I added another worksheet which ran to 85, then thought "how early could I retire and still have a positive bank balance at 85?" The answer came out at, flippin' 'eck, 55!!!! My lifestyle is simple and my pension (although it will be actuarily reduced for early payment) would only have to support one person, not two, so I decided that it would be a good idea to go early and be able to do what I enjoy - fellwalking and mountain photography - whilst I am (hopefully) still fit enough to do it.

    After a lot more rejigging to improve the accuracy the possibility came down to 53, 52 or even 51 if a couple of sharesave schemes really go ballistic. OK, I still have a lot of assumptions included which will need further checking/adjusting but the plan is to clear my mortgage early, then retire when the forecasts look feasable, buy a house near (not in, too expensive) the Lake District hopefully for cash using my savings, then sell my flat down south to recover the savings which can then be drawndown to top up the pension where needed.

    Even if I don't manage it at 53 (or 51/52) it should be very doable by 55 and keeping the forecast going is a great spur to "make it happen".
    Last edited by chris_m; 16-11-2010 at 5:05 AM.
    • brewerdave
    • By brewerdave 16th Nov 10, 6:21 AM
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    brewerdave
    CAUTION!!!
    I started planning for early retirement in my early 40s ramping up my savings in equities/ISAs and cash (as far as possible with two young kids!);the Company I was then with, had an Early Retirement Facility that would have allowed me to retire at 55 on a "full" pension with the Company's permission.
    HOWEVER, things changed rapidly in the mid/late 90s with the result that I was made redundant at the age of 49. Got another job at a lower rate of pay and much less generous pension scheme,so revised target retirement to 60. Got made redundant again at 56, not able to retire and out of work for several months so took a job at a lower salary again.
    Got made redundant again after 2 years - couldn't get another job so was forced into taking original Company pension early.
    My finances are considerably worse now at 60 than my original plan - we will survive but many of the luxuries that we had originally planned for retirement "have gone up in smoke"!
    The point I'm trying to make is that any early retirement plan should include worse case scenarios especially a loss of a well paid job.
    • Marine_life
    • By Marine_life 16th Nov 10, 9:04 AM
    • 985 Posts
    • 1,913 Thanks
    Marine_life
    CAUTION!!!
    I started planning for early retirement in my early 40s ramping up my savings in equities/ISAs and cash (as far as possible with two young kids!);the Company I was then with, had an Early Retirement Facility that would have allowed me to retire at 55 on a "full" pension with the Company's permission.
    HOWEVER, things changed rapidly in the mid/late 90s with the result that I was made redundant at the age of 49. Got another job at a lower rate of pay and much less generous pension scheme,so revised target retirement to 60. Got made redundant again at 56, not able to retire and out of work for several months so took a job at a lower salary again.
    Got made redundant again after 2 years - couldn't get another job so was forced into taking original Company pension early.
    My finances are considerably worse now at 60 than my original plan - we will survive but many of the luxuries that we had originally planned for retirement "have gone up in smoke"!
    The point I'm trying to make is that any early retirement plan should include worse case scenarios especially a loss of a well paid job.
    Originally posted by brewerdave
    Those are very wise comments indeed. You can spreadsheet away to your hearts content but at the end of the day life has a nasty habit of throwing curve balls in the general direction.

    The timing of my early retirement links to when my son goes to university which effectively then gives us the geographical freedom to move (which will be overseas where we already own a property). However, what we haven't really factored in yet is what the difference is between a frugal retirement and a retirement with a few luxuries.

    Some examples I can think of will be around what sort of car we will drive (I know, horribly materialistic but it's one thing that is important to us), we also would like to resume playing golf - not a cheap hobby).

    There are other more practical things which we haven't yet really worked out around health insurance etc.

    However, all told if we wanted to live a VERY frugally we could potentially retire now but to me what its all about is making a comfortable decision that has sufficient buffer in for the unexpected.

    Damn.......need to get working on those spreadsheets!
  • bendix
    CAUTION!!!
    I started planning for early retirement in my early 40s ramping up my savings in equities/ISAs and cash (as far as possible with two young kids!);the Company I was then with, had an Early Retirement Facility that would have allowed me to retire at 55 on a "full" pension with the Company's permission.
    HOWEVER, things changed rapidly in the mid/late 90s with the result that I was made redundant at the age of 49. Got another job at a lower rate of pay and much less generous pension scheme,so revised target retirement to 60. Got made redundant again at 56, not able to retire and out of work for several months so took a job at a lower salary again.
    Got made redundant again after 2 years - couldn't get another job so was forced into taking original Company pension early.
    My finances are considerably worse now at 60 than my original plan - we will survive but many of the luxuries that we had originally planned for retirement "have gone up in smoke"!
    The point I'm trying to make is that any early retirement plan should include worse case scenarios especially a loss of a well paid job.
    Originally posted by brewerdave
    True, but at the same time it's possible to over-analyse and over-forecast and think of every possible contingency.

    Sometimes you just gotta live a little and take some chances
    • Loughton Monkey
    • By Loughton Monkey 16th Nov 10, 9:55 AM
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    Loughton Monkey
    True, but at the same time it's possible to over-analyse and over-forecast and think of every possible contingency.

    Sometimes you just gotta live a little and take some chances
    Originally posted by bendix
    Although I don't disagree, I still would advocate strongly two things to 'retirement planners'. The first it to keep very detailed accounts, not least so you know where every penny is coming from and where it's going.

    Secondly, a detailed spreadsheet or plan to age 85 or 90. OK, the later years become very simplistic, and 'guesswork'. But they should be 'ballpark' right. You learn, progressively, from updating projections with reality. There is a 'virtuous circle' in these two points. It 'forces' you to become far more 'savvy' with your pension scheme values and how they have changed. You can get a feel for how your Endowment policies are doing. Same with your house equity etc. The 'true' cost of motoring etc.

    But I agree it should not take over your life. My own model didn't, for example, plan for b*ggering off to Asia to work for 6 years, but I took the plunge and did it. Best thing I did, because it filled any gaps and allowed me to come back to UK and retire.
    • Linton
    • By Linton 16th Nov 10, 1:55 PM
    • 10,726 Posts
    • 11,097 Thanks
    Linton
    True, but at the same time it's possible to over-analyse and over-forecast and think of every possible contingency.

    Sometimes you just gotta live a little and take some chances
    Originally posted by bendix

    True, you cannot plan for every possible "event". But you can cover most by making pessimistic assumptions and ensuring a large amount of slack at least in the early years. You dont plan for the money to run out just as you pop your clogs.

    And of course, unless you have a plan and have done the basic analysis, you wont realise that you are taking chances.
    • lvader
    • By lvader 16th Nov 10, 5:36 PM
    • 1,887 Posts
    • 1,601 Thanks
    lvader
    One of my reasons to plan for early retirement is that I won't be reliant on a high salary post 55. If things go pair shaped before then I might have to work longer. Plan for the best , prepare for the worst.
    • Gatser
    • By Gatser 16th Nov 10, 6:55 PM
    • 588 Posts
    • 220 Thanks
    Gatser
    We think we will manage until the sp kicks in - wondered if anybody had similar experiences with a big cut in salary for the years until 66.



    I know the 40k could be larger ideally but with bumping the mortgage off in the last five years and both children through university restricted our saving potential.
    Originally posted by LGH29
    Good Luck to you LGH29!
    In principle, I have a similar situation in mind (although Uni fees increase probably makes that less realistic for our littluns!)

    Your comments made me look at what I am planning for the ages 50-69. My spreadsheet shows total Income split as:

    AGES...................50-54....... 55-59....... 60-64....... 65-69
    Employed income ...100% ........60% .........30%........... -
    Pension Income........ - ...........40% .........70% .........70%
    State Pension........... -............ -.............. -........... 30%

    Total Income (55-59) is the same as (50-54) as I plan to use pension income to subsidise semi retirement in my (55-59) period.

    I can further reduce working hours (60-64) as I drawdown a larger pension...

    Then (65-69) the State Pension should replace my part-time income entirely... time to get an allotment methinks!
    THE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is 26k pa)
    My Other NUMBER: ZERO Working Days to SEMI-retirement: Achieved!
    • Gatser
    • By Gatser 16th Nov 10, 7:13 PM
    • 588 Posts
    • 220 Thanks
    Gatser
    CAUTION!!!
    The point I'm trying to make is that any early retirement plan should include worse case scenarios especially a loss of a well paid job.
    Originally posted by brewerdave
    Yes...Wise words indeed.
    I have had to change a few spreadsheet columns (starting 2009) following sudden redundancy...and a drastic income drop.
    It does tend to wake you up... out of the comfort zone... just like a bucket of icy water... but refreshing too because I was forced to re-examine my aims, and appreciate more the value of free time & reduced stress.

    For that, I can thank the %$%$'s that fired me!

    I also have a theory that on lower pay, I am less of a target in these cost cutting austerity times...
    THE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is 26k pa)
    My Other NUMBER: ZERO Working Days to SEMI-retirement: Achieved!
    • Gatser
    • By Gatser 16th Nov 10, 7:34 PM
    • 588 Posts
    • 220 Thanks
    Gatser
    One of my reasons to plan for early retirement is that I won't be reliant on a high salary post 55. If things go pair shaped before then I might have to work longer. Plan for the best , prepare for the worst.
    Originally posted by lvader
    That gets my vote.

    My Early Retirement planning/spreadsheet is driven by the key objectives of:
    * More Leisure time (whilst fit & active)
    * Reduce reliance on employed income
    * Greater variety/interests.

    With all our financial planning and cautious scenarios...its encouraging to talk to friends that HAVE retired.
    They ALL say "Go for it, ASAP!" Their experience is that you will be pleasantly surprised how little you do tend to spend
    and the perverse pleasure that can be had by hunting out bargains and further money saving
    with all that extra free time (if you need to)
    THE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is 26k pa)
    My Other NUMBER: ZERO Working Days to SEMI-retirement: Achieved!
    • Loughton Monkey
    • By Loughton Monkey 16th Nov 10, 10:30 PM
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    Loughton Monkey
    With all our financial planning and cautious scenarios...its encouraging to talk to friends that HAVE retired.
    They ALL say "Go for it, ASAP!" Their experience is that you will be pleasantly surprised how little you do tend to spend
    and the perverse pleasure that can be had by hunting out bargains and further money saving
    with all that extra free time (if you need to)
    Originally posted by Gatser
    You tend to find that you need less 'stuff'. In our case, we were always buying furniture, porcelain etc. But not now. Yes, the extra time certainly helps in (a) managing your money better, and (b) reducing your fixed costs.

    But I'd still encourage everyone to wait until they are sure and/or have a nice safety margin in the figures. That way, you find it somewhat ironic, but rewarding, that there you are, effectively living off savings, and yet you are still 'saving' by squirrelling away the 'fat' in your projections.

    It could, of course, go the other way, but I could still have my 8 week holiday. Most of the cost goes on eating out etc., Petrol and Motorway tolls zooming around Italy or Portugal.... Well if we couldn't afford it, we'd stick to France and save quite a lot.
    • okydoky
    • By okydoky 16th Nov 10, 11:06 PM
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    okydoky
    when is the time right??
    My circumstances are fairly straightforward.

    Soon to be 55 and OH 53 - 3 of our 4 kids still at home but 2 in employment and youngest half way through teaching degree and all quite independent.

    The nitty gritty - pension pot of 200K which will keep invested until 60, will take max tax free of roughly 70K by then and pension of nearly 1K pm level annuity.

    Wife will continue p/time until she is 66 as loves her job and earns 750pm.
    House mortgage free and worth 200K - will downsize as kids move away over next few years. Cash pot of 140k split 50/50 between shares and cash, mainly ISA's

    Spend max of 1500pm so happy to use savings to live off over next five years and continue pension contributions at 3600pa to boost the pot.
    Pension and income/drawdown from what is left from savings will keep us going from age 60 to 66 when SP kicks in for me - current projection is about 750pm. Two years later OH SP kicks in at 600pm with work pension of 250pm.

    So to get out of RAT RACE - when is the right time and can I afford to now?
    • Loughton Monkey
    • By Loughton Monkey 16th Nov 10, 11:20 PM
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    Loughton Monkey
    Sound OK, okydoky.

    I don't know in what detail you work out your private figures, but I did mine on a spreadsheet. One thing about this is that you can see the estimated position by retiring now. Then you can easily do it again just one year later. [Don't know if your employer still contributes to pension etc.] But depending upon your income, if it vastly exceeds your outgoings, then you find that just one extra year gives a huge boost to retirement figures.

    That's because it's one less year to support yourself, and indeed one more year on top to stash quite a bit more away. The only trouble is, there is a danger of trying 'yet another year' and if you get 'greedy' then you will never retire! But you have to weigh that up against the sheer hassle of work, and only your own mind can tell you when is the right time to call it a day.

    Best thing, of course, would be to make a decision (say next year for example) and by then, engineer a situation where you get made redundant! Then you'll have a nice brown envelope, perhaps, to boost the funds even more.
    • brewerdave
    • By brewerdave 17th Nov 10, 7:22 AM
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    brewerdave
    Another thing to factor into any early retirement planning is how much control you have over your OH's spending patterns!! Its all very well deciding how much you think YOU could live on post retirement but UNLESS you can get your wife (or husband/partner!!) to buy into your form of "austerity" package you may have some nasty shocks coming, in terms of how long savings will last ,for example!Or car replacements,holidays etc.....Its ESSENTIAL that its a joint plan
    A further thought I've had concerns those who plan to move to part time working to supplement their pension income post early retirement - its not easy to find such jobs currently (I speak from personal experience!!!) and those sort of jobs can vanish literally overnight with no redundancy protection. I certainly didn't factor part time working in to my plans at any stage, its only been a consideration when the plan fell apart in the last 4 years or so.
    Last edited by brewerdave; 17-11-2010 at 7:33 AM.
    • Marine_life
    • By Marine_life 17th Nov 10, 8:08 AM
    • 985 Posts
    • 1,913 Thanks
    Marine_life
    Another thing to factor into any early retirement planning is how much control you have over your OH's spending patterns!! Its all very well deciding how much you think YOU could live on post retirement but UNLESS you can get your wife (or husband/partner!!) to buy into your form of "austerity" package you may have some nasty shocks coming, in terms of how long savings will last ,for example!Or car replacements,holidays etc.....Its ESSENTIAL that its a joint plan
    A further thought I've had concerns those who plan to move to part time working to supplement their pension income post early retirement - its not easy to find such jobs currently (I speak from personal experience!!!) and those sort of jobs can vanish literally overnight with no redundancy protection. I certainly didn't factor part time working in to my plans at any stage, its only been a consideration when the plan fell apart in the last 4 years or so.
    Originally posted by brewerdave
    I think some of those comments definitely ring true for me.

    I won't say that my other half overspends (in fact I am the one who "leaks" most money on gadgets) but neither does she have a mindset geared towards austerity. However, I do think it's important to have the standard of living you want in retirement and not have to make too many sacrifices - at the end of the day it has to be a personal choice about how much you value the personal freedom versus how much you want in the retirement pot.

    It is some time since I started talking about the idea of retiring at 50 and I think at first my wife thought it was a joke - however, she is now with the program (in mind if not in spending habits) but I suspect that given the uncertainty at work it will still be another year or so before we have settled on a really firm plan.

    But you are right - it needs to be a joint plan

    I really have / had no intention of working part time but there are some potential avenues that I could pursue - at the moment I spend about 20 days a year teaching and that is something I would like to continue. After all with around 25 years work experience it would seem a shame to waste. But it would need to be something intellectually stimulating and not just for the sake of bringing in a few quid! Those of you following my other posts may have seen my thread about poker. Its something I really enjoy as a hobby and something I would like to invest some more time in when I am retired. I have historically made a reasonable amount of money playing low stakes (generally a profit of $3-4,000 a year) but I am convinced that playing larger tournaments I could win more (its not a money committment more a time commitment)

    Although not sure how my other half would like that!
    • hugheskevi
    • By hugheskevi 17th Nov 10, 6:19 PM
    • 2,253 Posts
    • 2,943 Thanks
    hugheskevi
    But I'd still encourage everyone to wait until they are sure and/or have a nice safety margin in the figures. That way, you find it somewhat ironic, but rewarding, that there you are, effectively living off savings, and yet you are still 'saving' by squirrelling away the 'fat' in your projections.
    One of the things I am most looking forward to is when I get to the point that I could retire, albeit without much 'fat', but am still working to build up a safety margin.

    I anticipate that my attitude to work will be much more positive, knowing that at any time I have an option should I choose to exercise it. Not that I don't like my job, I just that I think I'd be much happier knowing I am choosing to do it, rather than having to do it, if that makes sense.

    Does anyone who is in that position now - or has been through it - have any views on this?
    • Linton
    • By Linton 18th Nov 10, 7:57 AM
    • 10,726 Posts
    • 11,097 Thanks
    Linton
    Another thing to factor into any early retirement planning is how much control you have over your OH's spending patterns!! Its all very well deciding how much you think YOU could live on post retirement but UNLESS you can get your wife (or husband/partner!!) to buy into your form of "austerity" package you may have some nasty shocks coming, in terms of how long savings will last ,for example!Or car replacements,holidays etc.....Its ESSENTIAL that its a joint plan
    Originally posted by brewerdave
    What we did is to agree beforehand a fixed (index linked) personal annual allocation which can be used however the owner wishes.

    In that way we can individually be responsible for our own expenditure without the need to look over each others shoulders at a detailed level, but have a mutual interest in not exceeding the overall budget.
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