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    • ams25
    • By ams25 8th Feb 19, 5:51 PM
    • 236Posts
    • 363Thanks
    ams25
    My Early Retirement Story - Another Perspective
    • #1
    • 8th Feb 19, 5:51 PM
    My Early Retirement Story - Another Perspective 8th Feb 19 at 5:51 PM
    With thanks to OldMusicGuy for his inspiration (and format), I thought I would post on my early retirement experience.

    Background: I early retired from my 30+ year high stress (but quite well paid) corporate career over 2 years ago at 52. Loved my career for most of that time, but not so much once past 50. I believe I suffered ďburn outĒ which made work harder and less enjoyable. So as soon as I realised I could stop (financially) it seemed the only thing to do. Other factors were that my wife had just gone back to work after many years looking after our children and I was keen to spend time with the kids while still young (primary school age). My wife is younger than me and will work for a few more years while she enjoys it, but would like to stop within 5 years. So while we have my wifeís income at the moment and it certainly helps bridge the gap, itís not part of our long term planning. It currently covers around 45% of expenses.

    Our number: We live in London/south east so the cost of living is quite high but the house is mostly paid for (< 5% mortgage remaining). We are neither very frugal nor spendthrift and I would say live a normal/modest middle-class lifestyle. Iíve kept a detailed budget for years and have been tracking spending closely since I stopped working and we are pretty much achieving our plan. We tend to spend around 45k pa (after tax), including holidays (which is the largest single expense). Lots of spending is child related Ė clothes, days out, after school activities etc. We spend much more on the kids than ourselves. My planning allows our number to be around £50k but trying to stay below it. Our lifestyle has not changed since I stopped working, in fact we spend more as my savings rate was previously quite high Ė around 35% if you include mortgage overpayments and tax/NI also took out a big chunk (HRT) which thankfully it no longer does.

    Pensions/Investments: Iíve been investing since I started earning (back in the days of PEPs, before ISAs) and that habit plus time in the market and compounding is what has enabled me to stop working early. In my case having kids relatively late helped because I was investing ďthatĒ money which then had time to grow.
    Iíll have a decent DB pension at 60 (c.50% of expenses) and full SP at 67. My combined SIPP and ISAs pot at about 3% withdrawal rate should cover the other 50% of expenses. For the next 6 years these funds (plus some cash reserves) have to bridge the gap to the DB. Like OMG, I have taken a relatively defensive approach: I hold 2-3 years expenses in cash and a further amount in bonds and less volatile investments so hopefully no need to sell equities in a bear market. Equity allocation is just over 50% (down from around 90% when working). Like OMG my DC/ISA pot is down about 4% from the peak but about the same level as when I stopped working. My wife has relatively poor pension provision so we are diverting some funds to build that up. I have ringfenced some money for the kids to cover uni and associated costs Ė this is an area of my plan I am less secure with as it may not be enough, but also assume we have enough in our number to cut back in other areas if we need to fund other child related costs. Downsizing is not planned in the short term, but 10-15 years out I can see us doing this to release equity to help the kids property wise and provide for LT care if needed.

    The retirement experience: In my case I have a fair amount of childcare responsibilities so I will not be typical of early retirees, with less time for other hobbies, but itís been great being the only dad in the park! I have spent time getting fitter, improved my cooking, I am much more relaxed but still wonder where all the time goes let alone how I found time to work!! Iíve yet to do any volunteering, but I do plan to. Financial literacy really interests me (as there seems so little of it and I know the difference it can make first hand) so I would like to get involved in that area. I know I should do more new things, but with kids the time available is actually quite limited.

    Like OMG, Moving from accumulation to decumulation after over 30 years saving has been a struggle (as a natural saver/investor) but I am getting used to it. Iíve read a lot on safe withdrawal rates, market volatility etc and the more I read and learn the more comfortable I feel that I should be ok even when we do experience a bad market (though I know it wonít be fun). Also recognising that the go go years (50 and 60s) need to be enjoyed before the go-slow years (70s and 80s) - if you are indeed lucky enough to have them - has helped me to appreciate that front ended spending down is a good thing.

    I thought I might miss work after a while, but so far I have not and have no regrets. I am glad I took the decision to quit when I did. I feel that sticking it out another year or two would have been bad for my mental health and feel so grateful that the decisions I made in my 20s to save and invest have enabled my 50s self to quit when I needed to. Having a good (but not stellar) job helped but it was saving/investing early and spending modestly that really worked.

    Thanks again OMG for your post and I hope others will be willing to tell their stories to help and inspire the community.
Page 2
    • ams25
    • By ams25 10th Feb 19, 8:44 PM
    • 236 Posts
    • 363 Thanks
    ams25
    From a US perspective UK tuition fees are negligible. I still think having to pay any fees is ridiculous, but I'm an old socialist when it comes to things like education and will always be grateful to the UK for allowing me to do a BSc and PhD without paying a penny in direct fees. I have a colleague with one child at Boston University and another at Northeastern. The fees add up to over $100k per year...and they are 4 year universities. They do get some scholarships, but they will also be paying off hundreds of thousands of dollars in loans for many years.
    Originally posted by bostonerimus
    In my view you have to consider the ROI really carefully...same applies to private schools here in the UK as well as universities here and more so in the US. Is paying...in many cases huge amounts...going to generate equivalent huge increases in earnings. They may in some cases, but I seriously question if they would in most. I know children that have been to expensive and mid priced private schools but ended up in very ordinary low paying jobs that in no way justified the expense. They would be far better off receiving the invested school fees money at 25 to cover a good size deposit on a property, which the jobs won't allow them to do. I know it also depends on the schools available and sometimes the poor choices may force parents to go down the private route, but as often its seems a default option.
    • ex-pat scot
    • By ex-pat scot 10th Feb 19, 9:50 PM
    • 296 Posts
    • 372 Thanks
    ex-pat scot
    It's not about RoI. or at least that's way down the decision tree.

    We have 4.

    They are all hugely expensive, and it is largely our choice.
    We have no 6th form nearby, but a couple of private options. That's a conscious but hugely expensive decision.
    We pay £70 pw for eldest at university, as the loan is restricted owing to my earnings.

    We pay thousands for music lessons, dance lessons, drama plus indirect costs (30,000 miles per year driving them...). Kit, Instruments. Clothing.
    The school trips are technically optional - the orchestra tours etc tend to be £600+ each per child.
    That's where it #all# goes. Not on holidays (as a family).

    it will get cheaper once they are older.








    NB I have not defined "older".
    • bostonerimus
    • By bostonerimus 10th Feb 19, 9:50 PM
    • 2,626 Posts
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    bostonerimus
    ROI for university isnít easy to calculate as there are so many intangible benefits and it shouldnít just be a training course for a job. I hate to think that fees are dissuading people from doing what they love or from even attending university, but I think thatís whatís happening and the UK is probably not fully developing a lot of great talent. If there was still a string apprentiship culture in the UK I wouldnít be as worried, but that ended just as I graduated back in the early 80s. I had friends who were that last intake of British Steel apprentices and when they finished training they were let go, so most of them took contract jobs in the Middle East.
    Misanthrope in search of similar for mutual loathing
    • Marine_life
    • By Marine_life 10th Feb 19, 10:27 PM
    • 941 Posts
    • 1,751 Thanks
    Marine_life
    Unfortunately DD'd desire to be a vet means she is going to start working life with a massive loan balance. 5 or 6 years of £9k fees plus 5 or 6 years of £4.5k maintenance loan, both of which will have been accruing interest at 6% during the course. Add in the course requirement of a further 38 weeks of work experience to be done during the uni holidays, making getting a holiday job more challenging. We have told her not to stress and to think of it as a tax as she will never pay this off in the 30 years.
    Shame we aren't Scottish. All my friends with European or Eire links have been getting dual passports for their kids to avoid the uni fees.
    Originally posted by MallyGirl
    I would assume that if she qualifies a Vet there is a very good chance that she will pay off a big chunk of that debt.

    6% is obscene.
    Money won't buy you happiness....but I have rarely if ever been in a situation where more money made things worse!
    • bostonerimus
    • By bostonerimus 11th Feb 19, 12:58 AM
    • 2,626 Posts
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    bostonerimus
    I would assume that if she qualifies a Vet there is a very good chance that she will pay off a big chunk of that debt.

    6% is obscene.
    Originally posted by Marine_life
    If she has some financial sense then she will pay it off asap if the interest rate is 6%. But whatever happens she is starting off with a financial handicap which could well limit her options. Carrying debt limits our choices and is an added layer or risk. It's particularly important for early retirement as an increase in the rate of a mortgage or having the fixed cost of a loan if your income sources are stretched in a downturn can destroy a plan that's a bit too optimistic.
    Misanthrope in search of similar for mutual loathing
    • MallyGirl
    • By MallyGirl 11th Feb 19, 7:20 AM
    • 3,363 Posts
    • 8,562 Thanks
    MallyGirl
    I would assume that if she qualifies a Vet there is a very good chance that she will pay off a big chunk of that debt.

    6% is obscene.
    Originally posted by Marine_life
    Unless she ends up with her own practice vets don't actually earn that much. My prediction spreadsheet has her still owing £200k after 30 years (when it is written off) and the interest being added annually being higher than her loan payments so it would actually be growing at that point.
    They add the 6% interest during the course but you don't start repaying till the April after graduating so that could be nearly 7 years into the loan by then. A vet starting salary is about £27k. It would have been a lot easier for her to have wanted to do something else but she is not wired that way.
    • justme111
    • By justme111 11th Feb 19, 8:13 AM
    • 3,173 Posts
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    justme111
    I think with vet degree she could branch into management, planning, science, pharma hopefully with a higher income if endless on calls for local farmers and lambing sheeps get to her.
    • fred246
    • By fred246 11th Feb 19, 8:13 AM
    • 1,368 Posts
    • 821 Thanks
    fred246
    If she has some financial sense then she will pay it off asap if the interest rate is 6%.
    Originally posted by bostonerimus
    It's not that simple though. It's not a normal debt. You may never pay it back. I was speaking to someone who's son works in financial markets on the other side of the world. He gets a letter from the UK government and he just says he's unemployed. Apparently the UK government has no enforcement powers abroad. If they couldn't work or had long term sickness they just don't pay it back. I could have paid the fees up front but I thought my children were better having the money and just think of them paying a higher rate of income tax or graduate tax.
    • shinytop
    • By shinytop 11th Feb 19, 9:48 AM
    • 158 Posts
    • 163 Thanks
    shinytop
    I was speaking to someone who's son works in financial markets on the other side of the world. He gets a letter from the UK government and he just says he's unemployed. Apparently the UK government has no enforcement powers abroad.
    I think that's called fraud...
    • Johnnyboy11
    • By Johnnyboy11 11th Feb 19, 12:31 PM
    • 87 Posts
    • 66 Thanks
    Johnnyboy11
    I would assume that if she qualifies a Vet there is a very good chance that she will pay off a big chunk of that debt.

    6% is obscene.
    Originally posted by Marine_life

    Equally obscene is the UK Government selling the student loan books to its banking chums in the city then squandering the proceeds.
    • AlanP
    • By AlanP 11th Feb 19, 12:41 PM
    • 1,479 Posts
    • 1,151 Thanks
    AlanP
    I think that's called fraud...
    Originally posted by shinytop
    I don't think it is in this case.

    Student Loan repayments is tied in to PAYE / tax system essentially so if you are not employed in UK then "unemployed" is likely to be the correct answer to the question being asked.
    • shinytop
    • By shinytop 11th Feb 19, 1:10 PM
    • 158 Posts
    • 163 Thanks
    shinytop
    Student Loan repayments is tied in to PAYE / tax system essentially so if you are not employed in UK then "unemployed" is likely to be the correct answer to the question being asked.
    I think you still have to pay; there is a different form if you work overseas. The method of collection and the threshold is different.
    • Nual
    • By Nual 11th Feb 19, 7:49 PM
    • 173 Posts
    • 77 Thanks
    Nual
    My youngest is a Dr, currently working in NZ, and she certainly has to pay back her loan.
    • happyandcontented
    • By happyandcontented 11th Feb 19, 8:02 PM
    • 1,848 Posts
    • 3,957 Thanks
    happyandcontented
    It's not that simple though. It's not a normal debt. You may never pay it back. I was speaking to someone who's son works in financial markets on the other side of the world. He gets a letter from the UK government and he just says he's unemployed. Apparently the UK government has no enforcement powers abroad. If they couldn't work or had long term sickness they just don't pay it back. I could have paid the fees up front but I thought my children were better having the money and just think of them paying a higher rate of income tax or graduate tax.
    Originally posted by fred246

    http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678668&_dad=portal&_schema=PORTAL
    • westv
    • By westv 11th Feb 19, 8:16 PM
    • 4,695 Posts
    • 2,292 Thanks
    westv
    I've never really understood why it's not "student tax" or similar rather than "loan". Then people might be less likely to get their knickers in a twist over "interest" and "debt".
    A tax that runs until you are 55 (?) and only affects income over £25k or so.
    • JoeEngland
    • By JoeEngland 11th Feb 19, 8:35 PM
    • 224 Posts
    • 427 Thanks
    JoeEngland
    My youngest is a Dr, currently working in NZ, and she certainly has to pay back her loan.
    Originally posted by Nual
    Maybe she's more honest than people working in financial markets!
    • Anonymous101
    • By Anonymous101 11th Feb 19, 9:35 PM
    • 1,203 Posts
    • 728 Thanks
    Anonymous101
    I've never really understood why it's not "student tax" or similar rather than "loan". Then people might be less likely to get their knickers in a twist over "interest" and "debt".
    A tax that runs until you are 55 (?) and only affects income over £25k or so.
    Originally posted by westv
    Its a loan and not a tax because of the differences in the value of the education each student receives. A medic studying for 5-7 years will incur much more costs than a standard undergraduate studying for 3 so should pay the equivalent back.

    If value wasn't recouped appropriately then you're just encouraging manipulation of the system to a point where students could remain in full time education perpetually.

    IMO the whole University system needs an overhaul. It doesn't provide value for the students yet is pushed as some sort of fast track to high earnings.
    It keeps the unemployment figures low and while people are in debt it also keeps them paying taxes for longer so I can understand why its pushed so much.
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