Early-retirement wannabe
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brewerdave wrote: »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.
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! :rotfl:
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)0 -
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.
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)0 -
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);)
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.0 -
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?0 -
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.0 -
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.0 -
brewerdave wrote: »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.
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!Money won't buy you happiness....but I have never been in a situation where more money made things worse!0 -
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?0 -
brewerdave wrote: »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
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.0 -
As has been said the key is the spending.
Rather than spreadsheets I would recomend investing in an old copy of MSmoney and track everything in detail, go back a couple of years if you can to give you some history to start looking for cutbacks.
There are loads of builtin tools for analysis and projections.
The devil is in the detail, understanding where every penny goes is the key to understanding where your future spends will be and what the trade offs are for the money you have.
Once you have the minimum spend foot print you can add in the discretionary spends.
There are 2 approaches to funding the future spends from savings/investments.
Fully funded : ( best for the min spend footprint like housing and food you don't now how long you need these).
That means whatever means you use the income will always exist, this could be by indexed pension income or investment income that does not involve reuctions in capital.
Draw down : usefull for spend that will reduce or dissapear over time.
If you asume that the pot of money will at least grow with inflation you can use fixed amount at the start to fund the spend.
To see the comparisons in the strating size needed take cars as the example and 5% as the return after inflation
Starting at 50 and getting £10k cars that last 10 years.
so one at 60,70,80,90.......
That needs a pot of £18208, that will grow by £10k every 10 years.
But you can asume you don't need an endless supply of cars the pot to buy each car is
1st car £6070
2nd car £3684
3rd car £2236
4th car £1358
So cars till 100 needs less than £13400k much less than the £18k for a neverending pot.0
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