Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Marine_life
    • By Marine_life 5th Nov 10, 10:46 AM
    • 924Posts
    • 1,725Thanks
    Marine_life
    Early-retirement wannabe
    • #1
    • 5th Nov 10, 10:46 AM
    Early-retirement wannabe 5th Nov 10 at 10:46 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 222
    • OldMusicGuy
    • By OldMusicGuy 19th Jul 18, 11:54 AM
    • 675 Posts
    • 1,425 Thanks
    OldMusicGuy
    It is quite difficult to define what "retired" actually is these days, with so many opportunities to do a bit of work from home. In the pre-internet, pre-smartphone days you were either at work or you weren't. Now, with the boundaries blurring for so many people, and so many freelance or "gig" opportunities available, it's much harder to define when your status switches from one to the other.

    My wife, who has been a stay at home mum and done a bit of sole trader curtain making, said the other day "when do I retire"? We agreed it was a state of mind shift and we are both calling ourselves "retired" from now on. She also decided to wind up her curtain making business (which is very small, never generates any taxable profit).
    • MallyGirl
    • By MallyGirl 19th Jul 18, 12:20 PM
    • 3,133 Posts
    • 8,172 Thanks
    MallyGirl
    For me, retired will be when I leave the full time job with no intention of getting another one. OH is coming round to the idea of retiring at 60 now - we could probably go earlier but that will see DD through uni as it is a long course with less opportunity to work in the hols. I expect we will want to help her as it is her vocation - vet med - and I would rather do that than have her struggle with balancing studies/work experience placements and trying to earn some cash to keep her going.
    He did say he was at a meeting with a similar aged colleague the other day and the guy said he was looking forward to 2 years time when he could retire (must have been thinking about turning 55). DH is always better when he finds someone else doing something that I am trying to get him to do!
    LinkedIn did send me an interesting part time consultancy role in a local charity yesterday. I suspect I might take that sort of gentle wind down route (but before 60) as I am not sure I want another 9 years of the stress/hassle/grief of the FT role.
    • kidmugsy
    • By kidmugsy 19th Jul 18, 12:32 PM
    • 12,202 Posts
    • 8,643 Thanks
    kidmugsy
    Could be some interesting conversations:


    Random Person: "So what do you do for a living?"
    Me: "I'm a stay at home dad."
    RP: "Oh, so what does your wife do for a living?"
    M3: "She's a stay at home mum."
    RP: "?????"
    Originally posted by Triumph13
    We are of independent means.
    Free the dunston one next time too.
    • Anonymous101
    • By Anonymous101 19th Jul 18, 2:38 PM
    • 1,162 Posts
    • 591 Thanks
    Anonymous101
    If you need to give a job title other than retired, "self employed" or "Investment manager" would be options if you want to play a straight bat.

    Depending on the person asking I'd like to have a bit of sport though.
    • Terron
    • By Terron 19th Jul 18, 4:35 PM
    • 350 Posts
    • 295 Thanks
    Terron
    I think that can vary a lot depending on your relationship to the part time work.
    • If you need the money to make your plans work then you are definitely still a wage slave.
    • If you are using it to cling on to your status and/or identity then clearly you haven't made the transition.
    • If you are using it to keep your options open in case you want / need to return to full time work then mentally you're probably not what I would call retired.
    Originally posted by Triumph13

    Adter I lost my job when I was 54 I bought properties to let. I pay other people to manage them so that id very much a part time job. I could have surviced living off my capital but it felt better to pit it to work,

    With the tax changes I started putting new properties into a company, so I am technically employed as the director. though I have payed a lot more into the company that I have taken out so far.,
    I did a bit of GDPR consultancy for one of my letting agents this year. I needed to research it for myself anyway,
    Having found out that my pensions aren't quite as good as I thought they were going to be. Property forms part of my plan, but I am my own boss in all roles and can chose when to work or not.

    As far as HMRC are concerned I am still working (tax bill arrived this morning ). As far I my sister are concenrned I don't work. Pne of them "retired" from teaching but went back to cover a maternity leave and srill does tutoring.
    Last edited by Terron; 19-07-2018 at 4:50 PM.
    • k6chris
    • By k6chris 19th Jul 18, 5:21 PM
    • 326 Posts
    • 532 Thanks
    k6chris
    We are of independent means.
    Originally posted by kidmugsy

    I am a Lifestyle Entrepreneur......
    "For every complicated problem, there is always a simple, wrong answer"
    • atush
    • By atush 20th Jul 18, 4:03 PM
    • 17,318 Posts
    • 10,868 Thanks
    atush
    Adter I lost my job when I was 54 I bought properties to let. I pay other people to manage them so that id very much a part time job. I could have surviced living off my capital but it felt better to pit it to work,

    With the tax changes I started putting new properties into a company, so I am technically employed as the director. though I have payed a lot more into the company that I have taken out so far.,
    I did a bit of GDPR consultancy for one of my letting agents this year. I needed to research it for myself anyway,
    Having found out that my pensions aren't quite as good as I thought they were going to be. Property forms part of my plan, but I am my own boss in all roles and can chose when to work or not.

    As far as HMRC are concerned I am still working (tax bill arrived this morning ). As far I my sister are concenrned I don't work. Pne of them "retired" from teaching but went back to cover a maternity leave and srill does tutoring.
    Originally posted by Terron
    Have you set up a pension thru the company?
    • Terron
    • By Terron 20th Jul 18, 4:12 PM
    • 350 Posts
    • 295 Thanks
    Terron
    Have you set up a pension thru the company?
    Originally posted by atush

    Not yet. I have been reinvesting the profits so far. I am currently in the process of buying a third property for it. T transferred my pure DC company pension to a flexible scheme and plan to start paying into that from my company. probably next year.
    • MallyGirl
    • By MallyGirl 10th Aug 18, 12:15 PM
    • 3,133 Posts
    • 8,172 Thanks
    MallyGirl
    I am now back from a 'bucket list' type of holiday which has helped to crystallise some of our ideas on early retirement and our approach.
    For some, the 'being frugal now to quit earlier' is the way to go but this break has shown that that is not for us. We will continue to contribute heavily to pensions (for the tax/NI breaks) and ISAs (for the flexibility and ability to manage income tax bills) but we will also be taking some more of these sort of trips whilst we are still fit and healthy enough to do it. I would hate to retire and find I was too knackered to do some of the things I had been looking forward to - and then there is also the bus that might take me out tomorrow.
    I would rather work a little longer to pay for this approach.
    DH actually enjoys his job so that might be a future challenge - if I want to quit before he does. We'll cross that bridge if we come to it.
    We had quite a physical holiday seeing wildlife and it was fantastic but it brought home that we might not be able to do this stuff if we leave it too long. My Dad, 72, has had both knees and one ankle replaced so that doesn't bode well genetically.
    I think this will mean that we might still have some outstanding mortgage to pay - and we will have had to extend the mortgage term while we are still working - into retirement but we will be able to more than offset that with a TFLS should we want to.
    • happyandcontented
    • By happyandcontented 10th Aug 18, 12:36 PM
    • 1,706 Posts
    • 3,513 Thanks
    happyandcontented
    I am now back from a 'bucket list' type of holiday which has helped to crystallise some of our ideas on early retirement and our approach.
    For some, the 'being frugal now to quit earlier' is the way to go but this break has shown that that is not for us. We will continue to contribute heavily to pensions (for the tax/NI breaks) and ISAs (for the flexibility and ability to manage income tax bills) but we will also be taking some more of these sort of trips whilst we are still fit and healthy enough to do it. I would hate to retire and find I was too knackered to do some of the things I had been looking forward to - and then there is also the bus that might take me out tomorrow.
    I would rather work a little longer to pay for this approach.
    DH actually enjoys his job so that might be a future challenge - if I want to quit before he does. We'll cross that bridge if we come to it.
    We had quite a physical holiday seeing wildlife and it was fantastic but it brought home that we might not be able to do this stuff if we leave it too long. My Dad, 72, has had both knees and one ankle replaced so that doesn't bode well genetically.
    I think this will mean that we might still have some outstanding mortgage to pay - and we will have had to extend the mortgage term while we are still working - into retirement but we will be able to more than offset that with a TFLS should we want to.
    Originally posted by MallyGirl
    We have taken this approach too.

    We could both retire now theoretically, but we also both enjoy our jobs and if I am honest I am not sure that we have enough hobbies, aside from travelling, to sustain retirement!

    We are now actively exploring new hobbies to see what will appeal long term whilst we have now decided to both do an extra 18 months working to add to our cash reserves and boost my pension.
    • JoeEngland
    • By JoeEngland 10th Aug 18, 8:25 PM
    • 184 Posts
    • 275 Thanks
    JoeEngland
    We have taken this approach too.

    We could both retire now theoretically, but we also both enjoy our jobs and if I am honest I am not sure that we have enough hobbies, aside from travelling, to sustain retirement!

    We are now actively exploring new hobbies to see what will appeal long term whilst we have now decided to both do an extra 18 months working to add to our cash reserves and boost my pension.
    Originally posted by happyandcontented
    Hobbies, learning something new, playing a sport, volunteering etc, the world is your oyster and the only real limit on what to do with your time when retired is your imagination.
    • AnotherJoe
    • By AnotherJoe 10th Aug 18, 9:17 PM
    • 11,858 Posts
    • 13,831 Thanks
    AnotherJoe
    Similarly if you're a carer then that's your main responsibility. Personally I'd class retired as not having to work - whether that's in a job or otherwise.
    Originally posted by Anonymous101
    If you follow the FIRE community, surely that is is Financial Independence not Retire Early ?
    Put it this way, suppose you don't "need" to work but like it (or just decide to do OMY) and commute each day Mon-Fri for your 9-5 city job. And you tell your boss you have "retired ".
    • Techno
    • By Techno 11th Aug 18, 10:15 PM
    • 1,083 Posts
    • 697 Thanks
    Techno
    Part time is (we have found) a very pleasing alternative with the option to say we no longer want to work if things aren't going the way we want them to
    If you think you are too small to make a difference, try getting in bed with a mosquito!
    • hugheskevi
    • By hugheskevi 11th Aug 18, 11:25 PM
    • 2,076 Posts
    • 2,646 Thanks
    hugheskevi
    As I approach retirement, I've started to work out a few different 'buckets' I need to fill. How full I make them will determine my optimal balance between working longer and having less but retiring early. The buckets are (in chronological order):

    (1) A few years of world travel after leaving work (0% complete - could be cancelled to bring forward retirement. This will be the last 'bucket' to be filled.)

    (2) Purchase of retirement house (100% complete, on basis that current assets would fund purchase - spend would be between 300,000 to 500,000 to range between something with compromises and something perfect)

    (3) Period between traveling and age 50. Desired income would be between 30,000 and 45,000 (increasing by prices). This is closely linked to purchase of retirement house, as it draws on the same capital resource. If I purchased a 300,000 house I'd be 52-78% complete at current time. A 500,000 house would see close to 0% completion.

    (4) Age 50-54. Using same income target, 52% to 80% complete. This is invariant to house purchase as this is sourced from pension income. However, addition capital will be needed for this period and that additional amount would be connected to house purchase price.

    (5) Age 55-65. Income will be sourced from DB and DC pensions. Pretty much 100% complete. If DC returns don't fulfill expectations it would be necessary to add more or commence a DB pension early.

    (6) Age 65-68. Other DB pensions come into payment but still would expect to use some DC. Pretty much 100% complete. If DC returns don't fulfill expectations it would be necessary to add more or commence a DB pension early.

    (7) Age 68 - State Pensions come into payment. 100% complete from DB and State Pension alone. Should be very comfortable as still accruing both DB and State Pension despite already meeting 45,000 income target.

    My wife and I are close to age 41 now. I've pretty much decided to take a quite cautious approach, not playing games such as using mortgages to effectively borrow from retirement income (although this would be very desirable) or become a landlord when traveling (highest expected value, but hassle).

    I don't want to sacrifice world travel - it would help the plans a lot, but it would be too much of a sacrifice. I'm very unwilling to compromise too much on income between age 41-54 as I have no other sources of income to draw on if required so don't want to sail too close to the wind - after age 55 I could draw on DC funds and if required draw a DB pension early (subject to legislative change around minimum pension age).

    The main area I am willing to compromise is around house value in retirement. For the area I want to live 500,000 would be sufficient to live somewhere with few, if any, compromises. 300,000 would be the minimum I would want to spend, anything less than that would have too many compromises. I may well go with something around 400,000 which would involve some acceptable compromises.

    I found the exercise of considering each 'bucket' quite useful in determining what my balance between working longer and retiring earlier with less actually is. Admittedly in my case it is a lot easier as I will be retiring in mid-40s, so a couple of extra years of work isn't a big deal. Also, having DB pensions is great, as it has enabled me to work backwards, sorting out later retirement first and then progressively working on earlier stages of retirement.
    • michaels
    • By michaels 12th Aug 18, 9:25 AM
    • 21,762 Posts
    • 101,299 Thanks
    michaels
    3
    As I approach retirement, I've started to work out a few different 'buckets' I need to fill. How full I make them will determine my optimal balance between working longer and having less but retiring early. The buckets are (in chronological order):

    (1) A few years of world travel after leaving work (0% complete - could be cancelled to bring forward retirement. This will be the last 'bucket' to be filled.)

    (2) Purchase of retirement house (100% complete, on basis that current assets would fund purchase - spend would be between 300,000 to 500,000 to range between something with compromises and something perfect)

    (3) Period between traveling and age 50. Desired income would be between 30,000 and 45,000 (increasing by prices). This is closely linked to purchase of retirement house, as it draws on the same capital resource. If I purchased a 300,000 house I'd be 52-78% complete at current time. A 500,000 house would see close to 0% completion.

    (4) Age 50-54. Using same income target, 52% to 80% complete. This is invariant to house purchase as this is sourced from pension income. However, addition capital will be needed for this period and that additional amount would be connected to house purchase price.

    (5) Age 55-65. Income will be sourced from DB and DC pensions. Pretty much 100% complete. If DC returns don't fulfill expectations it would be necessary to add more or commence a DB pension early.

    (6) Age 65-68. Other DB pensions come into payment but still would expect to use some DC. Pretty much 100% complete. If DC returns don't fulfill expectations it would be necessary to add more or commence a DB pension early.

    (7) Age 68 - State Pensions come into payment. 100% complete from DB and State Pension alone. Should be very comfortable as still accruing both DB and State Pension despite already meeting 45,000 income target.

    My wife and I are close to age 41 now. I've pretty much decided to take a quite cautious approach, not playing games such as using mortgages to effectively borrow from retirement income (although this would be very desirable) or become a landlord when traveling (highest expected value, but hassle).

    I don't want to sacrifice world travel - it would help the plans a lot, but it would be too much of a sacrifice. I'm very unwilling to compromise too much on income between age 41-54 as I have no other sources of income to draw on if required so don't want to sail too close to the wind - after age 55 I could draw on DC funds and if required draw a DB pension early (subject to legislative change around minimum pension age).

    The main area I am willing to compromise is around house value in retirement. For the area I want to live 500,000 would be sufficient to live somewhere with few, if any, compromises. 300,000 would be the minimum I would want to spend, anything less than that would have too many compromises. I may well go with something around 400,000 which would involve some acceptable compromises.

    I found the exercise of considering each 'bucket' quite useful in determining what my balance between working longer and retiring earlier with less actually is. Admittedly in my case it is a lot easier as I will be retiring in mid-40s, so a couple of extra years of work isn't a big deal. Also, having DB pensions is great, as it has enabled me to work backwards, sorting out later retirement first and then progressively working on earlier stages of retirement.
    Originally posted by hugheskevi
    I wonder if there is a way to draw forward funds from your post sp period when it seems you think you will be overprovisioned to effectively fill some of your earlier period buckets?
    Cool heads and compromise
    • hugheskevi
    • By hugheskevi 12th Aug 18, 9:51 AM
    • 2,076 Posts
    • 2,646 Thanks
    hugheskevi
    I wonder if there is a way to draw forward funds from your post sp period when it seems you think you will be overprovisioned to effectively fill some of your earlier period buckets?
    There are, but they all involve hassle and loss of value in one form or another.

    If I didn't plan to go traveling for a long period, it would be easy, as I would simply use a mortgage to achieve this. The travel element doesn't entirely preclude this, but it does make it harder and introduce risk. I would need to re-mortgage before going traveling, rent out property and then port mortgage to new property.

    There would be no guarantee I could port the mortgage, especially as I would have no income. I could mitigate that risk by leaving work on unpaid leave rather than resignation, meaning I could if necessary return to work for a while which would mean there would no reason a porting request would be rejected.

    The above would of course be a reasonable amount of hassle. There would also be additional mortgage fees payable, and I would probably have to pay additional stamp duty on my next house purchase, as my wife has first-time buyer status still but if I have a mortgage to port I would need to be involved in the purchase. Although the rental income would probably more than offset this, as I would have a fully furnished house ready to let out which would yield a lot more than the money from a house sale held in savings (needs to be low/zero risk as would be using it within about 2-3 years).

    On balance, I'm inclined to think all the above is too much phaff. The simplest approach is to sell my current house, go travel and buy next house in wife's name, later changing ownership structure to whatever is most appropriate. It might be that I can raise money against the property, but as I don't intend to have any income I can't rely on that. And it would be likely to be at interest rates higher than conventional mortgages.

    The difference in retirement age would only be about 2 to 3 years anyway, so not really a big deal. Hence my conclusion that the simpler approach is better - less to go wrong, fewer risks and overall higher income and capital.

    One thing I am finding it hard not to do is make additional pension contributions despite not needing them. Leaving tax relief on the table is difficult. I am happy to contribute to a DB AVC that I can take (as income) from age 50 - at least I get some return in a period I need (age 50-54) and it is super-tax efficient as it is probably going to be tax free (accrued pension amount is around the level of the Personal Allowance). But I also contribute more to a different DB AVC that I probably won't access until age 65 so that in some ways could be regarded as dead money.

    At the moment both my wife and I are very close to Annual Allowance (I'm deliberately aiming off it). Some of the DB AVCs are coming to an end soon, opening up the possibility of DC contributions. I'm quite tempted to make a decent amount of contributions for my wife, as she has a lot less DC than I do.

    It may not be optimal in terms of maximising early retirement, but I still want to be efficient in capital and income accumulation. Having more will never be a bad thing. I think this is the right thing to do for now, whilst I am still 3-5 years off retirement, perhaps in a couple of years or so I'll change course.
    • michaels
    • By michaels 12th Aug 18, 4:48 PM
    • 21,762 Posts
    • 101,299 Thanks
    michaels
    Someone on here talks about vct as being a tax efficient way of avoiding tax or be it with a 7(?) year lag.
    Cool heads and compromise
    • FIRSTTIMER
    • By FIRSTTIMER 12th Aug 18, 5:44 PM
    • 414 Posts
    • 63 Thanks
    FIRSTTIMER
    I!!!8217;ve been fortunate to have paid into defined benefit pensions since I started working properly at 21, aged 35 now. I!!!8217;ve decided to really look at what I want and when. I do not want to be working past 60 at all. 65 at the very maximum.

    Have decided to pay the absolute maximum I can pay into my current government pension (TPS/USS) which is equating to around 17% of my pretax salary after buy outs and faster accruals/additional pension. I!!!8217;ll keep doing this until i have maxed out or change careers, who knows what the future holds.

    In addition I am paying 300 monthly into an S&S ISA which will hopefully bridge the gap between 60 and when I do take my pension benefits (albeit i will probably take my first pension I paid into then as well. It also means this is accessible in emergencies, but I have income protection too until 65.

    My mortgage is always due to finish at 65 depends where and when I move to. I have just ensured that i have fully planned future events now and live with it rather than wonder why I am working until 75!
    • gadgetmind
    • By gadgetmind 12th Aug 18, 7:23 PM
    • 10,874 Posts
    • 8,793 Thanks
    gadgetmind
    I regularly paid 40%-50% of my salary into my defined contribution pension so that I could retire at 55. I'm now semi-retired, haven't drawn anything other than PCLS from pension, and hope new business will let me leave it (mostly) alone this tax year.

    My long term (and tightly held!) plans have been replaced by a very relaxed "make it up as you go along"!
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • FIRSTTIMER
    • By FIRSTTIMER 12th Aug 18, 7:44 PM
    • 414 Posts
    • 63 Thanks
    FIRSTTIMER
    My only query is always whether to max a S&S ISA or pay into a LISA if I have maxed out the the work pension. I am toyed with S&S due to emergency access but toyed with LISA due to 25% uplift but not happy at access at 60.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

166Posts Today

1,592Users online

Martin's Twitter