it seems possible to retire - do you do it?

throwaway4372

throwaway4372

throwaway4372

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I want your thoughts on this idea I can't seem to get out of my head...

I'm really struggling to find a job, maybe it'll happen eventually but this side of Christmas seems unlikely, so maybe I stick with the search until June or so, but there must be a line somewhere where I eventually give up and either do something else or try to retire. [interested to hear thoughts on when you think is reasonable to give up]

Rounded numbers because this doesn't need to leak all my info, but does need to represent the decision so you can answer properly.

Imagine you're 38, you can sell a house and pocket about 400k, and you have about 200k investments/savings.
You also have 250k in your pension which you plan to use between 57-68, then whatever's left you take on top of the full state pension from 68.

If you buy a basic house oop norf for about 130k, you have 270k of house money left, and about 200k investments/savings still, 470k total.

My understanding is you can earn about 17.5k income from savings tax free (income tax personal allowance plus starter rate for savings).

If you dump £350k in a 5% savings account, you earn that. You have 470k so you can afford it. [interested to hear about how you'd use your money more effectively in this scenario, this is a basic example I doubt it's optimal]

You have a budget spreadsheet which says you spend 14k a year, but you can give up the car and cut back a bit to make that 11k.

So it seems possible to retire - do you do it?
 
I'm making the same plan, although I am older than your example.

In simple terms, your numbers are too low.

What kind of existance are you going to have on a grand a month, going by bus everywhere, in Rotherham, before bills? No thanks!

Are you on your own or do you have a family?

On your own.....digital nomading (grown up backpacking) would be my choice. Still working but more fun.
 
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This is literally my plan for when I’m 40.

ISA bridge to LISA bridge to SIPP and then whatever state pension awaits.

Isn’t for everyone, but I’m a childless homeowner, nearly paid off my mortgage and earn enough to build up sizeable savings to support my current lifestyle which isn’t extravagant but not eating beans everyday either although I quite like beans.

People often overestimate how much they’ll need in retirement generally.

Although as above, likely to volunteer or work part time doing something less soul destroying rather than just enjoying my hobbies as I imagine I’d lose interest if only doing that.
 
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CapitalOne said:
On your own.....digital nomading (grown up backpacking) would be my choice. Still working but more fun.
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100%

You've got savings and so this seems like an ideal opportunity to get out and do things, if you can pick up work along the way then even better. Nothing has to be final at this age, so you could always eturn to work in 5-10 years after enjoying life now.
 
I'd only retire fully early if I could fund my time.
In the scenario above.. Probably not.

But I'd absolutely be looking for maybe temp work/contract work.

My realistic short term goal is to work part of the year and travel rest.

I'm actually starting to question whether the typical "own a house, pay off mortgage etc etc" is really for me.

Time is speeding past and I'm not really happy.

Alas. I don't have the same level of funds as you. I only have 60k in easy access and 150k of house equity.
 
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5% is optimistic and I think you would pay some tax. Inflation etc will increase your monthly outgoings.
So you’d end up living like a pauper.
I retired at 58/59, I have two db pensions which pay out roughly what you’re expecting in interest. I would say it’s perfectly doable but 30 years is a long time.
My wife still works full time which obviously helps a lot although she is dumping a lot into avcs.

Just to add, I found I have absolutely no inclination to do work of any sort, I’ve just had enough of that life.
I seem to find plenty of things to fill my time, I have the family still living at home so that’s enough human interaction for me.
I do have significant savings which is useful for one of expenses.
 
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Ayahuasca said:
Anything where you can turn up, do the same thing and switch off when you clock out. Yes, it will be monotonous and soul-destroying full-time, but two shifts a week or so shouldn't take too much of a toll.

Local warehouse work, delivery driving etc.
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Yes, I feel this way very much. The stress from dealing with mounting accountability, especially when relying on other people, complicated technical debt, corporate disorganisation, arbitrary KPIS and interdepartmental politics is overwhelming. I am as a result quite seriously envious of those in the gig economy, the power of being able to completely pick and choose when and where you operate feels huge to me.

:edit: yes, I watch uber eats delivery channels while doing the washing up. I am become... whatever that is.
 
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Zefan said:
Yes, I feel this way very much. The stress from dealing with mounting accountability, especially when relying on other people, complicated technical debt, corporate disorganisation, arbitrary KPIS and interdepartmental politics is overwhelming. I am as a result quite seriously envious of those in the gig economy, the power of being able to completely pick and choose when and where you operate feels huge to me.

:edit: yes, I watch uber eats delivery channels while doing the washing up. I am become... whatever that is.
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I was thinking about this this week and wondered if I was just being daft.

Sometimes I long for the days where I was just sat at my desk with headphones on building a bit of I.T stuff.
 
You can earn £18570 in interest without paying any tax if you have no other income yes. However your 'earnings' in real terms will go down over time. You won't notice it to start with but in 5,10,20,30 years your 350k in savings is still only earning the same sum.

A better strategy would be to crate a ladder using UK linkers. Say you're 38, a 20 year ladder will get you to 58 when you can access your pension. Say you put 18k into each year (360k) when the bonds mature each year you'll be paid an inflation beating return with no tax to pay. You wont be rich but its possible.
 
Is 38 even old enough to have enough paid up years for full state pension?

I think the earning 5% on 350k may be a bit wishful? I may be completely wrong, but thought most accounts I've seen paying a decent interest rate tend to only be for the first 5-10k. By the time you get up past 100k it's barely half of that.

Also regarding the house purchase. To get a house for a 130k these days you'd have to live in a pretty rough area - even up north. Either that or something like an ex-mining village where you literally have nothing else around you.

I can't be bothered to do the sums, but it sounds like it would provide you a minimal comfort retirement for the next 40-50 years, certainly nothing luxurious. That's a very long time to live just to basically survive. What do you plan to do with all your free time? Do you not have any ambitious life plans / places you'd like to visit.
 
5% in stocks and shares isn’t particularly ambitious, even if you consider that includes inflation (so really 7-8%). I go slightly lower and assume 4%~ after inflation is achievable.

My SIPP after 10 years invested in the cheapest global funds is up a total of 30% currently. I won’t be accessing it for another 30 years probably.
 
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