it seems possible to retire - do you do it?

[throwaway4372]

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?

 

[throwaway4372]

Should be easy enough to get something part-time that requires almost no effort.

What sort of work do you have in mind?

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

On my own.

 

[throwaway4372]

Is 38 even old enough to have enough paid up years for full state pension?

No, 9 or 10 years left, but they can be bought.

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 know a couple of potential areas, I'm from the north originally. I wouldn't call it rough, but sure it's basic.

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.

No particular plans, just a simple stress-free life. I travelled a lot as a kid, so don't feel the need anymore. If I wanted to do something specific I would have already done it.

 

[throwaway4372]

You must have a plan not just for your finances but also for the state of your physical and mental health.

I think some folks saying they couldn't imagine doing nothing must be extroverts. I'm an introvert and have pretty much always spent most of my time alone and would be totally fine with doing that for the remainder.

Physical health is actually a reason to want to retire, because my web dev job has had me chained to a desk getting stressed and stress eating, just not having the stress and eating better and being able to go outside for a couple of hours whenever I feel like it in the day is huge (doing it now as I'm unemployed, lost almost a stone so far).

Removing the career stress is the biggest mental health improvement I can imagine.

 

[throwaway4372]

Not on 11k per year.. if it was 20k per year.. then yes.. absolutely..

Back more onto the OP's question. 11K a years sounds like a terribly small amount, nevermind inflation reducing it's buying power. Absolutely everyone is different in terms of their needs, but that sounds very much at the bottom end of of any graph.

The £11k figure is essential spending per year.
The £17.5k figure is an example income earned by downsizing house and using the money to earn income.
Just clearing this up so nobody thinks £11k is income.

 

[throwaway4372]

How about about using this for income?

Legal & General Active Global High Yield Bond Income Fund Price & Information

www.hl.co.uk

Says it pays 7.3% (fund fee: 0.41%, and hl platform fee ~0.4%)
6.49% of £350,000 is £22,715

Does that seem like a good choice?

Edit: or £270k for the 17.5k tax-free (down from £350k)

Edit2: seems like there are many options for beating 5%, may be best to combine a bunch to make an income portfolio, maybe some interest vs dividends calculations to do also.

Edit3: maybe there's a structure for "income investing" for an income between what you need (11k) and what you can get tax free (17.5k/18.5k) - then "growth investing" the rest to try to beat inflation - then transferring from growth to income as required.

 

[throwaway4372]

I'd be interested in knowing if people actually feel their workplace would miss them when they were gone.

I'm not easily replaceable, but companies don't care so they'd hire a replacement or two as best they can and not lose any sleep over it. Of course if retiring while employed I'd be professional about it and help them prepare. I think I'm most likely to retire at a natural break between jobs, like how I'm thinking about it now, but who knows.

The role I just left I was responsible for about 90% of the output, but got treated like trash so I left, presumably they're a bit stuffed now. Demonstrates that companies aren't always rational or really have a clue who does what. So even if you should be missed, maybe you won't be.

I like the idea/principal of esrly retirement or at least winding down to part time whilst your still young and fit enough to do other things. But on those figures, nope I wouldn't do it.

Do you have a figure in mind?

 

[throwaway4372]

One thing he mentions is the difficulty some people face in finding jobs once in their 50s.

Never mind 50, it's happening to me now at 38.

Frustrating that I'm not going to inherit boomer wealth, it would be completely different story if I had two motivated parents (1 estranged, 1 minimum wage career). Worked my nuts off getting a good career and doing well, and I'll still end up no better off than my parents in retirement.

 

[throwaway4372]

I don't know how you can write that post tbh, in my mind your parents are extremely well off with the best retirement package you can get.

Because if I can't find work and end up retiring now it's spread over a much longer period of time.
If I end up finding work and work a bunch more years then yeah it works out fairly good.