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Fire calcs have made me think about retiring now

Including Financial Independence and Retiring Early (FIRE)
dingdong
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Fire calcs have made me think about retiring now

#348501

Postby dingdong » October 17th, 2020, 4:42 pm

Hello

I just tried out some of the FIRE calcs in this forum which all seemed to look positive for retiring immediately. Although I've generally saved money throughout my career I hadn't realised it would mean I could potentially retire already and was expecting to have to keep working for a few years. I'm now trying to figure out if it would be a sensible move or if working for a few more years whilst I'm probably at my peak earning age would make sense.

Just wondering what people would think based on my current situation:

Age 46

SIPP: 700k
ISA: 400k (Share ETFs)
Single Company Share: 600k
Cash: 80k
Retained Profits in Limited Company: 250k

I realise the single-company share is a huge risk. These are from my ex-employer discounted share scheme which I was in for 15 years (Shares in USD). I have been selling each year up to the CGT limit to transfer to the ISA but there is a huge unrealised gain of 450k. They are tech related and have outperformed the market significantly over the last 15 years.

No dependents, and currently live on about 50k a year.
Mortgage of 200k - I assume renewing a mortgage becomes impossible once you say you're retired which might mean that had to be paid off.

General plan would be to live off dividends from the limited company, then the ISA before the SIPP would be needed.
The single company share would be the emergency buffer fund.

Would appreciate any thoughts from people who have spent far longer thinking about FIRE than me!

Thanks

JohnB
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Re: Fire calcs have made me think about retiring now

#348507

Postby JohnB » October 17th, 2020, 5:06 pm

So £1.2m with paid-off house and £650k of shares in a booming company. Presuming the £50k you spend each year includes servicing that mortgage, and commuting costs, your expenditure could drop to < £40k on retirement. and £1.2m would cover that, and the single company returns could give you lots of fun money.

Retire and have fun!

Dod101
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Re: Fire calcs have made me think about retiring now

#348511

Postby Dod101 » October 17th, 2020, 5:21 pm

From the capital that you have, even netting off the outstanding mortgage I should think you could comfortably retire. However if I were you I would be looking at the investments in the various pots very carefully and calculate the likely income from these different pots, netting them down to allow for tax payable. Then you will have reasonable idea whether the net income will meet your needs. That is the way I would look at it anyway.

Dod

kempiejon
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Re: Fire calcs have made me think about retiring now

#348514

Postby kempiejon » October 17th, 2020, 5:33 pm

dingdong wrote:Hello

I just tried out some of the FIRE calcs in this forum which all seemed to look positive for retiring immediately. Although I've generally saved money throughout my career I hadn't realised it would mean I could potentially retire already and was expecting to have to keep working for a few years. I'm now trying to figure out if it would be a sensible move or if working for a few more years whilst I'm probably at my peak earning age would make sense.

Just wondering what people would think based on my current situation:

Would appreciate any thoughts from people who have spent far longer thinking about FIRE than me!

Thanks


Let's say you have enough money - I would retire on less than you have accumulated. What would you do with your time, do you like working? What do your mates/family do all day everyday? Let's say you're healthy enough to live for as long as you've worked so far that's a lot of life to fill if you work was full time and pretty consuming.

I have a list of activities I'm holding off or only indulging occasionally as I still have to go to work to accumulate more income.

I was made redundant a few years back and I had 3 years off/out of work so I know you do need to have something to do with your months once your out of the race.

dingdong
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Re: Fire calcs have made me think about retiring now

#348519

Postby dingdong » October 17th, 2020, 6:13 pm

Thanks all. Yes I can imagine without a clear plan and a list of activities it could become quite dull suddenly being at home all day when everyone you know is busy working.

I have a list of things I'd like to do but totally agree it needs proper planning before giving up the day job!

tacpot12
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Re: Fire calcs have made me think about retiring now

#348532

Postby tacpot12 » October 17th, 2020, 8:16 pm

You could certainly retire now, but whether you should is another question. I retired at 53 having reviewed by income requirements for retirement and my assets using FIRECALC. I decided that it was worth it to me, to retire from a career that had never been very fulfilling, at the earliest opportunity, even if this meant that I would not have a great standard of living.

After three years, I'm still very pleased with my decision. I do some volunteering but in front-line roles where I don't have to take responsibility for the difficult issues that come up, but the rest of the time, I do whatever I want to. My time is now my own. I've been able to try new sports, and spend more time with my aging parents, at least until the pandemic started. I am healthier now than I have been for a long time because I have time to look after my health and I have an absence of stress. I'd recommend that if you can do it and are happy with the level of income you will have.

Steveam
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Re: Fire calcs have made me think about retiring now

#348551

Postby Steveam » October 17th, 2020, 11:01 pm

Although yr numbers look as if they will work do they have enough slack?

I retired very early and long ago and it’s all gone well. When I retired I had plans to travel the world and as I didn’t scrimp my first four years of retirement were vastly more expensive than my pre- retirement.

What about private health care costs or old age care?

TUK020
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Re: Fire calcs have made me think about retiring now

#348587

Postby TUK020 » October 18th, 2020, 9:53 am

dingdong wrote:Hello


Would appreciate any thoughts from people who have spent far longer thinking about FIRE than me!

Thanks


You no longer need to work to earn a living.
What you do need is some idea of what you want to do for the rest of your life.
I have found this Harvard Business Review article by Peter Drucker really helpful
https://signallake.com/innovation/managing_oneself.pdf
the last third talks about the 'second half of your life'.
Important the you don't think of retirement as 'stopping', but no longer needing a salary gives you a much wider choice on what you want to do with yourself

ReallyVeryFoolish
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Re: Fire calcs have made me think about retiring now

#348590

Postby ReallyVeryFoolish » October 18th, 2020, 10:31 am

I have nothing of use to add so I won't. Congratulations to the OP on a great outcome. One that the vast majority of the population will never come close to achieving.

Myself, I chose to stay working until 63 to basically give my grown children the inheritance before I am gone. They needed the money much more now than later and are debt free.

Well done OP

RVF

dealtn
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Re: Fire calcs have made me think about retiring now

#348593

Postby dealtn » October 18th, 2020, 10:47 am

Is your single company share listed, and the exposure hedgeable?

Itsallaguess
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Re: Fire calcs have made me think about retiring now

#348595

Postby Itsallaguess » October 18th, 2020, 10:50 am

TUK020 wrote:
I have found this Harvard Business Review article by Peter Drucker really helpful

https://signallake.com/innovation/managing_oneself.pdf

the last third talks about the 'second half of your life'.

Important the you don't think of retirement as 'stopping', but no longer needing a salary gives you a much wider choice on what you want to do with yourself


It's a good read, and I can only assume that I've read it in the past from you posting the same link previously, so thanks for that.

Why I've posted is to say that I found one line in it that resonated with me very strongly -

'There is one prerequisite for managing the second half of your life: You must begin long before you enter it...'

I really can't think of a worse situation than working so hard for so many years, that when it came to retiring, someone might stand there and think 'Well, now what?', and I think it's very important to start asking ourselves that question many, many years before it might actually get to happen, and to start being able to actually answer the question with answers that are likely to be fulfilling to each of us as individuals...

With regards to the OP, like others I'd just like to give my hearty congratulations. Whilst I'm not able to specifically answer any of his concerns, I do want to say that I always enjoy reading about people managing to get to this stage of their lives in such good positions, given that many of us here will know how hard it usually is to have been able to do so, and it really does give a great sense of encouragement to the rest of us that have yet to get there!!

Great stuff, and I wish the OP all the very best with his forthcoming plans..

Cheers,

Itsallaguess

AsleepInYorkshire
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Re: Fire calcs have made me think about retiring now

#348600

Postby AsleepInYorkshire » October 18th, 2020, 11:17 am

Hmm ... what you will need in retirement is a lot of friends. Very poor friends like me ;)

I've taken the liberty of sending you my address by PM :lol:

I'd like if I may to ask you to do one small thing please ... call back in ten years time and let us know what you've done in that time. Perhaps you could learn to fly? Or play golf (sorry if you already have). Or get involved in a charitable concern for a day or two per week? What about keeping fish - tropical, marine or outdoor? It really is limitless what you can do with your time.

Enjoy

AiY

UpTheIron
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Re: Fire calcs have made me think about retiring now

#348778

Postby UpTheIron » October 18th, 2020, 9:06 pm

My numbers aren't hugely different to yours - although the asset classes are different - I've got a couple of mortgage free rentals instead of your shares the sum is roughly the same.

My outgoings are probably less and could/would be reduced more in retirement barring expensive hobbies (however mine are mainly running, cycling, fitness and DIY so fairly cheap compared to some).

45 next month.

One angle your post didn't cover is whether your "no dependents" is because your kids are grown up, or because your wife/partner is similarly comfortably well off.... or if you are single. If the latter perhaps consider how that changing could affect your needs. Having said that, families survive on less and you would have the benefit of free time.

Also, depending on the nature of your Ltd Co, is liquidation (MVL) and option? It might make sense as it would crystallise the gain at 10%, leaving you free to invest and immune from future (tax) legislation.

PaulBullet
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Re: Fire calcs have made me think about retiring now

#348843

Postby PaulBullet » October 19th, 2020, 9:11 am

Are the ETF's in the ISA dividend paying? If so later on in your plan you can withdraw this income tax free and may want continue to fund the ISA

Paul

bluedonkey
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Re: Fire calcs have made me think about retiring now

#348893

Postby bluedonkey » October 19th, 2020, 11:15 am

Is the level of living expenses immutable? My expenses happen to have reduced in the past year due to less on holidays and eating out but I don't feel I'm worse off. Or: if you trade £10k/year less expenditure for an earlier retirement, what would that feel like?

I'm almost semi-retired and don't have any difficulty in filling up leisure time. I know that others sometimes differ in this, with the absence of work leaving a big hole. How important is work to your enjoyment of life?

JohnB
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Re: Fire calcs have made me think about retiring now

#348908

Postby JohnB » October 19th, 2020, 11:42 am

Change of expenses on retirement so depend on the person, deltas that might apply include

Commuting
Clothes - gardening trousers or strutting your stuff
Food - staff canteens, sandwiches, people who lunch
Holidays - while backpacking through Ecuador you might as well pop over to the Galapagos
Not paying people to garden or clean
More time to hunt for bargains or pesky collectables.
Local pub and restaurant prices rather than city centre
Keeping up with the Jones - a culture of excess could be worse with your colleagues or your friends
Travel - longer trips so flight costs amortised vs not tacking a few days onto a company trip
Housing - moving to a cheaper area or needing a garage to build that boat
Socialising with friends vs colleagues, the former may be more fun, but much wider spread.
New hobbies - Conservation work free, restoring main battle tanks less so

Me, a scruffbag who likes hacking down scrub, but wants to get that country count to 100.

Adamski
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Re: Fire calcs have made me think about retiring now

#348970

Postby Adamski » October 19th, 2020, 3:39 pm

Congrats on being in a position to RE. I'm semi retired, in a similar position, but not as much. The freedom not working gives you is great. Plus reduction in stress. Worth forgoing the extra salary but depends how much you love your job. With the pandemic a lot of people I think are reviewing their options, and may not want to return to full time office working, if they don't need to.

bluedonkey
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Re: Fire calcs have made me think about retiring now

#348986

Postby bluedonkey » October 19th, 2020, 4:20 pm

Adamski wrote:Congrats on being in a position to RE. I'm semi retired, in a similar position, but not as much. The freedom not working gives you is great. Plus reduction in stress. Worth forgoing the extra salary but depends how much you love your job. With the pandemic a lot of people I think are reviewing their options, and may not want to return to full time office working, if they don't need to.

Yes, I've noticed the reduction in stress being semi-retired. As I can pick and choose what/when to work, it does reduce stress, makes me feel a lot more in control over my working life.

James
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Re: Fire calcs have made me think about retiring now

#348999

Postby James » October 19th, 2020, 5:34 pm

I'm not in a position to retire early, but if I were I'm not sure I'd be looking at doing it now. With all the things that make retirement worthwhile (to me) largely out of bounds, I figure I'd rather keep on earning while I can't do anything else. When you're largely trapped within the confines of your house, are you going to have enough to keep you occupied? I'm not sure I would.

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Re: Fire calcs have made me think about retiring now

#349011

Postby UpTheIron » October 19th, 2020, 6:36 pm

James wrote:I'm not in a position to retire early, but if I were I'm not sure I'd be looking at doing it now. With all the things that make retirement worthwhile (to me) largely out of bounds, I figure I'd rather keep on earning while I can't do anything else. When you're largely trapped within the confines of your house, are you going to have enough to keep you occupied? I'm not sure I would.
I meant to say in my post above, this is a key reason why I haven't stopped yet.


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