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Including Financial Independence and Retiring Early (FIRE)
denimchunky
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#645622

Postby denimchunky » February 8th, 2024, 3:22 pm

I have just come back to this site having been a regular lurker on TMF in the day. I have found the discussions on this board in particular quite helpful.

I have been pondering when I would be able to retire for a couple of years now. I am 53 and my wife is 50. She is a GP and therefore has a great pension which we had review recently. She works 3 days a week and the plan is to drop that to 2 days a week by the time she is 55 (maybe sooner), with final retirement at 60. Estimated pension at that point is probably £55k per annum.

I have a DC pension worth circa £650k which I am currently adding just under £60k per year to.

Have about £170k in cash.
Between us £210k in ISAs
I have an offshore Investment Bond worth £210k
We have a joint GIA worth £168k which we are gradually converting into ISAs.
We have a family trust of which me and the children are beneficiaries worth around £650k

When I look at it on paper, we have net family wealth of over £2m, excluding our house and my wife's pension and I think that it should be possible for me to retire shortly.

My biggest concern is that our children are still relatively young (17, 15 and 13). My eldest will want to go university next year and he wants to take a course which lasts 5 or 6 years. My daughter (15) also aspires to a top university, albeit thankfully only a three year course. Not so sure about my youngest, he may want to go straight for a job at 18.

At the moment, it is the uncertainty of just how much the university experience is going to cost that is holding me back from making a decision. I am happy with them taking the loans for the fees but I suspect that we (or the trust) are going to have to support their living expenses quite extensively whilst there.

One of the options I am pondering is going part time. I think I could halve my hours and still earn a good living (circa £65k), albeit that would mean my big pension contributions would have to stop. They may have to anyway if Labour reverse the annual allowance increase.

The other issue is the discrepancy between me retiring early and my wife continuing to work (albeit part time) until 60. I am not sure how wise that is.

I always thought that decisions would get easier at this stage of life but I guess the timing of your retirement (subject to having funds) is not something for which there exists a defined path. It will vary on individual circumstances and there is therefore no right or wrong answer.

Sorry for the ramble but would appreciate any thoughts...

James
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Re: View sought

#645634

Postby James » February 8th, 2024, 3:50 pm

Without wishing to get too Four Yorkshiremen about it, I got through six years of university and only scavanged a few hundred quid from my single income parents.
You've got enough money to get them all through to 18 and the 650k in the trust is more than enough to help them out through college.
Set them, and yourselves, free.

BigB
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Re: View sought

#645636

Postby BigB » February 8th, 2024, 3:58 pm

You don't mention a mortgage, nor do you mention what your chosen cost of living is. *

Fully funded student living could be quite a wide range, for potentially 3 kids. **

Those items/questions aside, your position looks pretty comfortable and many folk would be able to retire from there I'd say.

Dod101
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Re: View sought

#645637

Postby Dod101 » February 8th, 2024, 4:01 pm

Children at the ages of yours are expensive because their tastes are growing and yet they are not yet able to earn much if anything. Once they are at university they are probably less expensive because they can get jobs to help with them.

You do not seem to be short of financial assets but that is not the same thing as income. Your wife is happy to continue to work for another ten years.

It seems to me that a sensible compromise would be for you to continue working part time. Basically I guess you would be left with a similar net income as now but would not be able to make these very large contributions to your DC pension. As I said you appear to have sufficient capital overall so that may not be too significant. But you are sacrificing a lot so think carefully about it and of course the tax issues.

Dod

denimchunky
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Re: View sought

#645646

Postby denimchunky » February 8th, 2024, 4:18 pm

BigB wrote:You don't mention a mortgage, nor do you mention what your chosen cost of living is. *

Fully funded student living could be quite a wide range, for potentially 3 kids. **

Those items/questions aside, your position looks pretty comfortable and many folk would be able to retire from there I'd say.


Mortgage is fully off-set so not included in the figures I quoted. We could clear if necessary but as we don't pay any interest, we haven't.

My initial thoughts are that bunging the kids £12k a year whilst they are at university would be a generous approach to their living costs. They can apply for the living cost loan on top of that (albeit is not a lot). Anything else they can work for etc.

Cost of living is a hard one. At the moment it's high because all three are at home. If we move to the stage where we just allocate some of the Trust capital to them for every year they are at university, I suspect our monthly bills would come down quite a bit!

denimchunky
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Re: View sought

#645649

Postby denimchunky » February 8th, 2024, 4:25 pm

Dod101 wrote:Children at the ages of yours are expensive because their tastes are growing and yet they are not yet able to earn much if anything. Once they are at university they are probably less expensive because they can get jobs to help with them.

You do not seem to be short of financial assets but that is not the same thing as income. Your wife is happy to continue to work for another ten years.

It seems to me that a sensible compromise would be for you to continue working part time. Basically I guess you would be left with a similar net income as now but would not be able to make these very large contributions to your DC pension. As I said you appear to have sufficient capital overall so that may not be too significant. But you are sacrificing a lot so think carefully about it and of course the tax issues.

Dod


I did some back of the fag packet calculations about surviving on a reduced salary. Obviously current DC contributions are sheltering a lot of income from tax. However the net impact of dropping the salary and the pension contributions on what we have to live on each month, does not make as much of a difference as you might expect, so you are quite right. I would still get 10% contributions into my company GPP (5% from me and 5% from the employer) so not like the pension would not be increasing at all, just nowhere near as much.

I think dropping down to three days a week would make quite a difference to my quality of life!

Wife will also benefit (I hope) from the McCloud judgement which may put more of her pension into the earlier, more advantageous DB scheme which can be taken from 60 without penalty.

88V8
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Re: View sought

#645676

Postby 88V8 » February 8th, 2024, 5:41 pm

denimchunky wrote:The other issue is the discrepancy between me retiring early and my wife continuing to work (albeit part time) until 60. I am not sure how wise that is....

Financially you would be OK, barring a Labour tax grab and depending how easy a ride your kids expect and for how long.
It should not be hard to develop a 5% income from your pot, subject to some tax.

I retired in 07, aged 57. My wife worked full-time until 011, that aspect, as you say, could cause difficulties, depending.
In our case it was fine, her job was well paid, local and not stressful, and I did a lot of DIY work on our house so it was not as if I were idling.

It's a big decision, stopping work. Some people get bored. It helps if one has a hobby or two that can be expanded.
I never for a moment regretted it, nor have I been bored.

Imagine not working. What would you do, and would you have the money to do it? If in the affirmative, then stop.

V8

xxd09
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Re: View sought

#645711

Postby xxd09 » February 8th, 2024, 7:51 pm

In a good position but……..those kids!
They are are a big financial unknown-I certainly budgeted to be paying for them till the last one was 23-another 10 years in your case
I didn’t want my 3 to have student loans ( life is hard enough for youngsters out there) so sums involved were quite large -they did 5 years courses
If you can cover the kids finances then you are good to go
You certainly want them well qualified and employable as they leave university or other institution of tertiary learning-no further subsequent financial demands or having to live with you!
Might be worthwhile to start running a financial expenses program so have a handle on your actual day to day expenses
Another guide-£100000 of a 60/40 stocks and shares portfolio generates an income of £3000+ per annum without reducing capital
xxd09

denimchunky
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#645715

Postby denimchunky » February 8th, 2024, 8:01 pm

xxd09 wrote:In a good position but……..those kids!
They are are a big financial unknown-I certainly budgeted to be paying for them till the last one was 23-another 10 years in your case
I didn’t want my 3 to have student loans ( life is hard enough for youngsters out there) so sums involved were quite large -they did 5 years courses
If you can cover the kids finances then you are good to go
You certainly want them well qualified and employable as they leave university or other institution of tertiary learning-no further subsequent financial demands or having to live with you!
Might be worthwhile to start running a financial expenses program so have a handle on your actual day to day expenses
Another guide-£100000 of a 60/40 stocks and shares portfolio generates an income of £3000+ per annum without reducing capital
xxd09


I am comfortable with them getting loans for the course fees. They are all going to be looking at well paid jobs post uni and I think they need the incentive to realise that they have to work hard for what they want. I might choose to help them with a house deposit later but that’s a possibility rather than guaranteed.

xxd09
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#645721

Postby xxd09 » February 8th, 2024, 8:22 pm

I just felt that if they entered the world of work as employable young people unencumbered by debt then house purchase is something I could leave to them
Turned out that way though I helped one with a small amount for a deposit
I also feel that time is especially tight for girls if they want to have kids at a reasonable age and not have to rush back to work
Student debt can be a tough one -one more unnecessary load for them to carry if career breaks for kids are factored in
Had 2 girls -were well qualified (GP and Lawyer) and could stop and start in the workplace as they wished with good control of their work life balance
Just my view
xxd09

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Re: View sought

#645824

Postby International » February 9th, 2024, 10:16 am

xxd09 wrote:I just felt that...


This is one of the things I love about this particular board. Viewpoints from people like xxd09 who are further along in time and are kind enough to share how they have done things.

Denimchunky, like you, I am current planning things out and haven't retired. I certainly haven't lived in retirement for years. Because of that I don't feel qualified to give any advice, but a couple of thoughts from a fellow traveller:

1) Your wife's DB pension is enough to cover a reasonable lifestyle for a couple according to the https://www.retirementlivingstandards.org.uk/ . Eyeballing your portfolio you've might have been spending more income than that, though. So to form an opinion on when to retire you probably need to define what income level you want in retirement. Then you can work out if your pot is big enough. xxd09 has provided a way of reckoning.

2) My children are pre-university and I'm planning to work through their uni or equivalent years, simply because it is expensive and I want to have my human capital monetized through that. My personal view is that having made them I have a duty to give them a reasonable launch, but of course this is a very personal choice.

Charlottesquare
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#646090

Postby Charlottesquare » February 10th, 2024, 12:38 pm

Having done the Uni bit with our two, what their costs are really depends where they go, some locations are a lot cheaper than others.

Our two both went to St Andrews, not the cheapest town re rents but not London, they each spent four years , had their fees paid and I believe total cost to us was circa £50k with each taking max loans ,though oldest only got £945 loan for his first two years so we had to sub his living costs for these two years>Thereafter they each got circa £4,500 loan a year, this they lived on and we paid their room rents which were circa £4,000 pa and £5,500 pa. (This was from circa 2009 through to 2015 so adjust figures for inflation) I suspect there may have been other payments to them from my other half but she has not formally admitted this, however there were the odd balls etc and I think outfits were needed and funds provided etc)

denimchunky
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#646392

Postby denimchunky » February 12th, 2024, 12:00 pm

Charlottesquare wrote:Having done the Uni bit with our two, what their costs are really depends where they go, some locations are a lot cheaper than others.

Our two both went to St Andrews, not the cheapest town re rents but not London, they each spent four years , had their fees paid and I believe total cost to us was circa £50k with each taking max loans ,though oldest only got £945 loan for his first two years so we had to sub his living costs for these two years>Thereafter they each got circa £4,500 loan a year, this they lived on and we paid their room rents which were circa £4,000 pa and £5,500 pa. (This was from circa 2009 through to 2015 so adjust figures for inflation) I suspect there may have been other payments to them from my other half but she has not formally admitted this, however there were the odd balls etc and I think outfits were needed and funds provided etc)


Thanks - that is really helpful. I think it can vary enormously depending on where they go. My eldest and his sister both aspire to Oxbridge, which bizarrely seem to be cheaper than other unis due to the amount of college owned accommodation and relatively cheap food in college.

If my eldest doesn't get Cambridge, then I think he fancies Edinburgh (which I image will be expensive) or Nottingham (I imagine less so).

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#646402

Postby Charlottesquare » February 12th, 2024, 12:41 pm

denimchunky wrote:
Charlottesquare wrote:Having done the Uni bit with our two, what their costs are really depends where they go, some locations are a lot cheaper than others.

Our two both went to St Andrews, not the cheapest town re rents but not London, they each spent four years , had their fees paid and I believe total cost to us was circa £50k with each taking max loans ,though oldest only got £945 loan for his first two years so we had to sub his living costs for these two years>Thereafter they each got circa £4,500 loan a year, this they lived on and we paid their room rents which were circa £4,000 pa and £5,500 pa. (This was from circa 2009 through to 2015 so adjust figures for inflation) I suspect there may have been other payments to them from my other half but she has not formally admitted this, however there were the odd balls etc and I think outfits were needed and funds provided etc)


Thanks - that is really helpful. I think it can vary enormously depending on where they go. My eldest and his sister both aspire to Oxbridge, which bizarrely seem to be cheaper than other unis due to the amount of college owned accommodation and relatively cheap food in college.

If my eldest doesn't get Cambridge, then I think he fancies Edinburgh (which I image will be expensive) or Nottingham (I imagine less so).


Of course he ought to attend Edinburgh, best university there is, but of course I would say that.

Not sure Nottingham is that cheap, my daughter worked down there for two years after graduation, I think a little less than Edinburgh but not that much less. (West Bridgford )

Edinburgh flat rents are not cheap, if you can get one, I understand a room in a flat can be circa £600-£700 a month unless lucky (Two bed flat circa £1200-1400 per month) There is a reasonable supply of Student Accommodation but no idea what they charge for term time occupancy.

I was chatting to someone who manages some St Andrews flats on Sunday, he indicated the St Andrews rents are similar to those days in Edinburgh.

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#646576

Postby denimchunky » February 13th, 2024, 9:43 am

Charlottesquare wrote:
Of course he ought to attend Edinburgh, best university there is, but of course I would say that.

Not sure Nottingham is that cheap, my daughter worked down there for two years after graduation, I think a little less than Edinburgh but not that much less. (West Bridgford )

Edinburgh flat rents are not cheap, if you can get one, I understand a room in a flat can be circa £600-£700 a month unless lucky (Two bed flat circa £1200-1400 per month) There is a reasonable supply of Student Accommodation but no idea what they charge for term time occupancy.

I was chatting to someone who manages some St Andrews flats on Sunday, he indicated the St Andrews rents are similar to those days in Edinburgh.


I know West Bridgford well (only an hour from us and my sister in law used to live there). It's just about (other than the Park), the nicest part of Nottingham and is not cheap.

Fortunately the veterinary students are out on a campus at Sutton Bonnington, miles out of Nottingham which hopefully makes it cheaper...

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#646580

Postby Charlottesquare » February 13th, 2024, 9:54 am

denimchunky wrote:
Charlottesquare wrote:
Of course he ought to attend Edinburgh, best university there is, but of course I would say that.

Not sure Nottingham is that cheap, my daughter worked down there for two years after graduation, I think a little less than Edinburgh but not that much less. (West Bridgford )

Edinburgh flat rents are not cheap, if you can get one, I understand a room in a flat can be circa £600-£700 a month unless lucky (Two bed flat circa £1200-1400 per month) There is a reasonable supply of Student Accommodation but no idea what they charge for term time occupancy.

I was chatting to someone who manages some St Andrews flats on Sunday, he indicated the St Andrews rents are similar to those days in Edinburgh.


I know West Bridgford well (only an hour from us and my sister in law used to live there). It's just about (other than the Park), the nicest part of Nottingham and is not cheap.

Fortunately the veterinary students are out on a campus at Sutton Bonnington, miles out of Nottingham which hopefully makes it cheaper...


Not sure you are getting what is important when attending university, you are placing location of classes and studies ahead of social life!!!


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