Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Another confidence-boosting request for your expert appraisals

Including Financial Independence and Retiring Early (FIRE)
Chindit
Posts: 4
Joined: February 26th, 2020, 10:44 am
Has thanked: 6 times
Been thanked: 1 time

Another confidence-boosting request for your expert appraisals

#286851

Postby Chindit » February 26th, 2020, 12:29 pm

Hi all. I am a newbie to this excellent forum and first want to apologize for this needy-sounding, confidence-salving plea. Like so many others I am sick to death of my job! I am a 52 male and hoped/planned to duck out of work at age 55-60. However, the past few years have been a living hell and for sake of my mental health I want to bring that escape forward a couple of years. I don't have much in the way of transferable skills and starting a new full-time job is not really feasible for various reasons.. Be that as it may, I don't intend to be idol in retirement and will be undertaking some voluntary and low-financially draining activities.

Assets-wise I calculate the following:
1. Own home - no mortgage but with no medium term intention of downsizing
2. 2nd rental property - current value 375k with a mortgage of 150k
3. SIPP - current value = 200k
4. Company Pension with a transfer value = 180k (I'm in the process of transferring this to a SIPP)
5. Current Pension - current value = 40k
6. Cash and other semi-liquid assets = 50k

I intend to sell the 2nd property in the medium term. I had a few rental/tenant issues and can't be doing with that agro anymore. I estimate the sale to yield 200k after CGT some of which I intend to gradually hive off into ISAs.

So in summary I calculate the following:
Liquid/semi-liquid assets = 250k
In-pension assets = 420k

My wife has an income of 15k per year and I envisage a drawdown of 30k per year, taking into account any tax burden, up to age 67 when I will drop it the equivalent of the current-value of 8k (i.e. once I get my state pension, for which I am fully paid-up). I've based my estimates on a very modest portfolio growth - basically offsetting the cost of living rise. I estimate my portfolio running to age 80 after which ... well I am not too worried about making plans to downsize.
You can probably see that I'm fairly risk-averse but I do not see the point in continuing in the current dirge I've found myself.

I'd really appreciate an honest appraisal and unless anyone can see any gaping holes in my logic/maths I intend to start digging Charlie tunnel and begin this break for freedom. Thanks in advance

dealtn
Lemon Half
Posts: 6072
Joined: November 21st, 2016, 4:26 pm
Has thanked: 441 times
Been thanked: 2324 times

Re: Another confidence-boosting request for your expert appraisals

#286864

Postby dealtn » February 26th, 2020, 12:50 pm

Health trumps wealth.

Take that break, it will do you good. You have a long time ahead of you, and have plenty of options, many of which you won't even be aware of yet. It might be the end of your working life, or turn out to be a "sabbatical" until you discover what you want to do next, that you will enjoy.

By staying you not only risk your mental health further, but will always be pondering the "what ifs" of not doing it.

Urbandreamer
Lemon Quarter
Posts: 3120
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Another confidence-boosting request for your expert appraisals

#286878

Postby Urbandreamer » February 26th, 2020, 1:20 pm

Chindit wrote:My wife has an income of 15k per year and I envisage a drawdown of 30k per year, taking into account any tax burden, up to age 67 when I will drop it the equivalent of the current-value of 8k (i.e. once I get my state pension, for which I am fully paid-up).


I personally think that £30kpa is too risky.

Fireing the data through Firecalc
https://www.firecalc.com/

Suggested a 25% risk of things going badly, assuming that you live to 100 and reduce spending with age (based upon £600k capital).
Drop the drawdown to £25kpa and the risk drops to 8%.

Of course the above assumes no other income, ie if you need £30kpa, but earn £8kpa then drawdown drops to £23kpa doesn't it.

Personally I'm 57 and doing similar sums. Work's not as bad for me and I can hang on those three years. Given my pension contributions and lack of drawdown they make a huge difference.

That said, you never get your health back. Work can be a killer and not just the dangerous sort of work.

Chindit
Posts: 4
Joined: February 26th, 2020, 10:44 am
Has thanked: 6 times
Been thanked: 1 time

Re: Another confidence-boosting request for your expert appraisals

#286897

Postby Chindit » February 26th, 2020, 3:38 pm

Many thanks for the responses. Interesting and yet validating replies in different ways - both hit the nail on the head re: health.

The firecalc estimations are very illuminating. Realistically I see myself needing a little more in the first 1-3 years (as one beds into a different way of life) but I hope I would realign (and reduce) my required income to something with more legs, if that makes sense.

staffordian
Lemon Quarter
Posts: 2298
Joined: November 4th, 2016, 4:20 pm
Has thanked: 1887 times
Been thanked: 869 times

Re: Another confidence-boosting request for your expert appraisals

#286925

Postby staffordian » February 26th, 2020, 5:08 pm

Something you may well already have a handle on, so apologies if you have, but it's well worth keeping detailed spending records from now on, to give more certainty to base estimated outgoings on.

It goes without saying that both income and outgoings are key in making these decisions, and if you find your outgoings are less than you currently estimate, then clearly your income requirements from the pensions and investments falls, making the decision simpler.

The key point is that for most people their essential expenditure falls on retirement. Less petrol to out in the car, no suits to buy, no expensive coffees on the go, etc etc.

What may well increase is discretionary spend, but this can usually be adjusted if needed.

Good luck whatever you decide, I can recommend early retirement as an antidote to stress at work.

Gan020
Lemon Slice
Posts: 461
Joined: March 3rd, 2019, 12:25 pm
Has thanked: 178 times
Been thanked: 246 times

Re: Another confidence-boosting request for your expert appraisals

#286929

Postby Gan020 » February 26th, 2020, 5:48 pm

The size of your withdrawal at £30k per year on a pot size of £670k until you are 67 would seem to be on the risky side to me principally because inflation is going to erode away your spending power.

I would suggest you take a closer look at your spending. £45k a year for two people seems high to me, unless there is a good reason. Not working saves money. No need for several suits, no popping out for coffee during the day, no rounds of fishbowl drinks after work, no travel expenses to and from work, the list goes on.

Chindit
Posts: 4
Joined: February 26th, 2020, 10:44 am
Has thanked: 6 times
Been thanked: 1 time

Re: Another confidence-boosting request for your expert appraisals

#286931

Postby Chindit » February 26th, 2020, 5:56 pm

No, I appreciate the nudge. Thank you. I have begun to rigorously log my expenditure. It’s also a good exercise in working towards the - I won’t say reduced but - alternate budget. I did briefly find though that I started to become slightly too pinching in my expenditure - almost fearful of spending normally. It would be a mistake to replace the stress of work with the stress of over-zealous bean counting. Probably just a personal foible.

TUK020
Lemon Quarter
Posts: 2039
Joined: November 5th, 2016, 7:41 am
Has thanked: 762 times
Been thanked: 1175 times

Re: Another confidence-boosting request for your expert appraisals

#286945

Postby TUK020 » February 26th, 2020, 6:42 pm

Chindit wrote: Like so many others I am sick to death of my job! I am a 52 male and hoped/planned to duck out of work at age 55-60. However, the past few years have been a living hell and for sake of my mental health I want to bring that escape forward a couple of years. I don't have much in the way of transferable skills and starting a new full-time job is not really feasible for various reasons.. Be that as it may, I don't intend to be idol in retirement and will be undertaking some voluntary and low-financially draining activities.


A lot of things can contribute to stress and misery at work: the commute, pressure to perform, trying to be nice to a bunch of obnoxious wankers/colleagues etc.
What can be quite releasing is to consider a major change down a gear in the sort of work you do - get a job at the local B&Q, a postman, etc etc.
Find something with no managerial responsibility, and you may discover that you can have fun if you jettison all of your existing preconceptions of status that go with your current career job.
It doesn't take too many years of earning 15-20k, and consequently postponing/reducing your pension withdrawals to drastically reduce your drawdown risk.

Chindit
Posts: 4
Joined: February 26th, 2020, 10:44 am
Has thanked: 6 times
Been thanked: 1 time

Re: Another confidence-boosting request for your expert appraisals

#286958

Postby Chindit » February 26th, 2020, 7:40 pm

Gan020 wrote:The size of your withdrawal at £30k per year...£45k a year for two people seems high to me


This seems to be the consensus so far. I have probably made the mistake of sticking too rigidly to a 70%-of-current-income rule but also in not tailoring my estimated budget to having no mortgage. Although I will have one until I sell the 2nd property. Once this is done and dusted I’ll be mortgage-free (hopefully) so the required drawdown can reduce accordingly. Thanks. A pity about having to forego the fishbowl cocktails though :?

airbus330
Lemon Slice
Posts: 558
Joined: December 1st, 2018, 3:55 pm
Has thanked: 364 times
Been thanked: 288 times

Re: Another confidence-boosting request for your expert appraisals

#287000

Postby airbus330 » February 26th, 2020, 11:28 pm

For what it is worth, I'm 8 years older than you and my total pot is about 30% more than your own.On that basis I can justify 30k a year safely for 30 years. I have calculated pretty conservatively, so hopefully I'll actually have a bit more for the caramel lattes in reality. But, as a newbie to living off what you've got, the last few days of watching the stock markets fall has been unpleasant, even though I have factored downswings into the plan. I think you might need a 'little' job to make it work. GL


Return to “Retirement Investing (inc FIRE)”

Who is online

Users browsing this forum: EthicsGradient, uspaul666 and 13 guests