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

Darka's FIRE Update (2021)

Including Financial Independence and Retiring Early (FIRE)
Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Darka's FIRE Update (2021)

#468566

Postby Darka » December 26th, 2021, 1:53 pm

Summary
I FIRE'd on the 19th November 2021 just after my 52nd birthday; my wife on the 10th September 2021.
Not super early, but it was the best I could manage as I wanted a good safety margin.

My original plan was to retire in September 2024 when I could access my SIPP, but the last few years of work had been pretty bad so I did some calculations, increased my Salary Sacrifice and saved hard. (With my company pension contribution, I was sacrificing 46% of gross salary, we saved an additional 50% of our joint net income.)

2021 was also the year when I hit 35 years of NI contributions, this was the final trigger I was waiting for as I wanted a full state pension to be available later on (Mrs Darka also has full NI contributions).

Resigning
I had hit a point where I just couldn't carry on working anymore, I was exhausted, stressed and I'd had enough, I'd been working all my life after leaving school (excluding University which was a different kind of work) without any periods of unemployment.

I could feel it significantly impacting my physical and mental health so I had to get out.

So, I took great pleasure in handing in my notice in August, 3 years before my original date and without the need for my SIPP.
I had to work my 3 months notice, but I did have some holiday saved up which I took, making my last working day the 28th October.

My idiot manager didn't tell many people that I was leaving, and I had stopped caring a long time ago - so I received no leaving gift after 13 years of working there. I was not surprised and don't mind, the greatest gift of all was my freedom.

Finances
Until the end of 2021 we are living off our final payslips, but from January 2022 we move to being fully funded from our retirement savings.

I have been moving more towards IT's over the last few years and any new money will be invested in the same way, I prefer the diversification and general income stability that IT's provide.

We have both Income and Growth IT's, as I think a mixture of both is the best approach.

49.0% - Investment Trusts (income and growth)
26.6% - HYP Shares
5.5% - My DC Pension (will be moved to my SIPP and invested in IT's with some taken as cash)
7.5% - Cash
11.3% - Mrs Darka's DB Pension


Cash Flow
We intend to live off the natural yield of our portfolio, but will take cash out if required as we have no children; so I don't mind spending from capital if required and of course there will be some for care homes if required later on, or a nice trip to Switzerland later on for me.

This year all dividends (excluding my SIPP) were paid out into a collection account, this in addition to my wife's DB pension provides the Income Float that we will live on next year.

On Christmas Eve, we sat down with a glass of Bubbly, looked at the total value of our Income Float category and divided that by 12 to calculate our monthly salary for next year. We then updated our budget and the standing orders between the collection account and our spending/savings accounts so that it's all automated.

Doing it this way means that we don't have to rely on dividend forecasts, we know exactly how much money we have for the following 12 months, as it's sitting in cash. This keeps things very simple as we will just repeat this process each year.

The monthly income works out as more than we were spending in the last few years so is a nice pay rise too!

The Income Float will be replenished during 2022 by dividends, wife's DB pension, etc. so that on Christmas Eve next year we again know exactly how much income we will have for 2023. This automatically takes into account any dividend cuts/raises, premium bond prizes, etc.

It's recommended that you have a "FIRE Number" of at least 25, but I wanted a minimum of 30 (including my SIPP) to provide some extra protection. i.e. your retirement pot should be at least 25 x the annual spending you want to have.

Portfolio Yield = 4.98%
2022 Income = 3% of total retirement funds
2022 FIRE Number = 32.9 (total retirement funds / yearly spending)


Cash Pots
Our current cash position is made up of the following:

- 1 Year Income Float (Divided by 12 to provide our monthly 'salary') - CASH
Provides monthly 'salary', continually replenished throughout the year.

- 6 months Income Reserve - PREMIUM BONDS
Only used in case of emergency, will be boosted to 1 Year once my SIPP becomes available in 2024.

- 1 Year Spending Reserve - PREMIUM BONDS
This will cover things such as appliance replacements, new kitchen/bathroom, etc.
Any spending will be rebuilt over time from our safety margin excess.


Safety Margin (SM)
My wife's DB pension is a very useful contribution to our income, but is not enough by itself, our investments will provide 85% of our income.

We thus need a Safety Margin in addition to the Reserve mentioned above.

The safety margin built into our monthly income is 22%, in addition we could cut discretionary spending by another 22% in an emergency for a total safety margin of 44%.

Once my SIPP kicks in this will rise significantly, although of course we intend to spend more then as well.
Until then, the SM will be reinvested.

Feelings
I was very anxious the day I resigned, spending the morning checking (many, many times) that our retirement funds, portfolio balances, etc, were enough.

Then I had a quick call with my manager about something pointless, at the end of which I said something like, "well none of that matters as I'm handing in my notice today", at which point he went very, very quiet for quite some time :), he didn't speak to me again for over 2 weeks.

Anyway, working my notice was boring, I was pretty much ignored so did very little for a couple of months, but that was their choice as I did try to keep being involved.

It's still early days, but I want to say the best feeling so far is an overwhelming sense of freedom, which is still exciting and liberating every single day.

Can't recommend it enough, it's brilliant!!!


Future
Lots of hobbies, guitar, running, art, and loads more including some holiday's of course and eventually a dog when we are older.
We are both thinking of joining a gym to help with some strength work, but waiting until the New Year to decide.

I'm also not done with out retirement pot, aiming to grow that over the years and continue to invest.

Previous Link
Fired! - viewtopic.php?p=435587

Sorry for such a long post, but it's also a reminder to me about the process and details for furture interest.

regards,
Darka

77ss
Lemon Quarter
Posts: 1271
Joined: November 4th, 2016, 10:42 am
Has thanked: 233 times
Been thanked: 414 times

Re: Darka's FIRE Update (2021)

#468570

Postby 77ss » December 26th, 2021, 2:13 pm

Darka wrote:Summary
I FIRE'd on the 19th November 2021 just after my 52nd birthday; my wife on the 10th September 2021.
Not super early, but it was the best I could manage as I wanted a good safety margin.

My original plan was to retire in September 2024 when I could access my SIPP, but the last few years of work had been pretty bad so I did some calculations, increased my Salary Sacrifice and saved hard. (With my company pension contribution, I was sacrificing 46% of gross salary, we saved an additional 50% of our joint net income.)

2021 was also the year when I hit 35 years of NI contributions, this was the final trigger I was waiting for as I wanted a full state pension to be available later on (Mrs Darka also has full NI contributions).

Resigning
I had hit a point where I just couldn't carry on working anymore, I was exhausted, stressed and I'd had enough, I'd been working all my life after leaving school (excluding University which was a different kind of work) without any periods of unemployment.

I could feel it significantly impacting my physical and mental health so I had to get out.

So, I took great pleasure in handing in my notice in August, 3 years before my original date and without the need for my SIPP.
I had to work my 3 months notice, but I did have some holiday saved up which I took, making my last working day the 28th October.

My idiot manager didn't tell many people that I was leaving, and I had stopped caring a long time ago - so I received no leaving gift after 13 years of working there. I was not surprised and don't mind, the greatest gift of all was my freedom.......


Well done! I remember our earlier conversation on this.

52 is the same age that I went at - some 20 years ago.

The freedom to do what you want, pursue your outside interests etc is inexpressibly joyful.

I wish you both a long and fulfilling 'life after work'!

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468572

Postby Darka » December 26th, 2021, 2:21 pm

77ss wrote:The freedom to do what you want, pursue your outside interests etc is inexpressibly joyful.


I could not agree more, it's even better than I was expecting it to be.

77ss wrote:I wish you both a long and fulfilling 'life after work'!


Thank you!

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

Re: Darka's FIRE Update (2021)

#468579

Postby TUK020 » December 26th, 2021, 4:04 pm

Well done

flyer61
Lemon Slice
Posts: 575
Joined: November 11th, 2016, 12:53 pm
Has thanked: 130 times
Been thanked: 208 times

Re: Darka's FIRE Update (2021)

#468585

Postby flyer61 » December 26th, 2021, 6:04 pm

Congratulations a fabulous achievement!

What sort of ballpark net figure can you and your wife live on per month. Not to the nearest penny, but ballpark would help confirm if i'm on the right track!

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468592

Postby Darka » December 26th, 2021, 7:30 pm

flyer61 wrote:Congratulations a fabulous achievement!

What sort of ballpark net figure can you and your wife live on per month. Not to the nearest penny, but ballpark would help confirm if i'm on the right track!


Thank you flyer61,

Based on the PLSA's research https://www.retirementlivingstandards.org.uk/, the income levels they quote for a couple are:

£16,700 - Minimum
£30,600 - Moderate
£49,700 - Comfortable

We could live on the Minimum level, it would cover our bills and groceries but wouldn't leave much for anything else, little fun money and no safety margin.

As I retired at 52, I would feel very uncomfortable on that however as there isn't much scope to adjust should something go wrong and my state pension is over 14 years away, so I couldn't rely on that to save me in the short or medium term.

Our actual position is around the Moderate figure, which includes fun money, savings for holidays and a reasonable safety margin which will get reinvested to counter inflation. Again, this excludes any state pensions we may get eventually.

It's of course impossible to compare to others as there are so many variables and things can be drastically different depending on where you live, etc.

I've been planning and saving hard for this for a long time, it helped that we had no children and also paid off our mortgage 13 years ago when I was made redundant from a previous job and received a healthy payment for keeping my mouth shut in addition to the stock options we were given a year or so before that.

All I would suggest is aiming for as high a level as you can, without letting your job kill you.

hope that helps,
Darka

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

Re: Darka's FIRE Update (2021)

#468594

Postby TUK020 » December 26th, 2021, 8:03 pm

Darka wrote:
flyer61 wrote:Congratulations a fabulous achievement!

What sort of ballpark net figure can you and your wife live on per month. Not to the nearest penny, but ballpark would help confirm if i'm on the right track!


Thank you flyer61,

Based on the PLSA's research https://www.retirementlivingstandards.org.uk/, the income levels they quote for a couple are:

£16,700 - Minimum
£30,600 - Moderate
£49,700 - Comfortable

Darka


I believe these figures are net, i.e. after tax

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468595

Postby Darka » December 26th, 2021, 8:04 pm

Thanks Tuk020,

Yes, I also took them to be net from their research.

Pendrainllwyn
Lemon Slice
Posts: 304
Joined: November 4th, 2016, 9:53 pm
Has thanked: 162 times
Been thanked: 200 times

Re: Darka's FIRE Update (2021)

#468601

Postby Pendrainllwyn » December 26th, 2021, 8:43 pm

Well done. It sounds like you are in a good place mentally and financially. Your wife being aligned with you is a big win. Wishing you decades of freedom.

Pendrainllwyn

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468602

Postby Darka » December 26th, 2021, 8:46 pm

Pendrainllwyn wrote:Well done. It sounds like you are in a good place mentally and financially. Your wife being aligned with you is a big win. Wishing you decades of freedom.

Pendrainllwyn


Thanks Pendrainllwyn,

Having a like minded partner is indeed a huge win, I think it's probably essential to be honest.

Her being older than I, and having suffered from cancer in 2016 reinforced my attempt to retire as soon as I could, didn't want to miss any time together as none of us know how long we have.

ursaminortaur
Lemon Half
Posts: 6944
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1718 times

Re: Darka's FIRE Update (2021)

#468609

Postby ursaminortaur » December 26th, 2021, 10:47 pm

Darka wrote:Summary

2021 was also the year when I hit 35 years of NI contributions, this was the final trigger I was waiting for as I wanted a full state pension to be available later on (Mrs Darka also has full NI contributions).
.
.
.
We have both Income and Growth IT's, as I think a mixture of both is the best approach.

49.0% - Investment Trusts (income and growth)
26.6% - HYP Shares
5.5% - My DC Pension (will be moved to my SIPP and invested in IT's with some taken as cash)
7.5% - Cash
11.3% - Mrs Darka's DB Pension



Have you confirmed that Mrs Darka will get a full state pension ? The fact that you have 35 years of contributions does not guarantee that you will get a full state pension. Many/most DB pensions were contracted out so she may well have suffered a deduction when the 2016 starting amount for the new state pension was calculated.

vrdiver
Lemon Quarter
Posts: 2574
Joined: November 5th, 2016, 2:22 am
Has thanked: 552 times
Been thanked: 1212 times

Re: Darka's FIRE Update (2021)

#468629

Postby vrdiver » December 27th, 2021, 8:54 am

Congratulations on your FIRE. Once I'd taken the leap the only regret I can think of is not being able to do it earlier!

Re NICS, I second double checking that you've secured the maximum SP you can. (Get a forecast.)

If it turns out one or both of you could increase it, think about becoming self employed for the necessary number of years. There's plenty of advice on the Pensions, practical problems board (need to check the title) and options can range from a bit of private work in your professional field through to selling a few items on eBay. Self employed and paying (voluntary) class 2 NICS doesn't need to take more than an hour or so out of your year...

Here's wishing you and Mrs Darka all the best for 2022.

VRD

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468632

Postby Darka » December 27th, 2021, 9:15 am

ursaminortaur wrote:Have you confirmed that Mrs Darka will get a full state pension ? The fact that you have 35 years of contributions does not guarantee that you will get a full state pension. Many/most DB pensions were contracted out so she may well have suffered a deduction when the 2016 starting amount for the new state pension was calculated.


Thanks ursaminortaur,

If the state pension forecast can be relied on we should both get a full state pension, I have checked every year for a good few years now but I did check again after your question, just to make sure :D

I have 35 years NICS and Mrs Darka has 40 years.

Both state:

£179.60 is the most you can get
You cannot improve your forecast any more.


regards,
Darka

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468633

Postby Darka » December 27th, 2021, 9:17 am

vrdiver wrote:Congratulations on your FIRE. Once I'd taken the leap the only regret I can think of is not being able to do it earlier!

Re NICS, I second double checking that you've secured the maximum SP you can. (Get a forecast.)

If it turns out one or both of you could increase it, think about becoming self employed for the necessary number of years. There's plenty of advice on the Pensions, practical problems board (need to check the title) and options can range from a bit of private work in your professional field through to selling a few items on eBay. Self employed and paying (voluntary) class 2 NICS doesn't need to take more than an hour or so out of your year...

Here's wishing you and Mrs Darka all the best for 2022.

VRD


Thanks VRD,

Indeed I wish I could have done it sooner, but so far no regrets - the feeling of freedom is immense.

Both of our forecasts do show full state pension, I've kept track of them for a couple of years to make sure.

regards,
Darka

wanderer
2 Lemon pips
Posts: 171
Joined: September 17th, 2017, 2:44 am
Has thanked: 153 times
Been thanked: 105 times

Re: Darka's FIRE Update (2021)

#468646

Postby wanderer » December 27th, 2021, 11:54 am

Congratulations - you made it! Stories like yours give me inspiration to keep on the FIRE path! I've also been mulling over how much of a cash reserve I would need and I quite like your idea of 1x year's spending as a capital reserve for lumpy expenditures and may well adopt that myself (alongside the income reserve etc!)

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468651

Postby Darka » December 27th, 2021, 12:22 pm

wanderer wrote:Congratulations - you made it! Stories like yours give me inspiration to keep on the FIRE path! I've also been mulling over how much of a cash reserve I would need and I quite like your idea of 1x year's spending as a capital reserve for lumpy expenditures and may well adopt that myself (alongside the income reserve etc!)


Thanks wanderer,

I do think the capital reserve is a useful addition to the income reserve, and allows the income reserve to remain untouched if something needs replacing, without the need to maintain lots of different pots for individual items.

I wanted to keep it simple and a single capital reserve pot made the most sense.

ursaminortaur
Lemon Half
Posts: 6944
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1718 times

Re: Darka's FIRE Update (2021)

#468652

Postby ursaminortaur » December 27th, 2021, 12:37 pm

Darka wrote:
ursaminortaur wrote:Have you confirmed that Mrs Darka will get a full state pension ? The fact that you have 35 years of contributions does not guarantee that you will get a full state pension. Many/most DB pensions were contracted out so she may well have suffered a deduction when the 2016 starting amount for the new state pension was calculated.


Thanks ursaminortaur,

If the state pension forecast can be relied on we should both get a full state pension, I have checked every year for a good few years now but I did check again after your question, just to make sure :D

I have 35 years NICS and Mrs Darka has 40 years.

Both state:

£179.60 is the most you can get
You cannot improve your forecast any more.


regards,
Darka


It always says that on the online forecast but the critical bit is if it says something immediately above it like

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2021
£xxx.xx a week

Forecast if you contribute another x years before 5 April 2027
£179.60 a week

£179.60 is the most you can get

You cannot improve your forecast any further, unless you choose to put off claiming.


If it doesn't then you should get the full state pension though I'd probably ask for a written forecast anyway as there were reports of the online forecast sometimes being wrong and not matching the written answer a year or so ago - hopefully that has been fixed but it doesn't hurt to ask for a written forecast.

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468653

Postby Darka » December 27th, 2021, 12:43 pm

Mine did have that section last year, but it disappeared in April this year when I finally hit the 35 years, I also had a written statement a few years ago which backed this up.

I'll get another written one in a few years time, but I'm happy that I'll get the full pension, unless things change of course.

kempiejon
Lemon Quarter
Posts: 3488
Joined: November 5th, 2016, 10:30 am
Has thanked: 1 time
Been thanked: 1145 times

Re: Darka's FIRE Update (2021)

#468664

Postby kempiejon » December 27th, 2021, 1:50 pm

Darka wrote:
wanderer wrote:Congratulations - you made it! Stories like yours give me inspiration to keep on the FIRE path! I've also been mulling over how much of a cash reserve I would need and I quite like your idea of 1x year's spending as a capital reserve for lumpy expenditures and may well adopt that myself (alongside the income reserve etc!)


Thanks wanderer,

I do think the capital reserve is a useful addition to the income reserve, and allows the income reserve to remain untouched if something needs replacing, without the need to maintain lots of different pots for individual items.

I wanted to keep it simple and a single capital reserve pot made the most sense.


Darka, congratulations on getting out. I'm still employed but hopefully the last innings, I'm hoping a department review threatened since pre-covid and committed to concluding before end of 2022 might see me out with redundancy, I've set a plant to run my numbers again in April and double check I can afford it.

With regards planning I like your working, have an investment income that more than matches expected outgoings so there's a little extra to top up the pot or treat yourself. Predetermining the income for years is another nice touch, especially in the early days. For my capital reserve I like the idea of 3 years of expected baseline expenses to save selling in a down market. If I had some guaranteed income like yours and Mrs D DB pensions I'd probably reduce that.

Cheers and like another poster said tales of success can keep us all motivated on the road to FI(RE).

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Darka's FIRE Update (2021)

#468675

Postby Darka » December 27th, 2021, 3:42 pm

kempiejon wrote:Darka, congratulations on getting out. I'm still employed but hopefully the last innings, I'm hoping a department review threatened since pre-covid and committed to concluding before end of 2022 might see me out with redundancy, I've set a plant to run my numbers again in April and double check I can afford it.

With regards planning I like your working, have an investment income that more than matches expected outgoings so there's a little extra to top up the pot or treat yourself. Predetermining the income for years is another nice touch, especially in the early days. For my capital reserve I like the idea of 3 years of expected baseline expenses to save selling in a down market. If I had some guaranteed income like yours and Mrs D DB pensions I'd probably reduce that.

Cheers and like another poster said tales of success can keep us all motivated on the road to FI(RE).


Thanks kempiejon,

Hope things work out for you in 2022 and that you get the redundancy you want, I did try for that myself but it wasn't going to happen sadly.

Only Mrs D has a DB pension, sadly I have to rely on my DC (currently with Legal & General, but will be moved to my SIPP in the new year).
As for predetermining the income, I figured it would be the easiest solution and less prone to unwanted surprises ;)


Return to “Retirement Investing (inc FIRE)”

Who is online

Users browsing this forum: No registered users and 5 guests