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