Retire early (living off savings)

Retire early (living off savings)

Author
Discussion

baliongo

Original Poster:

937 posts

179 months

Sunday 7th January 2018
quotequote all
I have just turned 50 yrs old and i have had enough with the rat race for good,i am sick of travelling to work and would like to sit back and enjoy what the future holds.
I have a few hobbies incl cycling,walking,jogging and motorcycles which keep me busy and being self employed/semi-retired i have tested the water working approx 6 mths of the year for the last 5 years and enjoying the other 6 months off work.

I have set aside £120k to live on and i usually spend approx £7k per year topping up my wife`s part time earnings,so i have 17 years of savings to live on taking me up to 67yrs (if i make it) when my pension starts giving me around £20k per year to live on until death.
I have no mortgage and our home is valued at £550k so it could be sold and we could move somewhere cheaper if need be and both my sons have had some money from me to start on the property ladder themselves.

Has anyone here done/doing this??

How mad am i,yes maybe a little.....(just to add we own a new car that should last a few years and i have a few bob set aside for emergencies..)

98elise

26,366 posts

160 months

Sunday 7th January 2018
quotequote all
I'm doing the same at 55 but I'm aiming to have significantly more put by, however that's actually my pension rather than stop gap until a pension kicks in.

If you feel you can do then you should. We can always make more money but you can't make any more time.

Have you factored inflation into your calculations?

anonymous-user

53 months

Sunday 7th January 2018
quotequote all
Living on £7k a year sounds like a pretty miserable existence, particularly as your money will buy less each year. How much does your wife earn? Is she going to be happy to keep working and subsidise you for the next 17 years?

If I was going to retire early, i'd need enough money to be able to do interesting things with my time, whether that be travelling, doing up houses, buying fun cars, or whatever.

Rather than stopping work entirely, couldn't you find a job that's closer to home, and perhaps more interesting, even if the pay is not so good?

glenrobbo

35,061 posts

149 months

Sunday 7th January 2018
quotequote all
scratchchin
I'm sure I've had this feeling of déja vu before...

Robbo 27

3,605 posts

98 months

Sunday 7th January 2018
quotequote all
With respect, you dont spend very much, if you can keep all your spending at that level you may be ok but its marginal and doesnt allow for major unexpected bills..

A financial adviser has told me that I should be looking for over £250K in cash or easily transferrable assetts (not property) to have a stress free retirement and also have around £2000+ a month in pension income on top of that.

I agree with you on working, I had enough by mid 50s, especially commuting to work and having to deal with some of the toerag backstabbers who wanted to make themselves appear taller by walking over you but my honest advice to you would be to keep going until you have had enough.

bitchstewie

50,767 posts

209 months

Sunday 7th January 2018
quotequote all
Where's the £120k and what's it earning you whilst you draw off it?

glenrobbo

35,061 posts

149 months

baliongo

Original Poster:

937 posts

179 months

Sunday 7th January 2018
quotequote all
Cheers Guys,


My wife earns £14k a year working part time and we can live on that amount with ease but factored the £7k as a worse case scenario.
She loves her job (nursing) and the fact that she walks to work helps so no expenses there and we have a holiday fund for a few years set aside too..

at the moment the £120k is sitting in two cash isa`s

Edited by baliongo on Sunday 7th January 09:45

baliongo

Original Poster:

937 posts

179 months

Sunday 7th January 2018
quotequote all
glenrobbo said:
Thanks......i will have a look

PurpleMoonlight

22,362 posts

156 months

Sunday 7th January 2018
quotequote all
If it's what you want to do and you can manage financially, then do it. It really doesn't matter what anyone else thinks.

You can always return to some form or work if you get totally bored.

PS, I've been working 40 years this year, and feel bloody tired. laugh

baliongo

Original Poster:

937 posts

179 months

Sunday 7th January 2018
quotequote all
PurpleMoonlight said:
If it's what you want to do and you can manage financially, then do it. It really doesn't matter what anyone else thinks.

You can always return to some form or work if you get totally bored.

PS, I've been working 40 years this year, and feel bloody tired. laugh
True,i was hoping someone has done/doing it to give me some pointers....i have been in construction since 17 yrs old and everything aches.

At least for now i can look out on a monday morning from my window and watch the rat racers rush off to work while i pour a cup of coffee and read the paper..no plans to go back to work until spring for now then i will see how i feel about full retirement.

red_slr

17,122 posts

188 months

Sunday 7th January 2018
quotequote all
Could you up that 120k to closer to 200?

If you could you could utilise the "4% safe withdrawal rate" which will give you your £7k income and also maintain the pot of £180-£200k for the long term. (it would probably actually grow).

The simple rule is to multiply your ideal income by 25.



red_slr

17,122 posts

188 months

Sunday 7th January 2018
quotequote all
baliongo said:
at the moment the £120k is sitting in two cash isa`s

Edited by baliongo on Sunday 7th January 09:45
Ah, you would need to move those to S&S ISAs for the 4% to work.


bitchstewie

50,767 posts

209 months

Sunday 7th January 2018
quotequote all
red_slr said:
If you could you could utilise the "4% safe withdrawal rate" which will give you your £7k income and also maintain the pot of £180-£200k for the long term. (it would probably actually grow).
Retirement isn't on my immediate horizon but for the OP go here and play with some numbers.

http://www.thecalculatorsite.com/finance/calculato...

Gives an idea how your returns v withdrawals interact together with compound interest.

w00tman

603 posts

144 months

Sunday 7th January 2018
quotequote all
4% safe withdrawal rate is what you need to be looking for, as above, but that assumes you are investing at the SWR + inflation, otherwise your money is essential getting worth less and less as time moves on - £7k now is not the same as £7k in 20 years time!

Best places I've seen are MrMoneyMustache and boggle heads - please use the resources as it's very doable, the hard bit is getting the cash and you're not a million miles off.


red_slr

17,122 posts

188 months

Sunday 7th January 2018
quotequote all
If you want to cover inflation you can. It is very unusual to have 2 or more years of deflation in the markets, so you can adjust as you go. To be very safe you can use 3.5% SWR for the first 3-5 years of FIRE then revert to 4% (of year 0 number). However at these levels and given the OP is saying his wife will cover their day to day its not a big deal.

So long as you don't start to increase WR beyond 4% of the pot you are ok but this can only be done periodically as re-setting the 4% year on year increases the chance of failure massively. The older you get the safer it becomes though. So someone who FIREs at say 40 really does need to stick to 4% SWR for the long term, but someone who FIREs in their late 50s can start to play around once they get into their later years without so much risk - unless they need to pass the money onto kids etc.

IYSWIM.

Robertj21a

16,475 posts

104 months

Sunday 7th January 2018
quotequote all
I hope your wife isn't thinking of going off with that old flame from school days etc etc......

rolleyes

red_slr

17,122 posts

188 months

Sunday 7th January 2018
quotequote all
Here is a 30 year fire calc simulation based on 120k/7k. (USD). Its inflation adjusted.

FIRECalc looked at the 117 possible 30 year periods in the available data, starting with a portfolio of $120,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 117 cycles. The lowest and highest portfolio balance at the end of your retirement was $-368,787 to $482,310, with an average at the end of $42,149. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 52 cycles failed, for a success rate of 55.6%.

FWIW I ran for a few more years:

10 years 100%
15 years 94%
20 years 79%

jonah35

3,940 posts

156 months

Sunday 7th January 2018
quotequote all
What is in your pension as you can access that at 55
Yes I did something similar not too long ago and it’s really enjoyable
You don’t need much money to love a good life. Cycling, walking, watching TV, internet, gym all cost nothing really
I’d also suggest you consider long holidays - 3/4 week deals are possible and cost very little especially in the Far East
Once you can get off the treadmill it’s a much nicer way of life

People appear to ‘compete’ with each other even on a website like this where no one has met and even friends play one upmanship with each other etc. The minute you admit you’re retired and out of the game and happy in your Next shirt is interesting when they realise they can no longer play the game of one upmanship.m and they are still working lol

Robbo 27

3,605 posts

98 months

Sunday 7th January 2018
quotequote all
bhstewie said:
Retirement isn't on my immediate horizon but for the OP go here and play with some numbers.

http://www.thecalculatorsite.com/finance/calculato...

Gives an idea how your returns v withdrawals interact together with compound interest.
Thats a useful site, started with the cash I have now earning 1.4% and amount I needed to live on per month and what i would be left with at the end of 20 years.

The calculator allowed me to increase the monthly draw down so that I am close to £0 in 20 years time,

Thanks for posting