Leaving the rat race after COVID
Discussion
rockin said:
Johnnytheboy said:
I get about 25k ... also earn about 13k p/a rental income too.
... the fifth day a week I work nets me a princely ~£50 after tax.
Yes, the "top slice" of earned income can take a kicking.... the fifth day a week I work nets me a princely ~£50 after tax.
- £25k p.a. for a 5 day week = £5k gross a day
- 20% taxpayer plus 12% NI so top slice of earned income "taxed" 32%
- 5,000/100 x 68 = £3,400 net p.a. for working that 5th day
- 3,400 / 52 = £65 net per 5th day worked
- The cash figures will be lower if you're making a pension contribution, but you would get good value for that.
Not doing calculations, but £25K p/a gross would give a wage of around £95/day.
A person earning that would not pay tax on the first £12,500 of income, and your position on on NI payments are as wrong as everything else you've stated..
Yes I have certainly thought of this during lockdown/furlough. Unfortunately I am the sole provider for a young family. We have a big mortgage and are stuck in the PCP cycle for two cars. Need to be earning what I’m earning now or more to be able to clear the help to buy on my house in a few years time by re-mortgaging. I’m a bit of a one trick pony, re-training isn’t realistic and I doubt I could earn the same salary elsewhere starting from the bottom. I might be able to change jobs within my field to something that doesn’t require as many long hours or as much travelling, although it would still involve a commute and 9-5, but beyond that I’m probably stuck in the ‘machine’ until I’m retired/dead.
AudiMan9000 said:
Yes I have certainly thought of this during lockdown/furlough. Unfortunately I am the sole provider for a young family. We have a big mortgage and are stuck in the PCP cycle for two cars. Need to be earning what I’m earning now or more to be able to clear the help to buy on my house in a few years time by re-mortgaging. I’m a bit of a one trick pony, re-training isn’t realistic and I doubt I could earn the same salary elsewhere starting from the bottom. I might be able to change jobs within my field to something that doesn’t require as many long hours or as much travelling, although it would still involve a commute and 9-5, but beyond that I’m probably stuck in the ‘machine’ until I’m retired/dead.
Wow - that's a very stressful position to be in, I hope it works out during the downturn.AudiMan9000 said:
but beyond that I’m probably stuck in the ‘machine’ until I’m retired/dead.
No really... you always have a choice. Sell the cars and buy something cheaper outright. Sell the house and buy something smaller/further out. Only you can weigh those options up against the current situation, but to say that you don't have a choice for the next 30 years is plainly incorrect. Many people get by quite happily with a £2k car and a cheaper house than they could afford. Condi said:
No really... you always have a choice. Sell the cars and buy something cheaper outright. Sell the house and buy something smaller/further out. Only you can weigh those options up against the current situation, but to say that you don't have a choice for the next 30 years is plainly incorrect. Many people get by quite happily with a £2k car and a cheaper house than they could afford.
But his wife might not be so happy stuck in a smaller house...OzzyR1 said:
rockin said:
Johnnytheboy said:
I get about 25k ... also earn about 13k p/a rental income too.
... the fifth day a week I work nets me a princely ~£50 after tax.
Yes, the "top slice" of earned income can take a kicking.... the fifth day a week I work nets me a princely ~£50 after tax.
- £25k p.a. for a 5 day week = £5k gross a day
- 20% taxpayer plus 12% NI so top slice of earned income "taxed" 32%
- 5,000/100 x 68 = £3,400 net p.a. for working that 5th day
- 3,400 / 52 = £65 net per 5th day worked
- The cash figures will be lower if you're making a pension contribution, but you would get good value for that.
Not doing calculations, but £25K p/a gross would give a wage of around £95/day.
A person earning that would not pay tax on the first £12,500 of income, and your position on on NI payments are as wrong as everything else you've stated.
£25k PA gross:
Working Mondays contributes £5k to gross
Working Tuesdays contributes £5k to gross
Etc etc
OzzyR1 said:
That makes no sense at all, .... and your position on on NI payments are as wrong as everything else you've stated..
I'm always keen to learn and would like to know where you think I have gone wrong. What we are looking for is the "actual net pay" received for working that 5th day. Let's call it Friday. My tax calculation was based on a top rate income tax of 20%, taking into account gross income of £38,000 p.a. There is no personal allowance available for the 5th day, it has already been used up by Wednesday lunchtime.
My NI calculation similarly applies the employee rate of 12%. There is no LEL (Lower Earnings Limit £9,500 p.a.) available, it has already been used up by Tuesday evening.
These together add up to an effective "tax rate" of 32% applicable on Friday.
If we apply that to your suggested figure of £95 a day the net pay comes to £65
As I said, if my numbers are wrong I will welcome corrections.
I’ve been planning how to leave the rat race since I entered it to be honest.
My parents did well to be at the top of their relative fields, but in a location where they were a ten min commute from work, living in the countryside. Mum had to jump on a train to London once a week.
They’ve both retired early, dad fully. Mum kept a couple of directorships and in fact during COVID has gone back to working 3 days per week because one of the businesses had a massive boom due to everyone being at home.
A fine aspiration as I did my 2hr commute between north London and Berkshire every day for 5 years before moving to Hong Kong. My intention is to use my time here to build up a chunk of money that will allow me some freedom when deciding what next.
My ideal is to make director level, stick with that for a few years and then retire early and consult. Iceland is top of my list. In the mean time, I’m trying to work out a move to our office in Malaysia as I manage a team there as well as HK. This is mainly due to the way the political situation here is going but also I’m starting to get a bit claustrophobic.
HK has taught me that I’m less fussed about owning a car than I used to be, and where I used to dream of a huracan now quite frankly I’d be happy with a used cayman and a defender, a couple of dogs and a garden. All of which I could have if I quit work tomorrow - the thing that’s keeping me in at the moment is planning for retirement. Hence the ‘one more promotion’ plan.
My parents did well to be at the top of their relative fields, but in a location where they were a ten min commute from work, living in the countryside. Mum had to jump on a train to London once a week.
They’ve both retired early, dad fully. Mum kept a couple of directorships and in fact during COVID has gone back to working 3 days per week because one of the businesses had a massive boom due to everyone being at home.
A fine aspiration as I did my 2hr commute between north London and Berkshire every day for 5 years before moving to Hong Kong. My intention is to use my time here to build up a chunk of money that will allow me some freedom when deciding what next.
My ideal is to make director level, stick with that for a few years and then retire early and consult. Iceland is top of my list. In the mean time, I’m trying to work out a move to our office in Malaysia as I manage a team there as well as HK. This is mainly due to the way the political situation here is going but also I’m starting to get a bit claustrophobic.
HK has taught me that I’m less fussed about owning a car than I used to be, and where I used to dream of a huracan now quite frankly I’d be happy with a used cayman and a defender, a couple of dogs and a garden. All of which I could have if I quit work tomorrow - the thing that’s keeping me in at the moment is planning for retirement. Hence the ‘one more promotion’ plan.
At 60 we just had a little re-org at work giving me more work to do.
It was nice though a little scary after 40 years to say I’m not doing that,
I have 13 more days of work to do and I’m retired.
House and cars are paid for, I’m already taking one of my pensions just means the decision came forward a year, will mean a little bit less in the bank but I really didn’t want more work same pay so just opted out.
It was nice though a little scary after 40 years to say I’m not doing that,
I have 13 more days of work to do and I’m retired.
House and cars are paid for, I’m already taking one of my pensions just means the decision came forward a year, will mean a little bit less in the bank but I really didn’t want more work same pay so just opted out.
Here you go
For the price of a London suburban semi, a ready to go established business with owners accommodation.
Peaceful village but close to the NEC and motorway network.
https://www.rightmove.co.uk/property-for-sale/prop...
http://www.old-ivy-house.co.uk/
Guest accommodation (4 bedrooms and breakfast room) at the front with its own entrance.
Owners accommodation (2 bedrooms, living room, dining kitchen, cellar, office, private courtyard garden) at the back. The two areas kept separate by a connecting door.
For the price of a London suburban semi, a ready to go established business with owners accommodation.
Peaceful village but close to the NEC and motorway network.
https://www.rightmove.co.uk/property-for-sale/prop...
http://www.old-ivy-house.co.uk/
Guest accommodation (4 bedrooms and breakfast room) at the front with its own entrance.
Owners accommodation (2 bedrooms, living room, dining kitchen, cellar, office, private courtyard garden) at the back. The two areas kept separate by a connecting door.
Edited by PositronicRay on Monday 13th July 09:53
Interesting thread and something that’s been on my mind recently. I turn 55 in January and have worked for the same employer for 36 yrs with a reasonable DB pension scheme. I have two children at 20 & 18 with the eldest starting her last year of Uni in September and the youngest looking for work (no desire to go to Uni). Whilst I enjoy my job it no longer excites me or gives me the satisfaction it once did, so come Jan next year I’ll be actively looking to take retirement and reassessing what’s important in life.
If working from home becomes normal then we’re possibly going to give up our main family home in London, and relocate to be near one of our families, which means Northumberland or the Pyrenees, either of which allows a once a fortnight commute back into London for a couple of nights.
I hope that this is the way that things go, as I am not sure that I’m going to want to maintain a house like we have in the inner commuter belt given how London is nowadays.
I hope that this is the way that things go, as I am not sure that I’m going to want to maintain a house like we have in the inner commuter belt given how London is nowadays.
Condi said:
I don't really see that line of logic. Why does my salary relate to costs, and what costs? If the company is saving 50% on office costs that is extra money which can used for salaries. 
You could well argue company car or cash for car could be removed but that’s only if your up shot creek. Welshbeef said:
Condi said:
I don't really see that line of logic. Why does my salary relate to costs, and what costs? If the company is saving 50% on office costs that is extra money which can used for salaries.
You could well argue company car or cash for car could be removed but that’s only if your up shot creek. WFH means the company can hire from the whole country not just those that want / are able to live in London.
Reckon someone up north would be willing to do it cheaper?
highpeakrider said:
At 60 we just had a little re-org at work giving me more work to do.
It was nice though a little scary after 40 years to say I’m not doing that,
I have 13 more days of work to do and I’m retired.
House and cars are paid for, I’m already taking one of my pensions just means the decision came forward a year, will mean a little bit less in the bank but I really didn’t want more work same pay so just opted out.
Was anyone surprised you weren't keen on this reorganisation? It was nice though a little scary after 40 years to say I’m not doing that,
I have 13 more days of work to do and I’m retired.
House and cars are paid for, I’m already taking one of my pensions just means the decision came forward a year, will mean a little bit less in the bank but I really didn’t want more work same pay so just opted out.
This situation has made me think more about where I want to be in the future, not only location, but work and lifestyle. The wife and I live 250 miles away from immediate family and not being able to see them through this period has put things into perspective somewhat. As well as that, we love where we live, but for us to have our ‘dream home’ (ideally somewhere rural with a bit of land) we will have to move, as property prices are too high in the SW for us to get what we want.
I’m 34, the wife 29, so we have time on our side.
I’m financially beholden to my current role until my 40th birthday when I can leave and get an Armed Forces ‘pension’. £7-9k a year until 55 then index linked until SPA when it increases. Golden handcuffs situation.
So our plan (or one of our plans) is for me to leave the RAF and go contracting for 5 years. We will then sell up, hopefully realising an increase in our house value. Use my RAF payout to get a BTL and pay off ASAP and move to north wales (where we both grew up) to live a more relaxed lifestyle, send the kids to a local school, etc. If I need to carry on earning significant amounts then I’ll work away a couple of days a week in the SW.
I have a hobby (general aviation) that I’d like to earn some beer tokens off, so I’ll be spending the next few years training to become an instructor so that I can do that one or two days a week.
Less work, less hectic lifestyle, with a couple of additional income streams is where I want to be by 45.
I’m 34, the wife 29, so we have time on our side.
I’m financially beholden to my current role until my 40th birthday when I can leave and get an Armed Forces ‘pension’. £7-9k a year until 55 then index linked until SPA when it increases. Golden handcuffs situation.
So our plan (or one of our plans) is for me to leave the RAF and go contracting for 5 years. We will then sell up, hopefully realising an increase in our house value. Use my RAF payout to get a BTL and pay off ASAP and move to north wales (where we both grew up) to live a more relaxed lifestyle, send the kids to a local school, etc. If I need to carry on earning significant amounts then I’ll work away a couple of days a week in the SW.
I have a hobby (general aviation) that I’d like to earn some beer tokens off, so I’ll be spending the next few years training to become an instructor so that I can do that one or two days a week.
Less work, less hectic lifestyle, with a couple of additional income streams is where I want to be by 45.
Since the industrial revolution, it has been clear to anyone that employers do not care about their employee's welfare. They simply want to extract your labour as cheaply as possible. The game is fundamentally stacked against anyone forced to earn a wage.
I did the hard years in London, which was great for gaining professional experience but utterly miserable. Earning a fantastic salary, but unable to afford the deposit to buy a house, and working too many hours to have a meaningful relationship with anyone worthwhile.
I then decided to move back to my home town. I took all my experience and contacts with me. I setup my own business. I worked manically and made enough money in twelve months to buy two houses. One to live in and one to rent out. I then got married. I could now retire tomorrow if I wanted to. I am 35.
My humble working class parents failed to teach me anything useful about life, but I managed this liberation from economic bondage merely from innate dogged drive and simple gut instinct. Had I been taught better, I would have planned this from the start. I could have retired at 29. Anyone could.
Whether you work on a building site or in a professional services firm, most people working hard at demanding jobs will have 10-15 years of true graft in them at most. Some manage 20. But it is all downhill from there. You need to have a game plan and exit strategy from day one.
I did the hard years in London, which was great for gaining professional experience but utterly miserable. Earning a fantastic salary, but unable to afford the deposit to buy a house, and working too many hours to have a meaningful relationship with anyone worthwhile.
I then decided to move back to my home town. I took all my experience and contacts with me. I setup my own business. I worked manically and made enough money in twelve months to buy two houses. One to live in and one to rent out. I then got married. I could now retire tomorrow if I wanted to. I am 35.
My humble working class parents failed to teach me anything useful about life, but I managed this liberation from economic bondage merely from innate dogged drive and simple gut instinct. Had I been taught better, I would have planned this from the start. I could have retired at 29. Anyone could.
Whether you work on a building site or in a professional services firm, most people working hard at demanding jobs will have 10-15 years of true graft in them at most. Some manage 20. But it is all downhill from there. You need to have a game plan and exit strategy from day one.
The plan now is to retire in 7 years at age 55. I'm in the process of cashing in my final salary pension for a decent amount and will put that money to work. It won't be touched until I'm 55 so hopefully will have built up to a much better amount by then. The mortgage finishes then too. I wanted to buy a property to rent out through my sipp but the tax man's rules have put paid to that! Lol.
We'll then downsize the house, cash in some of our pensions and buy somewhere abroad to spend 6 months of the year in the warmth. Surely I can put up with just 7 more years of this s
t?!
Hopefully sooner if my shares can perform well over the next few years...
We'll then downsize the house, cash in some of our pensions and buy somewhere abroad to spend 6 months of the year in the warmth. Surely I can put up with just 7 more years of this s
t?! Hopefully sooner if my shares can perform well over the next few years...
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