Poll

What's your UK FIRE amount?

<£500k
35 (26.5%)
£500k-£750k
24 (18.2%)
£750k-£1m
34 (25.8%)
£1m-1.25m
12 (9.1%)
£1.25m-£1.5m
4 (3%)
£1.5m-£1.75m
8 (6.1%)
£1.75m-£2m
2 (1.5%)
£2m-2.5m
8 (6.1%)
£2.5m-£3.0m
1 (0.8%)
£3.0m-£4.0m
3 (2.3%)
£4.0m-£5.0m
0 (0%)
£5m+
1 (0.8%)

Total Members Voted: 131

Author Topic: What's your UK fire amount?  (Read 20264 times)

PhilB

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Re: What's your UK fire amount?
« Reply #100 on: August 08, 2019, 05:14:29 AM »
Ö Right now the tension for me is between spending and saving, so my budget is set such that it's generally right on the nose and the surplus gets whisked away to savings. If I had a big margin it would feel like a wasted opportunity to save. Ö
It's so important to work out what works best for your own particular brain.  I can entirely see the logic of your view regarding having a bigger budget.  For me, however, having a bigger budget is in itself an opportunity to save money against that budget and that's what I've found presses my buttons best.

poppydog

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Re: What's your UK fire amount?
« Reply #101 on: August 18, 2019, 03:22:03 AM »
We're retiring next summer, aged 63/60

Total net worth is about £1.64 million, made up of:

a. Defined Benefit pension, when valued at x20 the annual income (and allowing for early take on) worth £600,000
b. House, mortgage paid, worth about £370,000
c. Other DC pensions, SIPPs, ISAs worth around £670,000 - this will be invested in income producing trusts, funds etc., after keeping aside about £55,000 which I'll use to "pay" us the equivalent we'll get from our state pensions until they come on stream.

Interesting to see this thread again, and to review my own post from just over two years ago.  Mrs PD and I retired at the end of April last year, and we're doing really, really well.  Our net worth has improved also.  We are significantly better off than we ever imagined we would be when we first started planning our retirement about six years ago.

We have guaranteed income from our defined benefits pensions, and the state pension of around £44,000 p.a. (I will receive the state pension next year, and Mrs PD in three years - in the meantime we have a ring-fenced cash sum which is "paying" us the post-tax equivalent until they come on stream.)

We have around £750,000 in SIPPs and ISAs which contain a diversified portfolio of income producing Investment Trusts, which include trusts focussed on equities, fixed interest, property and infrastructure.  The dividends from these amounted to £38,000 in the last 12 months.

So our combined total income is just over £80K and we are mortgage-free.  Now, readers here will know that all pension income from whatever source is taxable, but there is no national insurance to pay.  With the personal allowances of £12,500 each, and the dividends from the investments in our ISAs (about £10K) being tax free, AND carefully balancing our assets over the last few years so that neither of us gets into a higher tax bracket, the income tax isn't too bad.  In any case, we feel privileged to be so comfortably off and don't begrudge the taxes at all.

I have to admit that we have behaved very un-mustachian over the last year.  Lots of holidays, spoiling the grandkids etc.  We are calming down a little now!





never give up

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Re: What's your UK fire amount?
« Reply #102 on: August 18, 2019, 09:37:15 AM »
Glad to hear from you poppydog. You sound so comfortable Iím sure you donít even bother tracking expenses now. The markets have had a couple of dips since you retired. I hope none of these have caused you any concern. I hope you continue to adjust well to the retired life.

poppydog

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Re: What's your UK fire amount?
« Reply #103 on: August 18, 2019, 12:36:46 PM »
Glad to hear from you poppydog. You sound so comfortable Iím sure you donít even bother tracking expenses now. The markets have had a couple of dips since you retired. I hope none of these have caused you any concern. I hope you continue to adjust well to the retired life.

Thanks NGU. All is good and retirement is wonderful.  The market dips havenít concerned me one jot - Iím just taking the dividends and not touching the capital.  We could do a considerable amount of belt tightening but itís not at all necessary at the moment.   Downsizing the house is also possible and we are considering that move at the moment.

Keep up the blog!  I donít comment here much but I do follow.

PD

Zola.

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Re: What's your UK fire amount?
« Reply #104 on: August 20, 2019, 02:28:50 PM »
I worked out a basic figure of £625,000, as of now we have £65k in investments.... 10% of the way there :)

vand

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Re: What's your UK fire amount?
« Reply #105 on: August 21, 2019, 02:53:41 AM »
There are obviously different assumptions under everyone's magic FI number. Some people might consider x20 expenses in a pension, others might consider it x30 in an ISA. Best to go on estimated annual expenditure...

So I'm pretty sure that I could get by happily on £20k/pa after tax (not including OH, we keep finances separate). With a paid off home and a simple low cost lifestyle, that sort of figure just below the median wage would represent financial freedom to me. That said, it's difficult to know for sure. Just a few things to consider are:

- If I RE then I will have at least 50% more "free time" on my hands. It's difficult not to fill that gap with at least some additional consumption, something which being in a 9-5 job currently curtails

- I work a 2nd job which actually love and have no intention of giving up as long as I can earn good money from it. RE for me would only be from the day job. If I RE'ed I would 100% for certain just shift a lot more of my time into doing my other job

- Currently supporting a 1yo through Nursery. I'm also fully committed to fully funding her JISA & JSIPP and if that means a longer time to reach my own FI goals then so be it.

Given all that I would personally consider myself "FI" with as little as x18-20 my annual expenses in tax-deferred accounts. It's not that I will leave my job and never work another day.. in fact that couldn't be further from what I would most likely do!

« Last Edit: August 21, 2019, 03:04:21 AM by vand »

joseph_uk_6

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Re: What's your UK fire amount?
« Reply #106 on: August 30, 2019, 02:38:12 PM »
There are obviously different assumptions under everyone's magic FI number. Some people might consider x20 expenses in a pension, others might consider it x30 in an ISA. Best to go on estimated annual expenditure...

Hiya,

Can I just clarify why you would need more in a ISA vs pension? I thought you would need less as the money is already tax free when removed. So net income from ISA would be lower than SIPP?

Thanks,
Joe

cerat0n1a

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Re: What's your UK fire amount?
« Reply #107 on: August 31, 2019, 12:48:27 AM »
Can I just clarify why you would need more in a ISA vs pension? I thought you would need less as the money is already tax free when removed. So net income from ISA would be lower than SIPP?

The balance between ISA and pension depends upon what age you're planning to retire at. You can't touch your pension until 55/57/possibly some later age in future, depending on when you were born. Simplistically, if you're planning to retire at say 45 and can retire at 55, you need at least 10 years worth of money in your ISA (or normal investment accounts outside of a tax shelter).

You might say, well, I'll just use ISAs only and forget about pensions, but pensions are a great deal for several reasons and you can build up money much more quickly in a pension than outside.

  • You get additional money from your employer. When I worked, if I put in 4%, the employer put in 7%. So each £4 I put in instantly became £11.
  • The money comes from your tax-free income. This is especially important if you're a higher-rate (40%) taxpayer, or caught in the 60% bracket between £100k and £121k. That £4 you put into your pension only cost you £2.40 in take-home pay.
  • If you are in a salary-sacrifice scheme, you don't pay national insurance on pension contributions and your employer might add some or all of their national insurance payments into your pension too. That's an extra few percent potentially.
  • There are still some public-sector pensions which operate on a defined-benefit basis, giving you a cast-iron guarantee that is pretty difficult to match for a private citizen.

So anyone seeking to RE in the UK needs to think about using both ISAs and pensions and to think about the balance between the two. At a minimum, everyone who is in employment should contribute enough to get the employer match.

never give up

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Re: What's your UK fire amount?
« Reply #108 on: August 31, 2019, 01:04:14 AM »
Yes and I assume Vand was making the point that an ISA implies the person is retiring a lot earlier than someone taking the pension. So 30X expenses in an ISA may be more prudent for someone retiring at 43 while 20X expenses in a pension may be fine for someone working until 63 or whatever. So it wasn't the investment vehicle that meant more was needed in an ISA, it's the retirement age that is important here.

As cerat0n1a details, the vast majority of us would use both ISA's and a pension of one type or another and getting the balance between them isn't easy, especially with government tinkering around pensions.


vand

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Re: What's your UK fire amount?
« Reply #109 on: August 31, 2019, 02:26:13 AM »
 Yes, my point was simply that there are a lot of assumptions one has to make to arrive at a certain desired pot size, and £x in one wrapper isn't the same as £x in another. Correctly, an ISA should sustain a higher level of expenditure for the same amount given the tax has already been paid on the way in, and there will also be quite a high range of withdrawal rates that different people will aim to work with. so all in all, comparing pot sizes is comparing apples to pears; a quoted pot size could be interpreted to provide quite a wide range of retirement income amounts.

joseph_uk_6

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Re: What's your UK fire amount?
« Reply #110 on: August 31, 2019, 02:32:22 AM »
Gotcha, thanks!

londonbanker

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Re: What's your UK fire amount?
« Reply #111 on: September 03, 2019, 02:42:42 PM »
Not to forget about pension is the inheritance tax free benefits which also makes it a strategic part of estate transmission

djr8369

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Re: What's your UK fire amount?
« Reply #112 on: September 11, 2019, 10:53:57 AM »
Currently I estimate I'd need around 500k across ISA and pensions, dependent on holidays and if the mortgage is paid off. That isn't accounting for my OH but is including current mortgage payments.

Tricky as while the mortgage rate is low it doesn't seem worth paying off but would obviously reduce living expenses. Also, I'm not accounting for the state pension (will I get it and how many qualifying years will I have?) and I never know whether I should include a military pensions I have which is worth approx 100k as this is annuitised but not paid fully until I am 65.

On that note, there doesn't seem to be many UK case studies on the forum?

skip207

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Re: What's your UK fire amount?
« Reply #113 on: September 15, 2019, 06:12:15 AM »
NW 850 low end 1M top end.

Liquid portion (i.e outside pension / property) £200k ish.

A little update as 2 years has passed aiming for 300k now not 200k (curretly at about £100k). 
TNW £850k is starting to look about right.  TNW currently c.£620k.

Hopefully about 2-3 years to go which is crazy as it seems like only a few months ago I made the above post so in the same time again I should be closing in on 100%.