UK folks - FIRE target and plan?

[shanghaiMMM]

Firstly, apologies if this thread is a repeat, I tried rather unsuccessfully to find one first.

So, UK mustachians. Obviously on this American-centric board, dollar figures for every range of FIRE plan can be found, from the ERE quoted $6000 a year, to MMM himself at $25,000 a year, or $600,000 + paid off house. Ranges of the forum can go higher than this too obviously. But UK figures are harder to come by. As I currently live abroad, my own cost of living here isn't applicable to a UK based ER.

I remember when I lived in the UK my wage was fairly average and I only took home about £1200 a month after tax/NI etc. But I also remember I lived comfortably and had an enjoyable life. So I was very roughly aiming to make about £1200 a month in passive interest plus a paid off house (somewhere LCOL in Yorkshire; Sheffield maybe).

So that would equate to £360,000 plus a paid off house. But like I say, I've been out the country a few years and it's mainly in my time abroad that ideas of FIRE have sprouted so I'm curious to see what others thinks!

Question part 2 - what are your plans for FIRE? SIPPs? ISAs? Part time working? Would just like to hear a few viable options that people are aiming for.

[dreams_and_discoveries]

Hi from the UK.

You'll be easily able to live quite comfortably off £1200 and a paid off house anywhere in the country - that's roughly what I spend minus mortgage, and I've got a very luxuriously frugal lifestyle. You'd be able to afford travel, days out, good food, some luxuries etc.

I'm not planning to pay off my hefty mortgage any time soon (1.5% interest rate) so I'll need more to FIRE - ideally aiming for £750k. In a mixture of SIPP, ISA and Taxable accounts. The balance of pension/non pension income is a tricky one, both for access reasons (as the rules could easily change before I can access my funds) and tax reasons, as pensions will be taxed on the way out.

What are you aiming for? How far away are you?

[shanghaiMMM]

Thanks for the reply dreams and discoveries!

As I'm abroad that complicates things a little, I'm not sure if I'm allowed to open new SIPPs or investment accounts. So I am continuing to transfer money into my existing ISA stocks and shares and when they are full I'm just using taxable stocks/shares accounts for now. I will probably alter this when I return to the UK in a few years.

If I follow my plan above, it would include a house up North costing in the region of 100-150k. So maybe 500k total for everything. With regards to that target I am currently about 40% of the way the way there, and in 2 and a bit years time when my contract is done here, I hope to be about 80% of the way there. If we move to the UK (and it's still and if at this stage, which is a slight complication!) I would love to slow down and try to work part time until we hit 100%.

What about you?

[shanghaiMMM]

Pitiful reply to see if there are any UK mustachians about at this time..!

[cerat0n1a]

I think there have been a few threads where people have gone through their UK budgets in a bit of detail - maybe go to google and do a search for something like "council tax site:forum.mrmoneymustache.com" will find a couple of them?

Our current spend is closer to £3000 per month and that is with no mortgage but I'm expecting it to drop sharply once children are at university.

[Phil_Moore]

My current non-mortgage expenses run at about £11k per year in London, so I imagine you should be fine on 1200 per month somewhere more reasonable, however I’m budgeting in a lot of leeway into my target FI number, due to:

1) No kids yet.
2) I think it is a near certainty there will be major changes to UK government policy on pensions and savings in the coming decade.
3) Brexit. It likely will impact on the assumptions made in my original plans.
4) I think I (and perhaps most people) dramatically under-budget for long-term house maintenance costs in the UK.

So I’m aiming for £500k in ISAs and taxable accounts and a paid off house. But I really don’t need (or like) a lot of house.  I do have an unholy mix of pensions, but I am assuming that what they provide will be a nice bonus for my late 60s onwards at best.

[shanghaiMMM]

Fungalist - good to know London figures, that sounds pretty Mustachian! My original £1200 per month was based on me and my wife and thinking back, our £400 rent came out of that too. So technically it could be a bit lower, but that extra will allow some leeway.

I have considered point 2) as well, it seems the government brings out a new ISA every year at the minute. And point 3)... who knows what it may eventually entail.

[SpreadsheetMan]

....
2) I think it is a near certainty there will be major changes to UK government policy on pensions and savings in the coming decade.
3) Brexit. It likely will impact on the assumptions made in my original plans.
4) I think I (and perhaps most people) dramatically under-budget for long-term house maintenance costs in the UK.
.....

It's the political and economic unknowns that are concerning me the most. I know how much I need to live very comfortably proven by spend tracking for the last couple of years (£24k pa/couple with owned house), but the size of investments to support that is very hard to predict in the current climate. 25x? 30x? 33x? 40x? who knows?

I'm allowing about £1500pa for house maintenance on a small 3 bed semi - trying to do that as a percentage (e.g. 1% is quoted quite often) doesn't make a lot of sense. Basic maintenance cost on a £150k house vs a £450k house that is identical apart from geographic location won't be much different.

[shanghaiMMM]

40x expenses seems a little drastic, no?

I try not to read everything about Brexit (circle of control and what not), what is it that makes you worry that much?

[Playing with Fire UK]

I can live on £10k per year and be very happy on £12k (excluding my work costs). Not being concerned about health insurance is a massive benefit compared to the US.

I've only heard the 1% for housing maintenance from the US, and I think the standard roof over there needs replacing more than our tiles. I could just about image 1% if you 'needed' a new bathroom every few years. To me the benefit of stopping work will be having time to do most home repairs. Also, as long as the stache is healthy, I have no problem with dipping into it for a new boiler when the time comes.

[Torran]

Hello - I live right now on £1500 a month.

With a paid off house I think you'd be sailing by on £1200.

[KCM5]

We're planning on moving back to the UK with about $700,000 USD - at current exchange rates that would be over 500,000 pounds, but we all know that probably won't hold. We're not planning on moving for another 8 years, so there really is a lot of uncertainty baked into those numbers.

The general plan is to stay here saving money for as long as possible, then move to the UK and either retire fully or work lower stress part time or full time jobs. We'll buy a widebeam narrowboat and live on a permanent mooring for a few years while our child finishes school then move on to travel more (probably with a proper narrowboat rather than a widebeam).

Here in the US our basic expenses (including great food and regular travel) are somewhere around $35k, so we may have to work for quite a while in the UK yet as our stash wouldn't cover our basic expenses at 4%. Or travel less. But considering we'd be moving to a country that neither of us have immediate immediate family living in, I don't see that happening.

I know nothing about SIPs/ISAs/etc. So much to learn!

[cerat0n1a]

I know nothing about SIPs/ISAs/etc. So much to learn!

Neither helps you unless you're a UK taxpayer. Assuming that you're american, even the ISA probably doesn't help you, because the US continues to tax its citizens who live permanently elsewhere. The IRS recognises UK pensions for tax purposes, but not ISAs.

[KCM5]

I know nothing about SIPs/ISAs/etc. So much to learn!

Neither helps you unless you're a UK taxpayer. Assuming that you're american, even the ISA probably doesn't help you, because the US continues to tax its citizens who live permanently elsewhere. The IRS recognises UK pensions for tax purposes, but not ISAs.

I guess I should say I know very little - I figured I would worry about that if we ever work in the UK. So as we'll both the American citizens when we leave (so much easier to return to live here or even to visit for extended periods of time), the ISA is effectively useless? Thanks for the heads up.

The US/UK tax treaties, from what I've read, are very favorable to our plan from what I understand. As we'll be pulling money from pretax American accounts, we'll pay the tax to the IRS and the UK will be okay from that arrangement (will confirm with everyone when we get closer to realizing our plan).