Author Topic: Can I stop work now?  (Read 4173 times)

DT

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Can I stop work now?
« on: December 19, 2012, 09:36:39 PM »
Hi

I live in New Zealand so a few things are different such as tax rates (approx 15% for income up to 20K) but I am hoping to leave my job next week (cos it kind of sucks right now) - do you think I can?

No debts
Assets: $50K in superannuation locked in for 30 years, $750K in a variety of on call funds and bonds. I have them on call as don't own any property at the moment and will buy in the next year.
Interest rates: approx 5% before tax so 3.5% after tax.
I don't own much "stuff" right now and am currently carless so these are additional outlays that need to be factored in.

I consider housing to be hugely overpriced in this country, the median house price in the city I work is $475K but I intend to move South so expect to pay approximately $300/350K for a smallish property. There is a bit of a boom on due to the earthquake but this may not settle due to ongoing housing shortage.

Expected expenses - I estimate $20 - $25K per annum. Major expenses will be house insurance and local rates - total approx $5K per annum. There is no need to pay for health insurance as the public hospital system is free to residents.

I am currently single, mid 30's with no children.

Any independent views would be greatly appreciated, the general opinion of my friends is I shouldn't leave a secure job when unemployment is relatively high.

Thanks
D

marty998

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Re: Can I stop work now?
« Reply #1 on: December 19, 2012, 09:50:29 PM »
If you already own a place and are downsizing then yes you are able to stop working.

If you need to fork out 350k then no, you probably won't be able to make it happen, but then who am I to judge.

Try living off your investment income for a year i.e. stash all your salary and see if you can survive off the interest and dividends. If you can make it work then you have your answer


happy

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Re: Can I stop work now?
« Reply #2 on: December 19, 2012, 10:28:51 PM »
Safe withdrawal rate  of 3% for 25k/ year (countries out side US are closer to 3% than 4%) means a stash of 820k.
You are there if you don't have to buy a house out of the $750K

If you buy a house @350k and have 550k left, you've got about 22 years of expenses @25k.....you could do it if you spent less,  and felt safe with a slightly higher withdrawl rate of 4% ie 20k at 4% = 500k.

IMO you certainly have FU money....but  as for never working again ever, that might be a little tight depending on your tolerance of risk and satisfaction with living permanently on 20k.

If  you were planning to quit because your job really sucks, and find something else , a part time gig, or seasonal work or intermittent contracts, lower paying but more satisfying work etc, then I think you have enough FU money. With that size stash you only need to cover your expenses (25k) with work each year... and the stash should keep growing. You don't say what your current income is, but I'm betting its higher than that to get the size stash you have at 30. Could you negotiate to work part-time to cover expenses?  Working part-time makes a sucky job a lot more palatable.

Congratulations on your stash! - you've done well, and will soon be able to reap the rewards of this great foundation.
« Last Edit: December 20, 2012, 12:18:09 AM by happy »

kiwichick

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Re: Can I stop work now?
« Reply #3 on: December 19, 2012, 10:42:34 PM »
Agree with Marty and Happy. If you need to purchase a house out of that $750K, then you'll need to have some sort of other income to make it work. If you're in a high-demand area of employment, you could take some time off to recharge, but this could be risky in the current work environment. That being said, with a mortgage-free house, you could live very cheaply - so even a part time job in retail could be an option (don't have to take your work home with you, flexible hours etc).

One thing, you mentioned all your funds are in on-call accounts. The highest interest rates for these are (I believe) 3.4% at Rabodirect. That's pretty puny. After tax and inflation you wouldn't actually earn anything to live off. Would you consider investing in the share market or bonds?

nz

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Re: Can I stop work now?
« Reply #4 on: December 20, 2012, 12:47:47 AM »
I agree with you about housing being overpriced in NZ and for that reason you might want to hold back on buying a house at this stage. Being single you could live cheaply in a variety of ways...caravan? house sitting? flatting?
You can also think outside the box a little...say live in South East Asia.....Thailand/Cambodia/Laos etc exotic ,interesting and cheap.
I agree with Kiwichick about getting your money to work a bit harder for you.  There are some very sound companies that return 6-8% on the NZ stock market.

What line of work are you in? Any chance to reduce your hours? Casual work?

Anyway you have a nice problem as not many people your age have your net worth and freedom!!Well done!

directionseeker

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Re: Can I stop work now?
« Reply #5 on: December 20, 2012, 12:58:09 AM »
I agree with you about housing being overpriced in NZ and for that reason you might want to hold back on buying a house at this stage. Being single you could live cheaply in a variety of ways...caravan? house sitting? flatting?
You can also think outside the box a little...say live in South East Asia.....Thailand/Cambodia/Laos etc exotic ,interesting and cheap.
I agree with Kiwichick about getting your money to work a bit harder for you.  There are some very sound companies that return 6-8% on the NZ stock market.

What line of work are you in? Any chance to reduce your hours? Casual work?

Anyway you have a nice problem as not many people your age have your net worth and freedom!!Well done!

If the job is really very sucky, you can always travel around South East Asia for few years while watching your stash grow before you decide where to settle down.

Who know? You might fall in love with we SEA people and find your special one here.

Anyway, it's your choice. Welcome to South East Asia!

DT

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Re: Can I stop work now?
« Reply #6 on: December 21, 2012, 03:07:16 PM »
Thanks for your replies. I suspected I would have to keep working but will definitely take a break over the next few months/year. My work situation is particularly unpleasant as have had to deal with harrassment in the office so want to move on from there, I don't work in an area that is particularly in demand especially with the tight job market.
I have had losses with managed funds and shares in the past so haven't got back in to them but that is definitely worth considering.