Author Topic: Too cautious UK FI wannabe in compound interest balls up. Whatís possible?  (Read 1363 times)

never give up

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Hi, Iím a 40 year old UK based newbie to the site. This place is really helping people, and the boards are so friendly, I wish I had found the site earlier. I have a situation that may resonate with others and donít know what sort of goal is possible going forward. My key question is how long do I need to work full time for?

Although Iíve only just found this site Iíve naturally always been frugal. Hate debt, save before I buy anything, pay off ccís in full every month, do less than 4250 miles in a year in a car, cycle to work every day, work out at home etc. Iím happy here with my living standards versus savings balance. I wonít waffle on about budgets.

Earlier this year I paid off my mortgage (yay) but having found this site I now completely appreciate my very cautious mortgage overpaying approach has greatly hampered my ability to invest and benefit from compounding (boo). In the UK we donít really have the concept of 30 year fixes (that I know of) so I was always conscious of coming out of a 2, 3 or 5 year fix period into a much higher mortgage interest rate.

I suffer from panic attacks and anxiety and have always felt because of this Iím punching above my weight with the company I work for and income I have. As a result being mortgage free was my number one financial objective as I fear if I ever lost my job I wouldnít be able to get an equivalent. Iíve worked for the same company since leaving Uni. They have been very supportive to me and Iím very lucky to work there.

Being single its down to me to be responsible for my financial future. Hence the caution. (Happy to take either a face punch or a 50 yard run up and kick to the goolies though on the extreme caution. I didnít buy an 60k monster truck on credit though so thereís only so much Iíll beat myself up!)

Having cleared the mortgage I was conscious of lifestyle creep and so I reworked my budgets. I then tweaked this further having found this site. The main lesson I have learned from this site is not to be scared of the stock market and to invest for my future. My situation is as follows:

No debt
20k cash savings (Emergency Fund)
150k work pension
3k ISAís (I know, pathetic)
I can live quite comfortably on 22k per year and could reduce this if needed.

As a result of my budget tweaks and newly found stock market courage, each month I am now investing:

1.5k into my company pension (combo of company contribution and my own, comes out before income tax)

1.5k into an ISA (low cost index trackers, bonds. This equates to just over 50% of my post tax/pension contribution income)

Due to the anxiety/panic attacks its the FI part of FIRE that means the most to me. Being 40 I understand the really early retirement ship has sailed for me. However I am also quite happy to work part time until Iím 58-60. The structure, social interaction and working as part of a team are benefits that appeal. Being single I would worry the RE part of FIRE would turn me into a hermit.

So it seems saving 25X my annual expenses isnít the right approach for me here as I would achieve that at about the same time as I could start to drawdown my company pension. So it seems I have a combination of full time work, part time work, ISAís, company pension and state pension to get me through my life from this point forward. The key is how long do I need to do the full time bit for?

So whatís possible here?

Do I have any chance of moving to part time work at some point in my 40ís?
Should I be looking to work full time in my 40ís, part time in my 50ís, retire fully at 60?
Should I not look to take my company pension until Iím 65 to at least benefit from 25 years worth of compounding here and then fund the next 25 years until 65 on a combination of my ISAís and part time work?

There seems to be so many options, I need a strategy and some goals here. Iím like a hiker with all the right footwear, clothing, and equipment but with no map!

Thanks very much for reading and much appreciation in advance for anyone who takes time to post a reply.

patrickza

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Iím punching above my weight with the company I work for and income I have.
Well done on paying off your mortgage, it's not something many people can do by 40!

Have you ever thought you're maybe not giving yourself enough credit. A lot of people feel they haven't earned the right to be where they are, but success doesn't just fall into your lap. I'd imagine you're more than likely just another person with imposter syndrome.

Welcome to the club! I've spent time there too. It wasn't until I managed to achieve some success outside of work that I completely got over it. Have you thought of trying to build up a successful side gig or doing something creative like blogging/writing a book/developing an app etc?

Getting used to succeeding is very satisfying, even if it's something small.

never give up

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Hi patrickza. Many thanks for the reply. I haven't heard of this before. Thanks for attaching the link. I'll certainly have more of a read. I didn't consciously choose those words meaning too much behind them. I guess with the confidence and personality styles where I work, being shy as I am I genuinely feel I'm lucky to work where I do, although I do appreciate I have a lot of positive attributes too or I wouldn't have worked there for so long.

Yes I appreciate being mortgage free is a great achievement but also see how cautious the strategy was and want to ensure I make the best financial decisions for the next phase of my life.

former player

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Hello and welcome!

I see a lot of me in you: I'm single, I worked for the same employer for 25 years, invested in property rather than the stock market, I paid off mortgages because of debt aversion.  I retired aged 50 and I'm happy to call that early: there is a wide variety of retirement ages on the forum and no-one's going to call you out for doing it wrong.

I think you are in a good position.  Having paid off housing is a big advantage here in the UK where housing is so expensive and long-term renting not easy.  With paid off housing I think an annual spend of £22k is entirely comfortable.

As to moving to part time, I moved to a 9 day fortnight in my forties (in fact I worked 4 longer days each week, and as I had tended to work long days in any case it worked very well). I was in the civil service, so it was pretty easy to do, but I think it's likely your long service with an appreciative employer would get you a similar deal if you wanted it.

As to how you structure your retirement funds, I would start by looking carefully at the terms of your company pension scheme to see where you will be with it if you retired in 5, 10 or 15 years.  Because these forums are heavily USA based I think they tend not to consider pensions so much - in particular, they don't seem to have the government guarantees and index linking that UK pensions have.  Your scheme probably allows you to draw a pension at 55 but may discount taking the pension early quite heavily.  Your scheme will probably include a lump sum: personally I reverse commuted my lump sum back into my pension: if your scheme allows this it will set out the % rate at which it will do it - rather like an annuity, in fact.  I was happy with this as being single with no kids I don't care about adding to my estate, and I got 4.1% index linked for life out of it (which equals the expected long-term returns from the stock market) with an absolute guarantee of payment and no effort.

You are slightly underfunding your ISA investment as you can now put in £20k a year.
Be frugal and industrious, and you will be free (Ben Franklin)

Paul der Krake

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It sounds like you could move to some shape of part-time work tomorrow if you wanted to. You already live roughly £3k below your means each month, which means that if you already satisfied with what you would get from your pensions at normal retirement age, you could just decrease your current income by about that amount and be fine.

Obviously it's more of spectrum of options, not a binary choice.

MrThatsDifferent

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I agree with Paul.  I think youíve done great and if you really wanted to go p/t tomorrow you could. Iím not as good as these guys are and donít know the UK system, but this is how I would think about your situation. At $22k/yr expenses you need around $550k. You currently have $150k in your pension. Iím presuming this is invested and if so, should become $300k by 50 and $600k by 60.

Now, if you kept working f/t until 50, youíd add probably another $200k to your pension, while investing around $200k. Youíd have $500k in your pension, which would become 1 million by the time your 60. You could either work p/t for $14k/yr and draw $8k from your investments until your 60 or not work at all and take $20/k per year from your investments. When you turn 60, you should be set.

You could also, work f/t for 5 more years, then go p/t until youíre ready to stop. Would be good to build up your non-pension funds a bit to give yourself more freedom and options. This is just my back of envelope thinking, take with a grain of salt. Good luck!

dreams_and_discoveries

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You aren't in a bad place at all - however I think we need more details to offer advice.

What is your current savings rate or income? Why do you think the 25 times rule won't work for you?

You already have £170k of the £550k you'd need to FIRE, if you can keep up the 36k per year investments you'd be there in less than 10 years.

However, given your self confessed cautious nature, I think you need to do a lot of reading on investments, and stick to a buy and hold approach.

Playing with Fire UK

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Hi Never Give Up.

Some thoughts, in no particular order:

What is your current state pension situation (years of NI credits and years of being contracted out)? If you stopped contributing to your pension right now, it would give you around £6k/year (I'm assuming it is a DC pension as you've mentioned a pot size - but please correct if not). The full state pension is another £6k/year, which would give you £12k/year after the state pension age.

Don't beat yourself up about the mortgage. If you decide that you want a mortgage again, you can apply for a cash out mortgage (which is a bit tricky to do, but not impossible), otherwise, it sounds like the right choice for you. Personal finance is meant to be personal.

How many hours would you need to work to earn £22k/year, and would that 'count' as happy part-time work for you?

How would you feel about continuing to work part time until 55 or 57 or 58 (whatever the private pension access age is going to be by the time you get there)? If that would be great for you, you might want to prioritise contributing to a SIPP or work pension rather than an ISA (or push the % towards the pension).

If 55/57/58 is too late, you can 'buy back' that age by one year by saving £22k in an ISA, by two years by saving £44k in an ISA and so on. [It's actually less than that, because the money will continue to grow after you stop saving]

If your pension is direct contribution, where there is a pot of money in your name which you can use to buy an annuity or fund a drawdown strategy, you typically want to start taking it as soon as possible so that you can maximise the tax free allowance and low tax threshold. If you will be firmly inside the 20% tax band throughout, then it doesn't matter as much.

I'm a little confused about the budget. You say that the £1.5k ISA contribution is just over 50% of your net pay, which would make your budget around £18k, but the annual budget you mention is £22k. Is there a bonus or one off spending that comes from the savings account?

Spending £22k for one person with a paid off home seems high to me (not outrageous, but high). If you want us to check out the budget then add some more details, if you're happy with it then no need. Maybe live on your newly optimised budget for a couple more months and then see if there is anything else to cut? Also consider going through your budget and see what would drop out if you were working less or not working. For example, my post-FIRE budget excludes commuting costs, some people plan to stop a cleaning service or cook at home more. Others want to move to a cheaper area and release money from a home in a more expensive area.

For FIRE in the UK, you need 25x expenses in total (pensions and ISAs/taxable accounts), with the ISA/taxable component big enough to last you until the age when you get access to your pension. You don't need 25x expenses in an ISA plus a pension unless you are planning to FIRE very young.

No facepunch issued, you are doing really well.

never give up

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Thanks all for your replies, much appreciated.

Former player - thank you yes I need to understand the terms and conditions of my company pension inside out. I'll do some research. Great to know there are others like me out there!

Paul - yes you're correct, although this would prevent me from being able to save to the same extent I can now and I would still be reliant on employers in my area. It would be good to grow my passive income capabilities and I wouldn't want to have to go back to full time once I do go part time.

MrThatsDifferent - yes thank you, these are the sort of options that have been going through my head. I think I need to work full time at least 5 more years maintaining or increasing the savings rate where possible. I definitely need to grow my non-pension funds.

dreams_and_discoveries - apologies my wording around the 25 times rule was poor. What I meant was, there is no point in me saving 25 times my income in ISA's (as I would have needed to do if I had been attempting to retire fully in my 30's) as by the time I would achieve this I would be able to draw on my company pension and I would end up with far too much money for my needs. Absolutely the 25 times rule works for me with my pension and ISA's combined and I need to think of this as a combined effort now. It's just some of the investments are age restricted and some are not.

At the moment I'm finding it hard to see clearly how state pension, company pension and ISA's need to work together. The state pension rules change so much I've always played it safe and assumed I wouldn't get one, just so I take responsibility for my pension myself. However in all likelihood I will get something although will it be at an age of 72,73 by the time I get there. So much uncertainty here.

The company pension can be taken between 55-65 but there are annual allowances and lifetime limits etc so there must be a point where we in the UK would have too much in this? ISA's are the only piece of the puzzle where there is much more flexibility and the freedom to do whatever you want with the proceeds at any age. Throw in a happiness to work part time and I end up a bit muddled with how much I need between the different types of investment and any possible decision regarding stopping full time work.

You're right though I need to do lots of reading around investments and will do this. Despite my cautious nature I'm completely  bought in to buy and hold. I've seen how my company pension has grown despite all the world events that have happened since I started work and it's a lot higher than the contributions. I wouldn't sell in a downturn.

I guess regardless of US or UK rules and investment types, we all have in common a balancing act between how much is enough, what if any work are we willing to do, and a desire to make the right decision about not working a day longer than we need to in a pressurised corporate environment.

Playing with Fire UK

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The company pension can be taken between 55-65 but there are annual allowances and lifetime limits etc so there must be a point where we in the UK would have too much in this? ISA's are the only piece of the puzzle where there is much more flexibility and the freedom to do whatever you want with the proceeds at any age. Throw in a happiness to work part time and I end up a bit muddled with how much I need between the different types of investment and any possible decision regarding stopping full time work.

The annual allowance is when you put money into the pension; it is £40k per year, apart from very high earners. The lifetime allowance is £1M, don't worry about this. Unless you increase your spending plans significantly, you should be stopping pension contributions well before you are hitting the limit.

never give up

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Hi Playing With Fire UK. Many thanks for such a detailed response, lots of good info here, much appreciated.

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What is your current state pension situation (years of NI credits and years of being contracted out)? If you stopped contributing to your pension right now, it would give you around £6k/year (I'm assuming it is a DC pension as you've mentioned a pot size - but please correct if not). The full state pension is another £6k/year, which would give you £12k/year after the state pension age.

I've been paying NI for 18 years. Never been contracted out. Yes my work pension is a DC pension.

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How many hours would you need to work to earn £22k/year, and would that 'count' as happy part-time work for you?

I think I need my passive income to be at least half of my total income to give maximum flexibility with what part time work I do and the ability to leave if I'm not enjoying it. This is a good question. I need to think about the type of part time work in my area (within cycling distance) and what I could earn.

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How would you feel about continuing to work part time until 55 or 57 or 58 (whatever the private pension access age is going to be by the time you get there)? If that would be great for you, you might want to prioritise contributing to a SIPP or work pension rather than an ISA (or push the % towards the pension).

If 55/57/58 is too late, you can 'buy back' that age by one year by saving £22k in an ISA, by two years by saving £44k in an ISA and so on. [It's actually less than that, because the money will continue to grow after you stop saving]

Thank you, some great points, I need to think about this in depth.

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If your pension is direct contribution, where there is a pot of money in your name which you can use to buy an annuity or fund a drawdown strategy, you typically want to start taking it as soon as possible so that you can maximise the tax free allowance and low tax threshold. If you will be firmly inside the 20% tax band throughout, then it doesn't matter as much.

I see thank you. Yes I need to understand more about how tax works with regards to my company pension. Something I know little about at present.

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I'm a little confused about the budget. You say that the £1.5k ISA contribution is just over 50% of your net pay, which would make your budget around £18k, but the annual budget you mention is £22k. Is there a bonus or one off spending that comes from the savings account?

Spending £22k for one person with a paid off home seems high to me (not outrageous, but high). If you want us to check out the budget then add some more details, if you're happy with it then no need. Maybe live on your newly optimised budget for a couple more months and then see if there is anything else to cut? Also consider going through your budget and see what would drop out if you were working less or not working. For example, my post-FIRE budget excludes commuting costs, some people plan to stop a cleaning service or cook at home more. Others want to move to a cheaper area and release money from a home in a more expensive area.

Sorry so the £22k is what I think I would need to live on in the future once I've decided to go part time or be fully retired. You're correct, it is higher than what I currently am living on. The home I bought needed a lot of work, complete rewiring, new boiler, radiators, windows, roofing work etc. This has all been completed. As a result I believe my maintenance costs for the next few years should be very low. So at the moment I have a very low portion of my budget allocated to maintenance, so acknowledge this would need to increase in the future. I wanted to free as much of my budget as I could now to play catch up with my ISA's/Pension.

I don't believe my post FIRE budget will fall very much. I already commute by bike to work, cook 95% of the time at home, do all my own cleaning, gardening, general non-skilled maintenance etc. I only pay someone if it is for a specialist skill e.g. I wouldn't take on any electrical work or service my boiler. I play/watch sports and would want this to increase when I retire. My car is 10 years old and I want to get it to 20. Although I wouldn't spend much on a car this needs to be factored in. I would also want to travel more. So home maintenance, hobbies, car replacement and travel are the reasons for the increase to £22k. I'm happy with £22k. I could live on a lot less, it may not be truly Mustachian but this allows me to live happily and isn't excessive. It also gives me the ability to live at £17k or something similar if I needed to for whatever reason in any given year. I like the thought of having safe guards and buffers, it suits my cautious outlook!

shelivesthedream

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Sorry if I've missed how much you earn now, but I wanted to second what someone said above about asking your employer to work fewer hours now. A half-day off each week or one day off each fortnight would let you get your toe in the water and I think you're in a position to accept a corresponding decrease in pay. The Ask a Manager blog will have posts about how to ask for this, I'm sure, or you could write in yourself! Seems like it might be a pleasant first step for you.

never give up

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Hi shelivesthedream. Yes I think you're right and a braver version of me would do this. With so little in ISA's I think I need a period of saving hard to feel comfortable. I do think a gradual reduction in hours could be a good way of doing it. Maybe in a couple of years move to 4 days a week, a couple of years after that 3 days a week etc. Part time work at the company I work for will be much higher pay than part time work anywhere else in my immediate area, so I do need to increase my ISA to give me flexibility.

I think I will just perceive the state pension as a bonus that should come along at some point but not factor it into my calculations due to the uncertainties. That way I can concentrate on getting my pension to the number I need to support 22k. (I need to double check 22k is right for me, can I lower this number).

That way then it's a combination of part time work and ISA investments to see me through until I draw the pension. That seems a bit less muddled to me now. I think it also makes it clearer that I don't necessarily need to work full time for another 10 years if I don't want to.

Playing with Fire UK

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Tax and pensions:

When you first access a DC pension, you can elect to take 25% of it tax free as a lump sum. However you can also elect to take a little bit of your 25% tax free allowance every month/year.

So if you were 58 and not earning anything else, if would make sense to take a distribution of your tax free Personal Allowance (the same one that everyone gets before they pay tax). This is currently £11k5. Unless you've already taken a lump sum, 25% of a withdrawal is tax free, so you can withdraw ~£15k3 per year and pay no tax. If you go into the 20% tax band; for the next pound you take, you'll get 25% of the withdrawal charged at 0% tax, and the rest at 20% (so an effective rate of 15%).

If you have other income, then the total income will determine how much tax you pay. It's only the 25% that is different.

dreams_and_discoveries

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I'd frame it as follows: work 10 years full time or 17 more years part time, or somewhere in between!

You are definitely in a position where you don't need to work another 20 years full time.

shelivesthedream

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Hi shelivesthedream. Yes I think you're right and a braver version of me would do this. With so little in ISA's I think I need a period of saving hard to feel comfortable. I do think a gradual reduction in hours could be a good way of doing it. Maybe in a couple of years move to 4 days a week, a couple of years after that 3 days a week etc. Part time work at the company I work for will be much higher pay than part time work anywhere else in my immediate area, so I do need to increase my ISA to give me flexibility.

I would really encourage you to read about ways in which people have asked for this right now, in order to start psyching yourself up for it. A couple of years sounds like quite a long time when I think you could do it now if you wanted to.

never give up

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Playing With Fire UK - thanks very much for the tax info.

dreams_and_discoveries - that's a really good way of looking at it thank you. I must work on a more concrete plan of a somewhere in between I think.

shelivesthedream - I had a bit of a lull once I became mortgage free but I am fully motivated at work right now and enjoying working with the people in my team. I don't see an issue with working full time for another 2-5 years if they still want me, Brexit doesn't throw a spanner in the works etc. I will definitely read more about it though and ensure I get some timescales in place for reducing my hours.

dreams_and_discoveries

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That sounds like a plan coming along there; once you've put that line in the sand, you can always adjust it year on year depending on what life throws at you...keep working FT when work is fun, drop hours when the stock market does well, you are flexible to engineer a layoff/reduced hours if your company is looking for volunteers at a time that suits you.


never give up

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Yes flexibility is the key. I want to reach the point where redundancy is a opportunity rather than something to dread and where I can work part time almost anywhere (I.e. salary is irrelevant because my passive investments have me covered). For me that is FI and is more important than RE.

I need to read and learn a lot about investing & tax, work on my budget, think about part time jobs I'd be interested in and how reduced hours would work at my current employer. Then I think I can start to put a plan together with plenty of safeguards and flexibility to deal with whatever life chucks my way.

Appreciate everyone's comments, info and suggestions. Happy the thread is continue to be used to discuss part time versus full time, starting ISA's at an older age etc if people find them an interesting topic.

Linda_Norway

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Maybe in your case you only need to bridge 15 years with your assets, before getting a pension?

I advise you to do what I did. Make an excel sheet with what you expect to receive in income each year foreward, how much you expect to pay in taxes, how much you can take out of your stash. Then make some scenarios with different amount of stash and see where it is still enough by the time you start to receive your pension. For me it was a surprice to see the actual numbers and see how close it was.

You haven't done anything wrong by paying off your mortgage. That is a very safe investment.

Think also about the option of working part time during FIRE, either in your current or a similar job or in some totally different job that you enjoy. This could reduce the stash you need to FIRE.

never give up

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Thanks Linda. Some detailed budgeting and planning is definitely called for. Yes I'm happy to work part time. That does make things a lot easier for me.

May2030

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Wow! So many similarities with my current position but am 43. Will watch this thread with interest for the great advice.

I also paid off my mortgage and do not regret it despite the loss of investment potential. It was a massive carrot for me.

We are eligible for state pension at 67 or can defer.

shelivesthedream

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Have you read the JL Collins stock series? It explains risk and volatility very well and might give you more confidence in your investments.

never give up

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Wow! So many similarities with my current position but am 43. Will watch this thread with interest for the great advice.

I also paid off my mortgage and do not regret it despite the loss of investment potential. It was a massive carrot for me.

We are eligible for state pension at 67 or can defer.

Glad I'm not alone May2030. I would have thought there must be a lot of 40ish people out there that have been either in debt, paying off a mortgage or whatever and are only starting to think about retirement and investing for it seriously now. I'm learning a lot from this thread already.

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Have you read the JL Collins stock series? It explains risk and volatility very well and might give you more confidence in your investments.

I haven't no. I will take a look. Thanks very much for the recommendation.

Linda_Norway

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I think there is a separate thread for people discovering MMM over 40. I am also 44 and paid off our mortgage 5,5 years after buying our first house in 2000. That was in fact a good investment as the interest was 7,5 - 8 percent. Now we live in our second house, an expensive, mortgage free clown house, bought just before discovering MMM. I regret having converted most of our savings into one asset, but done is done. We have started again putting whatever we have left in index funds and we look into downsizing in FIRE. I have made a very conservative guess of what we can sell the house for and with that FIRE is at least two years ahead. Probably a bit more.

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Thatís a very good point Linda. I havenít really considered that I could move to a lower cost area in the future therefore taking some cash out of my property that way. Thereís a lot more than just financial decisions here. It really is understanding our full lifestyle requirements in order to ensure the financial strategy is joined up and everythingís working well together.

Linda_Norway

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Thatís a very good point Linda. I havenít really considered that I could move to a lower cost area in the future therefore taking some cash out of my property that way. Thereís a lot more than just financial decisions here. It really is understanding our full lifestyle requirements in order to ensure the financial strategy is joined up and everythingís working well together.

I also have on my list to consider moving to a cheaper country. England and Germany are on my list. But emigrating once more when approaching 50 is quite challenging. Therefore only countries where we (somewhat) speak the language and not countries like Bulgaria. But this is only a small option, as the main plan is to move to somewhere cheaper within Norway.

never give up

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I know a couple of people were looking at this thread as their situation was similar. I just wanted to post an update as I received really helpful advice on here and on another thread and it seems rude not to communicate my conclusions. My thought process may be useful to others in the UK who are also completely new to all of this or alternatively someone may be able to tell me if I've misinterpreted anything and gone awry!

Thanks again to those that posted to help me. I started off a complete beginner and although I'm not much more than a beginner now I do feel I've moved from a state of confusion to being able to take some positive steps with future strategy.

Budget
Without any idea on budget/expenses/annual living amount its almost impossible to plan for anything. Even a couple of k difference in annual expenditure causes such wild differences in the FIRE target that its really important to have a strong grasp on costs. So I have spent most of my time in this area.

In this thread I quoted £22,000 as my target annual living expenses. I have been able to get this to £20,000. However I see some take the approach of trying to add 10-15 years worth of inflation onto this figure. Some don't. I am conscious that the state pension has some uncertainty around exactly what age it will pay out and the overall amount. Therefore I reached the following conclusions:

1. I won't rely on the state pension for providing any of my annual expenses, but acknowledge that I'm likely to qualify for something at some point.
2. I won't add inflation onto the £20,000 figure.
3. I hope to some extent these first two points cancel each other out. Where one giveth, one taketh away!
4. To play safe, give some contingency if inflation had a period where it was higher than normal, and to ensure I could always cut expenses if needed I will stick with the original £22,000 figure.

That gives me a FIRE target of £550,000.

Age Related Decisions
  • I've decided I don't want to work at all after 55 and will therefore look to take my company pension at this point. I can always be flexible with this and work PT if need be.
  • Between now (I'm 40) and 55 I will use a combination of full time work, part time work and ISA's to cover my expenses.
  • Ideally the full time part should be as short as possible.

Investment Decisions
  • I want my company pension to hit my FIRE target
  • I want to use ISA's to support part time work to give me my £22,000 annual expenses.
  • If that means my ISA's run out at 55 then that's fine although ideally not.
  • I will cut my emergency fund roughly in half to get my ISA's off and running.
  • From a monthly investment perspective I will change my company pension/ISA split from 50:50 to 66:34

To Do List
1. I will need to work full time for at least 4 years. I will have a major review of strategy Jan 2022 when I have much more certainty of what has happened in-between now and then and only 11 years left to cover expense wise (assuming pension is on track for 55). Hopefully part time work will be a positive step at this point.
2. I need to keep reading and learning about investing. I am currently reading some of the books on MMM's recommended list as well as the JL Collins series and of course these forums.
3. I need to plan whether I would want to work part time at my current employer or if I fancy something different, or a combination.
4. I must get some spreadsheets together to track my investments.
5. I need to understand what growth rate to use for compounding. So far I have been using 4.5% hoping this is a slightly pessimistic view (80:20 stock/bond AA).

That's it so far. Not a bad first week of learning from the forums!

shelivesthedream

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This is so great! Congratulations!

never give up

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Thanks sltd. I forgot to mention I have also had a major decluttering to help raise some funds and get the household in order. If anyone has any comments on the approach that would be much appreciated.