[UK] Fire in England or somewhere out there?

[Jacinle]

Questions:
1. Are we ready to FIRE?
2. What should we do to make it better?


Life situation

Husband - 44, British Citizen
Me - 43, HongKonger
Kid 1 - 10
Kid 2 - 7

We moved to London last year, after a bit of money relocation, here we are

Income

Husband - 28k after tax
Me - 60k after tax

Expenses
1. Rent pa - 26k
2. Living expense pa - 35k
3. Travel/home visit pa - 10k

Assets
1. house buying fund - 900k
2. Emergency Cash - 100k {typos...}
3. Pension Defined Contribution @ Hong Kong - accessible at 65 - 271k, no other pension pots
4. Investments in ETFs - 650k
5. Pending cash for investments - 350k (due to relocation move, so it is now in cash) {updated, mis-calculated in fxrates ....oops }
6. Univesity fund for 2 kids - 100k (in cash now, pending investment)

Total for investment for retirement = 1.27m (#3+#4+#5)

Using @Albatross formula
Yearly = 1.27/3% = 38k
Regular expense pot = 28k  (after 10k deducted from home visiting)

Monthly = 2333


Liabilities
None

Income post FIRE
None

[Jacinle]

Seeing no reply so wonder if there something I should add to discuss?

My main question is - Am I ready to FIRE?  What should I do next?

Thank you!

[SailingOnASmallSailboat]

If my math is generally right, you're looking at a spend of 70k a year - but with zero details provided on exactly what makes that up other than the rent. On an income of 88k. A 4% withdrawal rate would mean you need just shy of $2 million which I think you've got.

You're sitting on a whole lot of cash. No idea about UK and whether that is a good number health care wise (is that even a thing to worry about?) or school costs for the kids (ditto). Also no idea whether that house fund is realistic in London. Can you access the pension fund if you're not living in Hong Kong?

[Albatross]

OK it looks like your two main numbers are:

1. Expenses of $35k + $10k = $45k (I am excluding rent since you appear to have a house-buying fund).
2. Investment income: Item 4. and 5. of your Assets list amounting to $1.25M - although I think you could throw in half your emergency cash of $200k, to bring it up to $1.35M. I am excluding Item 6, since you don't want to assume that this University fund will be used for anything other than its stated purpose (if it generates more when invested then great but treat it as a bonus only).

So: Taking a more conservative 3% return after inflation, you are looking at $1.35M x 3% = $40.5k. As your required expenses are $45k, then you're shy of $4.5k. Instead you will need $1.5M to cover your expenses.

Of course you can tweak the investment return percentages to 3.5% or 4%, it's up to you. Perhaps only one of you needs to work, or you can both reduce working days.

[MarcherLady]

From very hazy memory I think 4.5% was suggested as the minimum SWR for the UK in a follow-up to the Trinity study.

[Jacinle]

OK it looks like your two main numbers are:

1. Expenses of $35k + $10k = $45k (I am excluding rent since you appear to have a house-buying fund).
2. Investment income: Item 4. and 5. of your Assets list amounting to $1.25M - although I think you could throw in half your emergency cash of $200k, to bring it up to $1.35M. I am excluding Item 6, since you don't want to assume that this University fund will be used for anything other than its stated purpose (if it generates more when invested then great but treat it as a bonus only).

So: Taking a more conservative 3% return after inflation, you are looking at $1.35M x 3% = $40.5k. As your required expenses are $45k, then you're shy of $4.5k. Instead you will need $1.5M to cover your expenses.

Of course you can tweak the investment return percentages to 3.5% or 4%, it's up to you. Perhaps only one of you needs to work, or you can both reduce working days.

| GrandCategory          | 2021_12 |
| ---------------------- | ------- |
| Auto                   |      68 |
| Charity                |      10 |
| Clothes & PersonalCare |      16 |
| Driving lessons        |     290 |
| Entertainment          |     102 |
| Food                   |   1,009 |
| Gadgets/Electronics    |       0 |
| Gifts                  |      81 |
| Rent                |   2,100 |
| Bills                      | 563 |
| Kids activities                  |     112 |
| Medical care           |       0 |
| Misc                   |      14 |
| Oneoff                 |       0 |
| Work                   |      19 |
| Z-Monthly Total        |   4,356 |

Without rent - 2256 for december, still trying to gather more datapoints
but expect when back to office , might bump to 3000
- work/commute/lunch - 20*10days = 200
- childcare - 25*2 kids *10 days = 500

[Playing with Fire UK]

Assuming that the majority of the cash gets invested, the stash seems Fire-able in the UK.

I'd be concerned about stopping work without a clear idea of your long term costs, including an idea or allowance for one-off expenses like gadget replacement, house maintenance and vehicle servicing/replacement. On the other hand, perhaps costs like driving lessons will be short term and childcare and work/lunch expenses would reduce and balance out occasional costs?

Would you be committed to London even if you weren't working? The house budget would go a lot further in other excellent places in the UK. It'll work in London if that's where you want to be long term.

Unless you are wanting to FIRE urgently, I'd get the housing finalised (either buying or finding a long term rental) as that could have a significant impact on bills (especially gas and electricity at the moment) and get some more months of spending data under your belt, then see about stopping work. While you are working in the UK, look into filling your UK pensions: they'll be a tax efficient way of funding the spending from ages 55/57 onwards.

Finally, are the investments tax-sheltered? If you are eligible to open ISAs you should do that this week and fill them up before the end of the tax year and then do the same again after 6th April.

[Jacinle]

Assuming that the majority of the cash gets invested, the stash seems Fire-able in the UK.

I'd be concerned about stopping work without a clear idea of your long term costs, including an idea or allowance for one-off expenses like gadget replacement, house maintenance and vehicle servicing/replacement. On the other hand, perhaps costs like driving lessons will be short term and childcare and work/lunch expenses would reduce and balance out occasional costs?

Would you be committed to London even if you weren't working? The house budget would go a lot further in other excellent places in the UK. It'll work in London if that's where you want to be long term.

Unless you are wanting to FIRE urgently, I'd get the housing finalised (either buying or finding a long term rental) as that could have a significant impact on bills (especially gas and electricity at the moment) and get some more months of spending data under your belt, then see about stopping work. While you are working in the UK, look into filling your UK pensions: they'll be a tax efficient way of funding the spending from ages 55/57 onwards.

Finally, are the investments tax-sheltered? If you are eligible to open ISAs you should do that this week and fill them up before the end of the tax year and then do the same again after 6th April.

Committed to London for at least another 12 years till kids leave for university
I have an ISA and also filled pension as much as I could

[Jacinle]

New aim - 1.4m

Variable Percentage Withdrawal Strategy - not sure how it work exactly
Duration - 50years
Lower - 40k
Higher - 45k

FI Calc - https://bit.ly/3SBwQXy

[FLBiker]

New aim - 1.4m

Variable Percentage Withdrawal Strategy - not sure how it work exactly
Duration - 50years
Lower - 40k
Higher - 45k

FI Calc - https://bit.ly/3SBwQXy

Looks good -- FYI on your FI Calc simulation, you could include your future pension.  That might enable a bit of a higher safe spend, if you're interested.

[Jacinle]

Looks good -- FYI on your FI Calc simulation, you could include your future pension.  That might enable a bit of a higher safe spend, if you're interested.

I don't think I will have a government pension as I moved countries and never plan to go back to the old one.
I have a company which is Defined contributions, which I have put in as the same pot 

I also take a look at the https://engaging-data.com/will-money-last-retire-early/ I want to make sure I will be alright

[Jacinle]

After a few months of moving everything onto Monzo, we have our expenses tracked. 
It is more or less the same
All in pounds, is it too much for a family of 4, with 2 primary school kids
I am finding hard to cut, it seems we are very frugal, buying from Aldi and the like.
Vacation budget is huge, but I am thinking they will only be travelling with us for another 10 years or so, and senior family back home would love to see them.

Monthly Bare Minimum (for a comfortable with social life)   
Groceries   725 (with home country food, more $$)
Bills   500
Eating out   290
Entertainment (gyms, tennis club, museums etc)   164
Transport   90.7
Charity   64
Misc   12
Shopping   6.25
house and car insurance   43
Pocket money Adults   500 (for 2 - work related expense, transport, work lunch, work clothes)
Pocket money Kids   400  (for 2 - school related expenses, lunch, extra-curriculars)
Total   2795
   
Vacation Reserves   
2 road trips   2k
1 home trip (2-3 weeks)   5k [with pounds falling, getting more expensive]
2 friends trip (each for hushband and me)   3k
Total   10k
   
Mum's monthly allowance   500

Annual
Bare : 33,543
Vacation: 10,000
Mum: 6,000

Total: 49,543
Total with 10% buffer : 55k

Need a larger pot or scale down
1.6m FICalc https://bit.ly/3rdPnNc

[Jacinle]

What your retirement could look like: retirement living standards in the UK
https://monevator.com/what-retirement-looks-like/

60k pa for a couple with mortgage paid off ??? hmmmm, I need to learn to spend that amount , or did I miss the big purchase ( e.g. 2nd hand 4-year old car every 7 years )

A quick play around at FI Calc, that's roughly 2m 

What's your enough number?

https://ficalc.app?additionalIncome=%5B%5D&additionalWithdrawals=%5B%5D&bondsFees=0.05&bondsFinalRatio=15&bondsInitialRatio=25&cashFees=0&cashFinalRatio=5&cashGrowth=1&cashInitialRatio=5&changeAllocationsOverTime=false&endowmentPercentOfPortfolio=5&endowmentPreviousWithdrawalRatio=70&equitiesFees=0.04&equitiesFinalRatio=80&equitiesInitialRatio=70&initialPortfolioValue=2000000&maxWithdrawalLimit=70000&maxWithdrawalLimitEnabled=true&minWithdrawalLimit=60000&minWithdrawalLimitEnabled=true&numberOfYears=55&portfolioRebalanceEquation=linear&rebalance=true&rebalanceFrequency=1&retirementStartingAge=60&withdrawalStrategyName=endowmentStrategy

[the lorax]

Are you actively looking to buy a house very soon? Are you planning to buy it in cash if so? Remember to factor in home maintenance and insurance for you own home. If it is for only ten years as a family home would you think about buying a place that would make a good rental so you have the option to rent it out and move somewhere cheaper?
I haven't lived in the UK for years so can't say if your expenses seem high sorry. Looking at your numbers it looks like you could have one or both of you be part-time

[PhilB]

I would echo the lorax on the costs of home ownership definitely being something you need to factor in to the budget.  I would also strongly recommend budgeting to pay voluntary National Insurance contributions of around £900 a year each until state pension age.  That will get you to about two thirds of the maximum pension and be one of the best investments you can make.

As to the overall question of whether you can FIRE, it looks tight to me if you are staying in London, easy if you move out.  By the time you factor in some home maintenance costs you are going to be looking at a 5% + withdrawal rate on current stash.  Historically that would probably be okay, but too scary for me, unless you were willing to cut the budget back hard if needed.