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Rage quit work?
Crunch:
Case Study
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45 years old, male, living in a Midlands town in the UK. Woke up to frugal living and investing a few years ago and decided to go via a private pension backed onto a low-cost index-linked fund. My current works pension runs alongside, as the employer match into that is too good to give up.
Assets:
-Currently approx £150K saved in the two separate pension funds, with an overall split into 80/20 Equities/Bonds.
-Got a job with good pay, and currently managing to save 36K per year (including employer contribution and AVC) into pensions - 3K per month, split into the two funds.
-Got an emergency cash fund of about 5K
-Got a second job in the Army Reserves - this currently brings in about £4K extra per year after tax, and accrues a very small army pension too. This is a lifestyle activity to me, I want to do the most I can with this.
Liabilities:
-We owe approx £30K Mortgage on our house, house value about £180 - 200K
-We have a young child
-Spouse has some debts, and is unable to pay off her share of the mortgage any quicker than scheduled. Spouse also has a good job and own pension arrangement
-No big inheritances expected
-Approaching burn-out at work
What the plan currently is:
-No plans to move or downsize in the next 10 years at least - kid will go to the local school etc
-Work until 50, and keep contributing to pension stash. Grow this to £300K+ in 5 years by contributions alone, more by compounding if the market stays hot, pay off my share of the mortgage as I go along and own the house free and clear.
-After 50, keep on in the Reserves and max out attended days - like 100x per year if possible, to make about 12-14K. With no other income and a paid-off house, this would be enough to live on and pay very little tax. Do this until 55 or so.
-Start drawdown on pension at age 55 - I am just old enough to be able to do that, at least under current rules. With the 4% rule and a £300K+ pot, this would give at least £12K per year income without reducing the capital. With a paid-off house, and no substantial liabilities, 12K would be enough to break even, just. 14K would be better, 16K would be just fine.
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After some unwelcome changes at work that are cramping my style, I fancy quitting work earlier - like asap. I am so stressed I trashed my home office in a rage last night completely, desk, chair, cupboards, the lot. Today I am back at work with my happy face on, fearing I might go postal. I don't want to live like this.
What the plan might soon become:
-Work for one more year, or 6 months, or what I can, gritting my teeth, and pay off as much as possible of the Mortgage instead of adding into Pension
-After house is paid off, leave work and get busy in the reserves to start making that 12-14K. If this is not feasible, return to the workforce. I have technical skills and certifications that should enable me to get another IT job quickly, even in my 40's
-Leave the Pension stash to grow on it's own - will the rule of 72 take it to 300K in 10 years?
-Retire at 55 as originally planned, but poorer - the pension is unlikely to be any more than 300K, and possibly less
Option:
This plan could just turn into a sabbatical instead - not have a job for a year, work instead on more certifications, work on the house, do what Reserves jobs I can get, then go back into the workforce in some less tiresome capacity. And not have a heart attack.
Question:
Does this look feasible to UK people on the forum? Or is it recklessly dangerous and deluded?
I am making good money at the moment, but it comes at an increasing cost of stress that at times is too much to bear. If I leave this job, I can get another one if required to, but I will probably be less well off and be less able to pad the pension stash.
Putting money into the pension is a better investment than paying off the Mortgage, but it also means I need to be able to keep earning money for longer to cover my biggest outgoing - housing. With a paid-off house we would have the outgoings we would expect to have in retirement.
Am I dooming myself to a lifetime poverty on 12K per year, or even less? We lead pretty humble lives, and could make it with spousal income bringing the household income to more like 24K after she retires, and a bit more in the interim while she continues to work.
I calculated 12K as my 'livable floor' for one person when I did my budget analysis - the 4% rule means 300K capital would be needed for this. I'd expect to run a car and feed myself with this, with very limited travel once annually. Supporting the kid might be tough on that kind of money.
An attitude adjustment to work would be the best investment here, but that is not entirely up to me as I am not in control of the issues causing the stress - schizophrenic business requirements of me.
I may even lose my job, in which case I will be in the worst position of high housing outgoings and low income from Reserves, while looking for another job.
Any input people can share, I would love to hear.
ysette9:
Is there a reason why you aren’t looking at your entire household financial picture together? It is hard to give advice with half of the picture missing.
one piece at a time:
--- Quote from: Crunch on April 19, 2018, 02:56:33 PM ---Case Study
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45 years old, male, living in a Midlands town in the UK
After some unwelcome changes at work that are cramping my style, I fancy quitting work earlier - like asap. I am so stressed I trashed my home office in a rage last night completely, desk, chair, cupboards, the lot. Today I am back at work with my happy face on, fearing I might go postal. I don't want to live like this.
Any input people can share, I would love to hear.
--- End quote ---
Take a week off. Grab a rucksack, pick a direction and walk for 5 days, work out how to get back, then review. Nothing is urgent except your current emotion and solvitur ambulando.
renata ricotta:
Whoa. If you are at "tear apart an office" level of mental health distress, I think you need to quit ASAP. That level of burnout is terrible for you and for your family. It sounds to me like you have at least enough of a financial cushion and good enough job prospects that you should give your two weeks' notice like, tomorrow. Take a month or six weeks to decompress, sleep soundly, have a therapy appointment or two, spend time with your kid.
Only at the end of the 4-6 weeks, sit down to plan your next move. Maybe you have been refreshed and are motivated to get another job in your industry, and then you can proceed with the "work until 50" plan. Or maybe you'll decide you're really enjoying your time off, and want to make the sabbatical a year. Either way, it doesn't sound to me like you are in a good headspace to make big decisions right now, and you can afford to give yourself a little breathing room on this decision.
Most work is more or less a drag, and most of us would rather be doing other things, but it is not normal or expected to have this level of stress and burnout, and you should get away from it if you possibly can regardless of when you become financially independent.
Luckyvik:
I second Bridget’s advice.
Alternatively take a couple of days off work and look for another job ASAP. You may need to work but you don’t need work in this job.
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