Poll

What's your UK FIRE amount?

<£500k
44 (21.8%)
£500k-£750k
44 (21.8%)
£750k-£1m
51 (25.2%)
£1m-1.25m
20 (9.9%)
£1.25m-£1.5m
8 (4%)
£1.5m-£1.75m
10 (5%)
£1.75m-£2m
3 (1.5%)
£2m-2.5m
12 (5.9%)
£2.5m-£3.0m
2 (1%)
£3.0m-£4.0m
5 (2.5%)
£4.0m-£5.0m
1 (0.5%)
£5m+
2 (1%)

Total Members Voted: 201

Author Topic: What's your UK fire amount?  (Read 81547 times)

PhilB

  • Walrus Stache
  • *******
  • Posts: 5925
  • Age: 58
Re: What's your UK fire amount?
« Reply #100 on: August 08, 2019, 05:14:29 AM »
Ö Right now the tension for me is between spending and saving, so my budget is set such that it's generally right on the nose and the surplus gets whisked away to savings. If I had a big margin it would feel like a wasted opportunity to save. Ö
It's so important to work out what works best for your own particular brain.  I can entirely see the logic of your view regarding having a bigger budget.  For me, however, having a bigger budget is in itself an opportunity to save money against that budget and that's what I've found presses my buttons best.

poppydog

  • Stubble
  • **
  • Posts: 156
  • Location: Scotland, UK
Re: What's your UK fire amount?
« Reply #101 on: August 18, 2019, 03:22:03 AM »
We're retiring next summer, aged 63/60

Total net worth is about £1.64 million, made up of:

a. Defined Benefit pension, when valued at x20 the annual income (and allowing for early take on) worth £600,000
b. House, mortgage paid, worth about £370,000
c. Other DC pensions, SIPPs, ISAs worth around £670,000 - this will be invested in income producing trusts, funds etc., after keeping aside about £55,000 which I'll use to "pay" us the equivalent we'll get from our state pensions until they come on stream.

Interesting to see this thread again, and to review my own post from just over two years ago.  Mrs PD and I retired at the end of April last year, and we're doing really, really well.  Our net worth has improved also.  We are significantly better off than we ever imagined we would be when we first started planning our retirement about six years ago.

We have guaranteed income from our defined benefits pensions, and the state pension of around £44,000 p.a. (I will receive the state pension next year, and Mrs PD in three years - in the meantime we have a ring-fenced cash sum which is "paying" us the post-tax equivalent until they come on stream.)

We have around £750,000 in SIPPs and ISAs which contain a diversified portfolio of income producing Investment Trusts, which include trusts focussed on equities, fixed interest, property and infrastructure.  The dividends from these amounted to £38,000 in the last 12 months.

So our combined total income is just over £80K and we are mortgage-free.  Now, readers here will know that all pension income from whatever source is taxable, but there is no national insurance to pay.  With the personal allowances of £12,500 each, and the dividends from the investments in our ISAs (about £10K) being tax free, AND carefully balancing our assets over the last few years so that neither of us gets into a higher tax bracket, the income tax isn't too bad.  In any case, we feel privileged to be so comfortably off and don't begrudge the taxes at all.

I have to admit that we have behaved very un-mustachian over the last year.  Lots of holidays, spoiling the grandkids etc.  We are calming down a little now!





never give up

  • Walrus Stache
  • *******
  • Posts: 7971
  • Location: UK
  • Kindness is free to give and priceless to receive
Re: What's your UK fire amount?
« Reply #102 on: August 18, 2019, 09:37:15 AM »
Glad to hear from you poppydog. You sound so comfortable Iím sure you donít even bother tracking expenses now. The markets have had a couple of dips since you retired. I hope none of these have caused you any concern. I hope you continue to adjust well to the retired life.

poppydog

  • Stubble
  • **
  • Posts: 156
  • Location: Scotland, UK
Re: What's your UK fire amount?
« Reply #103 on: August 18, 2019, 12:36:46 PM »
Glad to hear from you poppydog. You sound so comfortable Iím sure you donít even bother tracking expenses now. The markets have had a couple of dips since you retired. I hope none of these have caused you any concern. I hope you continue to adjust well to the retired life.

Thanks NGU. All is good and retirement is wonderful.  The market dips havenít concerned me one jot - Iím just taking the dividends and not touching the capital.  We could do a considerable amount of belt tightening but itís not at all necessary at the moment.   Downsizing the house is also possible and we are considering that move at the moment.

Keep up the blog!  I donít comment here much but I do follow.

PD

Zola.

  • Bristles
  • ***
  • Posts: 421
  • Location: UK
  • Let's do this.
Re: What's your UK fire amount?
« Reply #104 on: August 20, 2019, 02:28:50 PM »
I worked out a basic figure of £625,000, as of now we have £65k in investments.... 10% of the way there :)

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #105 on: August 21, 2019, 02:53:41 AM »
There are obviously different assumptions under everyone's magic FI number. Some people might consider x20 expenses in a pension, others might consider it x30 in an ISA. Best to go on estimated annual expenditure...

So I'm pretty sure that I could get by happily on £20k/pa after tax (not including OH, we keep finances separate). With a paid off home and a simple low cost lifestyle, that sort of figure just below the median wage would represent financial freedom to me. That said, it's difficult to know for sure. Just a few things to consider are:

- If I RE then I will have at least 50% more "free time" on my hands. It's difficult not to fill that gap with at least some additional consumption, something which being in a 9-5 job currently curtails

- I work a 2nd job which actually love and have no intention of giving up as long as I can earn good money from it. RE for me would only be from the day job. If I RE'ed I would 100% for certain just shift a lot more of my time into doing my other job

- Currently supporting a 1yo through Nursery. I'm also fully committed to fully funding her JISA & JSIPP and if that means a longer time to reach my own FI goals then so be it.

Given all that I would personally consider myself "FI" with as little as x18-20 my annual expenses in tax-deferred accounts. It's not that I will leave my job and never work another day.. in fact that couldn't be further from what I would most likely do!

« Last Edit: August 21, 2019, 03:04:21 AM by vand »

joseph_uk_6

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: What's your UK fire amount?
« Reply #106 on: August 30, 2019, 02:38:12 PM »
There are obviously different assumptions under everyone's magic FI number. Some people might consider x20 expenses in a pension, others might consider it x30 in an ISA. Best to go on estimated annual expenditure...

Hiya,

Can I just clarify why you would need more in a ISA vs pension? I thought you would need less as the money is already tax free when removed. So net income from ISA would be lower than SIPP?

Thanks,
Joe

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2331
  • Location: England
Re: What's your UK fire amount?
« Reply #107 on: August 31, 2019, 12:48:27 AM »
Can I just clarify why you would need more in a ISA vs pension? I thought you would need less as the money is already tax free when removed. So net income from ISA would be lower than SIPP?

The balance between ISA and pension depends upon what age you're planning to retire at. You can't touch your pension until 55/57/possibly some later age in future, depending on when you were born. Simplistically, if you're planning to retire at say 45 and can retire at 55, you need at least 10 years worth of money in your ISA (or normal investment accounts outside of a tax shelter).

You might say, well, I'll just use ISAs only and forget about pensions, but pensions are a great deal for several reasons and you can build up money much more quickly in a pension than outside.

  • You get additional money from your employer. When I worked, if I put in 4%, the employer put in 7%. So each £4 I put in instantly became £11.
  • The money comes from your tax-free income. This is especially important if you're a higher-rate (40%) taxpayer, or caught in the 60% bracket between £100k and £121k. That £4 you put into your pension only cost you £2.40 in take-home pay.
  • If you are in a salary-sacrifice scheme, you don't pay national insurance on pension contributions and your employer might add some or all of their national insurance payments into your pension too. That's an extra few percent potentially.
  • There are still some public-sector pensions which operate on a defined-benefit basis, giving you a cast-iron guarantee that is pretty difficult to match for a private citizen.

So anyone seeking to RE in the UK needs to think about using both ISAs and pensions and to think about the balance between the two. At a minimum, everyone who is in employment should contribute enough to get the employer match.

never give up

  • Walrus Stache
  • *******
  • Posts: 7971
  • Location: UK
  • Kindness is free to give and priceless to receive
Re: What's your UK fire amount?
« Reply #108 on: August 31, 2019, 01:04:14 AM »
Yes and I assume Vand was making the point that an ISA implies the person is retiring a lot earlier than someone taking the pension. So 30X expenses in an ISA may be more prudent for someone retiring at 43 while 20X expenses in a pension may be fine for someone working until 63 or whatever. So it wasn't the investment vehicle that meant more was needed in an ISA, it's the retirement age that is important here.

As cerat0n1a details, the vast majority of us would use both ISA's and a pension of one type or another and getting the balance between them isn't easy, especially with government tinkering around pensions.


vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #109 on: August 31, 2019, 02:26:13 AM »
 Yes, my point was simply that there are a lot of assumptions one has to make to arrive at a certain desired pot size, and £x in one wrapper isn't the same as £x in another. Correctly, an ISA should sustain a higher level of expenditure for the same amount given the tax has already been paid on the way in, and there will also be quite a high range of withdrawal rates that different people will aim to work with. so all in all, comparing pot sizes is comparing apples to pears; a quoted pot size could be interpreted to provide quite a wide range of retirement income amounts.

joseph_uk_6

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: What's your UK fire amount?
« Reply #110 on: August 31, 2019, 02:32:22 AM »
Gotcha, thanks!

londonbanker

  • Bristles
  • ***
  • Posts: 256
  • Age: 44
  • Location: London, UK
Re: What's your UK fire amount?
« Reply #111 on: September 03, 2019, 02:42:42 PM »
Not to forget about pension is the inheritance tax free benefits which also makes it a strategic part of estate transmission

djr8369

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: What's your UK fire amount?
« Reply #112 on: September 11, 2019, 10:53:57 AM »
Currently I estimate I'd need around 500k across ISA and pensions, dependent on holidays and if the mortgage is paid off. That isn't accounting for my OH but is including current mortgage payments.

Tricky as while the mortgage rate is low it doesn't seem worth paying off but would obviously reduce living expenses. Also, I'm not accounting for the state pension (will I get it and how many qualifying years will I have?) and I never know whether I should include a military pensions I have which is worth approx 100k as this is annuitised but not paid fully until I am 65.

On that note, there doesn't seem to be many UK case studies on the forum?

skip207

  • Bristles
  • ***
  • Posts: 422
  • Location: UK
Re: What's your UK fire amount?
« Reply #113 on: September 15, 2019, 06:12:15 AM »
NW 850 low end 1M top end.

Liquid portion (i.e outside pension / property) £200k ish.

A little update as 2 years has passed aiming for 300k now not 200k (curretly at about £100k). 
TNW £850k is starting to look about right.  TNW currently c.£620k.

Hopefully about 2-3 years to go which is crazy as it seems like only a few months ago I made the above post so in the same time again I should be closing in on 100%.

Vashy

  • Bristles
  • ***
  • Posts: 451
Re: What's your UK fire amount?
« Reply #114 on: November 06, 2019, 03:53:30 AM »
Iím aiming for about £850k for myself (this includes 250k equity in the house, not including further appreciation). Current NW is £374k, so I have a ways to go, but my FIRE date is 2025. Iím aiming to increase NW by 80-100k per year by maintaining an 80% savings rate and staying in my super stressful job - Iím unlikely to find a job with less stress and same money so Iíll have to tough it out for a while longer.

frugledoc

  • Pencil Stache
  • ****
  • Posts: 743
Re: What's your UK fire amount?
« Reply #115 on: November 06, 2019, 06:02:04 AM »
Iím aiming for about £850k for myself (this includes 250k equity in the house, not including further appreciation). Current NW is £374k, so I have a ways to go, but my FIRE date is 2025. Iím aiming to increase NW by 80-100k per year by maintaining an 80% savings rate and staying in my super stressful job - Iím unlikely to find a job with less stress and same money so Iíll have to tough it out for a while longer.

Just be careful and look after yourself.  No point in shortening your life because of stress.  Stress and anxiety are bad for you.

Vashy

  • Bristles
  • ***
  • Posts: 451
Re: What's your UK fire amount?
« Reply #116 on: November 06, 2019, 07:58:08 AM »
Just be careful and look after yourself.  No point in shortening your life because of stress.  Stress and anxiety are bad for you.

Very bad. The job got me to the point where I was diagnosed as being highly anxious and mildly depressed (though how much of that is Brexit is very hard to say). Ultimately, the choice is between touching it out here at a financial services salary for another 5-6 years and retire in comfort to only do side hustle and self-employment work or let the bastards break me and go to a place that pays 20-50% less and likely pays no bonus and no guarantee the stress would be easier to bear. I watch my sleep and nutrition and meditate and am moving towards ďNot give a fuck-nessĒ from being an overachiever and perfectionist, and that helps. Doctor appraising me said itís just ďtoxic City cultureĒ, so my firm isnít the only one by far, and my options are to leave or to cope, because the firm wonít
change. I do like the actual job Iím doing, though, but my skillset is now so specialised that I wonít be making the same elsewhere. At the very least, so need two more years, but the choice is to do this job for 5-7 more years or a different job for 10-14...

Jacinle

  • Stubble
  • **
  • Posts: 147
Re: What's your UK fire amount?
« Reply #117 on: December 19, 2019, 07:18:07 PM »
Just be careful and look after yourself.  No point in shortening your life because of stress.  Stress and anxiety are bad for you.

Very bad. The job got me to the point where I was diagnosed as being highly anxious and mildly depressed (though how much of that is Brexit is very hard to say). Ultimately, the choice is between touching it out here at a financial services salary for another 5-6 years and retire in comfort to only do side hustle and self-employment work or let the bastards break me and go to a place that pays 20-50% less and likely pays no bonus and no guarantee the stress would be easier to bear. I watch my sleep and nutrition and meditate and am moving towards ďNot give a fuck-nessĒ from being an overachiever and perfectionist, and that helps. Doctor appraising me said itís just ďtoxic City cultureĒ, so my firm isnít the only one by far, and my options are to leave or to cope, because the firm wonít
change. I do like the actual job Iím doing, though, but my skillset is now so specialised that I wonít be making the same elsewhere. At the very least, so need two more years, but the choice is to do this job for 5-7 more years or a different job for 10-14...

I second.  Your health should come first
But yes, we don't know if another job will be less stress, the boss is also a very important factor

Jacinle

  • Stubble
  • **
  • Posts: 147
Re: What's your UK fire amount?
« Reply #118 on: December 19, 2019, 07:29:25 PM »
My Fire target

1. Paid off mortgage - nearly there
2. Separate Pot - University fund for 2 kids - 100k
3. 40k p.a. pre-tax retirement income , if being tax at 10% -> 36k p.a.
- around 2500 p.m. (for a family of 4 )
- for parents 500  p.m.

FIRE amount = 100k + 40k * 30 = 1.3m

This seems a bit low FIRE figure compared to others

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2331
  • Location: England
Re: What's your UK fire amount?
« Reply #119 on: December 20, 2019, 02:27:17 AM »
My Fire target

1. Paid off mortgage - nearly there
2. Separate Pot - University fund for 2 kids - 100k
3. 40k p.a. pre-tax retirement income , if being tax at 10% -> 36k p.a.
- around 2500 p.m. (for a family of 4 )
- for parents 500  p.m.

FIRE amount = 100k + 40k * 30 = 1.3m

This seems a bit low FIRE figure compared to others

Doesn't seem particularly low. Given item #2, your family of 4 will become a family of 2 at some point, and reduce expenses? Also, you're assuming a withdrawal rate of 3.33%?

Manchester

  • Bristles
  • ***
  • Posts: 405
  • Location: UK
Re: What's your UK fire amount?
« Reply #120 on: January 02, 2020, 07:53:40 AM »
My Fire target

1. Paid off mortgage - nearly there
2. Separate Pot - University fund for 2 kids - 100k
3. 40k p.a. pre-tax retirement income , if being tax at 10% -> 36k p.a.
- around 2500 p.m. (for a family of 4 )
- for parents 500  p.m.

FIRE amount = 100k + 40k * 30 = 1.3m

This seems a bit low FIRE figure compared to others

If anything I'd say your figures are very high, unless you're aiming for a luxurious FIRE or ultra-security?  My absolute, rediculous, fattest FIRE imaginable is around £1m in all assets including my home.  There are people who've FIRE'd comfortably on less than a third of what you're suggesting. 

Good luck to you though.  If you end up with 1.3m in the bank you'll be very comfortable!

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2331
  • Location: England
Re: What's your UK fire amount?
« Reply #121 on: January 02, 2020, 01:14:19 PM »
There are people who've FIRE'd comfortably on less than a third of what you're suggesting. 

Probably not a family of 4, with some additional money being put aside for parents, though.

londonstache

  • Stubble
  • **
  • Posts: 115
Re: What's your UK fire amount?
« Reply #122 on: January 10, 2020, 04:14:06 AM »
I think that seems like a sensible FIRE amount to me, given the family of 4 and associated living costs with that, as well as including some support for parents.

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #123 on: January 24, 2020, 04:04:07 AM »

So I'm pretty sure that I could get by happily on £20k/pa after tax (not including OH, we keep finances separate). With a paid off home and a simple low cost lifestyle, that sort of figure just below the median wage would represent financial freedom to me. That said, it's difficult to know for sure. Just a few things to consider are:


I've been tracking my expenditure much more closely in the last year or so.. my 20k/pa was always a high-side estimate. My actualy spending is probably 25-35% below that figure.

Given that, I would draw my lean-FIRE line at the personal tax threshold, currently £12.5k. This of course works beautifully; pocketing the full tax savings gains on the pension. x25 pot is £312.5k.

Normal FIRE would probably be £15k/year. x28 pot for £420k.

FatFIRE for me would be 20k/year with a x33 pot, so £660k.


313k - 660k.. that's quite a wide spread. I definitely wouldn't feel ready to pull the plug on work at 313k, but would probably do before 660k. First, I need to get to 313k and then see how I feel. Hopefully I can hit that in the next year or so.


highlandterrier

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: What's your UK fire amount?
« Reply #124 on: January 24, 2020, 04:10:00 AM »

So I'm pretty sure that I could get by happily on £20k/pa after tax (not including OH, we keep finances separate). With a paid off home and a simple low cost lifestyle, that sort of figure just below the median wage would represent financial freedom to me. That said, it's difficult to know for sure. Just a few things to consider are:


I've been tracking my expenditure much more closely in the last year or so.. my 20k/pa was always a high-side estimate. My actualy spending is probably 25-35% below that figure.

Given that, I would draw my lean-FIRE line at the personal tax threshold, currently £12.5k. This of course works beautifully; pocketing the full tax savings gains on the pension. x25 pot is £312.5k.

Normal FIRE would probably be £15k/year. x28 pot for £420k.

FatFIRE for me would be 20k/year with a x33 pot, so £660k.


313k - 660k.. that's quite a wide spread. I definitely wouldn't feel ready to pull the plug on work at 313k, but would probably do before 660k. First, I need to get to 313k and then see how I feel. Hopefully I can hit that in the next year or so.
Just a thought, why are your multipliers different for fat/normal/lean fire? If anything I would have the 33x for the lean fire as you have less margin for error with a smaller planned income.

Sent from my moto e5 using Tapatalk


never give up

  • Walrus Stache
  • *******
  • Posts: 7971
  • Location: UK
  • Kindness is free to give and priceless to receive
Re: What's your UK fire amount?
« Reply #125 on: January 24, 2020, 04:33:03 AM »
Your spending thresholds are very similar to mine vand although Iím using x30 for expenses.

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #126 on: January 24, 2020, 09:35:07 AM »

So I'm pretty sure that I could get by happily on £20k/pa after tax (not including OH, we keep finances separate). With a paid off home and a simple low cost lifestyle, that sort of figure just below the median wage would represent financial freedom to me. That said, it's difficult to know for sure. Just a few things to consider are:


I've been tracking my expenditure much more closely in the last year or so.. my 20k/pa was always a high-side estimate. My actualy spending is probably 25-35% below that figure.

Given that, I would draw my lean-FIRE line at the personal tax threshold, currently £12.5k. This of course works beautifully; pocketing the full tax savings gains on the pension. x25 pot is £312.5k.

Normal FIRE would probably be £15k/year. x28 pot for £420k.

FatFIRE for me would be 20k/year with a x33 pot, so £660k.


313k - 660k.. that's quite a wide spread. I definitely wouldn't feel ready to pull the plug on work at 313k, but would probably do before 660k. First, I need to get to 313k and then see how I feel. Hopefully I can hit that in the next year or so.
Just a thought, why are your multipliers different for fat/normal/lean fire? If anything I would have the 33x for the lean fire as you have less margin for error with a smaller planned income.



there is an argument for having a bigger multiplier for LeanFIRE as you describe, but in my view the more your spending requirements the more liable you are to be hit with taxes upon withdrawal, so I scale the pot up to compensate for this.
« Last Edit: January 24, 2020, 09:41:14 AM by vand »

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #127 on: January 24, 2020, 09:59:31 AM »
Your spending thresholds are very similar to mine vand although Iím using x30 for expenses.

Yes, once the mortgage is paid off and all you are left with are ongoing day to day costs then its perfectly possible to be comfortable on a relatively small budget.

I'm cheating a bit in my calculations because I'm currently dishing out an ungodly amount in Nursery fees for our 2yo (bigger than my entire regular FIRE budget!), but I know we only have another 2.5 years of that to go.

highlandterrier

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: What's your UK fire amount?
« Reply #128 on: January 24, 2020, 10:22:23 AM »

So I'm pretty sure that I could get by happily on £20k/pa after tax (not including OH, we keep finances separate). With a paid off home and a simple low cost lifestyle, that sort of figure just below the median wage would represent financial freedom to me. That said, it's difficult to know for sure. Just a few things to consider are:


I've been tracking my expenditure much more closely in the last year or so.. my 20k/pa was always a high-side estimate. My actualy spending is probably 25-35% below that figure.

Given that, I would draw my lean-FIRE line at the personal tax threshold, currently £12.5k. This of course works beautifully; pocketing the full tax savings gains on the pension. x25 pot is £312.5k.

Normal FIRE would probably be £15k/year. x28 pot for £420k.

FatFIRE for me would be 20k/year with a x33 pot, so £660k.


313k - 660k.. that's quite a wide spread. I definitely wouldn't feel ready to pull the plug on work at 313k, but would probably do before 660k. First, I need to get to 313k and then see how I feel. Hopefully I can hit that in the next year or so.
Just a thought, why are your multipliers different for fat/normal/lean fire? If anything I would have the 33x for the lean fire as you have less margin for error with a smaller planned income.



there is an argument for having a bigger multiplier for LeanFIRE as you describe, but in my view the more your spending requirements the more liable you are to be hit with taxes upon withdrawal, so I scale the pot up to compensate for this.
Interesting way of looking upon it, I reckon you are leaving a very healthy margin for taxes, under current rules you can get 16.6K per year tax free including the tax free amount which on 20K income means you pay less than 1K tax. 1K is 5% so the 25x would be 26.25x. Rules can change though :)

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #129 on: January 25, 2020, 03:05:48 AM »
good point highlandterrier, I did not figure about the 25% tax-free amount.

I still like the idea of having a higher multiplier for higher "levels" of FI though.

To me, LeanFIRE vs FatFIRE is not so much about how much budget you leave yourself to live, its more about having a higher level of wealth whatever budget you envisage. FatFire for me represents a move beyond just financial "independence" toward financial "abundance". Spending vs stash size are inseparately joined at the hip... just a different way of expressing the same thing.

helloyou

  • Bristles
  • ***
  • Posts: 333
Re: What's your UK fire amount?
« Reply #130 on: July 23, 2020, 06:44:06 AM »
The UK FIRE amount is much lower than the general survey for FIRE amount. I suppose it's because in the UK we have way chance to get really good salary unlike in the US!

I mean here the top earner are around £150k probably. But in the US they can easily be $500k or more

Manchester

  • Bristles
  • ***
  • Posts: 405
  • Location: UK
Re: What's your UK fire amount?
« Reply #131 on: July 23, 2020, 07:54:23 AM »
The UK FIRE amount is much lower than the general survey for FIRE amount. I suppose it's because in the UK we have way chance to get really good salary unlike in the US!

I mean here the top earner are around £150k probably. But in the US they can easily be $500k or more

UK FIRE is so much lower (and more achievable) because of the NHS.  We don't have to worry too much about health care unlike Americans, which probably increases their yearly spend by tens of thousands of dollars on average.

I think this forum gives a bit of a warped view on how much the average American earns.  There will be lots of STEM employed Americans in the Bay Area who earn ridiculous money, but the average person across the states has an income of roughly £50k pa.   

I'd also argue there are loads of people earning more than £150k here.  In my extended family alone I can think of at least 4 people who earn more than that (with the top earner around £250k).  That's based in Manchester where wages are high, but nothing like London.  Where we have it worse than Americans is in tax.  They barely pay anything compared to higher earners here.

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2331
  • Location: England
Re: What's your UK fire amount?
« Reply #132 on: July 23, 2020, 10:52:36 AM »
Property taxes can be pretty significant in the US. I know of people who pay around 2% of the value of the property (i.e. can be more than $10k) per year on what is their equivalent of council tax. They also potentially pay capital gains tax on selling their own home, which doesn't happen in the UK. Also, there is a very real threat of being sued by someone which is not generally much of a consideration in the UK. OTOH, property prices in most of the US look pretty cheap compared to the UK.

I think the biggest difference is probably societal expectations. My former colleagues doing similar jobs to me in Texas typically had huge houses, boats, multiple trucks, a car for every household member and all manner of expensive unused toys. Their salaries would have been 2-3x mine, in a lower cost of living location, so I really think it's much, much easier to RE in the US, if you can resist the pressure to spend like everyone else.

The ONS publishes data for household incomes in the UK. The median household income (after income tax, NI, council tax taken off) is just short of £30k. The government says that there are 364 000 people who pay the 45% tax rate that kicks in at £150k income, and less than 1% of households have a post-tax income above £80k.

PhilB

  • Walrus Stache
  • *******
  • Posts: 5925
  • Age: 58
Re: What's your UK fire amount?
« Reply #133 on: July 23, 2020, 01:58:35 PM »
On the other hand the US minimum wage is very similar to that in the UK - and lower in some states.  The people at the top of the pile probably find it easier to FIRE in the US than the UK but I doubt that those towards the lower end of the income scale do.

helloyou

  • Bristles
  • ***
  • Posts: 333
Re: What's your UK fire amount?
« Reply #134 on: July 23, 2020, 02:04:17 PM »
Yes I think the US is a very unfair country which favour the rich.

But in the UK we have the median household income at £30k VS £50k for the US. So they globally earn more than the UK.

Also, as income gets higher, it's really not as advantageous. I have a friend at £150k/year and the take home is barely £7K/month after tax. So he lives decently but he still need to look after his budget and make wise spending choice!

So it looks much easier to FIRE in the US if you belong to the high earner!

helloyou

  • Bristles
  • ***
  • Posts: 333
Re: What's your UK fire amount?
« Reply #135 on: July 23, 2020, 02:11:40 PM »
When I see people goal toward $2M or $4M I know it's not with a normal wage one's person can reach it.

Just imagine a high income earner in the UK earning £100k/year. That would take home about £5.5K.
- And assuming a 50% saving rate to £2.75K/month that would save £33k/year.
- With a grow rate of 5% it would take 19 years to get to £1M. And that's excluding capital gain and income tax from stock/dividend gain!

So no wonder there are so little number of people aiming for much more than that!


cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2331
  • Location: England
Re: What's your UK fire amount?
« Reply #136 on: July 23, 2020, 04:35:17 PM »
Just imagine a high income earner in the UK earning £100k/year. That would take home about £5.5K.

They could put £40k a year into their pension, and take home £43.4K (approx £3600 per month), giving an effective tax rate of around 17%. If they can also use some or all of their £20K ISA allowance, no CGT or income tax on dividends would be payable and they get to £1 million significantly faster than 19 years. Even better if they have a working spouse who can also use their pension and ISA allowance.

Someone earning £150K a year really ought to be putting as much money as possible into a pension fund, because the marginal rate between £100K and £125K is 62% (due to loss of allowances, and NI).

helloyou

  • Bristles
  • ***
  • Posts: 333
Re: What's your UK fire amount?
« Reply #137 on: July 23, 2020, 09:00:09 PM »
Just imagine a high income earner in the UK earning £100k/year. That would take home about £5.5K.

They could put £40k a year into their pension, and take home £43.4K (approx £3600 per month), giving an effective tax rate of around 17%. If they can also use some or all of their £20K ISA allowance, no CGT or income tax on dividends would be payable and they get to £1 million significantly faster than 19 years. Even better if they have a working spouse who can also use their pension and ISA allowance.

Someone earning £150K a year really ought to be putting as much money as possible into a pension fund, because the marginal rate between £100K and £125K is 62% (due to loss of allowances, and NI).

I agree with the pension in principle, but I've put £0 in my pension so far. And my friend didn't put much either.

The thing is we can only access pension money when we're 57... and it may even be available later as gov try to save.

I like the idea of RE and getting access to this capital in 20+ year time is definitely not RE. I'd rather suck it up in taxes but have that money available when I want.

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2331
  • Location: England
Re: What's your UK fire amount?
« Reply #138 on: July 24, 2020, 01:09:03 AM »
The thing is we can only access pension money when we're 57... and it may even be available later as gov try to save.

I like the idea of RE and getting access to this capital in 20+ year time is definitely not RE. I'd rather suck it up in taxes but have that money available when I want.

If you plan/hope to live past the age of 57, money in a pension is definitely useful for RE. The idea is to have two pots which means money in ISAs/ elsewhere which you use from your retirement age until age 57, and then money in a pension which you access after 57. The proportion of your total FIRE amount that is in each pot will depend upon the age at which you FIRE. Someone who stops working in their early 30s probably doesn't want much in a pension. However, as you say, that requires a very high income. For people who earn £100K or £150K who want to RE, the pension is a very good deal. It allows you to reach the FIRE amount far more quickly.

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #139 on: July 24, 2020, 03:54:09 AM »
@helloyou, well if you make £150k with ambitions of FI but refuse to take advantage of a 60% pension tax break then DON'T COMPLAIN that saving money is difficult - you are purposely making it more difficult! You are making your own rules.

Your argument has no logic. Normal retirement is a complete subset of early retirement. They are not either/or! Neglecting to optimize your normal retirement means neglecting to optimize a huge proportion of your early retirement. 

Yes, you can't access money inside a pension until you are 57+, but you also won't  access most of your money outside of a pension when you are still under 57.

oneyear

  • 5 O'Clock Shadow
  • *
  • Posts: 99
Re: What's your UK fire amount?
« Reply #140 on: July 24, 2020, 04:04:26 AM »
My fire target is £900k at 3% withdrawal. Currently at £940-£960k any given day at the minute. Above doesn't include paid off mortgage at £240k and my share of a business which is in the process of being sold (within next month).

I'm confident with my numbers now but there's a huge pair of golden handcuffs that I need to get across the line in the next 5 weeks

helloyou

  • Bristles
  • ***
  • Posts: 333
Re: What's your UK fire amount?
« Reply #141 on: July 24, 2020, 10:08:45 AM »
@helloyou, well if you make £150k with ambitions of FI but refuse to take advantage of a 60% pension tax break then DON'T COMPLAIN that saving money is difficult - you are purposely making it more difficult! You are making your own rules.

Your argument has no logic. Normal retirement is a complete subset of early retirement. They are not either/or! Neglecting to optimize your normal retirement means neglecting to optimize a huge proportion of your early retirement. 

Yes, you can't access money inside a pension until you are 57+, but you also won't  access most of your money outside of a pension when you are still under 57.

The logic is simple. I'm 37 now and my current invested amount is close to FI (£600k) to withdraw about £1500-£2000/month.

I'm planning to stop working in a couple of month and if I was to put things in a pension it would significantly delay what I really want to do.

Maybe in 10 years time I'll gradually puts money into the pension if I'm still in the UK, but for my current situation it'd not only lock down my finance with the UK AND I won't be able to get any money out if needed until at least 20 years time.

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #142 on: July 24, 2020, 11:03:07 AM »
Yes, fine, we know you've killed it, so why are you still hooing and haaing about it. You've done it your own way and obviously earn enough that it doesn't really make much difference whatever you do, but most of us mere wmortal wage slaves are best served not looking a gift horse in the mouth.

helloyou

  • Bristles
  • ***
  • Posts: 333
Re: What's your UK fire amount?
« Reply #143 on: July 24, 2020, 11:48:54 AM »
Just saying in the UK its not easy to make money fast. I worked my ass off for long time for probably one of the lowest amount I can get away with to FIRE.

And that pension plan although advantageous is not what helps to FIRE because u can only benefit from it at 57+ year

shelivesthedream

  • Walrus Stache
  • *******
  • Posts: 6760
  • Location: London, UK
Re: What's your UK fire amount?
« Reply #144 on: July 24, 2020, 01:40:53 PM »
Yes, fine, we know you've killed it, so why are you still hooing and haaing about it. You've done it your own way and obviously earn enough that it doesn't really make much difference whatever you do, but most of us mere wmortal wage slaves are best served not looking a gift horse in the mouth.

I do think that's a little uncalled for. I still think helloyou's maths is wrong because they are not understanding the "two pots" system, but there's no need to name call.

vand

  • Handlebar Stache
  • *****
  • Posts: 2364
  • Location: UK
Re: What's your UK fire amount?
« Reply #145 on: July 24, 2020, 04:24:40 PM »
The UK for all its warts and problems is still one of the best countries in the world to get ahead in through sheer hard work and personal development - at least I believe that to be so.

If you earn a median wage by UK standards you are in the top 1% of earners by global standards. You think it's difficult making a high wage in the UK? Try making a high wage in the 95% of the world that has never known anything but squalor.

There is always someone doing better than you, earning more money than you, younger, smarter, and growing their wealth faster. On MMM we often criticize normal people for keeping up with the Joneses because they are always comparing visible wealth, but I think there is an equally unhealthy approach where you are continually comparing yourself to the person who saves the most, gets to FIRE at the youngest age, grows their wealth at double the market rate. Financial freedom is no freedom at all if you can't stop comparing yourself to everyone else.. FIRE will not be nearly enough to make you happy


daverobev

  • Magnum Stache
  • ******
  • Posts: 3973
  • Location: France
Re: What's your UK fire amount?
« Reply #146 on: July 25, 2020, 02:04:07 AM »
It's all education, isn't it. If you know about and are allowed to do salary sacrifice it's amazing. If you start young you shelter so much from tax in an ISA. Even if you earn very little (or nothing), the government will give you a 25% topup on the first £2880 you put into a SIPP.

The UK is extremely (overly) generous. Dividend allowance, ISA, small trading allowance, interest allowance, SIPP/salary sacrifice... plus universal healthcare, reasonable if not massive state pension (that is going to be an issue - demographic timebomb).

In hindsight the UK is (no longer? or perhaps never was?) particularly a nice place if you are really poor. Not sure.

helloyou

  • Bristles
  • ***
  • Posts: 333
Re: What's your UK fire amount?
« Reply #147 on: July 25, 2020, 04:42:49 AM »

I do think that's a little uncalled for. I still think helloyou's maths is wrong because they are not understanding the "two pots" system, but there's no need to name call.

I'm jusr saying that pension investing is not the right strategy if you plan to FIRE in your 30's because it'd be 20+ years away!

It can become a burden if you were to need that cash in 10 or so years before it gets available.

shelivesthedream

  • Walrus Stache
  • *******
  • Posts: 6760
  • Location: London, UK
Re: What's your UK fire amount?
« Reply #148 on: July 25, 2020, 05:17:22 AM »

I do think that's a little uncalled for. I still think helloyou's maths is wrong because they are not understanding the "two pots" system, but there's no need to name call.

I'm jusr saying that pension investing is not the right strategy if you plan to FIRE in your 30's because it'd be 20+ years away!

It can become a burden if you were to need that cash in 10 or so years before it gets available.

The idea is that you save for two different retirements. You save in the pension for 57+ and you save in the ISA for 30-57. You save enough in the ISA that you don't need the pension money until 57, so it isn't a burden but rather a separate pot of money that the government gives you extra money for, you pay less tax on, etc etc, and has 27 years to sit there growing. In a perfectly planned world, you get to £0 in your ISA on your 57th birthday and then start spending the pension money. This is unlikely to happen so you save a bit more in the ISA, but fundamentally the ISA only funds 27 years of your retirement and the pension funds the rest in a way that gets you more total money.

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2331
  • Location: England
Re: What's your UK fire amount?
« Reply #149 on: July 25, 2020, 05:48:49 AM »
I'm jusr saying that pension investing is not the right strategy if you plan to FIRE in your 30's because it'd be 20+ years away!

It can become a burden if you were to need that cash in 10 or so years before it gets available.

If you're planning to FIRE at 37, you could have got there a little sooner by using pensions. If you have done your sums correctly, you don't need that cash in the 10 or so years before it gets available.

I RE'd in my forties, with a much higher fire amount than yours. At no my point did my salary reach £100K, but I did fill my personal pension allowance for several consecutive years.

 

Wow, a phone plan for fifteen bucks!