I've finally decided on a retirement date from work...31/12/2024

RandallFlagg

TTony said:

RandallFlagg said:

 Accurate zero based budgeting will eliminate most surprises.  

Hmmmm.

The trick there is "accurate" (did anyone budget for the recent energy price spikes?) and then having the discipline to stick to what you've budgeted.

Suppose you develop other interests/hobbies in retirement, but they weren't in the ZBB, so can't be afforded.  Or your tastes change, and you decide to splash out on the occasional trip to Waitrose rather than relying on what's in Aldi's end-of-day bargains bin?

I'd like my retirement to be flexible and worry-free, not constrained by a check-the-spreadsheet-first discipline ...

Well I did say most not all.

If your life style changes over time, as it invariably will, adjusting the future budget according allows you to see the impact and will allow you to appreciate how foreseeable future income requirements may have changed so the long term plan can be adjusted accordingly, ie draw down more or cut spend in other areas to compensate. The energy price spike meant we had a family holiday in the UK this year rather than abroad, and just a cheeky weekend away in Spain for me & the wife. Next year may be different as energy prices have already started to come down.

It's horses for courses, but I like to know what impact a decision or price rise today will have down the road. We're not locked down completely to the point where the spreadsheet has to be checked before we buy a coffee in Costa each time, there is some flexibility and a generous monthly pocket money allowance keeps life enjoyable and allows for wanders off the track, but within some boundaries. I do however, monitor all spend and collect up receipts or check Apple pay each day to keep track of where we are.

RandallFlagg

RaymondLin said:

RandallFlagg said:

RaymondLin said:

RandallFlagg said:

RaymondLin said:

Honestly, providing that I am mortgage free at retirement, a state pension is enough for me to live on.  I also have a work pension that i have been putting in (work only contributes 2%, so I wack in 15% of my own money), and started a Vanguard index fund 5 years ago, only small but growing.

Can I retire before i am 60? Absolutely not, but I would expect i am okay when i am 67, if i live that long.

I am a great believer in index fund investing, never get out of the market, just keep adding and reinvesting dividends year in year out. Ignore the news, naysayers and market timers. The effect of compound interest is greater and greater as the pot builds. The growth curve is not linear and the early years can feel like it's not going anywhere but as Warren Buffet is quoted as saying: "someone is sitting in the shade today because someone planted a tree a long time ago" 

Which funds give dividends? 

I am currently investing in Life Strategy 80% Equity Fund-Acummulation, Target Retirement 2045, US Equity Index Fund.

Income funds and ETFs don't automatically re-invest dividends like accumulating funds do. We hold some money in Vanguard's VUSA (S&P500) ETF and have to manually reinvest the dividends each quarter as they pay out into the cash balance of the account.

The funds you have listed will automatically reinvest the dividends so they are baked in. The Life Strategy and Target Retirement funds you mention aren't strictly passive index funds as there is a degree of active fund management involved, rebalancing with the Life Strategy fund and asset re-allocation into "lower risk" assets over time with the Target Retirement fund.

I'm not a fan of either Life Strategy (too much UK weighting in the holdings) or Target Retirement (I really don't want any form of 'life styling" applied to my holdings - The "Life Styling" concept of moving funds into bonds over time on a glide path, as the set retirement date approaches, was based on the assumption that the accumulated pot would be used to buy an annuity at retirement)  

I do have S&P 500 UCITS ETF (VUSA) but its in my ISA, started this only last year though.  I guess it's just the same as regular index fund but within ISA?  I could put more weight into that, but was going to just spread it evenly across them.

Yes, VUSA is "typical" index fund, completely passive (aside for S&Ps index inclusion criteria and periodic committee agreed index constituent adjustments)

You should have already seen some dividends paid out via VUSA as cash by now, check your cash statement. We buy more VUSA units each quarter and leave a little cash balance to cover the fees but you can only buy whole units within Vanguard so have to buy in multiples of whatever the days unit price is, around £66 today. I think some other platforms may allow partial unit purchase, not sure.

RaymondLin

Oh I did get dividends from that ISA, you are right! I never noticed since it's a tiny pot.  I'll start putting more weight into that then, plus it's an ISA.  (I've got 6 months of living expenses saved up so pretty much can put all my spare money into investments)

Jetsam1

fretmeister said:

Good luck.

I'm not expecting to retire. I'll drop dead at work I reckon.

I anticipate the same. Too long in Uni based activity and self employment. Not enough time really left to do much about pensions, if they even still exist in 30 years time when I would hit retirement age. I will probably be dead by then anyway. Already had intestine removed and I do have to use a chainsaw fairly regularly.................

Philly_Q

RandallFlagg said:

I think you need a much bigger pot that £150K to be sustainable in all market scenarios, as well as no debt and full state pensions. £500-600K is more like it for an early retirement and a modest lifestyle.

Most of the discussion in the thread has been around pension pots, but presumably some of us have other savings and investments (although I appreciate many don't).  Or maybe there are some who have rental properties?  All I'm saying is, it may not be a case of having to live entirely on income/drawdowns from pension pots.

fretmeister

Jetsam1 said:

fretmeister said:

Good luck.

I'm not expecting to retire. I'll drop dead at work I reckon.

I anticipate the same. Too long in Uni based activity and self employment. Not enough time really left to do much about pensions, if they even still exist in 30 years time when I would hit retirement age. I will probably be dead by then anyway. Already had intestine removed and I do have to use a chainsaw fairly regularly.................

I reach it in 17 years. My kids won't finish uni for 5 of that.

I certainly won't be stopping work at state pension age. I reckon I'd get about £3 a week.

RandallFlagg

Philly_Q said:

RandallFlagg said:

I think you need a much bigger pot that £150K to be sustainable in all market scenarios, as well as no debt and full state pensions. £500-600K is more like it for an early retirement and a modest lifestyle.

Most of the discussion in the thread has been around pension pots, but presumably some of us have other savings and investments (although I appreciate many don't).  Or maybe there are some who have rental properties?  All I'm saying is, it may not be a case of having to live entirely on income/drawdowns from pension pots.

What is the difference between a pension pot (defined contribution) and savings/investments? It's the same money just saved in different types of account with differing tax treatments and allowable withdrawal dates, that is all. Modern DC pensions tend to allow a choice of a wide range of investments same as ISAs but some older or not so good work pension schemes may limit the choice of investments.

Salary sacrifice into a workplace pension is the most cost effective way for a higher rate tax payer to accumulate savings tax free but withdrawals are taxable after the first 25% and can't be taken until 55 (or 57 for younger viewers). Money saved in ISAs is saved after income tax and NI but is tax free on withdrawal and can be taken out any time..

We hold a workplace pension, a SIPP, a Stocks and Shares ISA and a Cash ISA, no property apart from the house we live in bought and paid for. Savings are prioritised according to the most tax benefit while accumulating (my pension first, then wife's SIPP then ISAs), as will withdrawals when drawing down.

LastMantra

I did it the other way round, I did everything I wanted to when I was young 

Philly_Q

RandallFlagg said:

Philly_Q said:

RandallFlagg said:

I think you need a much bigger pot that £150K to be sustainable in all market scenarios, as well as no debt and full state pensions. £500-600K is more like it for an early retirement and a modest lifestyle.

Most of the discussion in the thread has been around pension pots, but presumably some of us have other savings and investments (although I appreciate many don't).  Or maybe there are some who have rental properties?  All I'm saying is, it may not be a case of having to live entirely on income/drawdowns from pension pots.

What is the difference between a pension pot (defined contribution) and savings/investments? It's the same money just saved in different types of account with differing tax treatments and allowable withdrawal dates, that is all. Modern DC pensions tend to allow a choice of a wide range of investments same as ISAs but some older or not so good work pension schemes may limit the choice of investments.

That was kind of what I meant, really.    It's just that everyone was taking about their pensions and pension pots, I was just throwing in a reminder(?) that they might have other assets as well.  I only quoted your point because it neatly summed up the pension pot thing.

RaymondLin

Technically, my guitars are like a pension pot, they are worth more than i paid for them!

LastMantra

RandallFlagg said:

rolls1392 said:

Congrats on your decision. I retired in 2004 aged 49. Just prior to finishing I did a pre retirement course. Biggest point made in the Course was what to do to fill your day. Don't make the weekly shopping trip the highlight of the week.
I'm lucky as I have plenty to do( not diy or gardening) with horses, golf, running and guitar stuff.
It's not as easy as people think.
This retirement game can hard work!

Thank you. I've been making a bucket list of things to do in retirement. Not lavish things, just simple things that are easily achievable with the time that will be available. 

On the list are:

• Read the 100 books I have backed up on my iPad
• See a Kingfisher in the wild (that will need patience!)
• Spend some time around the colonies of Red Kites fairly nearby and get some close up pics
• I bought a DJI drone in January and have only found time to fly it twice so, get out and get flying more
• Cooking…but not stew!
• Gardening
• Walking
• Go to a really good model railway exhibition
• Learn some guitar solos that I have always wanted to get topside of
• Get the big Lego Millenium Falcon and make it
• See more of my wife's aunties and uncle, who are lovely people but don't live nearby

That sounds good, but have you honestly not been able to do all that stuff for over half your life?

Chalky

I'm a happy pensioner now.  But I suddenly retired as the pandemic started, taking it as a window of opportunity to relinquish all my work commitments.  Good decision overall, but dropping from high pressure 12-hour days to zero work took a huge toll on my mental health.  I wildy underestimated the impact. 

Suddenly, I no longer had pressure or motivation, had none of the good feelings that come from teamwork and collaboration, no conversations about challenges and how we would overcome them, no intellectual debates, no big difficult problems to be analysed and solved against the clock, and of course no sense of success and celebration of a good job done.

I have several hobbies but none of them were in any way a substitute for my previous work.  It took a couple of years and a battering to my health to get it all out of my system.  Not sure how it could have gone better, because of the lockdowns, but my advice to anyone else who has a high-pressure, multi-layered 60 hour a week job is: Don't underestimate the potential for negative impact on your mental health if you suddenly retire.

TTony

Chalky said:

but my advice to anyone else who has a high-pressure, multi-layered 60 hour a week job is: Don't underestimate the potential for negative impact on your mental health if you suddenly retire.

I think that's very wise.

To some extent, some employers try to prepare their employees for retirement with pre-retirement courses, etc.  But, for those of us who are self-employed, we have to prepare ourselves.  I'm still planning on phasing-out gradually and avoiding that hard stop.

RandallFlagg

LastMantra said:

RandallFlagg said:

rolls1392 said:

Congrats on your decision. I retired in 2004 aged 49. Just prior to finishing I did a pre retirement course. Biggest point made in the Course was what to do to fill your day. Don't make the weekly shopping trip the highlight of the week.
I'm lucky as I have plenty to do( not diy or gardening) with horses, golf, running and guitar stuff.
It's not as easy as people think.
This retirement game can hard work!

Thank you. I've been making a bucket list of things to do in retirement. Not lavish things, just simple things that are easily achievable with the time that will be available. 

On the list are:

• Read the 100 books I have backed up on my iPad
• See a Kingfisher in the wild (that will need patience!)
• Spend some time around the colonies of Red Kites fairly nearby and get some close up pics
• I bought a DJI drone in January and have only found time to fly it twice so, get out and get flying more
• Cooking…but not stew!
• Gardening
• Walking
• Go to a really good model railway exhibition
• Learn some guitar solos that I have always wanted to get topside of
• Get the big Lego Millenium Falcon and make it
• See more of my wife's aunties and uncle, who are lovely people but don't live nearby

That sounds good, but have you honestly not been able to do all that stuff for over half your life?

Yes of course, What you think I've lead a quiet life indoors scrimping and saving my money and having no fun?  I've travelled far and wide, seen many things and had much fun.

I'm not sure what point you are trying to make here, would you rather I stay working full time in a miserable job and just continue to live the life I want at weekends rather than gain financial independence and have complete freedom over how I spend my time? 

LastMantra

RandallFlagg said:

LastMantra said:

RandallFlagg said:

rolls1392 said:

Congrats on your decision. I retired in 2004 aged 49. Just prior to finishing I did a pre retirement course. Biggest point made in the Course was what to do to fill your day. Don't make the weekly shopping trip the highlight of the week.
I'm lucky as I have plenty to do( not diy or gardening) with horses, golf, running and guitar stuff.
It's not as easy as people think.
This retirement game can hard work!

Thank you. I've been making a bucket list of things to do in retirement. Not lavish things, just simple things that are easily achievable with the time that will be available. 

On the list are:

• Read the 100 books I have backed up on my iPad
• See a Kingfisher in the wild (that will need patience!)
• Spend some time around the colonies of Red Kites fairly nearby and get some close up pics
• I bought a DJI drone in January and have only found time to fly it twice so, get out and get flying more
• Cooking…but not stew!
• Gardening
• Walking
• Go to a really good model railway exhibition
• Learn some guitar solos that I have always wanted to get topside of
• Get the big Lego Millenium Falcon and make it
• See more of my wife's aunties and uncle, who are lovely people but don't live nearby

That sounds good, but have you honestly not been able to do all that stuff for over half your life?

Yes of course, What you think I've lead a quiet life indoors scrimping and saving my money and having no fun?  I've travelled far and wide, seen many things and had much fun.

I'm not sure what point you are trying to make here, would you rather I stay working full time in a miserable job and just continue to live the life I want at weekends rather than gain financial independence and have complete freedom over how I spend my time? 

  Not at all, it's just they way you put it it sounds like you're saying you never had time to do these things while you were working. A "bucket list"? A "miserable job".
If you have been doing all these things anyway them maybe you'll have more spare time than you thought?

RandallFlagg

LastMantra said:

  Not at all, it's just they way you put it it sounds like you're saying you never had time to do these things while you were working. A "bucket list"? A "miserable job".
If you have been doing all these things anyway them maybe you'll have more spare time than you thought?

Well I think it's the confines of the work/home routine that working full time imposes that really grates with me. Weekends are filled with being tired, cleaning cars, cutting the lawn, an endless list of routine jobs and housework and the gloom of that Sunday night feeling.

I long for the freedom to, for example go to the gym and be floating around the swimming pool at 09:00am on a Monday morning rather than being sat in yet another pointless meeting.

Iamnobody

RandallFlagg said:

I long for the freedom to, for example go to the gym and be floating around the swimming pool at 09:00am on a Monday morning rather than being sat in yet another pointless meeting.

Now you’re talking. I’d love that kind of freedom as well. That’d fill most mornings for me. 

Philly_Q

RandallFlagg said:

I long for the freedom to, for example go to the gym and be floating around the swimming pool at 09:00am on a Monday morning rather than being sat in yet another pointless meeting.

I wouldn't mind going to a gym or swimming pool if there was literally no-one else there.

LastMantra

Philly_Q said:

RandallFlagg said:

I long for the freedom to, for example go to the gym and be floating around the swimming pool at 09:00am on a Monday morning rather than being sat in yet another pointless meeting.

I wouldn't mind going to a gym or swimming pool if there was literally no-one else there.

The one I used to go to was pretty empty about 9-10 am. Also lunchtime and teatime. 

LPManic

RandallFlagg said:

rze99 said:

Read with keen interest. Thanks for providing some hope! 

I would encourage everyone to get a plan together, there are tools available to help but you need to be a little tuned in to pensions, funds, taxes, drawdown options and debt. Plus you really need a detailed budget to be able to project how much money you will need in retirement.

I have a detailed budget monthly, which is updated daily with actual spend as it happens and have projected this out monthly through to March 2026 with all expected income and outgoings! But I am OCD with money and love spreadsheets.

Randall I seriously need to learn your ways.

If you have time or interest, please offer us normal folk some pointers.