I’ve been playing with spreadsheets again, and I’m not liking what they’re telling me, which is that 3652 days may not cut it. It might, but it’s not very likely. My expectations of investment return have been optimistic, and unless we soon have another market crash a’la 2008 followed by a 10-year bull run, come 2025 I may not have enough to retire on.
How much is enough
Nobody knows for sure. Retirement calculators, Monte Carlo simulation and stress testing can give us a reasonable idea, but we don’t really know. Hence we end up using some sort of an estimate, and usually that estimate has an inbuilt layer of fat, just in case.
My estimate is a million in invested assets, including pension, indexed for inflation (December 2015 = 1), and no mortgage. That would give me about £1.9k post-tax income per month – enough to fund my life and leisure in retirement. It’s more money than I spend now, but I’ll need more when I retire. Because: I’ll have more time to travel.
Why this sucks
All that headspace which my work occupies – I need it for personal use. In a recent Banking Standards Board survey 26% of respondents said work had “a negative impact on their health and wellbeing”. I’m no wimp, in fact I don’t have much patience for weakness, but I’m getting sick and tired of being knackered all the moverloving time.
I want to retire so I that can slow down, take more trains and fewer planes. I want to know what trees are called, where they come from, and which tree families they belong to. Ditto rocks. I want to use my Natural History Museum membership more, I want to go to movies when I feel like it, not when I have time, I want to read more books, see more of this weird and beautiful planet we live on, maybe learn a couple more languages, or at least improve the ones I’ve tried learning in the past, my German sucks, for example. I want to kitesurf, sail, swim, walk, cycle, climb, discover. I need more time to do things, and I want to take my time doing them. I don’t want to get home at 3am from a weekend away and have to be at work by 9am the following morning.
What to do, what to do
Reducing my working hours is not an option in my role, my contractual 7 hours a week are a joke anyway, since I’m paid for results and not the time spent achieving them. Changing employers would solve nothing, I’ve tried that a couple of times before. I can’t be self-employed; as much as I’d like to dodge some tax and NI, it’s not possible in my industry in my line of work. So what’s left is biting the bullet – hard – and hanging on ’till it’s over.
Here’s what I’m not prepared to do:
- Increase my savings rate. There’s nothing else I can cut without turning my life into a miserly existence. I am aware that there are people with lower discretionary spending budgets than mine. It sucks to be them, and it would suck to be me if I were one of them.
- Take in a lodger. I had a lodger, and I didn’t like it. £7,500 a year tax free sounds like a good deal until you consider the downsides. I guess one gets used to not having to share.
- Matched betting. Again, I’ve tried it, it wasn’t for me, although it should be noted that it works for some people.
- Any “side hustle” that requires effort to generate income at an hourly rate that’s lower than what my job pays me, and particularly Kindle eBooks. I like books, and I find the idea of writing low quality ebooks to flog on Amazon almost … upsetting.
Having said this, I’d make one exception to expending effort at a low rate per hour, and that is acting as an extra in a Bond film.
Back in the day, when I was young and good looking, the company I worked for had a leadership development programme, which involved, among other things, an international secondment. I was one of two people selected from our office. For the secondment part I could pick any international office, provided they had a vacancy and agreed to take me. At the time, aside from the usual suspects, being our branches in global financial centres, there were vacancies the Bahamas and the Cayman Islands.
I, being a boring idiot with no imagination, went to a proper city with a financial services industry, whereas my colleague… didn’t. He went to the Bahamas, and promptly started flooding my fucking inbox and later facebook feed with photos of sunny beaches and pool parties. Also, boat parties. Then when Casino Royale came to the Bahamas to film their beach scenes, he signed up as an extra, the animal, and got paid to play frisbee in the water with some girls in bikinis.
So, ok, having thought about it, maybe I’d do it too. Even if I were retired at the time, I’d make an exception.
Going back to spreadsheets
I’ve looked at it this way and that, and the earliest I can repay the mortgage is 2023. That assumes that I don’t get sacked from my job, use all my pension allowance and ISA allowance, and don’t invest anything in taxable accounts, except my portfolio allocation to gold ETFs, which could be about £6k p.a.
Given that I want to retire with 4 years’ worth of expenses in cash outside of ISA and pension, and given that I’d have to live on that cash plus the ISA until I can access my pension… it’s tight. And I haven’t even begun thinking about whether or not I should continue paying NI contributions post-FIRE in hopes of maybe someday getting more by way of state pension.
And then there’s the joker – am I or am I not going to buy a boat? It’s a cheap way to travel near, but it’s a fixed cost at home when you’re away traveling far. Do I want it enough to work 2 years longer than I’d do otherwise? Am I sure that I don’t want it enough so I could say no to it and never regret it? Also, if I bought a boat and then things went south later, I could rent out my place and go live on the boat. If I couldn’t afford moorings in the UK, I could take it to France or Holland. The Med is tricky in summer, but winter is usually fine, and there’s always Turkey.
So I can laugh at RIT changing his delivery date every 9 months, but my own cojones are an untested quantity. There’s nothing safe about a 4% safe withdrawal rate. I’m aiming for 2.5%, and it looks like time ain’t on my side.
- I know. It sounds like cringey ENTJ bullshit with a side of “how to lick your boss’s ass”, but really for the most part it wasn’t like that… it was quite good, actually. I guess every experience is what you make of it 😉
- How he found time to get any work done is, to this day, unknown.
- SAYE shares don’t count. I can’t do anything about it other than to not participate, which would be akin to leaving free money on the table.