Early retirement

[cyrusir]

No one should be trying the play the market with ther pension, especially not 20-30 years out from retirement, get it in a good equities tracker and leave it! Worry about derisking closer to retirement.

[ryanb741]

If you think that why are you not selling all your equities?

My investments are diversified and will remain stable regardless of any forecasts.

My attempts at market timing are currently ranked at 2 good 2 bad and the second bad one was painful.

No one knows … plenty of talking heads ramping up a stock boom under Trump. I wouldn’t want to be out of equities if that happens. His last presidentcy was good for stocks.

Investments are like a bar of soap, the more you handle it the smaller it gets …

Before today I was 97% in equities and 3% in Gold. This is part of a rebalancing of the portfolio to have some in bonds as I'm 14 years out from retirement (hopefully) at age 60 and feel having 97% in equities at this stage is a tad high, hence I'm rebalancing. I only sold 18% of my equities today - put half of that into the gilts and will probably stick the other half into one of the lesser risk Lifestrategy funds (maybe LF60). Still leaves 79% of my portfolio in equities - around 65% of that is in a global index tracker and the other 35% in a Nest Sharia fund.

[Montello]

Before today I was 97% in equities and 3% in Gold. This is part of a rebalancing of the portfolio to have some in bonds as I'm 14 years out from retirement (hopefully) at age 60 and feel having 97% in equities at this stage is a tad high, hence I'm rebalancing. I only sold 18% of my equities today - put half of that into the gilts and will probably stick the other half into one of the lesser risk Lifestrategy funds (maybe LF60). Still leaves 79% of my portfolio in equities - around 65% of that is in a global index tracker and the other 35% in a Nest Sharia fund.

That’s a very different narrative to what you previously presented. Either way hope it works out for you.

[alfat33]

Before today I was 97% in equities and 3% in Gold. This is part of a rebalancing of the portfolio to have some in bonds as I'm 14 years out from retirement (hopefully) at age 60 and feel having 97% in equities at this stage is a tad high, hence I'm rebalancing. I only sold 18% of my equities today - put half of that into the gilts and will probably stick the other half into one of the lesser risk Lifestrategy funds (maybe LF60). Still leaves 79% of my portfolio in equities - around 65% of that is in a global index tracker and the other 35% in a Nest Sharia fund.

Fair enough, best of luck. I’ve tried balancing with gilts before, thinking I understood them, then finding out that maybe I didn’t. I missed out on some gains rather than losing a lot but I’ve decided to swerve them for now. My balance comes from cash for the next 2-3 years and tracker type funds for the rest, with a few more risky ones making up a small percentage. Worked OK so far.

[Halitosis]

Investments are like a bar of soap, the more you handle it the smaller it gets …

A great analogy - and one I wish I had heard 10 years ago. Kept moving my pension around funds while I should have left it alone. I am more hands off these days, though fear how I might react to a large market crash - one of the benefits for those who leave it for an IFA to manage I guess.

How does that tool deal with taxation on SIPP withdrawals?

Is it designed for the UK?

Is there a fee or is it free? If so how do they make money?

Guiide is free and UK-specific. It applies current taxation and I believe you can even select whether you are English or Scottish resident (different tax bands).
I find it very useful and worth using. The big downside is that it is designed for individuals and you can't run scenarios for a couple. Apparently such is in the works but in the meantime I just halve the values of our portfolios and spending budget. Happily Mrs H and I have very similar amounts anyway.

[Montello]

Guiide is free and UK-specific. It applies current taxation and I believe you can even select whether you are English or Scottish resident (different tax bands).
I find it very useful and worth using. The big downside is that it is designed for individuals and you can't run scenarios for a couple. Apparently such is in the works but in the meantime I just halve the values of our portfolios and spending budget. Happily Mrs H and I have very similar amounts anyway.

I’ll give it a go, I’ve been setting up a new portfolio since disposing of the BTLs last year. Still a bit to go.

Currently…

60% equities. Range of index trackers giving global coverage
20% cash. Deposits and mm funds
10% bonds. Index funds. Mix of gov and corp
10% REITs. Index funds UK, US and Europe
5% gold.

I know that adds up to 105% but there is a bit of rounding in the figures.

I plan to shift some more cash into equities in the next tax year. By then we should have a view on the Trump effect.

[sjedwardz]

A great analogy - and one I wish I had heard 10 years ago. Kept moving my pension around funds while I should have left it alone. I am more hands off these days, though fear how I might react to a large market crash - one of the benefits for those who leave it for an IFA to manage I guess.



Guiide is free and UK-specific. It applies current taxation and I believe you can even select whether you are English or Scottish resident (different tax bands).
I find it very useful and worth using. The big downside is that it is designed for individuals and you can't run scenarios for a couple. Apparently such is in the works but in the meantime I just halve the values of our portfolios and spending budget. Happily Mrs H and I have very similar amounts anyway.

Guiide is a very good platform. I like how it shows you how and where to take out your money to minimise your taxes when your retire.

[Montello]

Guiide is a very good platform. I like how it shows you how and where to take out your money to minimise your taxes when your retire.

I must be missing something with that Guiide site as it just seems like a simple 8 step wizard that just mashes a few numbers?

I have not been able to put in my investment details, or if they are in an ISA or GIA?

Either there is a separate area I’m missing or it’s very simplistic.

No montecarlo or historical modeling.

[ryanb741]

Looks like Spain is about to impose a 100% tax on homes bought by non-EU residents.

I don't understand why they don't just do what Thailand and the Philippines does - you can't own a house but you can buy an apartment. Solves 2 problems - the oversupply of apartments and the undersupply of houses.

[Scepticalist]

Due to its popularity with Europeans as a holiday and second home destination, Spain is short of everything, not just houses. Similar to London/UK, there are properties, but not where people need to live to earn decent salaries.

Not sure the non-EU tax is going to solve much - Since Brexit UK owners have sold and buyers have slowed down quite a lot due tot he restrictions on visiting periods, which is what's allowed other EU citizens to step in and buy property. German, French and Italians have really stepped up purchases since Covid leading to undersupply and pricing Spanish average earners out of the market. In Menorca where we have a flat, prices have gone up 25%. I'm even getting concerned I'll have to scale back our villa purchase when we retire there at this rate. Fortunately I have a Spanish wife so the tax won't affect us.

[Yeti]

Before today I was 97% in equities and 3% in Gold. This is part of a rebalancing of the portfolio to have some in bonds as I'm 14 years out from retirement (hopefully) at age 60 and feel having 97% in equities at this stage is a tad high, hence I'm rebalancing. I only sold 18% of my equities today - put half of that into the gilts and will probably stick the other half into one of the lesser risk Lifestrategy funds (maybe LF60). Still leaves 79% of my portfolio in equities - around 65% of that is in a global index tracker and the other 35% in a Nest Sharia fund.

Ryan,
I hope this isn’t too personal, but as a broad figure what type of monthly/yearly income are you or others hoping to achieve once retired?
The reason I ask is I am 95 per cent invested into property. I have the family home and a number of commercial properties which generate monthly income.
Il never sell my home, if I were to go abroad I’d probably rent it out and use the monthly rent to rent abroad. Hedging my bets against losing on the property market abroad and taxes to buy a property abroad etc. Will also allow for flexible movement of if I get bored of an area or country.
My rental income should in theory be with me till I pass in which case the kids will get them all.
Not quite sure what figure I’d be happy to pack up today to go and lie on a beach for the foreseeable. Be nice to see what others have in mind..

[Montello]

The best tool I have found for retirement planning is https://www.timeline.co/

This is a tool for IFAs and it’s the tool James Shack uses in his videos. You can get a trial account free for a month.

You can model a couple and it understands state pensions and you can model your actual portfolio then make predictions based on historical data and montecarlo analysis. You can factor in incomes from BTL but not capital growth.

Gives you all sorts of metrics and allows you to know the highest withdrawal rate for a given % success rate of not running out of money.

[ryanb741]

Ryan,
I hope this isn’t too personal, but as a broad figure what type of monthly/yearly income are you or others hoping to achieve once retired?
The reason I ask is I am 95 per cent invested into property. I have the family home and a number of commercial properties which generate monthly income.
Il never sell my home, if I were to go abroad I’d probably rent it out and use the monthly rent to rent abroad. Hedging my bets against losing on the property market abroad and taxes to buy a property abroad etc. Will also allow for flexible movement of if I get bored of an area or country.
My rental income should in theory be with me till I pass in which case the kids will get them all.
Not quite sure what figure I’d be happy to pack up today to go and lie on a beach for the foreseeable. Be nice to see what others have in mind..

Ok so my plan is to retire to Asia. I've calculated that Thailand/Philippines with around £50k a year will enable a good standard of living, renting a nice apartment, eat out most of the time, health insurance, car, and trip back to the UK every 6 weeks to visit my son who will be in specialist accomodation by then due to his complex care needs and the benefits it will provide him to be able to socialise with other similar adults.

Depends on what the market does over the next 14 years and I plan to sell my apartment in London to part cover this with SIPP and ISA the rest (albeit I'm only saving into a SIPP currently due to my new job's basic salary putting me in the 60% tax bracket) and bonuses are a while off yet.

At some stage I'm likely to get a significant inheritance via my mother's property in Poole - as and when that happens I'd use part of that to purchase an apartment near wherever my son's care facility is, AirBNB it for 2 or 3 weeks every month and stay in it when we visit him.

The inheritance isn't factored into my spending plan but as and when/if it happens it would provide something of a buffer.

The plans above have been stress tested for events like divorce etc and are based on retirement at 60 years if not divorced and 62 years if divorced. It does factor in state pension and did factor in the stock market returning 5% real per annum, neither of which are guaranteed.

I have no non-SIPP savings for personal reasons partly because I have an addictive personality and would just fritter it/gamble it away but also because if a huge debt I took on due to long medical treatment my son needed overseas when he was younger. That debt will be paid off in 2 years which enables me to start paying into a SIPP - im on a 1.25% mortgage fix currently which expires at the start of 2027 and I'd imagine rates will be much higher thereafter however I plan to not renew the lease of my car and use public transport/rent a car om the odd occasion I need to travel outside London and that should cover it at minimum. It's also not based on my gaining significant bonuses from work - I took a salary decrease just over a year ago to join a new SaaS company with very long sales cycles due to large deal sizes (£7 figure ARR). Some of the guys in the company have been earning £400k+ on top of their basic salaries and if that applied to me (it doesn't currently) then that brings forward timescales somewhat.

[Yeti]

Ok so my plan is to retire to Asia. I've calculated that Thailand/Philippines with around £50k a year will enable a good standard of living, renting a nice apartment, eat out most of the time, health insurance, car, and trip back to the UK every 6 weeks to visit my son who will be in specialist accomodation by then due to his complex care needs and the benefits it will provide him to be able to socialise with other similar adults.

Depends on what the market does over the next 14 years and I plan to sell my apartment in London to part cover this with SIPP and ISA the rest (albeit I'm only saving into a SIPP currently due to my new job's basic salary putting me in the 60% tax bracket) and bonuses are a while off yet.

At some stage I'm likely to get a significant inheritance via my mother's property in Poole - as and when that happens I'd use part of that to purchase an apartment near wherever my son's care facility is, AirBNB it for 2 or 3 weeks every month and stay in it when we visit him.

The inheritance isn't factored into my spending plan but as and when/if it happens it would provide something of a buffer.

The plans above have been stress tested for events like divorce etc and are based on retirement at 60 years if not divorced and 62 years if divorced. It does factor in state pension and did factor in the stock market returning 5% real per annum, neither of which are guaranteed.

I have no non-SIPP savings for personal reasons (basically i have an addictive personality and would just fritter it/gamble it away). It's also not based on my gaining significant bonuses from work - I took a salary decrease just over a year ago to join a new SaaS company with very long sales cycles due to large deal sizes (£7 figure ARR). Some of the guys in the company have been earning £400k+ on top of their basic salaries and if that applied to me (it doesn't currently) then that brings forward timescales somewhat.

Thanks for that Ryan, very helpful indeed.
I think if I rented my house for around £2500 pcm, I’d use this solely to fund living accommodation abroad. My rental income from other property would then provide my living costs. With 3 children all in education at the minute, doesn’t look like il be able to up sticks any time soon but I think your right £50k would be a minimum with £75k a year being a super sweet spot as it would allow you not to have to budget everything down to the last penny and allow for some luxuries.
Just got to get rid of my kids and il see you on that beach in Thailand 😂

[ryanb741]

Thanks for that Ryan, very helpful indeed.
I think if I rented my house for around £2500 pcm, I’d use this solely to fund living accommodation abroad. My rental income from other property would then provide my living costs. With 3 children all in education at the minute, doesn’t look like il be able to up sticks any time soon but I think your right £50k would be a minimum with £75k a year being a super sweet spot as it would allow you not to have to budget everything down to the last penny and allow for some luxuries.
Just got to get rid of my kids and il see you on that beach in Thailand 😂

So I could rent my flat for around £2800 a month however tax on that, management fees, service charge, ground rent etc would make that far less attractive than just selling it, using the funds to live on whilst also having them parked in an index tracker bar 4 years living expenses.

My wife has property in Thailand but we'd probably either sell that or rent it- I've not factored any of my wife's assets into my retirement planning btw. I wouldn't buy property in Asia - it loses money typically if an apartment so renting is the way to go.

BTW £50k in Thailand/Philippines is a huge budget - it's only so high because I'm factoring in a monthly expense to travel back to the UK. But high end living costs in Thailand would be £1k a month rent, £1k food/entertainment/regional breaks, £500 bills/fuel/medical insurance and then the rest on spending/trips to Blighty.

[walkerwek1958]

Having retired at 52 in 2010 I`ve had 15 years of not working, I consider myself v. fortunate (70% luck 30% sensible planning/decisions). You have to have a realistic set of assumptions when investing, but anticipating an overall 5% return on equities over a 15 year horizon is on the optimistic side of realism in my opinion.

What some of you don't realise is that your values are likely to change with age, the Rolex watches and fancy cars won't matter any longer.......if you're lucky. Hang on to your old values and you'll need a lot more money to be content, I consider myself fortunate to have made the transition. Those of you who are looking ahead have no idea how retirement/age will affect your thinking. As an example, at 50 I almost splashed £7k on a fancy number plate, nowadays I see such things as pointless and slightly ridiculous. Subconsciously I think there's an element of impressing colleagues, take work out of the equation and you realise no one really cares what you're driving around in or the expensive cruise you've got planned. After 2-3 years out of the workplace my values started to alter, changed significantly in 2015 following serious illness, and have continued to alter.


It's an old cliche, but with advancing years your priority becomes health, not wealth. Sure, there's no fun being old and skint but there's even less fun in being the richest guy in the graveyard.

[ryanb741]

Having retired at 52 in 2010 I`ve had 15 years of not working, I consider myself v. fortunate (70% luck 30% sensible planning/decisions). You have to have a realistic set of assumptions when investing, but anticipating an overall 5% return on equities over a 15 year horizon is on the optimistic side of realism in my opinion.

What some of you don't realise is that your values are likely to change with age, the Rolex watches and fancy cars won't matter any longer.......if you're lucky. Hang on to your old values and you'll need a lot more money to be content, I consider myself fortunate to have made the transition. Those of you who are looking ahead have no idea how retirement/age will affect your thinking. As an example, at 50 I almost splashed £7k on a fancy number plate, nowadays I see such things as pointless and slightly ridiculous. Subconsciously I think there's an element of impressing colleagues, take work out of the equation and you realise no one really cares what you're driving around in or the expensive cruise you've got planned. After 2-3 years out of the workplace my values started to alter, changed significantly in 2015 following serious illness, and have continued to alter.


It's an old cliche, but with advancing years your priority becomes health, not wealth. Sure, there's no fun being old and skint but there's even less fun in being the richest guy in the graveyard.

Well a 5% real return over year over 13/15 years is a fair bit below the average historical return (I'm talking S&P500). That being said between 2000 and 2013 your equities performance would have been woeful so it depends on luck as well in terms of what chunk of 13 years you get. An average one would be great. A slightly below average one is what I've factored in. The one we got between 2000 and 2013 would be a problem.

Agree with the rest of what you've said - I'm pretty much done buying watches, or maybe will get one every few years or so. No takeaways either - enjoying cooking fresh home made food

[lewie]

Well a 5% real return over year over 13/15 years is a fair bit below the average historical return (I'm talking S&P500). That being said between 2000 and 2013 your equities performance would have been woeful so it depends on luck as well in terms of what chunk of 13 years you get. An average one would be great. A slightly below average one is what I've factored in. The one we got between 2000 and 2013 would be a problem.

Agree with the rest of what you've said - I'm pretty much done buying watches, or maybe will get one every few years or so.

All pointless if god forbid you don’t make it that far

[Montello]

Well a 5% real return over year over 13/15 years is a fair bit below the average historical return (I'm talking S&P500). That being said between 2000 and 2013 your equities performance would have been woeful so it depends on luck as well in terms of what chunk of 13 years you get. An average one would be great. A slightly below average one is what I've factored in. The one we got between 2000 and 2013 would be a problem.

Agree with the rest of what you've said - I'm pretty much done buying watches, or maybe will get one every few years or so. No takeaways either - enjoying cooking fresh home made food

Sequence risk is the biggest issue …

https://www.investopedia.com/terms/s/sequence-risk.asp

If you retire into a bear market things can get very tricky.

[ryanb741]

Sequence risk is the biggest issue …

https://www.investopedia.com/terms/s/sequence-risk.asp

If you retire into a bear market things can get very tricky.

Yep agreed which is why the aim is to have at least 3 years spend in cash to hopefully avoid dipping into stocks right as a bear market kicks off.

[walkerwek1958]

All pointless if god forbid you don’t make it that far

Balance of probabilities predicts most people will, that' s the base case you have to plan for. All about striking a balance between living for now ( spending accordingly) and planning for a future which isn' t guaranteed but is highly likely to happen.

[reggie747]

My wife has property in Thailand but we'd probably either sell that or rent it- I've not factored any of my wife's assets into my retirement planning btw.

Is that because you've previously stated, on here, that you're going to divorce her in a few years anyway ??

[noTAGlove]

Is that because you've previously stated, on here, that you're going to divorce her in a few years anyway ??

There is half the retirement money gone, then.

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[Hood]

There is half the retirement money gone, then.

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Depends what her assets are.
From memory Ryan's good lady comes from a well to do family.
Anyhow Reggie that was a cheap shot.
Said in the bear pit perhaps.

[Passenger]

I did wonder about his Missus, in fairness R´s been pretty up front about going their separate ways, neither bad people obvs, just not worked out iirc.

[Passenger]

Having retired at 52 in 2010 I`ve had 15 years of not working, I consider myself v. fortunate (70% luck 30% sensible planning/decisions). You have to have a realistic set of assumptions when investing, but anticipating an overall 5% return on equities over a 15 year horizon is on the optimistic side of realism in my opinion.

What some of you don't realise is that your values are likely to change with age, the Rolex watches and fancy cars won't matter any longer.......if you're lucky. Hang on to your old values and you'll need a lot more money to be content, I consider myself fortunate to have made the transition. Those of you who are looking ahead have no idea how retirement/age will affect your thinking. As an example, at 50 I almost splashed £7k on a fancy number plate, nowadays I see such things as pointless and slightly ridiculous. Subconsciously I think there's an element of impressing colleagues, take work out of the equation and you realise no one really cares what you're driving around in or the expensive cruise you've got planned. After 2-3 years out of the workplace my values started to alter, changed significantly in 2015 following serious illness, and have continued to alter.


It's an old cliche, but with advancing years your priority becomes health, not wealth. Sure, there's no fun being old and skint but there's even less fun in being the richest guy in the graveyard.

We have that in common you know, both stopped working formally in 2010, got 15 years in thus far albeit I´m a trifle your junior in years ( 54 this summer! aargh, kidding that´s life and it´s mostly always better than the other option :). Good health and here´s to many more years.

[deepreddave]

I can't help but think that anyone who retires c50 is extremely fortunate, whether by virtue of their earning ability, inheritance or just good luck. I know as many people who retired c55 as I do those who consider they need to work beyond 65.

I think the majority of those born from 1980 onwards are going to find retiring pre 60 much harder, unless they inherit significant funds; this is something I thought would be more likely but seeing the 'boomers' live longer and spend large parts of their capital (substantial amounts drawn from property equity) makes me think otherwise.

I've just 'retired' prior to my 60th birthday so will see how that goes over the next few months. I don't envisage having to work again but have some volunteering plans in mind. I'll cut my cloth accordingly so won't be living the high life and travelling the world but should be ok too so feel fortunate in that regard and have time now to focus on getting a bit fitter!

[Passenger]

I can't help but think that anyone who retires c50 is extremely fortunate, whether by virtue of their earning ability, inheritance or just good luck. I know as many people who retired c55 as I do those who consider they need to work beyond 65.

I think the majority of those born from 1980 onwards are going to find retiring pre 60 much harder, unless they inherit significant funds; this is something I thought would be more likely but seeing the 'boomers' live longer and spend large parts of their capital (substantial amounts drawn from property equity) makes me think otherwise.

Agreed the world- the game gets more competitive, faster.

[dandanthewatchman]

Anyone looking for a safe 5.1% for 30 years the T54 Gilt is your thing as the running yield is over 5.1%. I've just added some to my portfolio and sold out of some of my equities as if you're getting over 5% from the government I can see stocks becoming somewhat less attractive and a sell off potentially ensuing.

If the running yield hits over 6% I'll be going back for more.

And today things change. If I may be so bold to say the personality traits you exhibit in the forum and also tell us about would suggest to me that you best to leave the management of your pension and any savings to a professional


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[Bluetinfloor]

Retiring in 6 months aged 62 and not read any of this - I had better catch up!

Ending of final salary scheme about 10 years ago spelled doom and gloom, but money purchase since then and think the combo works well in that I can take my 25% tax free from money purchase until final salary kicks in at 65, state pension at 67.

Bit of property income too, but had a property sell off in recent years, as dont want the hassle in retirement

Think I will be working to a plan of more spend in 60's and up to mid 70's and thereafter less of requirement as I lose the bottle for MTB or motorbikes.

By accident I think the defined benefit pension and money purchase pot combo should give that flexibility.

But...who knows what lurks round the corner well being & health wise, life curved balls etc ...cant really plan for that

[ryanb741]

And today things change. If I may be so bold to say the personality traits you exhibit in the forum and also tell us about would suggest to me that you best to leave the management of your pension and any savings to a professional


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I sold that gilt the same day at breakeven btw and it into a 1 year gilt that had a better ROI.

I still had big exposure to the S&P 500 so will benefit from today's mini-pump but it doesn't change the fact stocks are toppy and realigning my portfolio to deal better with any downturn would be sensible.

I'll be sequentially selling off my global index tracker fund and converting it to a global index ETF - reason I say this is Hargreaves Lansdown fund fees are 0.45% per annum on 1st £250k, 0.25% thereafter on top of the fund manager fee whereas holding gilts, stocks, ETF has a 0.45% fee capped at £200 per year meaning anything above £44k is effectively no charge so this actually makes HL cheaper than Vanguard if you hold ETFs instead of funds.

[Peck]

And today things change. If I may be so bold to say the personality traits you exhibit in the forum and also tell us about would suggest to me that you best to leave the management of your pension and any savings to a professional


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+1

It was also mentioned a few months ago you were “helping” junior colleagues with their pensions etc. You really need to not be doing that for their sakes

[gunner]

By accident I think the defined benefit pension and money purchase pot combo should give that flexibility.

Agreed, DB has become much less tax friendly wrt annual allowances so I think it's worked out well for you. Having both pots should help you maximise efficiency of drawdown.