Finally, a plan! 5 years to (semi) retirement

This blog has changed quite a lot in recent months. It started out as a bit of a playground for me to express finance related thoughts and ideas away from my day job as an investment writer. It was in some ways a trial zone for themes I wanted to discuss but couldn’t in my professional capacity due to the constraints of the brand I represent, my corporate identity or the industry regulator, the FCA. Sometimes all three.

Adelie Penguins Diving into Water (Composite)

Moving in to the investment industry two years ago (I’d previously had no interest in it or knowledge of it) turned my head, as you’d expect, towards my own finances. It soon got me analyzing my incomings and outgoings properly for the first time ever. It made me think about planning for my retirement. It got me calculating my rent as a percentage of income. It forced me to consider pensions, and with that, death. There’s been a lot of time pondering death.

I spent hours forecasting the second half of my life and always in a very cold, scientific way: estimating life expectancy, projecting property price growth by region, salary increments versus a potential rise in inflation and interest rates, the likely returns on a high risk portfolio over bonds for the next 10 years, tax breaks on a pension versus the accessibility of an ISA, and so on. Quite boring stuff really.

Time is money

But over the last 3 months my thoughts have strayed more and more to the emotional and holistic side of how money plays a role in our lives. As I’ve explored themes a little detached from this very sterile, textbook approach, I’ve found there are far bigger and more interesting questions to answer: What do you want to do today? What makes you happy? Who are your closest friends? Why do you only see them twice a year? Do you prefer light or dark, cold or warm, sex or love, food or fashion, time or money?

I want to understand the things I treasure most and do what I can to be around them as much as possible.  Consequently, a clear concept for me has now emerged and that is to find a way to NOT work as soon as possible.

I work with some good people and I earn good money, but if that money were no object I’d rather wake up slowly every morning with my wife, drink tea in bed, play with the cats, potter, do some light work locally to help a neighbour, learn a new instrument or a new language, fix something, go for a run, cook a lovely meal, drink a beer in the sun and meet up with friends. Now that’s a day.

This might sound like a retirement lifestyle. And if so, well, so be it – that’s what I want. But it’s unachievable right now. I can’t afford to give up my job. For a start, I’ve got a £1,700 a month mortgage to pay. But I want to get there as soon as I can. I think it’ll take 5 years.

The plan is:

1) Save and save damn hard (30-45% of net salary).

That should be ok. We don’t care much for posh nosh or fancy holidays, though we have forked out on them frequently in the past. It’s symbolic of the consumerist trap. You work hard to earn money to live well but then feel the need to spend it all on ‘treats’ in your spare time – to justify working so hard in the first place. But we don’t really need any of that stuff.

2) Move to one of the cheapest parts of the UK and buy a small home for us and a holiday let apartment.

Perhaps somewhere on the coast where there are good opportunities for tourist trade.

3) Compliment the holiday let income with some ebay selling, freelance writing, dog walking – whatever it takes really to get by.

This doesn’t of course rule out work completely but it means I can do it more on my terms, as and when needed. I figure we’ll need £1,500 a month for the two of us (and the cats). The properties will be paid for outright.

4) At 60, sell the holiday let and use it to top up our pension pot.

That’s it. That’s the plan. It’s pretty basic and still forming but it feels really exciting to potentially give up formal work at age 47. It also feels really scary and in some ways crazy to do so (can I really turn my back on a well-paid job?). But I want more than just a well-paid job. I want time.

The most exciting thing of all is that I have seen a new way of doing things, a new way of living. A way that is different to the blinkered 40-year city career path I’ve assumed is the only option until now.

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