If like me you have always wanted to retire early, but wish to follow the obligatory farewell from Vulcan Spock, it helps to do some forward planning & undoubtedly have some luck to make the process run smoother. So the purpose of today’s post dear reader is to share the lessons learnt in my experience and I hope you find some of the insights useful.
Well, firstly you need to sort out your finances pretty ruthlessly, as my golden rule “that the more I earned, the more I wasted” now has to apply in reverse! So within a day of making the decision such luxuries as our the third car and marina berthed motor cruiser were put up for sale and both thankfully sold pretty quickly.
My post on Peter “the miser” certainly applies too where I’ve written on my efforts to reduce bills which has been a staggering success, as well as “inheriting” my son’s iPhone 6, rather than upgrading my iPhone 5c with a sharply increased monthly contract!
We paid off the smallish outstanding mortgage on our drafty 1980’s Surrey privately built home by moving to Wales and buying a brand new home. Due to the regional differences in house prices instead of downsizing we actually ended up adding two bedrooms, a second bathroom and a fourth toilet plus had a substantial cash buffer saved in the bank afterwards too. The same design house built by the same builder in the South East costs well over £1m…
A word of advice here is to avoid any lingering romantic ideas I’d harboured of being a land owner isolated from others in a run down smallholding property in the Outer Hebrides, or even more realistically in the Brecon Beacons which we did look at quite closely at the time. No, a new estate house with a 5 year guarantee on everything internal and external has proved an excellent buy, with its high end insulation properties reducing our energy bills to boot.
We still have the most amazing views of the mountains surrounding Abergavenny namely Blorenge, Sugar Loaf and Skirrid Fawr, as well as a ten minute walk into town should the free car park be full or we want to avoid a nominated driver! Interestingly, although a Waitrose supermarket is a 3 minute walk away, we tend to find the prices so high we prefer to drive up the Heads of the Valley road to Asda in Brynmawr, unless it’s for a special occasion or food emergency.
The quality of life here in Wales compared to Surrey is much more conducive to long term health, although of course, there can never be any guarantees. We know and visit our friends & neighbours far more often, the pace of life is slower with the decrease in population density and traffic and the local views of the surrounding countryside and air quality are amazing.
The desire for early retirement in my case really stemmed from the fact that my father retired at 55 and enjoyed pretty good health right until he reached his 90th birthday. Sadly shortly afterwards he passed away to cancer, but still he reached “a good age” as they say and being retired for 35 years is quite an achievement!
Another driver in favour of seeking early retirement is that a good work colleague & friend of mine died of a brain tumour aged only 63. Although he went part-time for the last few years of his life, he never got to enjoy a full retirement, nor finished his long standing wish to write a book. I remember at his wake following the well attended funeral service speaking to his widow Fiona who urged me not to leave it too late, advice I definitely heeded.
By following in my father’s footsteps, I have learnt from the master, especially when taking into account the four years he spent serving in the Royal Navy during World War 2 and the seven years it took studying to be a Chartered Architect at Hull college. If you put all this together this meant that he actually only worked for 16 years before he collecting his half index linked salary pension for life, ending up as the chief borough architect for Holderness in East Yorkshire.
Now although my Pfizer pension was a final salary one too, I’m afraid that taking it at 50 after only 16 years service and having left their employ as a middle manager means that it’s only a small but useful part of my retirement funding. At least I did take it out super early just in time before the rules changed from 50 to 55 for taking a pension, as initially the trustees didn’t want to pay it out at all. Thank goodness I kept an old memo from HR that said I could with only a minimal reduction, which I faxed it by return to them on receipt of the initial refusal.
It’s now been in payment for over seven years and so an important lesson, is to keep all your financial paperwork forever! In these days of ubiquitous electronic records I’m now insisting utilities bills, bank statements etc arrive as original paper copies wherever possible too despite the environmental hit to my green credentials… I’m also glad I also refused to trade it in for a lump sum when offered a transfer to an enhanced defined contribution pension pot. It’s the only pension I have before the state pension arrives that increases each year.
All the other savings pots I’ve accumulated over the years in various SIPPs went to buying a series of flat payout joint annuities, so that if anything happens to me, Debbie still has the same income. I decided to keep the annuity option, rather than take advantage of the new pension freedoms as I want to forget worrying about managing money as far a possible with the exception of immediate cashflow!
So going forward with no debt and reducing outgoings as far as possible is key to make sure the various pensions cover our day to day expenses as far as possible. After all when I pressed the button to start this journey so to speak, it would be at least an 11 year wait for me to receive the state pension at 66. Luckily with Debbie being slightly older than me her wait was only to be 10 years! What I find amazing though is how quickly that time is passing and to be honest we’ll be very well off when that kicks in, especially if all the children are financially secure.
The financial buffer mentioned above we try to reserve for one off capital requirements such as the need for Easigrass with the advent of Molly, a daughter deciding to do a Masters research degree in Glasgow, and our eldest son getting married! Without it I think we’d both have to at least consider a part-time job to pay for these things, but so far we’ve got it covered and long may it continue.
Many people told me that I’d be bored “doing nothing” but quite the opposite has transpired. Debbie and I are no longer constrained to only going out at weekends and now time is no longer a constraint we can pick and choose when to do things like go fell walking or go on a cruise.
Ending this story where I began my inspiration, dad’s ashes were scattered at his request by my younger brother Simon and I on the banks of the River Humber in North Ferriby, a town where he bought the first family home. Whenever I’m up that way I always make sure to visit and look at the suspension bridge which the place overlooks.
I remember well the bridge being built and my father taking me down to the viewing point just outside Hessle. He told me he was invited as the local chief architect to take the temporary outside lift up the nearest concrete tower to the top, which must have been some experience!