AMA - Retired at 40

[Amaretire40]

As the title says, I’ve decided to retire at 40, so AMA!

I’ve had an enjoyable life (so far!) and I’ve certainly had some great experiences (we haven’t always been entirely frugal and particularly on international assignments made the most of travel) - I guess true FIRE would have had less opportunities around that.
The work has often been very tough, and I haven’t always had the energy or patience to be a ‘fun’ person so I’m looking to getting some balance around that. I have certainly missed out on some things, but I guess I now have some freedom to make up for it!
And money well-spent is never wasted - though I definitely think some of my £25 cocktails could have quite happily been £5 beers for the same fun…

Did you ever when you were younger think about getting a job that you actually loved, thrived in and got something out of?

For a lot of people, their job is not just a drudge with a life goal to retire, it is a huge part their identity, mental simulation, and actual enjoyment. It’s a shame in a way that you didn’t get to experience that.

I would genuinely, 100% miss my job and the social life it brings. I’m 45 now and I’ve just started my MSC funded by my job and I’m really really proud of myself.

Oh that sounds great, my aunt also retired in her 40s and she had an absolute blast too.

She now has a three dogs and has moved to the country after a life of international travel. She’s been getting involved in the local community and does a lot of sports and is mostly enjoying life, but does say she misses out on a few things, but wouldn’t change it for anything.

I think that’s the thing, you always feel like you could/would/should do certain things, but if you are happy overall, then that’s the best place you could be.

Yes but I knew I wanted to live in London after graduation and couldn’t see how to afford it really otherwise. I know people do, but I didn’t have any family safety net and this was something I could do. I wouldn’t say the job was ever my identity, but I’m excited to think what comes next might be.

Good for her! I think that’s it - you have to just move into whatever makes you happy (or offers the best chance of happiness) - whatever that looks like in terms of purpose, joy, contentment, adventure…

I think you'll definitely need to downsize because £500k just isn't enough to provide £36k a year.

I do think, however, that £36k would be plenty to live on mortgage free without kids. You'll be able to take ludicrously cheap flights during term time and cheap package holidays, if that's your thing.

A friend of a friend was an investment banker and he semi-retired in his thirties after being made redundant in the financial crisis. He said at the time that he'd fully retire when he had £10 million invested.

I think he's now lost the lot after being swindled by a business partner.

Congratulations OP! I think it’s very normal now for our generation to have multiple careers though, so you may be done with career #1 but presumably you’re in good health and probably after a bit of a rest you’ll be ready for round 2, whatever that might be but it’ll be reassuring knowing you’ve got the nest egg to fall back on.

i work in a demanding job (energy industry, the dirty one) and am ploughing money into my pension aiming for retirement at 55 (also got 3 kids) but currently I would absolutely just love to walk out of work and never go back but don’t have the cash investment backup to do that over the longer term! I would love to go and do something that paid a pittance but felt rewarding and worthwhile.

OP, are you in one of those industries that means out equals no way back in?

I retired at 57 from teaching and I now foster 2 teens with learning disabilities. I have a property portfolio of 13 houses and investments/ISA's and savings plus I draw my Teachers Pension and an annuity.

I'm sure I'll get beaten up on here for saying this, but I can't imagine feeling comfortable retiring on those numbers at your age, particularly if you're essentially supporting your partner. I'm in law, not in finance, but your margins don't leave room for anything other than a very frugal existence with seemingly no allowance for any kind of downturns.

And with the property market at the moment, I wouldn't count on downsizing as a reliable income generator unless you're willing to potentially move to a much cheaper area of the country. Like some other posters, I'm also surprised by your relatively small portfolio.

I was also thinking this. I am a similar age, have about the same in a pension pot, home equity (no mortgage), less investments - but do have a substantial private income - which means I would technically be able to retire…..but, I like a bit of luxury and want to live!!!! 36 k a year….even without a mortgage is not, in my opinion sufficient for two people to live on annually, if you want any luxury, it’s London - even calling a handy man out costs a ridiculous amount of money.

The OP has worked incredibly hard and I hope she has a lovely retirement from this career and finds something else she loves!

OP, well done on your IB career. You must have been very successful to earn 300,000k + 75-125% bonus at age 40.

I agree with the other poster that you will need to downsize, in fact as soon as possible. Experts advise that in retirement, don't live in a bigger house than you need. A bigger house means bigger maintenance bills. Unless you get a lodger in, it is dead money that does not bring in an income or yield. Property prices have been generally stagnating since 2016 especially in London and particularly for leasehold flats. By unlocking say 300,000 through downsizing, you will add 300K to 500K and keep your withdrawal rate of 25,000 pre-private pension (57 years) below 4%.

Right now, 25,000 of 500,000 is 5%.

You don’t write like you’re married. It’s all “I” “I” “I”.

The only post about your husband is to tell us

1. he hasn’t worked for years
2. he’s been trying to build a business for years and it’s not made a penny
3. you earn massively more than him

I hope you have structured your finances in a way that will protect you in the event of a divorce

She would have been restricted to £10k per year into her pension given her salary.

Congratulations! It sounds like you've worked really hard and fab to see a working class background white woman achieve in the still male dominated financial world. Finding a new sense of meaning/purpose will be important but taking your time and resting a bit first sounds great. Enjoy!

I guess if you eat up a portion of the £500k while you're still in London, then sell the London place when you've got (say) £300k left of the £500k, then you could add another say £500k to that. Certainly round here £700k would buy a very luxurious house. Then draw down at say 4.5% to get you your £36k a year - yes, you're gonna slowly eat the capital but at the same time your £400k is gonna be growing. Let's say you got 5% average on that till you're 60, then that would mean you have a £1M pension pot to draw down from then, so even if you've eaten away at your £800k, you'll still have enough to live on.

I don't think it works without downsizing probably.

I suspect you'll find you're up for doing something low key where you're your own boss to make a bit of money once you've had a few years off anyway. And even a baseline £8-£12k would make a huge difference to your drawdown rate on your savings and investments.

Obviously it wouldn't be enough to spend half the year staying in 5* hotels but £3k a month is plenty to have a lovely lifestyle if your partner funds himself, and enough to get by if he doesn't.

And teachers are always complaining that they’re not paid enough! Not many jobs enable you to retire at 57 owning 13! Houses.

I thought retirement age was 55, you have just chose to stop working.

I think retirement is whenever you stop working and can still afford to support yourself.

Do you ever wish you’d done meaningful work instead? Will you pursue that now?

I’ll be honest, to me working in finance you’ve utterly wasted your life so far.

Thanks for the thread @Amaretire40 & good luck

No idea why so many posters are trying to pull you apart 🙄

Good for you. I am also in finance and at 46 decided to go and do another degree then masters.

now I work one day a week in a finance job so am semi retired. I also do charity work -trustee of a charity. I would happily do another 1 day a week role if something interesting appeared (non exec director?) but am not actively seeking any other work.

The major thing I wanted even at 18 was financial stability and independence. I knew this was part of the deal (or at least this deal made it more likely for me), and went and did it. It hasn’t been all bad and certainly hasn’t been wasted - I’ve had some brilliant experiences with friends and family.
Meaningful jobs are a rather subjective (and tbf a bit judgemental) description. Finance does play an important role in the system that we have - from liquidity, to asset raising, to risk management - all of which impacts everyone. It’s not just (and certainly not post gfc 2008, so the entirety of my career) like Wolf of Wall Street trading.

Thanks! There’s always a few aren’t there..

That’s ridiculous. Finance is an essential part of the economy. Nothing would function without it. It sounds like OP has lived in London (which she wanted to do), travelled and earned a high salary. Can’t see anything wasted there!