AMA - Retired at 40

[Amaretire40]

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

More than a few on Mumsnet!

I’ll clear £25k net, which according to my previous spending is entirely managable without impacting principal. £36k is a pretty generous lifestyle… and I won’t be constantly jetting off to 5* hotels (though have already paid for spring in Asia so there is some luxury on the horizon). As I said, I am happy to rein in spending if needed, or figure out something else for cash is needed so I don’t see an urgent need to move house - mostly as I love London and am looking forward to having the time to explore it. I get that this is financially more risky, but it’s manageable enough. When the downsize happens it’s likely to be in a significantly lower CoL area where either I or DH grew up.

I worked part time for years but I didn't call myself semi retired until 60 when I took my pension, before then I worked part time. I'm not sure what you put on forms like insurance when you 'retire' very early, do you just tick the not in employment box.

I’m struggling with your numbers, your pension you can’t touch or you will take a huge hit, which means yoire living off the return on your investments

a high interest savings account would give you 5 percent, a decent investment fund at moderate risk 7-10 percent,

you expect 20-25k, so where is the 3 k coming from a month, unless you are using the capital sum. 3k after tax, means a much higher return

Yes I keep floating back to this and tbh it’s highly likely I’ll do it in future. For now it’s important to me that I don’t sign up / commit to too much too soon and give myself the space to reflect on what I’d give/get from the big world of options out there.

That was upthread around expected spend - I was being a bit lazy in the overall average vs pre and post-retirement income being paid. The £25k income is what’s sorted for now. Because of my job I was restricted in some of the investments I could make - I will be changing the portfolio. That said, whilst I expect to do better than that, I will only count the worst case…

Yes I’d take a year to enjoy time off then make plans that are more commuted.

i do manage to live on net of £15k per year (I salary sacrifice a lot) and with no mortgage (or kids) it’s fairly easy to achieve. Having a low maintenance property (like a flat) means not much maintenance costs and no car either to maintain.

so living on a lot less than £36k is quite easy without living a paupers lifestyle.

I know a couple of people who were in your position but both have them have gone back to work, all be it in a different line of work. A third person has gone to live in the Caymen Islands. Not sure how they pass their time but I expect its sailing and cocktails.

If asked, will you describe yourself as unemployed or retired?

Is your husband on board? Plans with him?

Depends. To friends and family - retired as I’m quite open about the state of finances. To people I’ve just met - I’d probably say I was in finance but currently not working. I don’t know what I have to say on official forms.

You’ve worked hard to get yourself into this enviable financial situation so make sure you enjoy yourself now. No need to make any firm plans as you can reassess as you go.

Yes. We have always had very open discussions around finances even though we don’t have shared accounts. He obviously knew this was a path I’d like to take and we agree on lifestyle, expenditure etc. I think he was more supportive than me tbh and he’s keen to see what comes next for me and us too.

Would be interesting to know what job this poster has that makes her feel that superior just because she finds her work somehow more meaningful than another person’s.

Yep, I just think it smacks of jealousy and spite.

I am interested in the numbers!

What are your expected outgoings py? How does that compare to what you spend each year currently (excluding contributions to pension / investments).
Is the plan to draw that amount from your investments?

P.s. cava is actually nicer than prosecco IMHO.

Sounds doable just about- presumably you've calculated the withdrawal rate you'll need up to 58, then 58-68, then 68+. There's not a lot of slack there though.

Have you really thought through how happy you're going to be with a big drop in income? In your shoes I'd be thinking about a second career rather than retirement- if you can afford to live on £25k you could try your hand at just about anything, starting at the bottom. I am all for retiring early- I'm planning to go early 50s- but retiring early on such a low income can be very restrictive and shuts down quite a few options for the rest of your life. But if you are confident that you will enjoy not working and will be happy being frugal, why not?

God this thread is my new roman empire 😅

Will you travel a lot together?
Will your 500k savings be fully eroded or close to by the time you hit state pension?
Are you concerned about mental atrophy? I live on a road with several elderly people the difference in the ones who are museum tour guides and enthused gardener vs ones who potter about is wild

I'm amazed by how much spite has been hurled at the OP on this thread! It reflects more on those posters than it does on the OP. Not a good look.

@Amaretire40 congratulations on your achievement and for stepping off the merry-go-round whilst you're young enough to enjoy life! I retired at 49 and couldn't be happier! Slightly different circumstances in that we have kids and are both ex military so got the pensions straight away. But we have a similar amount to you in terms of assets and were growing our investment pot as well.

You've got so much ahead of you! Let yourself get bored for a while (I must admit I haven't yet and it's been a few years now!). That way you'll start to really focus in on what you enjoy. Gardening sounds like it could be your thing, so maybe a community garden or inner city farm might be of interest.

Ignore the naysayers, you sound like you've got enough experience, common sense and resources to make a wonderful life.

That doesn’t seem like much to live on OP. Do you have a plan B if your investments don’t perform as well as you’d like?

Do you have costs coming out of this or is your husband paying all shared costs, utilities, insurance food etc,

im a little bemused to take retirement and not know how much you’re monthly income will be and be reliant on the markets,

gently was this a proactive choice or was there an issue with your job, health or even did lose your job and decide not to work again,

it seems a very risky decision and as you didn’t even know your own numbers quite odd, to clear 36 k you are heavily reliant on your investments performing and right now not much is

My outgoings whilst working were not negligible - daily tube, lunch, and slightly too often pub/meals out and being able to axe the office gym for my own home kit mean I’ll probably instantly ‘save’ £700-800 per month.

The budget trackers tell us that essential/normal household bills (utilities insurance phones and car/transport) are £750-900 per month which are shared.

On the discretionary side, I am good with cheaper pursuits and there are many locally - parks, museums, cooking - though I have a weakness for trying new restaurants (mostly local authentic places, occasional set lunch deals). Even accounting for holiday pot and extraordinary expenses, I don’t really see the remaining £1.5k being fully spent every month.

Yes as I’m really not overly motivated by the expensive stuff or experiences, really. I have a fair amount of decent handbags / clothes etc but I’m happiest in Uniqlo / M&S basics. It’s not a huge deal to stay in ‘only’ a 3* and take the Ryanair flight - we’d have been doing that anyway (but likely still stopping by the ritz for a cocktail).

We travel both together and separately already- and span the full spectrum of camping, city breaks in travelodge-types, a few nights in spa resorts and conventional canaries type holidays with the wider family. Caribbean isn’t really our bag, though we do enjoy Asia including what I’d say is backpacker lux.
I think the interest will mostly cover it, but am happy to dip into it (or modify the plan).
And yes v conscious of the need to stay physically and mentally fit, and find a purpose. I’ve done a few days of Loose Women followed by Countdown, so that’s giving me some balance, right?

Thanks! Yes, I’m backing myself and DH to give it a decent go (and if we are wrong then we will figure it out!)