FIRE starter

[Mia85]

This is a thread for discussing FIRE (Financial Independence Retire Early) and supporting each other in planning for the future.

For anyone new to FIRE, the idea is that you live significantly below your income and invest the surplus, usually in low cost funds. The aim is to amass enough that you can live off the returns. At that point you are finanically independent and you are free to spend your time as you wish (which might include working if you want to do that).

There's a huge amount on the internet about it. Lots of news stories e.g. here and here One of the main gurus of the movement is Mr Money Mustache and his website is a good starting point www.mrmoneymustache.com

A lot of the FIRE discussion out there seems to be very US based and/or men in their 20s with no kids trying to retire extremely young so I though it'd be great to talk here and hopefully find likeminded people.

Dashed, yes diving around the world I'd expensive but it's what I have chosen to spend my money on. You're right. But I have inexpensive hobbies as well. I keep bees.
I have always had wanderlust and I really miss travelling.
I appreciate the affect it has on the planet but I grow my own food (veggie) so very few food miles and I don't spend on other stuff.
I still have a few places left to go....but unfortunately things have now changed for me as my DP died recently.
I would say to anyone thinking of FIRE. Make your own choices and don't be influenced by what others think you should buy or do.
I don't know anyone who is FI and is able to make life choices who regrets it.

[quote Dashel]@LunaHeather yes, the value will be when you sell it, it’s a bit strange to me, the fluctuation of my pension and this ISA - at least when my documents have been verified and I can invest.

Interest rates are shocking at the moment, it seems like it’s worth trying something new.

@PensionsYes I haven’t always been super frugal, but I have never had a new car, or paid more than £3100 for one. That seems to be an area I know a lot of people spend a lot on.[/quote]
I was thinking that I'd have to have a commitment from them

So if it's a process, do they guarantee to sell at what it was on Monday at 3pm or whenever I gave the instruction, so to speak? Like with a regular share sale?

I didn't change my lifestyle due to pay rises. Before I bought, it went to the flat deposit. After I bought, it went into either savings or paying off mortgage.

I've even sold expensive birthday gifts I've been given, if no gift receipt. I hate being given an item of jewellery, for example, that for me was a day's wage. I don't earn a lot.

@LunaHeather the information I found was on

www.vanguardinvestor.co.uk/need-help/answer/how-do-i-make-a-withdrawal

I’m afraid I haven’t even managed to deposit into it yet so not tried the withdrawal process myself, but it says it will sell them at the next dealing deadline.

I won a whole £25 on my premium bonds but it’s another£25 for my pension overpayment so better then £0. I hope other people managed a bit better!

@yellowspanner I hope you are ok today. I wish there were some comforting words that could be said about tomorrow, but I hope it goes as well as it possibly can. COVID doesn’t make it any easier I know.

I am like you in that I would dive as much as possible in warm waters, I’m too much of a wuss for the UK. I even managed to get DH into it. If I managed to retire early I might look at getting some seasonal work around Christmas to pay for it.

@yellowspanner I hope the funeral goes as well as possible.

@Dashel great your PBs are paying out.

@LunaHeather I do worry about the gap between the sell price and when you can then buy something else... That’s stopped me making long-term moves more than once.

Nice to find this thread. We're more focused on the FI side than the RE part. A big part of that is living on one income as growing up we both experienced parents losing jobs through redundancy and ill health.

Short term that's going to have the benefit of being able to take a full year's maternity leave without dipping into savings and just pressing pause on mortgage overpayments. Once nursery costs become an issue we will definitely find living off one income a bit trickier but that will be short term!

We could definitely be more frugal, but like others we've known too many people put off dreams for retirement to never reach them, so we're still doing the holidays but on a budget.

[quote PensionsYes]@yellowspanner I hope the funeral goes as well as possible.

@Dashel great your PBs are paying out.

@LunaHeather I do worry about the gap between the sell price and when you can then buy something else... That’s stopped me making long-term moves more than once.[/quote]
Having look at Dashel link - thank you - I have a lot to learn.

I don't even know what the next dealing deadline would be and my worry is that inbetween me asking them to sell and the dealing deadline, something will occur and the value will plummet.

I was hoping it would be like selling shares and you just get a dealer confirming you are selling at x price right now.

Welcome along Molten, lovely to have more people.

@LunaHeather - re plummeting values - I feel the same!

@MoltenLasagne (great name). Good to have you along, the more the merrier.

@anyone - what proportion of cash do you invest in ISAs versus pensions?

Am I right in thinking it makes no sense to keep cash in ISAs (especially if you are early 50s and are almost mortgage free?) Trying to get my head around this currently..

Pensions "Am I right in thinking it makes no sense to keep cash in ISAs (especially if you are early 50s and are almost mortgage free?) Trying to get my head around this currently.."

Well, it's different for everyone..

What's your thinking, what other things would you like to do?

I am splitting money between cash isa's and pensions because I need to bridge the gap between ER and drawing pension which is currently 55 and rumours that it may rise to 57/8 soon. I am hoping to retire early 50s so need enough cash to cover at least those years.

Luna, I’m thinking to put DHs ISA into his pension... Feels like a no-brainer, in terms of the tax rebate. Even if the ISA is doing pretty well.

But the idea that the pension age may rise from 55 puts me off! Though I assume they would have to give some notice of this... Even so, thank you for mentioning that 2020...

Maybe we will find out more today?

Re pensions

I heard private pension age is rising to 58

For me, I'm 45 and always thought that

1. a pension is like giving money to an organisation to give me back later

2. as a lower tax rate earner, it's not that exciting

3. the potential changes to terms and conditions seem endless

I don't know if there are better protections now but my parents lost money in Equitable Life.

One of the reasons I asked upthread about what lump sum people would want for retirement with no or very very low income is that I imagine this will be me for a good few years. The age will be higher than 58 by the time I hit 50.

I think it's very clear that the minimum pension age will be rising sadly www.gov.uk/government/consultations/increasing-the-normal-minimum-pension-age-consultation-on-implementation and www.yourmoney.com/retirement/government-plans-to-raise-minimum-pension-age-to-57/

I am assuming that I won't be able to access mine till at least 58 and it'll be a nice surprise if it's earlier. For that reason I'm saving into an ISA as well as pension. I have wondered about whether I've go the right balance given that I'm not making full use of tax advantages. I'm more interested in the FI rather than necessarily RE. I want to have money that is accessible so I can make choices before that age e.g. if one of us had a period of illness, or were unhappy in job and wanted to make changes or have some time out etc. Also I do quite like aspects of my job and I can imagine my ideal will be to work very part time and maybe partially support myself from savings/investments. I don't want to have to trigger the MPAA if I do that so I want to build investments outside of a pension wrapper so I have choices. Of course you lose a lot of the tax benefits by keepng options open so it's a difficult blance.

Thanks for the welcome all.

I debate about the pension v S&S ISA split too. We're early 30s so think it's very likely pension rules are going to get a lot worse before we reach retirement age. We're putting enough in our DC pensions to get maximum employer match and then putting the rest in ISAs.

Almost certainly rising to 58. I plan to have 8 years worth of living costs in S&S ISA, at 50, to bridge the gap.

when do you think it will change to 58 as I'm 53 just now and was going to start drawing a smallpension at 55 to enable me to drop to 25ish hours a week?

@TeacupDrama

when do you think it will change to 58 as I'm 53 just now and was going to start drawing a smallpension at 55 to enable me to drop to 25ish hours a week?

If your predicted state pension age is still 65, then youll probably be fine.

I believe (not 100% sure), it only affects people whose SPA is going to be 68.

@TeacupDrama

when do you think it will change to 58 as I'm 53 just now and was going to start drawing a smallpension at 55 to enable me to drop to 25ish hours a week?

The consultation doc suggests it's further away than I thought

www.gov.uk/government/consultations/increasing-the-normal-minimum-pension-age-consultation-on-implementation

Just got brief overview of Budget

Nothing significant for FIRE folk, am I right? Is there any legal validity in income tax and CGT thresholds being frozen or can they just change their minds?

Remember income tax thresholds being held from 2022 (not this coming April) for 4 years will result in more people paying higher rates if tax on some of their income. It’s called fiscal drag. Most people will get small pay rises over the 4 years but because the tax threshold isn’t going up, some creep above it and have to pay higher taxes of tax (or start paying) Ona. Proportion of their income.

It’s a common way to boost tax revenue without actually increasing the tax rate.

Effects will be minimal though unless you get a big old pay rise or boost in income.

Well that's a silver lining to the fact that I am very unlikely to see any kind of pay rise for a while!

@WombatChocolate

Remember income tax thresholds being held from 2022 (not this coming April) for 4 years will result in more people paying higher rates if tax on some of their income. It’s called fiscal drag. Most people will get small pay rises over the 4 years but because the tax threshold isn’t going up, some creep above it and have to pay higher taxes of tax (or start paying) Ona. Proportion of their income.

It’s a common way to boost tax revenue without actually increasing the tax rate.

Effects will be minimal though unless you get a big old pay rise or boost in income.

But my fear was tax increases so none of that matters to me.

I've also never had a job where you'd get a pay rise unless you fought for one and had something over them. Not necessarily something sinister 😂

I know all the headlines scream about it being increased tax by stealth but I don't see it that way.

Actually, who are the people getting pay rises? Very senior to me - higher rate taxpayers I guess? Or public sector?

@LunaHeather

Actually, who are the people getting pay rises? Very senior to me - higher rate taxpayers I guess? Or public sector?

I would expect public sector where they gave guaranteed pay rises as they move up their bands.

A lot of the private sector jobs I know you don't automatically get any pay rise each year and at times I have had several consecutive years without.

Personally I think that is quite a good way of getting more tax but only from those that are going to be earning more each year.

I hope the funeral went as well as it could today yellowspanner.