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.

@chimichangaz

Just on the transfer of DB pensions point, I thought of you when I saw this thread on the MSE pension board forums.moneysavingexpert.com/discussion/6293051/pension-has-finally-landed-as-an-insistent-client-acting-against-advice#latest

It's someone who was able to transfer their DB pension despite not being able to get an advisor who would recommend that.

Actually I'd recommend that you post your Qs about pensions on the MSE pensions board if you want further thoughts on how to structure it and what the potential considerations might be. There's some really knowledgeable people there.

NB I'm sure that you already know this but if you are thinking of making additional pension contributions when you plan to work part time later on you should be aware of the MPAA as this will limit what you can contriubte if you have accessed your pensions already (with some exceptions). If might not be relevant to your plans but I thought I'd mention it. www.ii.co.uk/pensions/contributions/mpaa-triggers

Hi all, thought I would join here as I am starting the FIRE journey! I did a budget plan last week and realised I was pissing about a grand a month up the wall on shit I didn't need.

Started saving 100 a week initially in an ISA (we get paid weekly) towards a mortgage deposit (so about 400 a month) and , DP is going to be saving about the same. Current projection is that in 4 years time we will have just over 41k saved if we stay on our current salaries. Ideally I am looking to promote into a more senior role to up this figure and get us a better mortgage outcome. On top of this we are putting 200 away in instant access for a nice holiday away somewhere per year.

I would like to utilise some of my creative skills and get a side income coming in too which would solely go into savings. I have a few ideas so just exploring them at the moment and have come here looking for some inspiration and to find out what other amazing ideas there are out there to help get us that mortgage deposit!

Hi

Sounds like a great start. Is that a LISA to get the government top up (assuming this is your first home?). You could each open one. If you each put £4000 in, you would get an additional £1000 each per year.

Hello everyone, how are we doing?

If you set and forget it doesn't lend itself to updates does it?

I did end up sticking half my holiday fund in an ISA. Big holiday next year is unlikely so felt reasonable. Tolerated the recent drop although it was a lesson in overconfidence.

Does anyone do family linking on ajbell? I could transfer everything to them from HL but curious about the interface.

Interesting thread.

DH is very into fire movement. But doesn’t seem to get that retiring by 40 for us is unreasonable. Especially if we’re not overpaying mortgage now.

We’re 36/37. So not long.

But I’m working towards building up pension pots and savings so we can be more independent and maybe not have to work so much on the way to retirement.

Hi all

A little update from me (I commented right at the beginning of the thread in February and then went a little quiet).

DH and I are still focussing on investing as much as we can. I have been squirrelling away into my HL ISA and hope to max it out by the end of the tax year, and DH has started investing in barrels of whisky (it has been an interest of his for years and I know it is way riskier then other investments but I am just happy he is now in the habit of investing). He is also in the industry already so isn't investing blindly. It is a potential opportunity for him to quit the corporate world in our early 40s (when it will be ready to be bottled) which would be very difficult for us to achieve through other means.

We have also focussed on making sure we are being paid what we are worth, DH got a 40% pay rise overnight and I am interviewing for a role which pays 50% more and has very similar benefits. I am regretting not taking this into my own hands earlier!

In February we said that starting a family was our short term plan and that this would impact our ability to save at such a great rate. Sadly this has not yet been possible and we are planning to have IVF In January (new job permitting). The fact that we do not need to worry about the money side of IVF and could pay for multiple cycles now makes out desire to save and be financially free all worth it. It has taken a lot of stress out of a very stressful scenario and I am so grateful we can just relax and are free to go ahead with the treatment whenever we want! we may not be in a position to retire anytime soon but that feeling is so freeing nonetheless!
Another feeing of freedom through healthy finances- DH and I are also both entitled to one year parental leave (only first six months paid) so we are considering dipping into our savings and taking a 'mini retirement' to spend time as a family when baby (hopefully) arrives. Still considering the possibility but having the option is a fantastic feeling!

That is bittersweet news @bertieb7

I'm glad that your financial planning is making a difficult time more bearable. An excellent example of how it is as much about choices now as retiring early.

A shared early retirement sounds amazing. Time to build and enjoy your family together. I personally think the idea of 45 years flat out no breaks is a crazy way to go through life. There is benefit to everyone in taking time off the hamster wheel for deeper personal reflection. I realise it is a privilege not afforded to everyone. But I vote you should do it. What a great opportunity. Especially with only one child. We travelled during my mat leaves. It was much easier with the first, but was a great experience each time.

Very best wishes for the ivf

It’s really good to hear news from people!

@bertieb7 congratulations on the new job and pay rises and good luck with the ivf when you start that!

@ememem84 welcome aboard and personally I feel it’s better to aim to retire at 40 but actually retire at 55 or even 60 that it is not to try and retire at 68 or possibly later.
It’s quite sad that on other threads I have seen that some people are saying that they aren’t sure if they will ever stop working.

Things are carrying on more or less as normal for me. The direct debits go to the ISA, the pension deduction comes out of my wages and the rental income money is invested into our house. We are doing up our bedroom at the moment.

DH is more determined that ever to have a place abroad and have an early retirement, which is great news for me.

My main news is that I’m applying for a second job in a local pub to help out in a function room for events. It’s not going to be regular work, maybe one or two shifts a month but every penny will go to my pension

Hello,

Am wondering if anyone can help advise if we are on the right track with investments and allocation of our money. I’m concerned about pension pot, housing. We are 35 and 41. Everything is in vanguard - mostly life strategy 80% or 100%.

We each have £100k in SIPPs. So £200 altogether there.

We have a further £100k in ISAs. Some S&S ISAs and some cash that I think I want to transfer to Vanguard S&S ISAs.

We don’t own a house and we are renting. We are probably moving abroad soon which is why we haven’t bought one. I’m hindsight we probably should have bought a few years ago but that ship has sailed.

I’m about to come into some money. Probably about £70k. I was going to add to our pensions, put £35k in each. What would you do in my situation! Am trying to invest as much as possible and do some kind of FIRE. But not sure if it’s very realistic as only just started on this journey really.

Thanks!

DH and I married 4 years ago.
I moved into his home and we both invested to extend it.
My home is being rented to friends who are probably moving out September '23.
If I sold this house (With the equity) we can pay off our mortgage and still have a pot of about 120K
I'm 50 and DH is 52.
I have a private pension pot which will kick in at 58 and I will receive about 500 pounds a month if I choose to utilize it then. If I wait til I'm 67 it will be about 1850 pounds.
My state pension will also kick in at 67 and will be an extra 900 pounds (this is not a UK state pension btw - I'm not entitled to one) DH will receive a state pension at 67.
DH's private pension pot is about 70K and seems like he will be unable to draw until he's 67.

What would you advise doing with the 120k pot first of all ?

We were thinking of a flip as DH is brilliant at stuff like that and would work part time to allow him time to renovate the house.
Then we would have 2 houses - the flip we could rent out - and then in 3 years or so we could downsize from our present house and free up the 350K in this house which we could draw down on at about 20K a year until my private pension kicks in 3 years later.

We definitely don't need the 120k at the moment as I am working full time and he works almost full time - and we are also trying to save - we have about 22K savings.

I would like to retire in about 5 years though - as would he.
But if anyone else has a good idea what to do with the first 120K - I'd be very interested to hear it.

If your OH likes doing flips then that sounds like a good idea - but I'm not sure where you'd find one for £120k?

Someone else with much more knowledge than me will come along with some investment advice, I'm sure

@chimichangaz
We're up north- you can get them for about 60K

👍🏻

Anyone wondering whether the downturn in shares and increased cost of living is going to delay achieving FIRE? I’m hearing that some retirees are going back to work. I’m 55 and hoping to retire in about 3 years- not exactly FIRE but pre state pension age.

Hello @TheGander - yes I'm definitely wondering as you say ! I found an interesting discussion on Money Saving Expert forum on this also
forums.moneysavingexpert.com/discussion/6410118/retirement-planning-have-you-revised-your-figures#latest

Thanks for that link @BookWorm45 , seems a basic minimum of £35000 per couple and no mortgage is needed but probably need quite a bit more for a comfortable retirement. Maybe I’ll post on Gransnet for some tips! I suspect even if you cost things up, you need a cushion to protect against the kind of inflationary event we are experiencing now, as they do happen periodically. I remember my dad lived in a state of permanent anxiety about money in retirement and I want to avoid that.

Another flipper here. Can you add value to the house that you currently rent out? Instead of selling it, can you use it as your pension?
With the additional stamp duty rule, it will be more expensive to get the same house.
Do you have experience flipping houses? Have you had a consulting session with an architect on maximising your property potential?

It takes a lot of budgeting and project management. Can be overwhelming and risky. We only do it because I grew up with family working in the trade and I do property risk assessment as part of my day job. You need to be knowledgeable with property and the local market. Capital gain tax can be high if you are going to sell it as it is not your main home.

The property refurbishment courses from the NRLA are very informative. The auction property course from the NRLA shows you the risks and risk mitigation strategies.

I'd have thought pension would be better than property flipping. You have low pension values, so you can top up over a couple of years, and both keep earning as you are not earn less. It's less effort, likely much more tax efficient. Second properties for BTL or flipping look much less appealing these days due to tax incentives being removed.

@MamaSharkington it depends on the house you are getting, the finance and pension.

Depending on the property type, flipping can earn a lot more. I don't sell, so no CGT yet. I will keep holding onto them and rent them out. You can also leverage on flipping, which you can't in pension. If you buy a run down property with good potential such as an extension, a large plot with the potential of building another house, the return can be quite substantial. Some run down properties are fine structurally, they are mortgeable. With the cost of labour and materials going up in multiple, you are right that it is less appealing now. Whitewashing the walls and fitting a new kitchen wouldn't cut it.
It does come with risks. You need to be familiar with local planning rules, knowledgeable in construction and know the local market well.

Pension is less effort but the return on these DC schemes have been less what what I get from flipping. High fees from manager even if the return is negative.
It would be ideal if the UK can follow the Norway system, all DC schemes club together, increase bargaining power, lower fees and hold the investment manager accountable.

Flipping can be done part time while you are earning a full time salary.
The total pension tax free life time lump sum have not gone up over the years. Flipping can be very risky. I would not recommend it to anyone unless they know the local market, good with DIY and organised.

This thread is so interesting. I wish I'd known about FIRE 20 years ago.

I'm 52, DH is 54. DH is planning on retiring from his corporate job in 2030, age 62. He's building up a second income stream from a hobby.

I'm planning on retiring at 62, I love my job and I'm not sure what I'd do if I retired much earlier. The main thing we want to do once retired is travel for a year, later life gap year.

We've got 3 BTL which generate £20k pa after tax. Once we both stop working they'll generate probably £25k as we'll both have our tax free allowances.

At current contribution rates we'll have £700k in private pensions at retirement and will use the tax free lump sum to pay off the mortgage leaving £525k in pension and will draw on that until we can claim our state pension. We're planning on selling the house and buying ourselves a smaller place and giving the DCs enough for a deposit for their own place.

DCs are 16 and 19 and I've started SIPPs for them with Vanguard and Fidelity.

It's too late for FIRE for us but I am going to speak to the DCs about it when they finish education and start working. They may not want to follow the FIRE method but at least they'll be aware and have the option which I didn't because I didn't know it was a thing!

DH and I could have retired by now but we chose to send DCs to private schools and spend £10k+ pa on holidays which I don't regret at all. And possibly even if I'd known about FIRE ultimately I think I'd have still prioritised DC education and amazing family holidays which we'll all remember forever over retiring early.

I want to make sure my DC are financially literate and can make informed decisions as they grow older. Financial education is so lacking in this country. It should be a compulsory part of school. Not just saving and investing but also macro and micro economics so you not only have an understanding of your personal finances but also have an understanding of how the economy operates, monetary and fiscal policy, global influences on shares, investments, interest rates etc.