Anyone doing FIRE? How's it going?

[BigTittyLife]

I'm aiming for a fat FIRE at 48. We're 38.
We're hoping to have a £1m pot by that age spread across different investments - some accessible at 48, others tied up until later on. On top of those investments, we have a house worth about £340K which we've paid off. We also have shares in a company which may or may not sell for a decent price at some point.

I wouldn't say we're particularly frugal and we certainly don't go to the extents of some FIRE people. I guess our biggest savings compared to others are that we don't go on holiday at the moment because of our elderly dog, and that we don't have housing costs because we live in a modest house that we've fully paid off.

We're currently putting away about 79% of our income without trying too hard.

We're invested mostly in shares-based retirement tracker funds. We're dabbling in higher risk investments but only amounts that we can afford to lose. We have private pension pots but we don't put a huge amount into those. We both have decent-ish workplace pensions which will give an income of some size at some point.

Is anyone else doing FIRE? I'm on some FIRE forums but they're quite US-dominated and can be a bit weird. I'm wondering if any MNers are FIRE-ing?

@Sarkyandcynical Thanks for sharing such a positive story. I wonder if you'd be willing to say a little more about where you invested, please? It's so good to see your past saving behaviours are paying off 😊

@SareBear87 Well done on getting a chunk off your mortgage. For me, paying of the mortgage was a massive deal because it meant we've been much more immune to financial fluctuations so could plan better, we obviously have much more to actually save, and just mentally it feels wonderful to not have that commitment.

I am 39, I want to retire early. My plan is to do another 5 odd years in the corporate world, then get a more vocational or very part time job until early 50s.

I want a minimum of £1.5m in pension between us, and a few hundred thousand in my s&s ISA to tide us over before pension date.

I was stricter on it earlier (although I guess I also earned less so maybe is essentially the same!) - but have young children and want to balance with doing great holidays and having more time off with them now.

What's your current salary OP, and others? I've always been intrigued by FIRE but assumed you either had to be earning £60k+ and obvs not had kids if you were trying to do it from pay alone and not receive inheritance etc.

He clearly doesn’t understand how private pensions work. You can hold bland vanilla investments the same as in an ISA, no ‘risk’ is passed on other than that which you select.

We are FI, but won’t retire as now I spend on holidays like never before. We still save - it’s in my DNA, but spend 1 income on travel.

In the last thread quite a few of us were taking a 'FIRE light' approach i.e. drawing on a lot of the ideas and thinking behind FIRE but not going all out for the extreme frugal living that it's often associated with. Perhaps that's not 'true' FIRE, but mindful spending, consistent investing, valuing financial freedom etc are good habits.

PS why are you discounting the DB pensions in your 'worst case' plan OP? Of course regulations can change but presumably they're either govt backed or largely protected by the Pension Protection Fund. We've got enough DB pension to give us a moderately comfortable life from mid-60s (or earlier with a reduction) and that feels like a good safety net and allows us to take more risks elsewhere.

@Mia85 Yeah, that's a really good approach. The extreme frugal living of some of the US men is.... odd.
We discount the DB pension income just because it feels quite 'separate' from other money and investments, so we're not really in the habit of checking our workplace pensions. So when we're adding up "what we've got", we don't tend to log in to the pensions site and add that on too. It's just quietly doing its own thing in the background in a more passive way while we're taking a more active approach to other investments
Obviously as we get closer to RE and actually start some forecasting and planning, we'll include workplace pensions.

@Clingfilm Me and DP are both on £63K as gross base salary. DP earns an additional £36K-£45K gross from consultancy work.

Yeah I did. Got bored and went back to work though. However it is nice knowing you don’t have to work, makes it easier. I’m naturally a saver and am fairly low maintenance with spending.

@Hearya Did you go back to your old job or do something different?

I have read quite a bit of Mr Money Mustache and he does make some really good points (particularly in relation to the financial and environmental impact of the typical US lifestyle) but it could also be noted that he got divorced part-way through his FIRE journey.

Not saying that this applies to Mr MM, but I think there can be a very fine line between adopting a lifestyle as a whole family and financial control/abuse.

Just reached £300k net worth excluding property. I don't count property as I need somewhere to live.

My FI number is around £500k but I am not really aiming at that. My cashflow modelling indicates that I could have no earned income from 5 years time and have enough to live on. I work part-time, so expect I will continue doing that for some years yet.

The problem with FIRE I think is the RE part. It is not a cliff edge, you don't just stop all work. I feel you do work you want to do, when you want to do it.

The problem with FIRE I think is the RE part. It is not a cliff edge, you don't just stop all work. I feel you do work you want to do, when you want to do it.

Yes I think it's the FI bit that is really attractive: being in a position where work is a choice not a financial necessity.

FatFIRE here age 36, I’d recommend the Uk Reddit fat fire page.

We have focussed on maxing-out our ISA’s and they’re all in various low-fee index trackers held with Vanguard and Hargreaves Lansdown.

I’ve always paid into a DC pension but, once I started earning over £50k (only in the last few years of working), I maximised the tax-efficient pension contributions. I was paying 17% of my salary into pension at one point, plus any bonus, to make the most of the 40% tax relief. In order to spread the risk, I also opened a SIPP via HL and, instead of putting all the money into my work pension, I put some into the SIPP and invested in similar trackers to my ISA.
I look at the pension amounts alongside my other investments as I’ll be able to start drawing on them when I’m 58, which reduces the pressure on other income in the meantime.

I also have some invested in property. When I got married, rather than buy a house at our maximum affordability, we chose to buy something cheaper and keep my flat, which we have rented out for quite a few years. That’s worth less than it was at the peak of the market, and has not always brought in a profit for various reasons, but now brings in a small amount of regular income.
my husband has earns more than me and has money saved in S&S accounts.

We actually still have a mortgage. We have the money to pay it off but we fixed at a very low rate and the money is put aside in a fixed, high-interest bonds for a couple of years. It goes against instinct (especially for my husband) but is clearly the more sensible thing to do at this point. Once our fixed term ends, we’ll use the money to pay it off but will have earnt about 15k in the meantime. We also have some other money in high-rate fixed term bonds lasting between 1 and 3 years as the 6%+ that was available last year was too good to miss.

I have a spreadsheet that tracks where all our money is and how much income it is expected to bring in and when. I assume a conservative 4% average rise in the markets (I know that’s not in any way guaranteed). I have the pensions on there and assume I can draw on them from 58. I don’t include a state pension in my calculations.

I based my workings on how much cash we’d need to live a reasonable lifestyle until 90. I also include our house in the assets (but not income-generating) as we could downsize if everything goes wrong.

We’re now focussed on moving as much to tax-efficient savings as possible. I thought we’d never get there but, as I said, the last few years the growth has really sped up and I think we are seeing the benefits of long-term compounding.

As in, you achieved FatFIRE at 36? Congratulations if so!

Rick gets passed to DB pension funds, but you could put money into DC pensions and choose your investments to avoid that. Worth it for the tax relief.

@Sarkyandcynical can I ask, the money you have made on fixed high-interest bonds (you mention making £15k) do you have to pay tax on that?

My basic understanding is that ISAs are tax free so any gain is tax free. Savings have an allowance on interest before tax becomes payable (£1000 for basic rate tax and £500 for higher rate tax payer). I've realised that I have no idea how gains earned on bonds are classed. Are they taxed at your income rate or classed as capital gains (or neither)?

I'm 56 and have FI, I'm just downsizing work to three to four days and will go down to one to two by the end of the year. I might pick up some odd days of consultancy (my biggest worry is getting too much work - I want time off now).

I have c£600k in pension (always paid plenty in, to keep below 40% tax band, currently paying 43% of salary), then £150k in S&S ISAs, £50k premium bonds and c£70k cash (ISAs and other savings).

I'm about to inherit c£200k but even without that I would be OK now. Just the pension at a 4% drawdown rate is enough for me to live on, but actually I want to leave that untouched as long as possible. The first step there will be to take the £150k tax free lump sum. But that's still a few years off.

I've no kids, mortgage free.

The trickiest thing is going to be a mindset change - I no longer really need to save, but it's a habit.

I've not lived frugally but I'm lucky enough to be a high earner which obviously makes it a lot easier.

This is fascinating to me as a lifestyle. We have a house worth £600k with £300k equity. I also have £150k ISH in savings. If I was child free we'd stay in this house.

As it is, we're getting a huge mortgage and buying a £1m house (in London outskirts) so our kids will grow up with more space. We'll still have £400k equity and I'll keep trying to pay mortgage down as much as I can.

But realistically I'll probably downsize at retirement. I feel like I'm saving loads and ploughing loads into paying off our mortgage. Not sure if that is a good FIRE strategy, but as a saver I like the idea of FIRE.

Do you have any tips OP? Do the investments you've tried deliver more payback than investing your money in property (which imo generally goes up)

We are doing this.

I have a well paid but horribly stressful job which I loathe, and think of it as buying my freedom. The "retire early", for me, is retiring from Horrible Job, not necessarily work altogether (I would ideally want a low-paid, lower-stress job to just cover living expenses until I can draw my DB pension from 55).

Mortgage is paid off on a modest but perfectly adequate home, one child in secondary and savings put aside for her uni (if applicable) / getting started in life. We don't have a taste for luxury including fancy holidays or cars, so there's no sacrifice there. ISAs maxed out and additional pension purchased.

The ideal plan is to retire at 50 at the latest from Horrible Job.

However if it all becomes too much (it might) I can financially swing it from next year (42).

I don't talk about it to anyone other than DH and our parents (who are supportive). I find other people get very defensive, though I make absolutely no judgement on anyone else's choices. It's like a dirty secret, but a very satisfying one 😁

So much interesting info on here.

However, I'm a single parent of 3 with a non-contributing non-resident other parent - and also a teacher so will never be able to apply any of this to my life 😂 Nice to dream though!

(Anyone with job jump ideas for me would be very welcome! My actual salary now in 2024 is the exact same as it was in 2007- pay scales top out very early and less responsibility points available now... only in teaching could you earn the same at 28 as you do at 45 and it be considered acceptable.)

@Negroany Dropping days is great. Sometimes you have to say no to work requests. I don't like turning down work but I got out of working full time many years ago, so need to remind myself that I like having days to do what I like.
You may find that you don't view some things you do as being work even though you are paid for it. It's odd. You may enjoy the consultancy so much that you view it as being a fun thing to do, not as work.

You have a lot more in pension and savings than I have. Puts my £300k to shame.

Don't take all of the tax free lump sum. Often no need to take it all at once. Look at other options, such as UFPLS which is where you can take a pension payment and 75% is taxable and 25% is tax free.

I think you are right, the hardest thing is the mindset change, from being a saver to being a spender. You have saved for decades and that habit will be hard to break.

@MsCactus you sound similar to us, we also have a horribly expensive London house. I do overpay the mortgage as I want to be rid of it sooner, but it isn't always the soundest financial plan - over time inflation will reduce the value of my debt, and money invested will have longer to grow. I could also pay it/some of it with my tax free pension when the time comes

@nannynick yes agree dropping days is the way forward! I do 4 days a week now and I don't think I'll ever go back to 5

It’s treated as interest. So as I’m not currently working, it’ll be classed as part of my total income. If that’s my only income then it’ll be £12,500 tax free, then 20% on the rest.
One of the things I’ve been looking into now is tax-planning and how to most efficiently use investment growth/income/etc to support us in the longer term. Hence a focus on moving money into ISAs as much as possible, but also looking at interest allowances and capital gains etc.