Would you retire now or go part-time with this financial situation?

[Spitloon]

You're 45. You're married. You have fully shared finances.
You have £1m invested in various places which is generating about £5K per month interest at the moment (so £60K per year - ish)
You have £100K cash.
You have shares in a couple of companies which might pay out £200++ if things go well. But no guarantee.
You have a house worth £370K which is paid off.
You want to move to a different house in the next few years but no rush. That house would be about £600K.

Currently you spend about £30K per year in total.
But you'll be increasing this because you'll soon have more freedom for holidays, meals out, weekends away.
An annual income of £45K would be more than enough.

You don't hate your job but its stressful. You have a lengthy commute but this only averages a day a week over the year. Half your job is very autonomous where you can basically do what you like, which gives a good level of freedom but also means it can just expand. And it has done.
You want to take early retirement - i.e. give up working completely by 50. You know some MNers are dead against this but this is your plan, and works for you.

Would you:
> Give up work completely now.
Pros: No more work.
Cons: Cliff edge, weird adjustment process maybe.

> Go part-time for the last five years (contractually).
Pros: Still earning a bit. Slight reduction in the non-autonomous bit of your workload.
Cons: Stress doesn't necessarily reduce. Still have to work and commute.

> Go part-time for the last five years (just don't tell anyone).
Pros: Still earning full salary.
Cons: No reduction in the non-autonomous bit of your workload. Still have to work and commute. Potentially awkward to navigate.

DH and I have very different perspectives and I'm interested in what others think. Thanks.

Is this both of you or just you?

Honestly I’d probably do 3, and see how it goes. Cut right back on everything discretionary, take breaks during the day to increase your local hobbies and friend groups, £1m isn’t that much to retire on that early, so I’d want another five years of earnings to pay off the new house at least before you both retire. Although I note you’ve said that doesn’t include your pensions, so you obviously need to find out how much those are. If you take 5% a year you’ll have to be lucky to keep increasing that with inflation and COL increases, the normal safe withdrawal rate is around 4%. But if you only need to make the £1m last until retirement age you’ll be fine to retire fully now.

If you're both home bodies does that mean travelling a lot is not that appealing? I think 45 is too young to stop working, tbh. I've seen what it's done for a relative. I'd take a year out and think about what you'd really like to do and retrain and then, if possible, do that on a part time basis.

Agree with 45 being too young to retire. I freelance/contract and sometimes have a few months between projects. I get that insight into retired life to an extent. First month is great - have days out and enjoy the downtime. But the second month onwards I feel I need a sense of purpose and direction. Consider what you do with your time…a lot of things I do in my time off are quite physical but I’ve realised I don’t have the energy to do that day after day!

Not for me. I am very happy to retire at 45 😅
Life's too short to waste spend my time working for anyone doing anything.

I'm 48 and it's my dream to retire so I'm biased and would say do it!

What will you do though? For the next 40 years or so. Genuinely curious.

😅 I typed in a hurry and tacked on a % when I should not have.

I don't think you're taking inflation into account. Ie in 20 years time (when you're 65), assuming 3.5% inflation, you would need £90k per year to have the same spending power as £45k gives you now. When you're 85, you'll need £180k.

The usual rule of thumb is that you can take 4% of the initial capital - increased each year to keep the same spending power - and that is likely to last you 30 years (at which point, the capital is all gone).

Once you've spent £250k on the new house + moving costs/minor work, you'll have £850k to generate an income (I'd ignore the £200k founders shares, and take that as a bonus if it materialises).

That would give you an income of £34k (rising with inflation to keep the same spending power), with the money running out when you're 75.

If you withdrew £45k per year (rising with inflation), you would run out of money before SPA.

That might still be OK if your pension savings are substantial. I'd second the pp who say that you need to get the details of your pensions then speak to an IFA.

No way I would retire at 45. You might live until you are 90, and be retired for another 45 years. If you don’t like your job, find another one.

So can you spend £300k of your capital AND live off your interest for the next 40+ years?

I would go part time.

In 40 years time the £60k interest she's getting will only have the buying power that £15k does today. So she won't be able to live off it any more.

If she wants to live off interest and yet leave the capital intact in real terms (ie have the same spending power), she needs to leave invested the part of the interest which is actually inflation. Right now, that's £35k (3.5%) of the 60k i(6%)

If she's happy for the capital to dwindle down to zero, she can take more.

Yes!

And she plans to spend £300k on upsizing her house.

I’d consider three things:

what would you do with your brain and your body if you retired young? Work can be annoying but it keeps us learning and gives us purpose.That’s important for health and wellbeing (obviously unhealthy job situations are different). Where will your social connections come from? If all your close friends and family are still working full time they won’t be spending swathes of time with you.

what would your personal and financial future look like if your husband divorced you?

what would your personal and financial future look like if your husband died?

In 40 years time she’ll be 85 and could comfortably afford to spend the capital!

A proper dilemma! I feel I need to know what the conflict is between you and DH as it has to be a decision you’re both happy with. Will there be some resentment if it’s you who gets to go early?
The housing thing is interesting. You must be in a cheaper area to have a house that’s 370 now and where a lovely retirement house would be 600. If you’re homebodies does that get you a 3 bed with lovely garden and in the best area?
I’m minded to say just retire. Clear your mind. Enjoy your life - with no children you can and should spend it all on yourselves.

So how DO you plan to spend the next 40 years if not in employment? Presumably your friends are not in the same financial position as you so won’t be having lazy weekday lunches with you? Believe me, unless you have a busy hobby, it can be very boring trying to fill the time when you’re not working at all.

I’d talk to a financial advisor and expect to be told you should work until 50, you may only be halfway through your life, if you find out in 20 years that’s not enough that won’t be a very fun normal retirement period. I definitely get the new house paid off and probably try and grow the savings a bit. I don’t think it will feel like the same amount of money in 40 years time.

I’d probably go part time but then I like working

Sorry, should've said that the plan is to dwindle the pot to nothing.
We're planning a 3% drawdown each year adjusted for inflation.

I haven't mapped each day of my 40 year retirement yet. Anything, everything, is better than working for those years
If I'm stuck for how to "fill my time", being an employee is the very last thing I'd choose.

I find it unimaginative that the answer to potentially being bored in retirement is to just keep working then.

Thanks for all the comments, really appreciate it.

No idea but I'm 42 and reading this I feel I have gone very wrong in life

Working is not the only answer but you do need a purpose. Leisure is more enjoyable when it’s juxtaposed with non-leisure.

The causes of boredom are having too much or too control over how one spends their time. All I’m saying is don’t swap one for the other.

I wouldn't retire. You don't know what's around the corner and you'll never get back into work, at least in any role you were doing, once you've taken a break at 40+ as a woman. I also would worry about my brain being active. I would want a plan, volunteering role already set up etc.

I stopped working at 48 , my husband who is the same age didn't give up work for another 10 years .

It came about me stopping working because we moved to a more rural area and to find another job in the same field would see me driving 80+ miles a day to/from a place of work .

I found filling my days completely ok , I made friends , did some volunteering , joined clubs to do with hobbies , did some crafting , read , went out walking .

I also don't mind spending time by myself going out to places or visiting cafe's solo .
If you are the same , then go for it .

Where's the £1m invested - is enough of it accessible before pension access age to keep you going? Over the last few years it's been possible to get ~10-12% on investments without taking crazy risks so you might want to review what funds you're invested in as well.

Why so much in cash?

Have you factored in not just the cost of the proposed house move but the likely changes to your outgoings as a result? Would your bills increase? Don't forget maintenance costs as well.

The general rule of thumb is you can safely draw on 4% of your investments (adjusted for inflation each year)

I would seriously recommend you get a handle on your pensions before making any decisions. There are lots of resources you can use to learn more about this stuff:
Rebel Finance School
Meaningful Money
Damian Talks Money
are all good places to start.

As an aside, how on earth would you go part time without your employer noticing? I'd strike that off your list of options for a start.

I stopped working at 45 and have never had a problem filling my time - I had young dcs though and they tend to demand a lot of your time! But even now they're at school I have plenty to keep me busy and I'm fine doing things on my own. I'm in London so there is plenty going on to keep me stimulated - art classes, fitness, theatre matinees, public talks, concerts, gallery tours and exhibitions. I think in many areas there isn't as much going on during the day and I'd get bored in suburbia.
I don't feel I need to have a purpose through work or volunteering but the dcs meet that role a bit. Financially we have more than you in investments but then we are spending more due to the dcs, and want to preserve capital for them too.