Do we have enough to afford retirement?

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Pink sea thrift or armeria maritima

Which suggests around £25,000 – £30,000 a year is enough to retire on and be content and who are we to argue.  Other unspecified experts suggest 2/3rd of your working income is required for a happy retirement.  I have decided to share the details of our retirement income and savings on the blog to help others on a similar journey.  I know our circumstances are peculiar to us and what works for us won’t necessarily apply to you, whatever these online calculators and column writers suggest we are all individuals and what we feel we can live on and have managed to save will be different from anything you can and want to do.  But the information might inspire you or make you re-think your own ideas for financial independence and early retirement.

There are four reasons why early retirement for us has become possible.

Reason number one – downsizing
By 2008 our son was settled with his partner and we were able to sell our family home and down-size to a small flat that was cheap enough to buy mortgage-free [hurrah!] with enough left over to pay for the campervan [double-hurrah!].  The flat is also cheap to heat and run and so contributes to reason number two.

Reason number two – frugal living
Although I am grateful that a company is willing to pay me to give my time and do stuff I have the skills to do, my own income as a travel writer and administrator is below the average in the UK [currently £26,260/year gross].  Jointly we currently receive around £36,000 a year net from our different occupations.  I [honestly] cannot say that we are ‘ultra-frugal’; we have lots of holidays, eat out occasionally, go to gigs and plays, don’t always shop at the cheapest supermarkets and generally enjoy ourselves.  But the main thing is that we spend less than we earn.  Over the past six years [since returning from our ‘gap’ year] our average annual spending has been £24,125 a year [about 2/3rd of our income] and we have saved the rest.

Before we can retire our savings need to be sufficient to cover a period of nine years [see below].  After many modifications and adjustments we have come up with what we hope is a generous budget for retirement of £27,000 a year.  This is more than 2/3rds of our current working income but is near the half-way point of the Which figure above.  Because we have lived fairly frugally over the past six years and we are naturally cautious we wanted to have a bit of expansion room in our early retirement ‘income’.  We have estimated that this amount will be enough for monthly meals out, cultural stuff and [most importantly] travel in the campervan [we are not planning lots of long-haul flights].  It should also be enough to cope with most small household crises [for example buying a new washing machine] and for any larger problems we have a contingency fund of £15,000.

Reason number three – we have pensions
We have saved sufficient to cover our ‘income’ for the years from 2017 to early in 2026.  In this momentous year all of our various pensions [none of them very large] will provide us with an income of a similar amount.

A quick bit about our pensions.  We both have public sector pension that are final salary pensions and often described as ‘gold-plated’ in the media.  I have worked in the NHS for around thirteen years of my working life and for this will receive just over £2,000 a year [not even copper-plated really].  Mr BOTRA will have 30-years service in higher education and so will receive a more useful pension of around £12,000 a year.  In addition I have a couple of small private sector pensions from about eight years in the charity sector that might bring in a few hundred pounds a year but will be dependent on the annuity rates at the time.  I am ashamed to say that for many years I didn’t even save towards a pension but you live and learn.  According to the current forecasts our state pensions will make up the rest of our income.

Reason number four – the inheritance
Inheritance doesn’t sit comfortably with us but there is no doubt that when a close relative died we inherited enough money to bring our retirement forward by about five years.  Some of this inheritance came from selling a house but we also maximised the money by working hard to sell his 170+ paintings, 250+ ornaments and many other collectables.  There was a four-month period in 2014 when we spent our evenings and weekends learning about fine china and collectables, placing detailed adverts on Ebay, packing delicate ornaments and posting them to far-flung destinations.  We dealt with dealers and enthusiasts to make the most of what we had been given.  We are truly grateful for the opportunity this money has given us and as the money came from a relative who enjoyed a long retirement from his mid-50s and spent his money on lots of holidays I like to think he would approve of our choice of how to spend the money.

 

 

 

 

 

I am lucky to be able to choose when I finish work

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MRS ONL did a thought provoking post recently that highlighted how many people don’t get to retire when they would choose to.  The post was very timely as the small charity I work in has been going through difficult financial times.  I have told you about these problems before but things have become considerably worse since I gave notice of my impending retirement [these things are not related]!  Every week communications are sent out about someone else who is being made redundant; people who are skilled and dedicated workers who have given so much to the charity and each one of them brings me pain; to say that I feel I am leaving a sinking ship is to understate how fragile this organisation feels at the moment.

Mr BOTRA commented that if I could have hung on a month or more I might have been made redundant too and he is right, I am sure they will move on to the lower grade post when they have finished getting rid of the management tier.  And yet I feel pleased that I got in first, not only to save the charity I work for having to find the few weeks salary they would be obliged to pay me as redundancy pay but also for my own dignity; everyone knows that I am leaving to retire and it is my choice; I haven’t had the stress of ‘consultation’ interviews and competing for the one remaining post.  Other colleagues have not been so fortunate, are not leaving out of their own volition and will be going straight in to job seeking, a particularly tough activity during the festive period.

I don’t want to criticise the work of the charity, the services it delivers are extremely high quality but unfortunately the higher management took the somewhat reckless decision to grow and spend beyond the secured income a few years ago and individuals are now paying the price for that over-stretching.  The new management is taking control of the situation but many good people are being thrown out in the process.

This all really brings home how important having some back-up savings are for those times when employment let’s you down.  I feel privileged to be choosing when I can retire and I am very sad that I have colleagues with an insecure future.  I don’t intend to sound self-pitying, as I realise how fortunate I am, but leaving a despondent and bruised organisation means that certainly none of them will have any interest in joining my retirement party and there will be no one left to care enough about buying me a retirement present.  I will be able to slip away quietly and I think that is most appropriate in the circumstances.

 

 

 

I can’t wait to start spending those savings

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You might expect that as someone who has been saving for some years, firstly for a gap year and more recently for early retirement I am approaching the period when I have to start spending all that money with some trepidation and reluctance.  Instead I find that I am eager to start spending those savings.  I think this is for two reasons; firstly I think that money is only there to spend and I am somewhat uncomfortable earning more money than I need and so having spare money to save; I will be happy when we have just enough. Secondly, of course, the spending period of this early retirement project is the whole point; for me saving isn’t what defines me and money is only saved to be spent in the future.

Looking back I have only ever successfully saved for something when I have a clear goal in mind.  Since the early years of our marriage when the washing machine broke and we didn’t have enough money to buy a new one, we have always aimed to have at least £300 [for that washing machine] in a savings account.  We have prioritised saving for holidays [even when we had very little] for many years, we saved to buy our first campervan and we saved energetically to have our gap year in 2009.  Since returning from this gap year we have worked hard to put money aside to retire.  But apart from these periods of active saving I have generally been a spender and I am looking forward to returning to being that person.

This isn’t to say I want to throw money away or spend money on unnecessary stuff, I have never really been one of the world’s best consumers.  Although I certainly can’t reach the minimalist goal of owning just 33 items of clothing I don’t like owning surplus stuff and I am happier finding second-hand bargains than buying new.

I don’t feel that saving [or spending] money should define me.  I am keen for us to become a none-paid-work couple who have just enough money for our needs and no more [with a little in a contingency fund for that washing machine] and we can work our way through the savings, watching them dwindling as each year passes.  To me, this situation has a harmony; we will be financially secure but not rolling in it and we will be time-rich.  I think it is possible I might get a bit of a thrill if we are super-frugal and finish a year a few hundred pounds below our annual budget … but then if we do manage to do that I will want to celebrate by spending it on throwing a party!

 

 

I hope my retired self doesn’t forget the workers

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A dripping Scottish spiders web

One of my concerns about being retired is becoming one of those people [and I have met a few] who tell you about the one thing they have done in a day and then make out they are leading really busy lives.  They will tell you this in all seriousness and genuinely seem to have forgotten what life is like for the working population.  These retirees are oblivious to how the workers have to fit in dentist appointments, buying stuff on Ebay and getting the car fixed and all around the nine-to-five job.  And that these wage slaves still have to find time to get home and clean the bathroom … and yet all these retirees were these people once.  I hope that when I am retired I remember what it was like to feel that the days are running away with you and there is so much to cram in and I also hope I will be the retired person who offers to help out our working friends with tasks to make their life less stressful.

This isn’t that I won’t sometimes revel in the opportunity retirement will offer to just do not very much in a day, to not feel the need to fill my time and to be a one-task-a-day type of person.  This is one of the many benefits of retirement and I can’t wait to relax in to this state of being time-rich.  I will be able to sweep up the leaves and chat to the neighbours and then spend the rest of the day taking a walk, watching the wren out of the window, practicing some tai chi or curling up in an armchair reading.  What I want to avoid doing is telling anyone who will listen about how busy I have been to my working friends, and I hope I never say, ‘I don’t know how I had time to go to work’ just because I had to go for a blood test or I took the time to water the neighbours plants.  I hope I remember how lucky I am to be retired and I hope I do not feel the need to justify my existence by pretending I have a lot on my plate.

I will try hard not to become so relaxed that I forget the stresses of pre-retirement days but I hope that all my friends [real and virtual] will please tell me if I become that person!

We are wondering, how long will our retirement last for?

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Berlin is heaven for cyclists

A recently published map of life expectancy in Greater Manchester had a bigger impact on Mr BOTRA than it did on me.  Whereas I have long had a sense of my own mortality and tried to live every day as if it might be my last, this hasn’t really rubbed off on Mr BOTRA.  It took these figures from the University of Manchester for the short time we might have left to hit home.  The pictorial depiction of life expectancy using the Greater Manchester Metro tram map is a good way to demonstrate how deprivation affects life expectancy.  Our nearest tram stop is Anchorage and the map suggests that while I might survive until the grand old age of 74 years, Mr BOTRA will pop his clogs when he is just 69.

Of course, as a scientist, he understands that life expectancy is an average and includes all those who die shortly after birth or as young adults and the figures do not actually represent the life span he can expect to achieve.  This map and the figures are useful for public health campaigners but it doesn’t really help us plan for retirement and if we really expected to die at 74 and 69 we would have retired long ago!

As a non-smoker, cyclist and hill walker and certainly not poor, Mr BOTRA can expect to live longer than those who live a less privileged life and yet how these lifestyle choices and genes interact to decide a life-span is complex.  These thoughts of mortality got us thinking about how the urban area we live in where the air quality is poor might affect our health.  We love the vibrancy of living in the city and just hope that our regular forays to the hills and the countryside mitigate this air pollution.  Of course, we might be misguided, only time will tell.

What is a tragedy is that in England the wealthy continue to have considerably better health outcomes than the poor, as the map below shows:

Men and women aged 65 years in Manchester have the lowest life expectancy compared to other areas of the UK – men 15.9 years; women 18.8 years. This compares to 21.6 years for men in Kensington and Chelsea and 24.6 years for women in Camden. Healthy life expectancy (years of life in good health) can be as low as 54.4 years old for women in Manchester, compared to 72.2 years in Richmond upon Thames.

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Alice asked the Cheshire Cat … ‘What road do I take?’

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The Blue Bus by the Spanish coast

Sometimes it comes up in conversation and I tell people we had a gap year, living in our campervan for twelve months and travelling around the southern parts of Europe.  Most people’s reaction is, ‘I would love to do that’ with a dreamy look in their eyes and I don’t deny that it was a fantastic experience.  I have noticed that lots of people buy in to the romantic idea of the freedom of the road in a campervan and want to be part of that.  I don’t wish to trample on anyone’s dreams but if our conversation continues I often add that although I understand that everyone has specific circumstances that might explain why they can’t drive off in to the sunset, if we can do it then lots of other people can.

If the gap-year enthusiast is still with me I might mention that the trip was at least three years in the planning, that we saved a lot of money, sold everything we didn’t need, downsized the house and gave up secure jobs to do it and that fortunately Mr BOTRA and I love each other very much and so don’t find sharing the [lack of] space in a small campervan a problem.  At this point many people start to lose enthusiasm and reconsider, realising they don’t really want to go to that much trouble just to travel around in a tin box.  If they stay with me I might refer to how much we missed our son and daughter-in-law and friends while we were away and a few more fall by the wayside.  The final nail in this conversation can be when I explain the amount of effort we had to put in to find new jobs when we returned.  Of course, lots of other people do get organised and plan and execute a similar / longer / more adventurous trip and I am happy to share any useful experience I have with these folk; they are not just dreamers but are people who make things happen.

No matter what personality test I take I have always come out as a doer.  I used to co-run workshops for community groups and organisations where we took them through a visioning exercise, thinking about their community or organisation in five or ten years time, mapping that vision and then supporting them in planning the multitude of steps required to make that dream a reality.  To me this sort of planning is second nature but it became clear that some people were good at the vision but hopeless with the planning and even more struggled to get beyond the first couple of steps on the path to their dream.  Staying true to an idea through the tiny steps of the planning stage can be a struggle and needs perseverance and strength, an ability to pick yourself up when you get knocked down and a willingness to be adaptable when circumstances change along the way.

There are as many different dreams out there as there are individuals and I would love to be able to congratulate everyone who has ever had a plan and made it real.  The Financial Independence and Early Retirement community is not dissimilar to the [later life] gap year in a campervan community; they are people who have a dream or a vision of a different life and make it happen, even though the planning and saving to achieve this dream might take many years.

Although when travelling I like to see where the road takes me, in terms of life I like to have a plan and so my favourite life quote is from the great story teller Lewis Carroll in Alice in Wonderland, when Alice met the Cheshire Cat:

“Alice asked the Cheshire Cat, who was sitting in a tree, “What road do I take?”
The cat asked, “Where do you want to go?”
“I don’t know,” Alice answered.
“Then,” said the cat, “it really doesn’t matter, does it?”

 

 

We can afford to give our time

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We visited the Yorkshire Dales National Park recently and met a group of volunteers working on one of the paths while we were out walking.  We chatted to the group for a short while about the work they were carrying out and as we walked away we both agreed that we could do that.

Once I have retired fully it is my intention to give some of my time for free and I have started to think about the places I could do this.

I am already the Treasurer for a small charity and I give my time freely as a minute taker to the management board of our flats but not working will free up more time to do some good around Greater Manchester.

I am keen that my volunteering is enjoyable and I am thinking about conservation and environmental organisations where I could do some good for now and the future.  I would also like to volunteer locally and support an organisation in Salford.  Fortunately, we have plenty of excellent organisations around us.

The shortlist includes:

Ordsall Hall Museum

RHS garden at Worsley New Hall

Lancashire Wildlife Trust

Wildfowl & Wetland Trust at Martin Mere

Yorkshire Dales National Park

In addition, I plan to spend time every week [when we are at home] picking up litter and tidying up the bushes around our local area.  I used to collect litter walking to and from work every day and I want to spend a bit more time making the area where we live more pleasant to live in.