Ms ZiYou Enough retire

Have I really got enough funds to retire?

Following on from my current dilemma in giving up work, I have bits of news. I’m accepted into the Chinese course and I have a second interview for a new contract. So I wanted to dig into the numbers in more details. Do I really have enough funds to retire? How workable are these numbers?

Have I got enough money to retire?

Well, as you may have noticed from my recent Net worth Updates, I’ve crossed that magical FI line. I now have 25 x my current expenses in my FIRE fund.

Yet I don’t consider myself FI. I don’t think I have enough money to retire and confidently say goodbye to work forever. And here’s why.

The biggest reason – Pension Access Age

I’m in the UK, and a substantial amount of that money is in my pension. And in the UK, no matter what you cannot get the money out of your pension until the pension access age. Now to add a bit of complexity, this age is currently 55, but set to be changed to ten years before state pension age – which will be 58 for me. That is 20 years from now.

So while I am reasonably confident I’ll have a comfortable income as a pensioner and don’t have to worry too much about my later years, I cannot access this money before then. The money will remain invested and hopefully grow substantially over the next twenty years until I hit that magical access age. So we’re talking cruises and rocking old lady style in my future. I may even try and bring blue rinses back into fashion.

Another reason – Expenses I

Back to the present and one of the main figures needed to calculate FI and the ability to retire – annual expenses. These I have tracked for years and have a really good handle on. Although my expenses are stable at the moment at the £22k that these sums are based on, I know that these could be artificially low.

I own a house and car, yet haven’t spent much on repairs, replacements and maintenance for years. Having said that, the car is a luxury I don’t need. Nonetheless, I am expecting some big expenses to come my way. I don’t know what it will be, but I am due some large expenses.

Not to mention I am currently only supporting myself and a lazy feline, but who knows, this may change in the future. While this could result in expenses reducing, it could also go the other way. A big unknown here.

Ignoring this obvious discrepancy in my calculations is not my style, yet as it’s frankly a pain to calculate and model 400 different forecasts. Hence, I prefer a simpler approach to adding some contingency.

Leisure Expenses

Not to mention, my expenses are based on working full time with only a small amount of leisure time. If my time was free all of the time, would I spend more money?

And this is where my weird frugal nature comes in. In reality, as of today, I’d spend the time as follows.

  • Studying – Given my first-year expenses were negligible, I don’t expect these to be significant.
  • Running – Perhaps I’ll get through a few more pairs of running shoes.
  • Reading – The library is free – and the digital library is a godsend.
  • Yoga – Free classes abound on youtube, and library books/internet provide more material.
  • Blogging – Again, no additional costs for blogging more.
  • Volunteering – No additional costs.

So in reality, I’d probably not increase my expenses due to more leisure time. Although incidentals such as heating (I dislike the cold) would not doubt creep up a bit.

Playing it Safe – Hence the £750k target

While I know my figures look close, I do like to play it safe. And add a little bit of fat into the numbers. And that is why I have come up with the £750k target, giving an annual spend of £30k. Adding in the buffer for some contingency if times are bad. Or some amazing trips of a lifetime if times are good.

And I’ve also got a backup plan of £700k – this also looks doable, but has much less wriggle room than the £750k. But from my modelling and forecasts, if I can keep spending at current levels for a while, this reduced target will also work. Like a true FIRE geek, I’ve run many sets of numbers through both CFIRESim and Firecalc.

Future Earnings

I’m not a side hustler. It’s just not something that interests me. I’ve long ago accepted that for me my main employment is the easiest way to bring in the money. So while I may take other jobs in the future, this isn’t guaranteed.

Alternatively, I could get a lodger and use my home to bring in income. I’m not in a great area for rentals or lodgers, but there is some demand out there. I’m reluctant to give up my personal space at the moment, but am keeping this as an emergency card in case I need to take drastic action.

If I stopped now

So, I know that I might actually make it and have enough money now if I stopped work.  If the next 10 years gave a 8% return I’d be home and dry. Now, given my current portfolio has returned >10% over the 3 years horizon this doesn’t seem too far fetched.

Yet past performance doesn’t indicate future success.

So I’d just need a 8% return

And is that too much to ask? I feel that in this climate of market highs and political instability it might be too much of a demand.  Or those forces could work in my favour and delivery amazing market returns.

I feel that we’ve been lucky with a great bull run since the last crash and know I could never predict when the next crash will happen. I know it will occur and accept that, but boy does it make my planning hard!

Or alternatively to reduce my spending by £5k a year

Looking at another perspective, this could also work by reducing my spending. Truth be told, there is some fat that could be trimmed, but do I want to live a truly austere lifestyle? Would that really bring me joy? I could cut my great love of travel, but I don’t think I’d find that acceptable. So, like the lodger, this would be a back pocket emergency strategy. And not one that would be employed in good times.

Or hedge with a part-time contract

Slowly gaining on all other options, is the idea of working part-time. However, this is holy grail material to find a contract I want to do that’s amenable to part-time. Yet there is something very, very appealing about this option.

It’s a gamble

In conclusion, there are no right or wrong answers numbers wise. It’s all a gamble.  Am I feeling lucky?


Over to you

  • What are your thoughts?
  • Would you take the risk?

Thank you for reading – please leave a comment below and join in the conversation. You can also connect on Twitter or contact me privately.

35 comments on “Have I really got enough funds to retire?

  1. Working 2-3 months of the year, but full-time can still count as part-time imo.

    Personally, I think you are ready and it sounds like you want to do it.

    There will be hiccups along the way. An eight per cent return is bullish, but if it’s higher to start with – you can afford it to be lower later on. But in any case, you have a good buffer and the ability to flex through taking on more work, being more frugal or taking in a lodger if you need to.

    Appreciate you are not into side hustles, but who knows what opportunities may emerge. I had a side hustle for around a decade. I eventually figured out how to largely automate it and the income was simply too good to ignore. But I wasn’t unhappy when it gradually faded away as I didn’t need the money and it wasn’t something I was passionate about. Perhaps there is a way of crystallising your expertise or interests into a product or service?

    I’ve said before it doesn’t have to be a firm decision of no return. No-one is holding you to it. Decide what is good for now, and feel free to change your mind later.

    1. Thanks Greencat – indeed it does, but somehow I’m not very good at getting contracts that don’t extend and extend.

      And yes, eight percent is bullish and the returns could either work with or against me…

      Truth be told, I’m much more likely to volunteer my skills than sell them as a product!

  2. I imagine I’ll be having the exact same dilemma when I’m close to my FIRE goal. I’m not sure that it’s just a thing with early retirees either. My parents, who are planning to retire at the more traditional age of 60, have the same debates/arguments amongst themselves.

    Like you I worry about the pension access issue. Being of a paranoid nature my calculations work on the basis that I might not be able to access the pension until 65. I think that’s unlikely (I think 60 is more likely for someone my age) but I am an err-on-the-side of caution type.

    I was going to say in response to your last post that I am in the (possible minority) camp of pushing through those last couple of years until you are in a place you are definitely comfortable with but I guess it comes down to how jaded you are with work. Time always seems to go alarmingly quickly, which is always discussed in the negative (I.e. be careful the decades don’t just slip away from you doing a depressing office job) but once you’re close to your numbers it’s quite a boon that two years can go by in a flash.

    Whatever you decide, congratulations on being in a position where it’s an option to give up work. It’s a massive achievement in your 30s.

    1. Thanks Fretful Finance – wow, you are really erring on the side of caution there with a pension access age of 65!

      And yes, part of me thinks I should just give up these fanciful notions and do a few more years full-time work to get at that number.

  3. Hi Ms ZiYou,

    I agree with all the comments so far, you just achieved something really amazing, and it opens up so many options!!!! Definitely don’t think you are “locked in” to whatever you ultimately decide – the “retirement police” will just have to get over itself if you FIRE but later pick up some work or return to FT work. It’s your life.

    The only thing I would add is don’t forget you can also “geo-arbitrage,” i.e. if you find your FIRE lifestyle is getting too big, you can spend some time in very low cost of living countries, like Southeast Asia or Central America, to bring costs down. I just finished reading “Quit like a millionaire,” the book by the Millenial Revolution couple, and this is something they stress at length – that the same lifestyle that costs them $40k/year in G8 countries, really is more like $24k/year in Thailand, for example. Obviously you’re not planning to go full nomad and leave your UK base, but that’s another thing to think about.

    Best of luck Ms. ZiYou, and congrats no matter what!!! 😊

    1. Hi FF – lovely to hear from you and I love the framing that I am not locked in. And it’s true that my calcs don’t take into account geo-arb, so I could go cheap to save money for a good few years in the future – and that is something I am very willing to do.

  4. I’d go part time until you hit 750k. Working half the year then taking the rest of the year off is a good option. You can take long vacations and explore the world a lot more. It seems like a really good fit for your contract work. You can pick up some contracts when you get back in town. Is that possible?
    Congrats on getting in the Chinese program by the way.

    1. Hi Joe, yes part time does seem to be a good option – although I’m not ready to travel yet (I want to study this time) and can’t rent out my place easily, so working half the year and travelling half is not going to work for me.

  5. love the cat pic! so cute
    not much to say re your questions – I think you’re thinking about it the right way. Have you considered the downside scenario of markets getting walloped? In round numbers, if I were you, I think I’d be aiming for the round £1m number and know that I have various levels of buffer built in at that point.

    1. Hi FvL – thank for reading and commenting. You seem to be the most bearish commenter, thanks for taking the opposite side to most people. Perspective is good.

      Yes, there is a massive risk of a crash wiping out the plan. Years ago I was thinking £1m was a good target, but nowadays I think I like playing it riskier – and know that I actually don’t find roughing it or getting another job if need be.

  6. Aha, so following on from the question I asked against your last post (sorry, obvs got ahead of myself there!), I did think that most of your wealth would be stuck in your pensions.

    For me, SIPP or ISA doesn’t really make a difference since I’ll be able to access my SIPPs when I reach FI – must be a lot harder to plan for you youngsters!

    With that in mind, then I’d be inclined to keep on working to continue building your pot although having reached your 25x, you have the flexibility to take time off in between jobs (as you have done recently) – mini retirements as it were. Or ‘sabbaticals’ to people who won’t understand why you’re taking a break!

    Your other investments/income (perhaps from your ISAs) need to be that ‘bridge’ leading up to when you are 58.

    Love the gif of the dancing old ladies – I hope that’s me too but my FIRE will be rather leaner so perhaps only the occasional cruise!

    And that cat…haha! What a life!

    1. Hi Weenie – I am very jealous of those who are old enough that pension access age is not such a big deal – it makes the sums and modelling so much easier.

      And mini-retirements do sound very appealing … or sabbaticals …. I can be flexible with the naming!

  7. Congrats on crossing the magical line. I am more risk seeking than you, so I don’t need to be 100% sure I’ll never have to earn a cent again. Most of the people I know how have retired early end up earning money in retirement – even though they are not side hustlers. This often means they could have retired much earlier than they expected 🙂 I would just give it a go, see how things develop and then take action from there, but I fully understand why you want to play it more safe.

  8. I’m going part-time next year – I’m older than you so I only have to wait another 3 years before I can access my retirement account.
    I’d look at going part-time, but to be safe. As people above me have said, working full-time for 2 or 3 months = part-time.

  9. This is a fascinating post with several options to consider. I loved hearing your thought process “out-loud.” Whatever you decide – you’ve done the upfront work – and now you can buy yourself time and you don’t need to settle for anything other than happiness, optimization, meaning – or whatever is most important to YOU. I think you can certainly find ways to get paid for enjoyable work from here on out and coast (but that is just my opinion). Good luck with your decision!

    1. Thanks Savvy History – oh yeah, I love a bit of stream of consciousness! And yes, working out what is most important to me now is my current challenge.

  10. Really interesting last couple of posts. I’d be looking for a higher number to retire, but as we know, I’m cautious, and as everyone else has pointed out, it’s a very personal decision – one size doesn’t fit all.

    One thing that would worry me is that if you need to shoot for 8% pa, you can’t afford to derisk your 20 year pre-pension tideover pot at all. I’m guessing a big correction in the next few years could really hurt there given that pot only has a limited horizon (starting at 20 years) and you’ll be withdrawing from it? If you, say, chop 30% off the starting value for that pot and simulate it for 20 years with your planned withdrawals, what kind of success rate do you get?

    Hope it all works out great whichever way you decide to go.


    1. Thanks Jo – yes, you have the nail on the head there it all depends on how will the non-pension investments do – and I guess how comfortable I am cutting costs/ working again in the future.

  11. This is a sticky wicket, and one that I currently find myself caught in as well. I feel the urge to pull the ripcord a bit early.

    I think I’m personally going to keep my head down until I hit our target figure, or at least I’m going to really try. I suppose we could reduce our spending or hope for good returns in the next few years. But I keep hearing to expect low returns, given where CAPE is, and I’m not sure there’s THAT much left to cut out of our budget.

    Anyway, just my take. I think whatever you decide, you have plenty of time to correct course if things don’t turn out exactly as they were supposed to. With that, you have a lot of good options to choose from: none is really a bad one.

  12. Approaching FIRE is tough!
    I think I’m a couple of years from target, even on an optimistic growth front. Then I worry that the target will only have been made because of exceptional market growth and that it’s all super risky. The lure of OMY to be safe would be strong.
    But on the other hand, I am thoroughly fed up of working and this particular job especially, I can’t see me sticking it out when I get there. The ever hanging threat of redundancy never helps eith
    Keep plodding along, head down and let the days tick through, each one makes is closer and me safer!

  13. You probably have enough. I guess your pension numbers are sufficient given that they stay invested for about another eighteen years. You need to run your non-pension numbers through your calculators to see how they might cover you to age 58. Then you may wish to hedge with part time or temporary contract work, especially if that interests you and you wish to do more in the workplace, and largely on your own terms. I wouldn’t aim to significantly reduce your spending from where it is now or you might come to regard that as a punishment.

  14. Why not take a little sabbatical. See how it works out and then you could always go back and do a couple of other gigs. No matter what Congratulations! Awesome job!

  15. How has your industry responded to recession/market reduction in the past? Is it likely that you’d be able to find work at the time that you needed it, even if it wasn’t an ideal contract? If you are pretty confident that you could find work, it de-risks the situation because you’d avoid depleting your savings while the market is low, and any investments you could make while working would be super-charged when the market recovered. If your options for contracts are likely to dry up or have much more competition then it’d be riskier to call it quits early.

    In my industry, work for contractors increases when business tanks, because there are hiring freezes and it’s easier to get approval for a one-off job than an indefinite salary. Our pool of contractors is small though.


    1. Hi PWF – In reality, yes there is usually a lot of work there although mostly towards the lower end rates. And as you mention, recession doesn’t usually hurt as I tend to work on projects that are not impacted.

What do you think?