This time a year ago, Ju and I ‘pulled the trigger’, and we effectively retired at the age of 43. Nah, we didn’t win the lottery, win a bag of cash on the nags, discover we’d inherited a fortune from a long lost relative or get early access to a pension or two. The way we did it was much, much duller! You can read how we did it in this free eBook if you fancy, or here’s a very quick summary:
- Several years ago, we started to track every penny we spent.
- With this information, we minimised our costs.
- With the money left over from monthly pay, we paid off our mortgage.
- We learned about how to invest and, once the mortgage was gone, pushed as much money as we could into investments.
- We now live off the investment returns.
- We live in the UK, renting out bedrooms in our house, and travel when we want to in our motorhome.
If you’re thinking of a similar lifestyle change, I’ve given my ‘a year later’ answers to four key questions I asked myself before we quit working, things I was concerned about a year ago. Ju and I are in this as a couple, but I’ve written this purely from my perspective, but Ju has reviewed what I’ve written to make sure she agrees with it.
Question One: Will the Money Be Enough?
This was the big one for me. We knew from a previous two year sabbatical how much money we needed to travel in our desired level of comfort. But this time the question was a far bigger one: did we have enough money invested, in the right investments, to last us until we died, whatever circumstances we find ourselves in in the future? A pretty serious question, and I long pondered it, since we might live in retirement for another 40 or 50 years.
To try and answer it, I drew up personal accounts for us, the same type of accounts you have when running a business: a balance sheet, listing all of our assets and liabilities and their values, and a profit and loss statement, showing where our income came from, and where it went to. Ju’s kept detailed records of our costs and income for years, so it was easy to get a fairly accurate snapshot of these accounts. I then extrapolated these out over the next 50 years, making assumptions (guesses) around inflation, rental yields on property, void periods, and repair costs on property, taxes, dividend returns on shares, pension fund value changes and so on. All this went into a spreadsheet, where we could play around with some of the variables and effectively model our financial future.
The spreadsheet said: go for it.
Even making fairly pessimistic assumptions, it said we could afford to quit and never work again, if we chose not to. I’ll be honest, I only half believed it. It seemed too good to be true. We checked it, double-checked and triple-checked it, thought through various worst-case scenarios and it still said: no need for the 9 to 5 for you guys, you’ve done enough. The chances were our net worth and income would steadily increase over time, and at some point in the next couple of decades we’d reach a point where we’d simply not be able to spend the money fast enough without making significant changes to our spending patterns.
So, how has it worked out so far? Obviously a mere 12 months isn’t enough to make any kind of definitive long-term judgement, but so far so good. Our shares, which are almost entirely in a range of low cost passive index funds (Vanguard ETFs) have appreciated and consistently paid out dividends. Our properties have all rented out steadily and no major costs have come in this year. The sun has shone in the UK on our solar panels, and Feed In Tariff payments have popped into the bank each month. We’ve sold books, and this blog has generated income through Amazon Associates and Google Adsense. Our costs have been around where we expected them to be.
In summary, assuming zero capital growth on our UK property (just to be conservative: it’s likely the houses are worth more than a year ago), our total nett worth has still increased since we retired last year. We spent less than we earned (details here), so our emergency fund has grown in value and we need to look at moving some money from cash to shares in ISAs. Our passive income streams are all performing steadily and aren’t showing signs of any serious negative changes.
So far, things are going even better than I could have dreamed they would. We’re staying quietly vigilant of course: but I’m stressing about money much less than I was a year ago, and I wasn’t really stressing much about it then.
Question Two: Will I Miss Work?
In short: no, I haven’t missed work.
I miss the banter. I miss the occasional buzz when I achieved something. I miss some of the people.
But on the whole, no, I don’t miss work. When I think back to it, I did enjoy periods of the 20 years I worked, but in the end I wasn’t enjoying it, not for a long time. Mountains of red tape, negative and cynical workmates, resistance to any kind of change, high level political shenanigans and back-biting, dreaded commutes, inflexibility of holidays, an increasing expectation to work longer hours than I was paid for and to be answering emails at all hours and on holiday (one colleague I dealt with had a heart attack and ran meetings from his hospital bed). I suspect anyone in the corporate world will recognise at least some of this stuff. I don’t miss any of it.
That said, I have considered several times the prospect of again looking for employment in the UK. Maybe even the same nature of work which I’ve stated above I don’t miss. Why? I’m not entirely sure. Continuing vague background doubts about money perhaps? The desire to feel ‘normal’ in society? To test whether I can still do it? I don’t know to be honest, but the thoughts don’t tend to last long when I think about spending a winter in the Sahara, or living on Sicily or in Greece, or a few weeks following the Tour de France or visiting the Isle of Man TT or a myriad other things which just need a tiny bit of imagination to bring to life…
Question Three: Will I Get Bored?
Our plan on stopping work was to carry on the travelling we’d started on our two year sabbatical. Neither of us knew if it would be the same, when there was less likelihood we’d have to return to work, and when we’d already spent two fantastic years touring the continent. Would we enjoy it as much? Would we find there was no challenge to it, get bored and want to go home?
After stopping work we headed south, spending about 10 weeks touring France and Spain, followed by a few weeks back in the UK before a longer, ten month tour which has taken us down as far as Split in Croatia and as north as the North Cape in Norway. There have been some ups and downs, but on the whole the travelling has again been a highly positive experience. We’ve met fascinating people, relaxed in the sun, visited some fascinating museums, eaten wonderful foods, got up close with wildlife, seen the midnight sun and the Northern Lights, and a ton of other life-affirming stuff.
So far, we’ve not got bored, at least not for any length of time. That said, our plans to learn Spanish are coming on rather more slowly than we’d intended, as are our half marathon training ambitions – more effort is needed in some areas!
Question Four: Are We Happy?
You know what, it’s easy for us to forget just how lucky we are to be in this position. We thought about, focused and worked hard to get here, but in the end a good dose of luck was involved and stays involved to keep us here. On occasion we forget about it, and the usual stresses and strains of relationships and simply being alive weigh on us as they do everyone. But then, typically pretty quickly, something happens to snap us out of it. We’ll chat with a friend back home on a Sunday night, who relays with a sigh the fact they’re back to work the next day. We’ll see a complaint on Facebook about how awful the traffic was, or what an awful day at work someone’s had. We’ll wake to an incredible sunrise, sat on a beach or mountainside early on a morning, and reflect on our ‘old’ morning dash to get out of the house and into work before all the parking spaces and desks were gone. Each of these splash our faces with a fresh sense of the freedom again.
One argument I’ve heard against what we’re doing is an obvious, and very reasonable one: living like this we can’t just go out and buy what we want. I can imagine this making many folks unhappy: being in a position where you can’t go out and buy a new car each year, fill your wardrobe with designer gear, eat out a few times a week, or get the latest iTech as soon as it’s released. The reality of it for us is: we could actually do a lot of this stuff, and sustain the spending level for years without working. Eventually we’d run out of money of course, but the other reality is simple: we don’t want that stuff. We’re replacing our old kit this year: laptop, camera etc, but only because it’s old and needs replacing. Not buying stuff isn’t making us unhappy.
When we were pondering this lifestyle change, I thought back to the times I was happiest in life, and they were when life was the simplest. When I was a student at university I had little money, little stuff, but tons of opportunity and people around me. My feeling now is we’ve shifted back to a similar situation. We’ve stripped away a great deal of the superfluous stress and negativity which crept into our lives over the years, and are enjoying the simple things.
So, are we happy? I’m writing this on the 9th anniversary of my cracking wedding to Ju – a truly wonderful and fun day, and a fabulous nine years of life. We’re free to live our lives, making the most from each day, loving each other and growing together. This is my dream life, I can’t imagine being happier.