My Approach and Assets

So this initially started as a single page to track and show everything, but as I tried to condense it, I found it just didn’t work, so this is more of an overall statement, along with the necessary links (when they get published), let’s see how it pans out. I have now split it into the various areas, for this post I will focus simply on my approach.

I will also put my target up here, at the top, in full view.

1st June, 2025.

That’s the date I have put in for me to be FI. Right now, I think it’s highly unlikely (read impossible) because of my approach however – aim high! It will encourage me and keep me thinking. Worst case I am off by a few years it’s still giving me something to aim for! Why is this impossible? Simple – the mortgage is too high (and I am not willing to move), I am putting a lot into pensions for tax reasons (and I am not willing to change), and I don’t want to sell off parts of my ISA until I can collect my pension. So it’s all my own fault, and I accept this.

Approach

Like many people in the FIRE community, I have a figure in mind of what I think it will take for me to be able to make work as an optional extra. I even follow Mr Zombie’s experimental withdraw strategy which gives me confidence that these things will work, however there are some complications for me.

Key among them are what does that actually mean in terms of the big number (apart from being a big scary number!), can I actually cope with selling off units to live (the answer is no which increases the number I need) and what can I get at, when.

Firstly, can I actually cope with selling off stock? The simple answer is no. However this isn’t quite the whole picture. If I were to be at close to the Life Time Allowance in my pension then I would have no choice but to sell and take some money, but this is more of a tax decision than a personal one and I think I wouldn’t have a problem with that (in fact I would probably sell them, take them out of the pension and reinvest outside of the pension wrapper). In effect this means no sell down, but living off the natural yield – this means my big scary number needs to be even bigger.

What can I get at when – that’s a much bigger challenge, and so I have put a separate section to go through that as its more complex I think for the UK based folks than those in the USA (I am not sure about other countries but I am sure all of them have their own challenges).

So the short answer is I have a great big number to aim at and I need to get going (faster).

Firstly to make the extra cash above my expenses. A lot of people in the FIRE community go for Buy To Let or side hustles. I didn’t – I invested in myself, worked the extra mile and collected the promotions, moved jobs and worked my way up. Like RIT, this involves long hours, often weekends, but having seen how my total pay has gone up, well worth it.

I want to make it as tax efficient as possible, that means initially using ISAs & Pensions, and then after that what about broker accounts etc. however that would require me using up £40,000 of ISA allowances and then of course my pension allowance on top. That’s a lot of cash to find, but its a good aim to go for.

So I have a minimum figure in mind that I need to hit, however the “problem” here is that of all my assets not all will be accessible until I am older, and can access my private pension – this impacts the date I can achieve FIRE – however I want to make sure I make the most of the tax perks of putting money into the pension so I will continue to do just that. I will document my approach on finances and wrappers, from the very last piece (State Pension) to available now.

I know some people look at running down their ISAs and unwrapped accounts so they are almost empty to time with being able to access their pension. I am not comfortable doing that, so I aim to hit my FIRE number excluding Pension and Housing wealth whilst still building those up. Its a tall order indeed, and hence I don’t think it is going to be achievable by my date above, but I would rather aim high and get close than aim low and make a lower amount.

According to the Mad Fientist and Mike over at 7 Circles (deep link to the spreadsheet here) – I have used both of their spreadsheets  – I could retire before then, however I would have to sell down my ISAs in the run up to my pension, which I don’t want to do. I also rejigged the Mad Fientist’s spreadsheet so I can track full net worth FI, net worth excluding housing FI and then excluding housing and pensions FI. Based on that its 6 years, 17 years and 22 years respectively (this was before my November, a story for another post). That doesn’t fill me with confidence, but heck, I will go for it anyway. If I can look back at this blog in 9 years having made it and go “Wow, I did it” that will be amazing!

What do you think? Am I mad trying to set the bar so high, should I sell down my investments whilst waiting for my pension?

 

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Author: fireinlondon

Fighting the high cost of living in London

9 thoughts on “My Approach and Assets”

  1. Hello!

    Thanks for the link above.

    “What do you think? Am I mad trying to set the bar so high, should I sell down my investments whilst waiting for my pension?” –> Probably, yeah. But think along similar lines. Many of my projections involve hitting a number OUTSIDE my pension that will just cover day to day expenses. That way expenses are just covered and the Pension will be a bonus, whenever it comes in….

    Blogs looking good, will be following.

    Mr Z

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    1. Hi Mr. Z,

      Thanks for stopping by! I am fairly sure my pension on its own, when I can access it, will give me enough to retire on comfortably, although it wont be the most efficient due to tax 🙂

      On the day to day expenses, I have a plan for that (more to follow in another post on the approach) and different ways to cover things, I am genuinely going to be curious to see peoples thoughts, maybe I am being way too aggressive, or maybe I have missed something.
      Or I could just be clinically insane, who knows 🙂
      Cheers,
      FiL

      Like

  2. It’s obviously your call, but it does seem to me you’re really restricting yourself by not wanting to run your ISAs down. I can appreciate you not wanting to rely on the 4% SWR (or 2%, or whatever), but what about the following, which would seem to me super-conservative, as a talking point:

    On the day you retire, liquidate all your ISA investments and turn them into £x cash. Say you have n years til you can access your pensions at that point. Assume the government moves the pension goalposts out by 5 years just to spite you. So you allow yourself to spend x/(n+5) every year from your ISAs.

    You’d then retire as and when x/(n+5) is enough to meet your annual expenses.

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    1. Hi Steve,

      You are right, it is really restricting me, which is why I thought to see others opinions. I think you may be right on going for something like a 2% withdraw rate to see where I can get to.

      The challenge I have is I can’t cut my expenses as yet as my mortgage will still be present assuming I retire before I can take my pension. I think I need to run the numbers against what you suggest above, as I can’t reduce my expenses, so would mean I need to ensure the numbers will hold up for that, but a great suggestion, thank you!

      Maybe I am just worried more by the fact that I am reducing my total wealth, I dont know. I guess I know I have a good few years left anyway before I can potentially do it so keep saving hard, and then see if I can shave some years off by running down the portfolio conservatively.

      FiL

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  3. My target year for FI is around 2024/2025, not too dissimilar to yours, although I’ve not got an actual date in mind.

    Unlike you though, I don’t have the big earnings but this is balanced against my relatively lower cost of living compared to your London prices.

    Whilst I don’t intend to run my ISA down to nothing, my intention is to sell off bits of it, although I already know I will struggle with this as I’m very much in the buy and hold mould!

    The good news is that you have 9 years to decide on whether you are going to sell your ISA stocks – plenty of time to crank through lots of spreadsheet scenarios!

    Good luck with the FI plan – I look forward to following your progress and cheering you on from the sides! 🙂

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    1. Hi Weenie,

      As I state above I am not sure that the date is actually realistic, but I like to be positive so lets see – no harm in aiming high 🙂 I also accept that I am very lucky with my income, but yes London can end up being very expensive!

      You are right though, I have 9 more years to see how it evolves over time, and it will depend what rules change by the government as well, but its all part of the fun of the journey! Believe me I have a lot of spreadsheets 😉

      Thanks for the support, its going to be an interesting few years ahead, who knows what will happen!

      FiL

      Liked by 1 person

  4. Thanks for the namecheck. Here’s the direct link to the savings rate / retirement age spreadsheet, which is UK focused: http://the7circles.uk/savings-rate-four-pot-solution/

    Eight and a half years is an aggressive target. I’m guessing you’re in your early forties, so perhaps the target date is when you turn 50?

    Do you have an FI number in mind, and how far towards it are you at the moment?

    You should definitely think about selling stuff to live off. I know it’s difficult, though – I turned 55 thirteen months ago and I haven’t touched my pensions yet.

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    1. Hi Mike,

      Thanks – I have updated the post to link direct to the four pot solution. You are spot on – thats the target and yes I have a number and progressing along to it, however its part of a future post (sorry!) as there are a lot of different options there, which comes to your point about selling stuff to life off. I will be working through the retirement options and possibilities down the line, but it has to come down to what I am comfortable with – but good to know that you still havent had to touch your pensions yet!

      FiL

      Like

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