29 Mar 2012, 9:33am
personal finance reflections:
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  • Retiring Early – a high-level view. It’s not all about the money

    Most people think of the main issue in retirement as having enough money. By observation, there are two other main issues for people. One of them is retaining a social connection, and the other is health being a worry, though less so for early retirees :) You can do something to improve both, but they take time, measured in years, to get right. Many people, particularly guys, get a lot of their social connections through work. Talking to people who have retired from The Firm, this changes, absolutely and almost overnight.

    Maintaining a connection with other people

    Humans are social creatures, and isolation isn’t good for us. I’m less gregarious than many. Early Retirement Extreme had a view that early retirees tended in this direction being drawn from people on INTJ and ISTJ axes of the Myers-Briggs spectrum. I don’t have much idea of if he’s right. Perhaps early retirees who choose it as a life path are, but I’m met enough people who just get pig-sick of the rat-race and bail early who I wouldn’t describe as introverted. Anyway, even those INxJs need some connection with other people, and it’s something that many retirees get wrong, even if they retire at a typical retirement age. Early retirees will take a greater hit from this, because their friends and peers of a similar age are often still at work because they haven’t retired early!

    I would have been more exposed to this a few years ago, but DW setting up a community supported agriculture scheme means I’ve met a number of people from various walks of life over this last couple of years. Some of these even work(ed) for The Firm, though most haven’t. I can’t claim any strategic direction here, growing thing has been one of DW’s passions for decades, and I’m simply taking advantage of the free ride here. But hey, why not ;) It also comes with some activities that are working with others, after all it’s not really possible to raise a polytunnel on your own and it’s far more fun with a bunch of other people anyway.

    raising a polytunnel - much more fun with other people

    Building the frame is something you only need one or two people, DW and I constructed that beforehand rather than waste other people’s time. But skinning it needs more boots on the ground, and there is a feeling of satisfaction when it’s done!

    I’ve also tried to maintain a toehold in interests, though this narrowed down greatly over the last three years, slightly from the reduced outgoings but mostly from the stress. But I kept a strategic view and low-level activity with interests and membership of societies. One of the keys to lowering costs is to be creative, originate, don’t consume. Things to do with the natural world in particular are often a modest cost, and living in an attractive part of the country is good. I’m not yet realising the upside of this investment, but I hope it will pay dividends, in quality of life, not in money. I’ll find out after I do finish work, and a period of convalescence perhaps.

    Health

    Yeah, it’s the big one, and I’ve been lucky so far in terms of physical health. Retiring early is a very good thing to do for ones health all round, provided you don’t fail on the human connection part, and don’t have the stress of being poor. I hope to avoid both of those. Eliminating the stress of working will be good for my long term health, as will drinking less.

    No longer working in an office and spending some time in the open air will probably be good for my physical health. There’s a theory that willpower is something one only has limited resources of, and using it in one area depletes reserves to apply to another. Ending the working in a environment that isn’t suited to my values and saving heavily should give me some of these reserves back, and I will apply them to doing something about losing weight and getting more exercise, some of which will happen as a result of the change in lifestyle anyway. Cycling is a great way to reduce running costs for the small but frequent journeys. I’m not quite sure I will ever achieve MMM’s levels of badassity, but I can shift myself  some distance along that axis. It’s made a lot more attractive by having more time.

    What I eat is probably fine – we eat hardly any processed food and our veg is about as fresh as it’s going to be, within a couple of hours from field to kitchen. DW is a great fan of starting from the basics. In comparison with the typical modern Western diet we do fine.

    There’s a lot to play for

    If I die ten years earlier than my grandparents or indeed get as far as my parents are now then I have more of my adult life ahead of me than I have behind me. So staying interested in the world, connected to other people and in decent and hopefully better health is something worth playing for. And health of course gets a little bit harder as you get older, so while the best time to start sorting some of the strategy out with health was a decade or so ago, now is a good second-best.

    Things I can learn from younger people

    Quite a few people in the community supported agriculture scheme are in their twenties, and something that strikes me is how incredibly generous they are with their time, volunteering with things like the CAB and other interfaces wit hthe wider community. Particularly over the last three years, time has been exceptionally precious to me. I don’t understand the concept, I can’t ever imagine volunteering for anything that isn’t a specialised use of my skills.

    However, I am struck by the blaze of energy and the remarkable generosity of spirit. Perhaps I never had this by nature. I used to think it was being a young adult in Thatcher’s Britain and joining the workforce in Thatcher’s first recession, but the situation with youth unemployment is probably worse now than it was then so this is no explanation of why I lacked that sort of generosity as a young person, and have become a miser with time now.

    This isn’t the only thing I could learn from younger people, but it’s the one that is most obvious to me at the moment.

    A finance detour

    Though the most common concern is having enough money, reducing outgoings is a very good alternative. In the end it is the difference between spending and income that matters. DW and I have focused on reducing costs and winning self-sufficiency in some areas. Early retirement in particular is about spending less.

    Looking ahead, there will be two obvious battlefields for everybody in trying to maintain living standards over the next four or five decades. These are the cost of fuel, a fight people are already losing, and the cost of food. Both are non-negotiable, and both of these DW has in particular applied herself to reducing. I have also tackled energy, reducing electrical power usage drastically, while we have used the wood resources of the hedgerows and our wood heater to eliminate using the gas central heating totally this winter. We do use the central heating boiler it to heat water, if we can achieve success with the heating then there are other approaches to water heating. We have a biomass willow plantation elsewhere in town that is four years into its rotation and we plant into the hedgerow more than we take out, as well as using Italian Alder for windbreaks and potential firewood in future.

    Unfortunately since I switched to a fixed tariff EDF have been really slack on reading the meter. They already owe me several hundred pounds for electricity and I hope they will owe me a fair amount on gas, since they haven’t jumped to the change is usage.

    Fuel is serious work. Mr Money Mustache probably wouldn’t approve but we use a chainsaw for harvesting wood. There’s enough grunt involved in moving it and splitting it with an axe. Which may help with the exercise and health stuff, but hand sawing wood is no fun at all. There’s a balance to be had here, and it’s not always in favour of muscle over motor!

    The long view

    I will have worked for a shade over thirty years, and just might see more ahead. The world will be very different. That much is clear looking back to what it was like when I started work. ET and Star Trek 2: wrath of Khan were in the cinema, and over the next few years Greed was Good for Michael Douglas a Gordon Gekko summed up the rising Yuppies. People feared being wiped out in total nuclear war rather than the environment and global warming. There were only three channels on TV, and people listened to portable music on Walkman tape players, and vinyl records at home.

    The years to come will hold their own challenges for people and the economy. I don’t share this chipper view of the world in 2020, never mind the world in 2040. I think in particular the experience is going to be pretty rough for people in the West looking to retain never mind advancing their living standards. If we can get our heads round it all and stop living the consumerist lie then we may be able to salvage an improved quality of life; earning a living shouldn’t grind us out of the workforce in our fifties and sixties, particularly if people are going to start routinely living to 100.

    Retiring from the workforce

    I will retire from the workforce as far as earning an income from work – at least this is my current plan. I have paid far too much income tax. I’m not going to go all Ayn Rand – some contribution to society is fair enough, and I really do appreciate not having the stress of US-style healthcare insurance costs. But I’ve done my share. Last year, while saving furiously for retirement, I paid twice as much tax and NI as I was living on and a shade more than my pension will be. I’m pig-sick of paying for other people’s lifestyle, or indeed hard-done-by Guardianistas and high-rate taxpayers’ children.

    I am not going to retire from adding value to projects, I am merely going to retire from working for other people and working for an income; the value-add will show in either increasing the capital value of an asset, its ability to do work or it will increase other people’s income which may reduce my costs. I still won’t be able to escape the demon of income tax on my pension, even after Nick Clegg and his merry men achieve their goals with the tax threshold. At least you don’t pay NI on a pension, and I’ve got more than my thirty years’ NI stamps paid now.

    In my attempts to reduce taxation over the last three years I took my eye off the ball as to the damage NI does – for all the trumpeting of the aim to take low earners out of income tax I note wryly that the 12% NI tax still starts at £6000. Barstewards…

    So I’m retiring from income, not from adding value to stuff. I’m not yet ready to hang up my soldering iron, keyboard and spanners for good ;)

    And on that note I am going to start with that health kick, get up off my ass and bike to work, so the fuel tanker drivers and the Government can stick it, too ;) Tossers, the lot of them.

    A very British fuel panic

    On the way to work I spotted this very British fuel mini-panic (it was taken after the rush hour). Exactly what the Minister Francis Maude ordered. Panic, but only a little bit. Oh and on the topic of increasing fuel costs, that’s the last time you get to see a price of under £1.40 a litre. That’s up 40% from this time two and a half years ago.

    petrol at 101.9 ppl

    Great piece.

    I love the self-questioning in this piece. “I am struck by the blaze of energy and the remarkable generosity of spirit. Perhaps I never had this by nature…”

    Have you read William Boyd’s Any Human Heart? I highly recommend it for a perspective on the stages of life.

    [...] Simple Living in Suffolk warns that early retirement isn’t all about the money. [...]

    [...] Retiring early is not all about money – Simple Living in Suffolk [...]

    @ermine Time for a solar water heater ? I think you could go solar for water heating for about 5-6 thousand UK ducats.It costs about 9 thousand Canuck pesos back home.

    Interesting. My own solution to the exercise/transport question has been an electric bicycle. The beauty of it is, you get exercise (you still need to pedal) but it is not a chore going up the hills. I used this to commute on my last couple of years of employment and now use it most days for shopping, countryside trips, etc. My wife has one too. Marvellous – and it has allowed us to operate with only 1 car.

    You could look into getting a bike trailer. They aren’t expensive (considering the huge lifespan and alternative cost of running a vehicle) and you can transport a lot of stuff on one.

    Even in central Edinburgh mine comes in pretty handy for firewood (http://mccraw.co.uk/got-wood/) or white goods (http://mccraw.co.uk/who-cares-about-fuel-strikes/)

    Keeps you fit too… and there’s no cake shortage yet ;-)

    Great article, and something I am still mulling over. I seem to keep coming back to things I loved doing as a child – drawing, arts & crafts, making clothes. I just cannot imagine 30 years of those kinds of activities, and feel that some form of project would be better.

    Good insights – both in this and in the last post. I have set my early retirement date for 31 March 2013, and it feels pretty good to be on the final furlong, so to speak.

    Sad that a career that I once enjoyed and felt continual enthusiasm for has now been dulled by the eager adoption of daft management theories coupled with the relentless march of EU legislation. Still, there we are.

    I work in the not for profit advice sector, and friends who know my plans tend naturally to assume that, once retired from working for a living, I will just continue to do the same sort of thing as before – but on a voluntary basis. I won’t.

    Instead, I am building-in six months for recovery from work – during that time I wont allow myself to sign up for anything, or commit to doing anything on a regular basis. That gives me time to actually think about what existing interests I want to pursue, and the sorts of new things I might be interested in doing.

    I honestly believe that working full time in a stressful occupation literally leaves you with no head space to think about these things. There is no intellectual or emotional energy left over after work, and holidays are needed for rest – not brainstorming!

    I’ve worked a few years longer than you have, and for the last God knows how long I have lived on a small proportion of my salary – so retirement from pay will not make much material difference to the way I live. Of course, getting used to the fact that I no longer have a chunk of money popping into the current account every month will probably take quite some psychological adjustment…

    Fortunately, I am not even remotely attracted to the popular golf/cruises retirement template that is pushed at us from all sides. I know there is a whole world of interesting and satisfying stuff out there to do, and being able to offer your time, skills or sometimes just presence without having to ask for any payment opens so many new doors.

    Plus, there will be the wonderful luxury of knowing that there is plenty of time to sort out all the myriad administrative stuff that life throws at us, and time to cope with the needs of my elderly mother without having to run myself ragged trying to catch up at work!

    Jane

    4 Apr 2012, 2:02pm
    by ermine


    @Monevator – thanks – I haven’t read the book, must get my library card reactivated! There seems ot have been a TV series of this book done by channel 4 too. As Jane later higlights, it’s important to question the hidden assumptions that build up, else I will end up somewhere I don’t intend ot go…

    @g that’s definitely something I’ll consider. At the moment I am trying to spearate the variables in isolating the HW/cooking usuage of gas from the heating usage of it, once I have this information I cna process the investment/ROI of solat HW, it would seem the obviosu way to go. However, I will still need gas for cooking, and the standing charge on that may weaken the case for solar HW.

    @Moneyman, yep, I have come to a similar conclusion, I am considering a front wheel mod from these guys. Mainly to give me more range, though also to tackle the sea breeze. In general i’d be going east to the coast in the morning and west in the evening, and the sea breeze always seems to be from the sea in the mornign and to it in the afternoon which is tedious. On the upside I don’t have any hills to deal with. My natural range limit is about 30 miles round trip which is just a little bit limiting, 50 or 60 would be a bit advantage.

    @Dave, Snap – we already have a trailer that DW uses for some of the veg shifting and logs too. The method of attaching it to the bike seems very unsatisfactory and there seems no standardised solution so we can only use it on one bike. Yours looks better for moving lead acid batteries which is something else we have a need for. I’ve shifted them on the rack of a bike but apart from all the obvious reasons that’s not a terribly smart thing to do it makes the handling of the bike really terrible with a high COG.

    @Deb, I don’t know if you’ve already stopped work, and I haven’t, but I think Jane has put her finger on it – maybe you need a space to clear the decks and things will become clearer. It’s inevitable that the first things you’d think of for increased leisure may reflect an earlier period when you had it :)

    @Jane Congratulations on settign the date – it’s a nice time of year to make the change, too, when Spring is in the air. Sad to hear of another casualty of modern management theory, but perhaps it focuses the mind too!

    I like the idea of a six month’s convalescence from the daily grind, I may pinch the idea :) Of course, in terms of adding value to the Oak Tree that’s already somethign I will do, but there again if there are any bad management practices I’ve only really got myself to blame. However, not picking up any other regular commitments seems liek a really good idea, to clear the air, and find out who and what I am and what I stand for before starting to do anything.

    There’s also something to be said for having some time to make the adjustment before leaving work – some of my colelagues who are now gone from the office have found the sudden transition disorientating. A long glide path to adjust is valuable!

    @all thanks for your insights. There’s quite a lot to think about and get right in the run-up, and it’s great to have the encouragement and new ideas :)

    7 Apr 2012, 7:30pm
    by Grinning Chris


    I’m already appreciating one benefit of retirement – you have time to volunteer for things. Not the “volunteering” that takes place at The Firm, where senior managers spend a day getting muddy and wet so they can convince themselves they *do* have a spark of humanity after all. No, I mean the real sort where you do stuff that makes a difference to the community/the environment/the younger generation/whatever. Where your reward is knowing you’ve contributed, and your bonus is when someone says thank you.

    It’s a lovely feeling.

    Oh dear, I have a serious problem, I’ve come across a blog who’s opinion I completely agree with!!!!

    Surely the world is ending when that happens and we all disapear up our own backsides 8)

    (the first thing I will do when retired is learn to spell properly with out having to use a search engine 8)

    I look forward to your future posts and you logic is infallible ( I spelt that without looking it up i’m doing ok for a start on my quest 8)

    Warmest regards!!!

    \\Jay//

    [...] this in mind I think our day of financial freedom will be closer to Ermine’s assuming we continue to continue to follow the basic rules of good money management and don’t [...]

     

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