Early Retirement Extreme Update – May 2019

I’ve left it a while to do my wealth review this time around, mainly because it’s taken this long for the dust to settle on my house-move and for me to figure out what my ‘regular’ net income is now I’m self-employed.

Six months on from moving and I think I can safely say my financial situation is now relatively stable, so time for a review!

Total Net Wealth May 2019, excluding mortgage/ house valuation.

£25000 – Share account 1
£6000 – Share accounts 2, 3
£2500 – Share account 4
£1000 – Share account 5
£1500 – Private teacher’s pension
£7800– Peer to Peer Business loans
£4000 – Crypto (-10%)
£4500 – Cash

This doesn’t include a £3.5K liquid buffer to tied me over possible low-income months in July/ August.

Total Wealth ATM = £52300!

Minus future anticipated outgoings at the end of 2019

(unless I can cover them from elsewhere, which could happen if I keep earning more than expected like I have for the last couple of months!)

• £2500 tax bill for April 2018-19, which I’ll pay in October most likely.
• £2000 (interest free for a year) credit card debt!

TNW = £47 8000

Observations/ analysis

Given that I didn’t really do any proper paid-work for the last 6 months of 2018 I will take that figure of £47 800!

Moving house cost me a grand total of £11K, but I took out an extra £10K on the mortgage to maintain my wealth levels above. My mortgage rate is <2% and my returns on the above are, on average, more than double that.

I’ve probably got too much money in share account one, but I’ll rebalance that at the end of the year when I pay off the credit card and my tax bill for last financial year.

TNW including property wealth/ mortgage

• My current outstanding mortgage = £62K
• My house is currently valued at £173K (which is a relief, because when I looked it up a couple of months ago it was £20K less than that?!?)
• Total Net Wealth if I paid off my mortgage, not including the value of my house = £- 14, 200 (that’s minus!)
• Total Net Wealth including the value of my house = £158, 800 (that’s plus).

NB – this doesn’t factor in the value of 16 years of private teacher’s pensions contributions, worth about £7K/ year from age 60 and something like a £20K lump sum on top of that when I turn 60.

How long until full retirement?

Assuming the following four conditions

1. I pay my mortgage off fully
2. My current savings compound at the rate of 5% per annum
3. I can live off £8K a year (£700/ month) post mortgage
4. My TPS which gives me roughly £8K a year kicks in when I’m 60 (i.e. no changes are made to the age conditions).

I will have a TNW of £71K (excluding property) eight years from now, when I’ll turn 53. At this point, £71K will be enough to both yield me £8K a year draw-down until I’m 60, and be sufficient to pay off what will be an outstanding £12K or so on my mortgage.

So, based on these stats, I’ve got 8 years of semi-retirement ahead of me, assuming I only break-even in my earnings and merely meet my expenditure, and don’t save another penny in those 8 years.

Final word

A projected retirement age of 53 is a just over my desired 49-52 target when I started on ERE (light) back in 2014.

However, I only work about 5-6 days a month in my now ‘proper job’ as a teacher trainer, and even though I work several more days a month maintaining revisesociology.com to bring in my ‘passive-ish’ income from that, none of this is particularly stressful, and so the urge to fully retire isn’t as urgent!

Also none of this factors in the potential of crypto doing it's thang.... all of this is simply assuming that crypto just doesn't drop any further. If it does, I'm <10% of my current TNW down, which is not too bad. That's only about a six month retirement delay.