Long-time Monevator reader @old_eyes has enjoyed a stimulating career and a healthy income. Sound investing decisions have put his household on a firm footing as he and his wife enter their 70s. The challenge though is that they need to support TWO households. Please enjoy the latest in our series of real-life FIRE profiles.
A place by the FIRE
Hello! How do you feel about taking stock of your financial life today?
I feel that I have reached a good place, with financial independence reasonably secure. There is always the risk of some left-field catastrophe, but if the world continues its journey with a recognisable financial system, we should be okay. So now is a good time to look back on the journey and ask how we got here.
Whether there are any messages for other members of the Monevator community seeking FIRE, I don’t know. I was a late starter with serious saving and investing, didn’t really retire early, and I have not done anything clever or special.
I am also acutely aware how lucky I have been, not only in having a good and satisfying career, but also in being born at the right time. A time when defined benefit pensions were the norm, student debt was unknown (apart from sometimes having to grovel for a tiny, tiny overdraft), and homes were an understandable multiple of earnings.
It is a very different world for the next generation.
How old are you?
I am 69 and my wife 70. We have been together for 46 years and married for 40. (It’s a shock to write those four numbers down!)
Do you have any dependents?
We have two sons. The older is 37 and on the autistic spectrum, the younger 34.
Our older son is totally dependent on us. He has never worked and is extremely unlikely to ever work. He also has some health issues arising from an auto-immune disease.
We have been able to buy him a house in the centre of Liverpool. There he can live independently, something that would be impossible in our rural location. We cover all his bills as the state is unable/unwilling to do very much for him. So, we are effectively running two households. It is better for him to be where he can walk or get public transport to wherever he wants to go, and where there are accessible services and amenities. However, it does increase the costs.
His situation has a big influence on how we think about our savings and investments. They must support him after our deaths for the rest of his life. It is not just financial independence for us, it is lifetime financial independence for him. We can’t see the state becoming more generous to the unfortunate in the foreseeable future. Ours does not feel like a very caring society, and with fewer working people available to support those retired on unable to work, it is hard to see that changing.
Our younger son is married to an American and lives in the Bay Area with their young daughter. He works in marketing and communications for the tech industry. We have had to get used to the ferocious turnover rate that characterises that sector. From one call to the next we are never sure who he is currently working for – or whether he is currently working at all.
Where do you live?
We live in North Wales in a very rural area. It sounds out of the way, but we are an hour from Liverpool, an hour from Manchester and an hour from Snowdonia (Eryri). Unfortunately, rural transport is dire, so we are a two-car family.
When do you consider you achieved Financial Independence?
In 2016 at 62, the job I was then doing vanished out from under me. We looked at the numbers and realised that we had enough for financial independence now, and with a good chance of meeting our remaining financial goal of leaving a legacy for our autistic spectrum son.
I wasn’t aiming at a particular number. I knew I didn’t really want to go on until state retirement age, and the restructuring at work provided the incentive to consider whether I had reached FI. It looked okay so I pulled the trigger. Now I did not need to work anymore.
What about Retired Early?
I ran my own consulting company from 2001-2012. It was quiet across 2012-2016, whilst I was doing a last corporate stint, but picked up again after 2016. Now I have achieved FI, I am much more selective about who I work with. It is now almost entirely not-for-profits working in areas I think are important.
I try not to work more than a couple of days a week, but there are occasional intense bursts of activity.
I am still enjoying the work and will stop when I have had enough. Unlike @ermine, I never had a burning desire to get the hell out of it. My career was pretty pleasant, and although I suffered under stupid management from time to time, I always felt the work itself was satisfying.
It would be nice and neat to carry on to 2026, the 25th anniversary of founding my consultancy, but I am not sure I am motivated enough. I expect to quietly fade from view.
Assets: definitely maybe
What’s your current net worth?
I always find net worth a tricky question to answer.
Well, what are the main assets that make up your net worth?
We have £630,000 in cash and investments (with currently about £64,000 in cash-like assets). Almost all now in ISAs and a small SIPP for my wife.
If I closed my company down today, there is probably about £110,000 that could be taken out (after corporation taxes, but before personal taxes).
I have two defined benefit pensions, a full UK state pension, and a small Dutch state pension (I spent five years in the Netherlands working for a multinational). They currently total £96,000 p.a., so applying the 20x rule for Lifetime Allowance calculations, they are worth £1.92 million.
Is that part of net worth? I can’t do anything else with it except to take the income. If I still had a regular paying job, I would not multiply my salary by 20 and call that the cash equivalent. It would just be income.
Our house has not been on the market since 1986, so current value is a guess. Conservatively, £400,000. It’s a large house, but in a cheap part of the country.
My wife owns the house in Liverpool where our autistic son lives, bought with a legacy from her deceased father. She has about £80,000 in cash savings left over from that legacy, plus a full UK state pension and the same small Dutch state pension. The house will be passed onto our son. We are currently working out how best to do that.
We try to keep her pension and cash savings out of our thinking. It is her ‘mad money’ for when she wants to run away and join a circus. If we had to dip into it, I’d want to replace it as soon as possible.
What’s your main residence like?
We live in what was a two-up, two-down 17th Century stone farmhouse, that has been extended over the years. It once had stone shippons on each side – cow or animal barns, beudy in Welsh – and we still have some of those heavy stone walls inside the house. We added our own extension when I started working from a home base in 1998, and then a couple of heated conservatories for the gardener, my wife.
Some land also came with the house, and we manage that for wildlife. It was an accidental purchase, we were not looking for a smallholding, but it came with the house we loved. We have had fun digging ponds, planting trees and trying to keep back the blackthorn.
We own the house and land outright, having finally paid off the mortgage in 2010.
Do you consider your home an asset, an investment, or something else?
I’ve never been able to think of our home as an asset or an investment. It clearly is the first and probably the second, but it is not an asset I can use except to live in or borrow against. If I sell, I must replace it with something equivalent. We may downsize later, but that would likely be at a point where we need better access to urban areas and public transport. Such a property would be higher cost per m2.
Judging by the prices of comfortable and conveniently placed bungalows in our area, we would release very little by ‘downsizing’. Yes, I know there are imputed rent savings and all the rest, but I don’t think working that out would help me decide how to save, invest and spend.
Earning: good chemistry
What’s your line of work?
I never had a clearly defined career path. I was always envious (perhaps wrongly) of friends who knew exactly what job they were after, and how they expected their working life to play out.
What I did have was a passion for chemistry. I don’t know where from, but at a very young age (about seven) I was playing ‘chemistry’ with food dyes, water, and various glass bottles in a plastic washing up bowl. By 12 I had a modest chemical laboratory in my bedroom. I think it was the atavistic thrill of creating dramatic colour changes, setting fire to things, and making them go bang.
The passion stayed with me, and I studied chemistry at university without much idea what I would do with such a degree. Finding out that corporates wanted a PhD if you were going to lead research, I started one. Somewhere in the next three years, I decided I really wanted to be an academic, and – PhD in hand – I got a post as a lecturer at my local university.
That was in 1980, just at the start of the Thatcher cuts. (Starting salary £11,000.) A torrid time to be trying to build a reputation and career but I was fairly successful, and by 1986 I had a research group of 12. Unfortunately it was costing me two days a week hustling for money to feed them. I wasn’t sure I could make the impact I wanted staying there.
So, in 1986, I took a senior job with the corporate research group of a multinational. (Starting salary £24,000). I was still spending a couple of days a week on admin, politics, and pitching for budgets, but now I had a team of over 100, more capital to spend, and some really juicy problems to tackle.
In academia, you are often wandering around with a solution asking: “does anyone have a problem that matches this?” And if the problem you are working on is too difficult, you just redefine it. In industry, the problems are real, and will not go away. I liked that.
In 1993 I got a job as R&D director for one of the multinational’s subsidiaries in Europe. (Base salary £99,000). I thought it would be an extension of what I had already been doing, but it was not. Now I was sharing responsibility for the profitability of the company with a whole board of very business-focused people. They taught me a huge amount about what does and does not work in business. I learned that corporate R&D is not the real world. You are still insulated from day-to-day decisions.
In 1998, M&A activity saw the subsidiary I was in transferred to a new owner. There was a lot of fascinating work looking at the jigsaw pieces we had once the dust had settled, wondering what business configurations could be viable. As we sorted it out, I returned to the UK to become Director of Sustainability, working out how we would adapt to the net zero future that was already on the horizon.
Despite this very interesting work, major reorganisation was looming. The acquirer had overstretched themselves and needed to cut costs. As the focus shifted relentlessly to the short-term there was no interest in the longer-term strategies I was promoting. Job satisfaction ebbed away and in 2001 I accepted an offer of voluntary redundancy. (Base salary at that point £89,000).
Now I had to work out what to do next.
Did you leap straight into business for yourself?
My father was a serially unsuccessful businessman. He was okay at the technical side, but hopeless financially. He became a very unhappy man, and I had a very fraught childhood as a result. I swore I would never subject any family I had to the same stresses.
So my first thought was to get back on the corporate horse, but some very senior mentors told me that although I could easily go straight back into another corporate job, it would not make me happy. I was best at starting things, not at running them operationally. In five years’ time, I would be facing the same situation. Why not use everything I had learned about R&D, innovation, and sustainability as a consultant?
It took a lot of people a lot of time to persuade me that I was not my father, and that I could succeed. My wife had stopped working when we had children, so financial stability rested on me. I found that scary, but with a redundancy cheque in my back pocket we agreed to give it a go. Fortunately, some colleagues who had passed this way before told me it would be a year before I got new clients without the help of previous networks, so I did not panic when that turned out to be true. On 11th September 2001 I was on my way to a meeting with my first potential client, when I noticed people crowding around a shop window. TVs were showing planes crashing into skyscrapers. My meeting was cancelled, and nobody answered the phone for the next six months.
Despite my caution, within a year I started a second business with an ex-colleague targeting a different consulting market. That went reasonably well, but we both had other companies and in the end could not give it the time it needed. In 2009 we stopped.
But my own business grew. The first target was to rebuild the redundancy payment I had started with as a cash buffer. I always felt in the early days that I would be rumbled as a fraud and the work would melt away. The second task was to overpay the mortgage. We had previously experienced two bouts of very high mortgage rates with a new house and a new family. I wanted to reduce outgoings where I could.
I discovered a lot of business problems look the same, no matter the sector, so I found myself working with different organisations, both private and public. One was a government department setting up a new arms-length body. That body started off as a client, became a major client, and ultimately my only client. I did point out that paying a daily rate did not make sense when they had an insatiable appetite for my time. Their response was they liked the flexibility, and probably wouldn’t need me next month. They always did.
This went on for a couple of years until, in 2012, the government had one of its regular spasms about the number of consultants and contractors they used. I had to choose between becoming full-time staff or stopping work with them altogether. I thought the work was important and worthwhile, and the pay was acceptable (£85,000), so I took the job. I expected to do it for a few years until I had achieved my goals. In the end it was four years, and I left in 2016 to pick up the threads of my consultancy work again.
Since then, I’ve been working with a small number of clients. All in the public sector or not-for-profits.
One of my bosses described my career as “zig-zagging its way to success”, and that is what it felt like. I always felt that each career decision was the last one I would need to make – and I was always wrong.
What is your annual income now?
My current income is £96,000 in various pensions, plus a small salary and dividends from my consulting company. This is right up against the £100,000 tax trap where the marginal rate jumps to 60%. I try and keep to that figure as a limit, but I’m usually a bit over. I would prefer a more logical and progressive tax system – bring the 45% rate down to £100,000 if we must – but I’m not going to complain too loudly. It is a nice problem to have, and we all should contribute.
I may take advantage of the relaxation of the Lifetime Allowance for pensions next year to increase savings a bit further.
How did your salary progress over the years?
Over my career, my salary started at £11,000, peaked at £99,000, and by early retirement in 2016 it was £91,000. These are base salary numbers, excluding any benefits packages or bonuses.
From 2003- 2012 I was taking what I needed from my business as a salary, adjusted to provide roughly £4,000 a month after tax into my bank.
I was also taking the maximum amount of dividends that were tax-free, and from 2010 paying into a private pension.
When did you first start thinking seriously about money and investing?
In 2001 I left the corporate world, and realised that I was now responsible for delivering a sustainable financial future for my family. Up to that point I had always had a ‘regular’ job and assumed that the company pension would meet our future needs.
I had a deferred pension, which provided a base from which to build, but I realised I would probably need more. The first few years of running my own company were just scrabbling to keep all the plates spinning and learning how to be a consultant.
Was pursuing financial independence part of your career plans?
There was no thought of FIRE until I left the corporate world in 2001. In each job I thought that was me sorted until retirement. I had always relied on the prospect of a corporate pension.
I learned about ‘drop-dead’ money from James Clavell’s Noble House in the 1980s. It stayed a dream in the back of my mind, but I did no serious thinking until about 2010.
Did you learn anything about building your career that you wished you’d known earlier?
Understanding that I was not my father much earlier could have helped me. I could have been more flexible in my career if I had more confidence. But my terror of not having a steady income kept me around large corporates.
On the other hand, working in those large corporates taught me so much of what I have used since. I wasn’t unhappy, and I might not have been ready to branch out earlier.
Saving and spending matters
What is your annual spending and how has this changed over time?
I find it easier to think on a monthly basis. After tax I have £6,200 hitting my bank account each month. About £4,000 goes straight back out in the costs of running two households. So £2,200 a month, or £26,000 a year, in discretionary spending. That goes on major holidays, like visiting our son’s family on the West Coast, our hobbies, repairs and upgrades to the homes (recently a new heating system, PV and battery for our main home, and air-con for the Liverpool house), and savings and investments.
Looking back to when the whole family were living together, the equivalent numbers were £3,000 in regular monthly outgoings and £1,000 as discretionary spend. That included school fees for the younger son and private tutoring for our autistic son.
Income has increased, but although some costs have dropped out as one son left home and education came to an end, inflation and the costs of running two household have pushed up monthly outgoings. We definitely have more headroom now, but we have delayed some spending on the house and travel.
Do you stick to a budget?
We don’t have a budget. Instead, I keep an eye on what is going out monthly in immediate and repeating costs. Things like energy, water, food, telecoms, insurance, council tax, cleaner, gardeners, support for our autistic son, and additional carer costs for my 95-year-old mother.
If it starts drifting up, I check whether it is inflation we will have to live with, or whether we are changing our purchasing habits. That means I know how much headroom there is each month for additional saving and investment or building up the kitty for the next big purchase.
What percentage of your gross income did you save?
I never had a fixed saving percentage. By the time I knew about savings rates, I was running my own business and either taking the minimum I needed each month, or taking chunks as dividends and increasing the pension pot.
Do you have any hints about saving and spending?
For us, saving and spending less come to the same thing. There are two keys – knowing where the money goes, and spending with purpose. We have always had a pretty good idea of what is going out on a monthly basis, and how much headroom we have. A lot of friends and colleagues have very little idea the basic dynamics of their regular expenditure.
We spend intentionally, and I hope thoughtfully, on things that matter to us. When we first married, we made do with a mattress on the floor, but had a very expensive SLR camera and lenses. This shocked our parents, who thought we were not behaving appropriately, but we wanted the camera more than we cared about not having a bed. The important thing was not to try to buy both.
Pay for the needs first and then think hard about your wants. Don’t confuse needs and wants.
Do you have any passion, hobbies, or vices that eat up your income?
Astrophotography is my passion and vice. My pride and joy is an automated observatory I built on our land. It was a cool retirement project. I am also part of a syndicate that rents three scopes at an observatory in Spain that we operate over the internet. Astrophotography is like normal photography but much more expensive.
My wife is a keen gardener, with a very large garden and a small nature reserve. She also holds one of the national plant collections. What with acquiring plants, hiring contractors, and getting help with the heavier garden maintenance, costs of heating conservatories and endless bags of peat-free compost, she probably spends about as much on that as I do on astrophotography.
We spend freely on these activities that bring us joy, but not excessively (at least that is our excuse). As is usually the case, to outsiders it looks like we spend a great deal on these hobbies, but we both know people in our respective communities that spend many multiples of that.
That’s how we work it, one major vice each.
A galactic budget: The Orion Nebula, as captured by @old_eyes.
Investing: passive all the way
What kind of investor are you?
My first steps into investing were rather unguided. In 2010 my business was stable enough to give me a good cash buffer and something left over to invest. I went to an IFA for guidance and started a pension, and an ISA for both of us.
I was aware enough to pay for his advice, rather than allow him to manage my funds, but I did no thinking about where the money was going. In particular, I had no idea what the private pension was invested in, it was just a package from Scottish Widows. There were also a couple of individual shares. (Standard Life demutualisation in 2006, and Royal Mail in 2013).
After that initial phase I just kept paying what I could into the pension pot and added a little to the ISAs. Then I discovered the FIRE community, Monevator and other blogs, and began to think more carefully about where I was investing and reorganising things. I read Rowland and Lawson’s The Permanent Portfolio and based some of my thinking on that.
I ended up with something very similar to The Accumulator’s Slow and Steady portfolio. Initially it was 50:50 growth and defensive (all in funds), but I upped it to 60:40 because of my strong pension position. A rational analysis says I should go further still into equities, but 60:40 is far enough.
But passive. Passive all the way. I have no illusions that I have the time, interest, or expertise for active investment. I don’t think I can beat the market.
Right now, I am simplifying the portfolio as it has become untidy over time with funds from different providers that do the same thing. Rationalising funds, switching to simple global equities and so on.
My wife is very intelligent, but not remotely interested in the mechanics of investment. I need create something that requires the minimum of attention and maintenance, with operational instructions that fit on one side of A4. This is all part of building a ‘dying tidy’ file in case I die first. Something that will tell her or her agents everything they need to know about where the money is and where it gets spent.
What was your best investment?
It is a disappointing answer, but when I rejoined the conventional world of work in 2012, I had the opportunity of transferring the private pension I had built up into the civil service defined benefit scheme.
I had previously been stuffing money into the private pension from the profits of my consulting company. I transferred £177,000 into the civil service scheme and that bought me an index-linked pension of £12,000 p.a. with widow’s benefits.
Given my risk aversion, that was probably the best decision I made.
Did you make any big mistakes on your investing journey?
Most of the apparent mistakes are only visible with hindsight. Why was I in bonds in 2022-23? Answer, because I couldn’t have predicted what happened, and the reasons for investing in bonds are always the same and always valid. It’s part of being a passive investor dummy!
My two mortgages were endowment mortgages, and that caused me considerable heartache. But they were very common at the time, almost the default. I did not know enough to check the assumptions the brokers were making, and they were the only products that were offered to me.
What has been your overall return?
I don’t have much idea for the earlier phase of my investment journey, but I did keep records from 2015 onwards. So I can say that annual return (including fees) was:
| Tax Year | Return |
| 2015 | 2.11% |
| 2016 | 14.68% |
| 2017 | 1.23% |
| 2018 | 8.44% |
| 2019 | -3.11% |
| 2020 | 19.54% |
| 2021 | 7.78% |
| 2022 | -4.66% |
I have been putting in and taking out money on a regular basis for chunky outlays: work on our house and the house where my autistic son lives, and various ‘bank of mum and dad’ stuff helping our younger son.
Since 2015 the net contribution to the portfolio is only £8,000, yet the pot has grown by 67% from £374,000 to £629,000. Time in the market counts for a lot.
How much have you maximised your ISA and pension contributions?
From about 2010 to 2016 I was using all our ISA allowances and putting money into pensions.
Changes in the pension Lifetime Allowance pushed me to start taking my first corporate pension in 2013. I took a much smaller lump sum because I wanted to get the maximum regular income coming in. Signs of my continued aversion to risk. That meant I could afford to maximise pension and ISA contributions during the time I was working for a salary again.
Since 2016 there have been modest ISA contributions, as and when the cash buffer was full and there were no big expenditures on the horizon.
To what extent did tax incentives and shelters influence your strategy?
I have tried to make good use of ISAs and pension saving without getting silly. In one purple patch of business, I had more money coming in than I could put into a pension or ISA, so I had a largish slug of bare investments. Conversely, in years when I could not use all our ISA allowances, I moved investments into the sheltered accounts.
Now, apart from the cash buffer, we are entirely in tax sheltered accounts. About 86%.
How often do you check or tweak your portfolio?
I routinely check once a month, but that is really for information only. I don’t rebalance within the portfolio. Only when I am adding or removing money or simplifying.
Wealth: flexible finances
We know how you made your money, but how did you keep it?
Running your own micro-company, earnings are episodic. There is not much opportunity for regular savings and investment. So it was always in lumps. A good quarter or a bonus.
Investment was always into funds and pensions. Funds investment was intended to be buy and hold when possible. We have never invested in property. Too much like hard work.
Which is more important, saving or investing?
I think saving is the beginning of financial independence. That cash buffer is critical for lean periods and big ticket items. Once you have a cash buffer you are comfortable with, investment is possible.
Only you know how big a cash buffer makes you feel secure.
Investment grows your wealth, but savings help you sleep at night. Apart from a mortgage, we have been debt-free since around 1990. All the major one-off items, from holidays to home extensions and heating systems have come out of the cash buffer. And we always rebuild it as quickly as possible.
We know we are not maximising our investments and growing our pot as fast as we could, but it is comfortable. As for leveraged investments – we leave that to people with much better maths and a much stronger stomach.
When did you think you’d achieve financial freedom?
I wanted financial freedom, not to retire early but to work in whatever way suited me. I hoped I would reach that point before normal retirement age, but I didn’t have any specific timeline or plan until FI was already in sight. Perhaps around 58. Then I started thinking that 60-62 might be possible.
Are you still growing your pot?
I am still putting modest amounts into our investment pot. As and when cash is available.
So far, our needs can be met with the pensions, and we have only taken money from the investment pot for ‘bank of mum and dad’ stuff.
Do you have any further financial goals?
I have three goals: to leave a sufficient legacy to support our autistic son, to have enough money for quality care if we need it later, and to enable my wife to continue to live comfortably, should I die first (pension income would more than halve, and her costs would not).
How much do we need for that? I don’t know. My gut and back of the envelope sums say I can hit two out of three with the current pot, and when I stop consulting and close the company there should be another injection of cash. If the investments keep pace with inflation, I think we are okay.
What would you say to Monevator readers pursuing financial freedom?
I have three messages, none of them original.
Time matters, but it is never too late to start. I did not start seriously saving and investing until 2010 at age 56. Yes, I had great ‘floor’ in a decent pension, but I also need to leave a very substantial legacy. The pot to provide that has been built over 14 years. In the last eight years it has grown by 67% with only a tiny net cash investment, and a very conservative asset allocation.
Think hard about what you want to do with financial freedom. Running towards something is always better than running from something. I have seen many people stick at a job they dislike until they make their number, leave with a fanfare, and then rapidly decline in mental or physical health because they had nothing else. “I want to achieve FI so that I can…” is a better story than “I want to achieve FI because I hate my boss”.
‘One more year’ is a real and dangerous way of thinking. At every major event in your working life, check whether you have achieved FI and if one more year is really necessary. Too many people shift the goalposts as they get close, partly out of fear of some unknown catastrophe and partly from the absence of a plan for what next.
You can accuse me of hypocrisy because I have kept on working. Am I not guilty of ‘one more year’? Not really. I sought FI to have the freedom to do what I am doing now. To have the choice. Even if I had a much bigger pot than I need for my financial objectives, I would still be doing the work I am because I enjoy it and I think it does some good.
Any other business
Did any particular individuals inspire you to become financially free?
I had many good mentors and bosses in my career (as well as a couple of real shockers). Each added something particular to my philosophy.
Perhaps the most important influence was a main board director of the multinational I worked for. He was an active mentor from 1990 – 2001. He taught me many things over those years, but the critical intervention was when I was agreeing redundancy in 2001. He took me to lunch, and over a couple of hours gave me a clear-eyed analysis of my strengths and weaknesses, possible future, and introduced the idea of setting up as a consultant.
He also suggested an outplacement agency who would ask the question “what do you want to be when you grow up?”, rather than stuffing me into the first executive position they could find and taking their fee. Without him, the second half of my career would have been very different.
The person who drove my desire for financial independence (safety, in effect) was my father. I saw what living on the edge looked like and wanted out. I saw freedom from want as a solid salary, rather than true FI, and I had modest ambitions, but I wanted ‘enough’ so that I did not have to worry every month.
Can you recommend your favourite resources?
Monevator is always where I start on the web. The mix of learning resources, news, and pointers to interesting things makes it essential. It was the resource that got me organised with a clear plan. I am in ‘maintenance’ mode now, but I still read every post and comments – sometimes in wonder and sometimes confusion.
The only other website I check regularly for updates is Simple Living In Somerset (and before that Simple Living In Suffolk). The grumpy mustelid is a brilliant writer, and their thoughts on living in retirement are entertaining and insightful. Like the IgNobel prizes they make me laugh and then think.
Two books have helped me to understand what I am doing in pursuit of FI, what risks I am taking and why. The first is Daniel Kahneman’s Thinking, Fast and Slow. This has a lot to say about how we make decisions, how prejudices and biases get in the way, and how we convince ourselves we are being logical when we are not. It is a book I return to often.
A much more recent book is Morgan Housel’s The Psychology of Money. It came out after I had reached FI and semi-retired, but it was a great distillation of some of my own conflicts over money and security. It helped me to understand my own psychology a bit better, and hopefully improve my decision making.
What are your thoughts around charity and inheritance?
We give regular moderate amounts to environmental and conservation charities, one-off sums to disaster relief appeals, and intend to leave a bequest in our wills to a conservation charity we have worked with for many years.
In an ideal world we are not great fans of inheritance. Wealth ‘cascading down the generations’ does as much harm as good.
In practice our attitude is dominated by the need to secure the future for our autistic son. Once we accept that, we feel we should make some provision for our younger son to avoid family feuds. We have both seen those in action and they are ugly.
Our younger son knows that he is second in the queue and accepts it (I hope!). And with a bit of luck any inheritance will be so far down the line that it will be of more value to his children.
What will your finances ideally look like towards the end of your life?
For all the reasons given, we hope to die with a big enough stash to provide a 40 year FIRE for our older son and a nice surprise for our younger son.
Nothing super-remarkable in this story, as @old_eyes himself says. And yet also once again entirely personal and full of interesting insights – as well as unique challenges. Questions and reflections welcome, but please remember @old_eyes is just a reader, sharing his story, not a battle-hardened blogger like me. Constructive feedback welcome. Personal attacks will be deleted. See the rest of our FIRE studies.
Very interesting overview. Best of luck in managing your finances with regards to your family. I can imagine you and your wife feel the responsibility keenly. As you say your focus will understandably lend itself at least partially to providing for your elder son as and when the grim reaper comes calling.
“I have two defined benefit pensions, a full UK state pension, and a small Dutch state pension (I spent five years in the Netherlands working for a multinational). They currently total £96,000 p.a., so applying the 20x rule for Lifetime Allowance calculations, they are worth £1.92 million.”
If I may be so bold, this is an incredibly lucky position for you to be in given your historical earnings. It is nice that you are fully aware of this when you write “I am also acutely aware how lucky I have been”. Every day thank your stars…..
The brutal reality of today’s situation is that were history to repeat itself with your families situation and your achieved earning power it seems very unlikely that you would be in anywhere near the same financial position you are and serves to reiterate how much of a trickier outlook so many people are going to have than a previous generation.
Given your pension income covers your expenses for life (btw when you die, will it pass to you wife?) and the fact that your wealth needs to survive into perpetuity (your elder son could last another 60 years? – probably a bit high with an autoimmune disease) – I am also of the view that a higher equity % is going to be more appropriate than not albeit I appreciate the volatility might be tough to deal with.
Best of luck for the future.
“Our younger son knows that he is second in the queue and accepts it (I hope!). And with a bit of luck any inheritance will be so far down the line that it will be of more value to his children.”
This is an important conversation you need to have with him (if you haven’t already but by your “I hope,” I assume not.). You seem heavily focused on your autistic son – and I completely understand why! It seems very difficult to plan for a future where you won’t be able to step in and assist.
I don’t know your situation exactly but if you don’t know how your younger son feels about things it may be a good thing for you to discuss with him. They will only have each other when you’re gone. While I don’t think children should expect an inheritance (and my financial plans don’t include any), one getting more than the other could be an issue and could affect their relationship down the line. Your younger son may be relieved that he was included in a conversation and grateful to know what your wishes are and be given an opportunity to express any of his own worries about his responsibilities when you pass.
I found this story very inspirational, particularly the content about your older son. Best wishes to you.
It’s absolutely fantastic reading these stories. I just want to say thanks to everyone involved who gives their time and effort to this.
Thank you for sharing your story, which I found very interesting and thought provoking.
I am in awe of what seems to be your stoicism in relation to the situation of your oldest son. I think that, for me, the responsibility would be both terrifying and crushing. I hope that things work out well for him, and I’m sure you will do your utmost to ensure that it does.
I’m mildly amused by your attitude to finance, which comes across as quite broad brush and practical in its approach. You do not seem to be a fellow with a hundred detailed spreadsheets to support his thinking. My approach is very similar – I’m roughly aware of everything, but let the small details look after themselves. I’m also a fellow (ex-) PhD chemist (organic chemistry – a “bucket-chemist” really), so perhaps that is a trait that chemists have (unlike, say, the physicists and mathematicians I knew, who would have a far more rigorous approach).
You appear to be highly satisfied in your journey so far. Good luck going forward, and thoughts and prayers in particular for your eldest son.
@old_eyes – thank you so much for sharing. What a fascinating story.
There is lots here that resonates with me, and many things that are completely different to my London-centric life.
One thing you don’t talk about is your planning horizon. Without wanting to stray into the morbid, I’d be interested to know how you view timescales and SWR in your situation.
Lovely to read this.
And very interesting to read about you not wanting to be like your dad (or make the same mistakes).
That was an intergenerational dimension.
Another lovely story. At the risk of being sentimental, I love that people are able to tell the story of their lives in the context of their FIRE journey. We (folk in general, not this site community) tend to minimize The impact that money has on our core decisions and the way our life takes its twists and turns.
One of the things I really enjoy about Monevator has been the freedom to open up and talk freely about money and the life decisions that it impacts. @Old_eyes am sure decision to share your circumstances with your autistic son was not easy and I thank you for it.
On the portfolio side, your floor is certainly high enough and assuming some portion of it passes on to your wife, does it make sense to lock in some guaranteed income for your autistic son (although rates have definitely improved, I’m not sure what the annuity options are for a disabled 37yo) Failing that, increasing equities and having a plan for an executor to follow is good.
I, too, planned my financial life in full awareness of my father’s mistakes, so kudos to you and best of luck.
Thanks for sharing your story and all the very best to you and your family for the future.
I was staggered by the pension income you outlined, particularly after only roughly 10 years in the corporate world although those 10 at an exceptionally high salary! presumably its driven by an accrued DB pension – my intrigue, surprise, jealousy at how such a figure was achieved made me try/want to get my head around it. Were you part of something like a 1/48th scheme @ £99k income for 10 years then compounded up each year for 20 years at c5% inflation? However, you’ve achieved it all credit to you and I’m glad it’s supporting your life style and family.
It does massively show the risk shift that younger generations have had with the closure of DB pension schemes and move to DC. I started work some 20 years later and my starting salary was not too dissimilar to yours for a graduate role! To achieve anything like your pension income would require a mountain to climb and even if someone could sustain a mega salary for a long period, pension tax relief is tapered then capped at £10k! Never mind, sounds like I’m moaning. I’m not. Back to my Netflix and avocado toast….
Thanks again for sharing your story.
Fascinating insights into forks in the road taken (and not taken) re career and the impact they’ve had further down the line financially. In particular, it reminded me of mentors and how their advice can be invaluable.
Thanks for sharing.
Keep your sights pointed Heavenward 🙂
>Our older son is totally dependent on us. He has never worked and is extremely unlikely to ever work. He also has some health issues arising from an auto-immune disease.
It sounds very similar to our situation. Something for the pro inheritance tax brigade to think about.
Thanks for sharing your story. I wonder if it is worth revisiting the state benefits for your son with the help of a charity? Having gone through PIP assessment for my daughter, it’s all in the way you answer the questions. We are also looking at setting up a trust with Mencap help provide for her. Best to get legal and financial advice as there are lots of complexities to consider.
Building on CB’s comment – I was reading about my daughters NHS DB scheme and was very surprised to see reference to adult dependant children being mentioned as potentially inheriting their parents pension benefit. Never seen it before, and it sounds far too generous to me..Maybe worth a good look at you scheme rules and talking to the pension trustees.
CB is correct, definitely worth revisiting state benefits
@old_eyes – Thanks for sharing your story. There are some surprising coincidences with my own! I also built a modest chemistry lab in my bedroom at about the same age as you. I had a marble top table custom made for my experiments, glass tubes, various glass flasks, a condenser for distillation, a dissecter, a Bunsen burner, and a stock of various chemicals. All aquired by saving diligently my pocket money, any Christmas and birthday money gifts, and anything else I could earn from small jobs and by selling things that were no longer useful to me. During the sixth form though, my interest in chemistry was displaced by a much greater interest in Physics.
I also worked in the Netherlands for 5 years like you. Unfortunately, 5 years are no longer enough to entitle people to a Dutch state pension as it was when you worked there (I worked there from 1998 to 2003). I do have a very small private DB Dutch pension though. It has not started yet. When it does, it should be enough to cover a short ski holiday in the Alps every year 😉
Another parallel with you is that I’m still working despite having achieved financial independence. There are several reasons for this, but one of them is my wife’s wish to build a lake house. This project is near the end but my new job is a career change that is proving very exciting and interesting. It’s a very traditional Physics R&D role in a traditional physics industry where I can get involved in cutting edge research. I’ve got no plans to activate the Retire Early part of FIRE for the near future. FI is the sweet spot for me now 😉
This series of articles is great and this one in particular was very interesting. I trained in a vocational specialism and its always amazing to me how folk in other fields are able to find their way into very different types of position.
I second the comments above that some kind of specialist legal/ financial advice may perhaps be appropriate in the case of securing the future for your elder son. Your support and dedication is inspiring.
The other thing that fascinates me about these articles is the revelation of what people can earn in other fields. I checked your historic earnings in the BofE inflation calculator. The £11k starting salary in 1980 is £45k in today’s money, which is what I just retired on after 30 years of professional consultancy. The £99k base salary in 1993 is just under £203k now, which just isn’t possible in my specialty, where the ceiling is much lower.
Many thanks for sharing your story, which I thought was very well written, and best wishes for the future.
Thank you all for taking an interest in my story, and for the many kind words. I was not sure my slightly un-FIRE FIRE story would be interesting, and I am glad that you have found something in it.
I will answer some of the specific questions as well as I can.
@SeekingFire (#1). I am VERY aware of how lucky I am. The phrase “more by luck than judgement” seems to have been invented for me!
I know that I should/could be comfortable with a higher percentage of equities, but I that is not in my comfort zone, and since whatever investment pot is left must supply my son’s needs, there are also sequence of returns risks. There are survivor benefits for both my DB pensions, but if I die first my wife’s effective monthly income will more than halve. Her expenses will not (still have to support my son). So the investment pot needs to cover part of their ongoing costs.
@PostMorbus (#2) I have so far lightly raised the possible inheritance futures with my younger son. You are right it needs a more detailed discussion. That is planned for our next US trip.
@NickHudson (#5) There is a spreadsheet, but it is purely used for recording and tracking the investments. Managing the investments is easy as we are buy and hold as far as possible, and a very simple passive portfolio. As I said we do not budget specifically, just keep an eye on the regular outgoings watching for drift. It is a good way to watch out for cost increases from inflation, or paying too much attention to the Jones’ (there are a lot of them in these parts) and spending too much time on the hedonic treadmill. A structural shift in the monthly outgoings needs checking. We have the benefit of monthly headroom, so we are more interested in shifts to the baseline (energy costs).
@FirevLondon (#6). As we are living off the various DB pensions and not making any withdrawals from the investment pot, there is no SWR calculation and no direct concerns about longevity. My wife’s parents died in early 80’s, and my mother is still going at 95. All of our parents were war generation, which meant both deprivation and a carefully calculated and rationed diet. Pros and cons. What is our prognosis? Who knows, but I have reached an age where school friends are starting to disappear.
@Mr_jetlag (#8) We are looking at a trust fund for our son, but the question is when? we may need some of the money for care in our old age. Anyway, currently taking advice as this whole area is a minefield.
@You’ve got to roll with it (#9) “I was staggered by the pension income you outlined, particularly after only roughly 10 years in the corporate world although those 10 at an exceptionally high salary!”
I may have mislead you a bit. The £96k comes from all DB type pensions – two corporate, UK state and small Dutch state pension. 1980 – 1986 University pension, which was transferred into the pension for my first corporate role. That built up between 1986 and 2001. It was deferred and then taken early in 2013 (only a year before normal retirement age at 60 to cope with lifetime allowance issues) with a partial tax-free component. That pension is now worth £57k p.a. and was bult up over 21 years. Between 2010 and 2012 I paid into a private pension. Then transferred that into the civil service DB pension in 2012/13. That scheme was a career average salary scheme, so no funny games about what happened in your last year. As well as the transfer in and normal accruals I was making additional contributions. When I left that job in 2016 I took the available pension early. That is now worth £27k p.a. Let’s say that pension was built up from 2010 – 2016.
So yes, excellent outcomes, but not quite built up in 10 years :-).
@CB (#12). My son has worked with local support charities to see what he might be due from the state. I think he does get some support. A complication is that he is very proud of living independently, and very resistant to our ‘help’, or ‘interference’ as he sees it. He is mentally competent, and if he doesn’t include us in his financial and medical decision making, we can’t force him. This is quite hard to bear, especially for my wife. She naturally wants to get stuck in and sort things out for him, and he says no. Loudly and firmly. We know what he wants to tell us; no more.
@Boltt (#13) Thanks, I will check whether he is eligible to continue to be paid part of my pension after we die. If true it would scale down the pot we need to leave him.
@Tom-BakerDrWho (#14) “I had a marble top table custom made for my experiments”. Luxury! Eeh when I were a lad, we had to make do wi’ a scrap o’ damp cardboard for a workbench, tubes out’t toilet rolls for test tubes and a box o’ matches for a burner! All used!
Actually it was a rather nice Victorian drop-front bureau.
Congratulations on reaching FI. For me that is the important milestone. After that – you choose how you want to spend your time. I have ‘retired’ friends who have carried on in pretty much the same industry, some who have branched out into long-held passions (two chemists, one a garden designer and one a maker of hand-crafted fine furniture), and those who have taken to new types of activity – an engineer from the energy sector who now works on persuading landowners to preserve and restore ancient woodland. As he says – the meetings are just as long, and the arguments just as frustrating and futile as when I was in industry, but the goal feels worth it.
@Larsen (#15) I have long understood that there is no logic to rates of pay in any job. Compared to many people I have worked with my pay was trivial. They did not understand why I accepted such derisory wages. All I can say is that I never made a career choice in search of higher pay. It came, I was glad it came, but not even the industries I worked in were selected on the basis of what the pay rates were.
I have never seen any believable explanation for pay rates in any sector or level. I am sorry, but bankers perform a valuable service, but they are not intrinsically smarter, harder working, or more socially valuable than nurses. And few top executives make a measurable difference to the performance of a company. Certainly not enough to justify their differentials.
@old_eyes Thanks for sharing this.
It’s worth emphasising just what a(nother) generous feature of government DB schemes the ability for new entrants to transfer a DC pension to the scheme in return for a guaranteed, index-linked annual sum at SRA, complete with partner/dependant benefits, is.
A few years ago I encouraged my daughter to do this when she joined the Local Govt Pension Scheme, and she was offered an annual sum at retirement which, ‘in today’s money’ was worth 13.6% of the lump sum she was surrendering, with all the above benefits!
Clearly it has taken a lot of time and effort to pull together and publish this high quality and fascinating ‘chat’ – so many thanks to all involved. And, of course, special thanks to @old_eyes for agreeing to share his story with such candour!
Some points/thoughts if I may:
a) I recognise your concern about the [wife] survivor scenario and assume that the basis of “pension income would more than halve” is that the new state pension has no survivor benefits. Assuming both your DB’s have a default 50% provision, you may find the situation is a bit better than you fear. Explicitly, you mentioned taking a tax free lump sum, so that schemes survivor benefit may now be >50%, and I suspect her after income tax position would be somewhat better too; as less income would be taxable at HR.
b) You hint that your overall Pot objective may be to “keep pace with inflation”; in which case your Pots growth since 2015 [of 67%] is more than twice the cumulative CPIH inflation over the same period [which comes in at around 32%]. To my eyes, your allocation is not that conservative, and I admire your ability to hold such a relatively small percentage in cash!
c) Furthermore, as time goes on, you may find you spend less and are therefore likely to contribute more to your Pot too. On this theme, I was slightly surprised by my inference that you seem to be spending the majority of your state pensions – but that may be down to one-off CAPEX or the like.
d) I smiled at your, and others, observations on the differences between chemists and mathematicians/physicists
@TI/@TA
Do you feel you may be publishing too frequently. I ask as posts like this one from @old_eyes take [me] a while to fully digest and process. Could, of course, just be me, but thought it might be worth putting the thought out there?
loved this, love the whole series. please do more.
@AlCam (#18) – “Assuming both your DB’s have a default 50% provision, you may find the situation is a bit better than you fear.” You are right. The first DB pension offers a 50% survivors benefit, and that was on the basis of the initial full pension offered, not the reduced pension after taking the tax-free lump sum. That increases the survivors pension by 15%. I had not clocked that. You see! Tell your life story on Monevator and people help you! The second DB pension is a civil service scheme and only pays out 37.5% to your spouse or partner. Overall, including the uplift you have just pointed out to me, her overall income from my pension will drop to 45% of the current value. But as you say taxed a little less heavily.
“Furthermore, as time goes on, you may find you spend less and are therefore likely to contribute more to your Pot too. On this theme, I was slightly surprised by my inference that you seem to be spending the majority of your state pensions – but that may be down to one-off CAPEX or the like.” Fall off in spending hasn’t happened yet as we are still both fairly active. However, we have been doing a lot of catch-up work on our properties as we are prepared for the hassle now, but may not be in the future. Also, I am increasing paying for people to do work that I would previously have done myself. I am getting too old to feel comfortable up a ladder painting the house or sorting out loose slates.
The length of the post is entirely down to me. @TI generously allowed me to ramble on at great length, and did not wield the red pencil as severely as they might. All I can do in mitigation is quote Blaise Pascal “I would have written a shorter letter, but I did not have the time.”
Thanks for this. I found the openness about needing to support an adult child both helpful and quite moving – best of luck to you, and him. Just goes to show you can’t really plan what curve-balls life is going to throw at you – and like nearly all problems – they are certainly made no worse by having more money.
Thanks for this post, it’s fascinating to hear from different people with different careers, responsibilities and thought processes.
Your reflections on your parents’ approach to money/business and its impact on you was really interesting, and made me think about a few things.
Morgan Housel’s writing has a similar effect on me as you’ve mentioned, I’ve started listening to his podcasts and often have to pause them to reflect on wise bits.
Long time reader, never comment.
I’d just like to say how grateful I am for the privilege of being able to see this deep dive into your history and circumstances. It has helped me, thank you.
Love this series, I might even write my own story one day. Very best wishes to @old_eyes and the family. Having worked with many families on succession planning, I can report that open conversation is the very best method of avoiding conflict. I have seen many situations that on first sight appear to be a tinderbox resolved through good communication. Good luck and like many others I’m a huge fan of TM.
Dear Old-eyes,
I found your story very touching thank you for sharing. I am in a similar position as your youngest son (sibling who needs ongoing parental support), and I would really strongly suggest you having a chat with your younger child about your intentions. Siblings feel the a burden of responsibility in my experience for their sibling but it mixed with strong feelings of resentment which built up in childhood (about the unfairness of it all), which they will often do their upmost to hide from their parents out of feeling of shame for being selfish. Siblings will also often hide their own needs and difficulties from their parents, so we not to add to their burdens. I think acknowledging that the situation is difficult and (innately unfair on everyone) might be worth considering. Then being frank about your intentions, particularly that you have made provision to provide for your eldest so your youngest doesn’t need to take over this responsibility, would be good to communicate. Personally I don’t think inheritance should come as a surprise but neither should it ever be expected. In my limited experience lack of clarity (ie surprises) can lead to a lot of emotional difficulties later on for those left behind, as it can cause confusion which can never be resolved.
@Trying for Fire (#25) Thanks for the advice. One thing we have always been conscious of is the way in which younger siblings are affected by the problems of the elder. Sometimes resentment, sometimes mirroring , and sometimes fear that they are afflicted in the same way. You are probably right, it is past time for that in-depth conversation, but it needs to be one-to-one and not mediated by a videolink if at all possible.
@TheFamilyNED (#24) Thank you. We are getting the strong message that we should not assume understanding that may not be there. Hints and indirection will not do the job. We need that conversation.
Can I add my thanks to @old_eyes, the Monevator team and all previous (and future) contributors to this series. It’s such a fascinating and informative set of stories. Financial guidance tends to be rather abstract, and seeing this translated into concrete stories really helps with the process of trying to picture what FI might actually look like. I am approaching a position where theory seems to be telling me I could soon consider myself FI (and potentially RE, if I wanted to) but that of course depends on whether I am being realistic in my projected spending needs. Getting to see a range of other people’s figures gives a chance to sanity check some of my assumptions. Thanks to all involved, I look forward to further stories in the series.
(Oh and slightly tangential, but I also really appreciate the recently started series of posts on decumulation – another area where clear examples seem hard to find)