The other day, standing in a packed tram and having just finished reading my book, rather than dig out my phone to aimlessly scroll through Twitter, I started to idly think about my goal to FIRE.
My stretch goal (now my actual goal) is to FIRE at the end of 2024. This is in about 5 years’ time, which really isn’t that far away. I’m over half-way there.
And then it suddenly hit me.
Assuming that I will be continuously employed, this means that I only have 60 more pay days from my employer!
If not gainfully employed all that time, then less than 60!
Rather than think ‘Hurray, only 60 more pay days til I can stop working!’, I felt a flutter of doubt and fear about my numbers. Numbers which I have checked and rechecked numerous times over the years.
What if it’s not enough!?
I did the maths and the resulting number (ie 60 x my monthly salary) on its own added to my current pot is not enough for me to FIRE.
But I don’t save the full amount, do I? My savings rate is around 40-odd percent which means that based on my current savings rate, I’ll not be in sniffing distance of what I need.
Of course, there’s a chance that I might get a pay rise or two in that time and the occasional bonus, but such increases/bonuses will have a minimal effect. I’m not looking to move to another job if I can help it, so no big hike in salary from switching companies.
I will therefore be relying heavily on growth and income from my investments to get me past the finish line. Oh and a lot of LUCK, in regards to sequence of returns risk.
What Will I Do?
Over the next 60 months, I will need to continue to remain focused, to be mindful of my spending whilst still continuing to lead and enjoy what I consider to be a normal life.
Over the next 60 months, I need to continue making extra cash via matched betting and ensuring that I continue to bank/invest any affiliate income I receive from the blog, plus any lotto or premium bond winnings.
While my sis and nephew are living with me, I need to make the most of the extra contribution to bills.
Proverbial Spanner
There will of course be obstacles for me to overcome, expenses which will try to wreck my plans.
Barely 3 weeks into the year and a spanner has already been tossed into the works.
Over the weekend, one of the crowns on my back teeth loosened and fell out, causing pain and discomfort. I went to the dentist and he told me what I was half expecting but not wanting to hear: my tooth is broken and needs to be extracted.
After extraction, the two teeth on either side of the resulting gap will be checked to see if they are strong enough to support a bridge, cost will be around £600.
If not, then it’s highly likely that I will need to have an implant which will cost an eye-watering £2k! 🙁 It’s not on the NHS as it’s classed as cosmetic work and I’ve already used up my dental cover provision this claim period (which would only cover £100 in any case!)
Leaving a gap is not an alternative – I won’t be able to chew properly on that side of my mouth, plus there could be a risk that my teeth could move or twist into the gap.
I can’t go through the rest of my life not being able to eat properly, so it’s a needs must.
Fortunately, I won’t have to pay the £2k in one go but my trusty emergency fund will take its biggest hammering so far and will need to be replenished. This in turn will affect my savings rate.
£2k pretty much wipes out one of my pay days, so it’s now just 59 more to go! YIKES!
How?
How has this suddenly turned into a situation where I feel like I am running out of time (to save for FIRE), instead of joyfully counting down the time until I no longer need to work?
This is the goal I have set for myself, what I have been aiming for all these years.
I think this big dental cost is giving me negative vibes – I’m normally a glass half-full kind of person.
Time to go over those numbers once more…
I feel.for you
We are getting non essential but non cosmetic work done to half of oir windows – £3k thank you very much.
And another 3k later this year if the spreadsheet allows.
I’ve said before that there’s no such thing as an out of the blue bill bit there are certainly one off costs that can blow a big. Hole in your balance sheet and savings rate!
Good.luck at the dentist!
Thanks GFF. Agree that such bills shouldn’t shouldn’t be a surprise and I think as I get older, medical (in particular dental) costs will need to be factored in.
Ouch! Hope the dentist cures what ails you. At the end of the day sometimes we just pay what it costs to get the job done. Being able to eat comfortably is definitely one of those times.
The thing about “out of the blue” expenses is that while we rarely know what the exact thing will be, we can be reasonably certain that there will be something over and above routine spending.
Some things are predictable, like replacing ageing furniture or new car tyres. Others, like this dentist bill randomly crops up at the most inconvenient of times.
One thing that worries me about the LeanFIRE end of the net worth spectrum is that assumptions are based on the happy path all of the time. That makes for a fragile plan, as it doesn’t take much to upset the apple cart.
It is great that you’re validating your numbers, proving (or disproving how much will be enough). What we actually spent (without the commentary and excuses) provides a much truer picture than our rose tinted budgets and expectations for the future.
Thanks indeedably. My emergency fund is currently only around 3 x monthly expenses. I think at some point, I need to build it up to around 6 x minimum, possibly 12 x to account for these big bills, which could come in twos or threes, rather than one at a time. How to balance building up cash reserves while I’m still trying to increase my wealth by investing? It’s hard to juggle!
I think more validation of my numbers is required however, ie more spreadsheets!
Relax weenie, you’ll be fine.
You are currently living on just 50% of salary, your expenses will be less when you retire, over the coming five years you will put aside a further £60K+ and the final amount should generate an income of £10K plus your MB income and you have the option to do more side hustles and/or work part time if you get bored.
Thanks diy!
Just having a bit of a stress attack – I know things should be fine but there’s always the ‘what if’ question!?
I’m not going to rely on MB income (for reasons mentioned in other comments) but if it’s still there when I retire, then of course, it’ll be a bonus.
Belated happy new year Weenie. In my defence though i’m a week early in HK terms.
If you’re adamant about FIRE’ing in 5 years time and you firmly believe that you’ll fall short of your target (not sure why after the very good year just gone), i wonder if you need to review your asset allocation and possibly consider taking on more risk (eg less bonds more equity). Obviously this approach has potential disastrous consequences…having to work until you drop, sleepless nights etc, and with the market correction now later than the number 27 bus it’s probably not what you want to hear or be doing at this moment. This sort of decision is a very personal thing, and purely as a distant observer i’d see it as something to have as a backup option if a crash occurs in the near future and you felt the need to take some drastic action.
As for MB, i’d be wary of relying on that for any ‘essential income’. Contrary to popular belief, bookies do not like winners, and they eventually catch up and alter things in their favour. Commission scales on the exchanges are currently being increased, and this is effectively making the successful trader redundant. You’ve done really well over the past few years, but i would caution on expecting it to continue ad infinitum. Keep it going as a hobby for as long as you can, and use the proceeds as your ‘fun money’. Let Ladbroke’s pay for your holidays and Blackrock your gas and leccy bills!
PS – as for all your goals last year, you were 90% plus on most of them. That’s an A+ rating pass by most school standards, so no detention again for you!
Hey KC
Belated happy new year to you too (and happy year of the Rat in advance! 🙂 )
I think I’m comfortable with the level of equity risk I’m exposed to right now. Having rejigged my portfolio slightly with more bonds last year, I’ll probably keep at this split for now as I don’t want those sleepless nights you mention!
As mentioned above, I don’t intend to rely on my MB earnings at all – handy while I’m accumulating but only considered a bonus when I retire. I will however keep it going for as long as I am able.
PS – thanks, I hated detention! Do kids these days still write lines or is taking away their smart phones away for an hour punishment enough?
Agree with Kid Cocoa on MB profits… In Nov ’18 which was a little over 2 years after I started I took £1056, my best record by a heft margin. In Dec ’18 I took £905. I had assumed in my calculations I could make a minimum £50 forever.
By May ’19 I had lost all the major bookies and most of the minor ones, profit was then so hard to come by I gave up. I picked up another £100 just before christmas with some new sign up bonuses – but that’s me tapped out of MB forever.
Hi Dave
Agree that MB profits will eventually dry up due to account restrictions and limited offers.
I have lost many accounts over the years but still got a couple of the major ones left so it’s still worth doing for me. The riskier EW betting is probably the way forward, but even that has a shelf life, with bookies not liking punters who win.
I made just shy of £4k from MB last year so I will continue as long as possible with it, knowing that at some point, I too will need to call it a day.
All that sounded reasonable until I tripped over the word “lotto”. Now I’m a US guy so I don’t know how lottery works in the UK, but in the US it is a “stupid tax” that poor people pay to rich guys like me. In fact my youngest child got her college paid in part by a lottery scholarship. Tell me you aren’t really paying money to buy lottery tickets that enter you into a negative sum game. Perhaps you wait for those rare occasions when the odds times the ticket price are actually a positive sum game?
Hi Steveark
Hah, by ‘lotto’, I don’t mean that I buy lottery tickets, I mean the charity lotteries which I donate to regularly, which occasionally pay out small cash prizes. In the past, I spent far too much money on the ‘stupid tax’ you mention and while I will buy the very occasional ticket, it’s not something I do on a regular basis any more.
Damn, that’s awful. I’ve been one of the lucky few who have never had to have even something minor like a filling.
Don’t worry about the numbers, that’s what I love about them: they never lie. If you remain focused and have checked, checked and re-checked and keep a north eye over the next 5 years, I’m sure it’ll fast become a reality once compounding has had even longer to take effect.
Remind me, and I know I have read this on your blog before but, are you full FIRE-ing immediately, or will you test the water by moving to part-time for a bit first?
Hi AMM
It would be nice to move to part-time/reduced hours first but if not, then I would be full FIRE-ing. Unless I change my mind! 😉
Sorry to hear about the tooth. I’m really surprised that’s not on the NHS as it sounds serious, but I have literally no idea!
Can you shop around or is that a ridiculous idea?
As for FIRE in 60 months, I’m sure you can do it! And if it’s 65 months then it’s not the end of the world.
I’m going to do a bit more shopping around. I’ve seen some which seem to be a lot cheaper but I also spoke to colleagues who have had such work done and they recommended not going for the cheaper deals as it means more costs elsewhere, usually in the form of consultations and aftercare.
You’re right, 65 months won’t be the end of the world, I guess I was being a little dramatic! 😉
Have you ever considered doing some stress test scenarios?
Examples could include: rental property income dries up/reduces for a period, lower than forecast market returns, a spell of rampant inflation, unexpected but recurring need to spend somewhat more than foreseen, unfavourable tax changes, dividends get cut, interest costs increase, etc, etc.
This analysis will allow you to assess how robust your FIRE plan is to such risks and/or combination of risks, before committing.
That is, I guess, more spreadsheets!
Hi Al Cam
Yes, I do need to run more stress testing scenarios but it’s how to do them without getting too stressed myself, haha! I’ve recently had a quote from my DB pension providers so was in need to running through the numbers again anyway, cheers.
Might be worthwhile looking into Health Tourism with that crown of yours – that’s a hefty fee, and the world is a much smaller place. Even if you still decide to ‘bite the bullet’ (sorry, I couldn’t resist that pun) and go with your own dentist, at least you will be making an informed decision and, who knows, you may even get another blog post out of it. On the plus side, you may get a holiday thrown in for free where your pounds go further, and still come back quids in. You may even be able to see whether you can get a better price than that in the UK … after all, that’s the whole point of going private! And even if not, it wouldn’t necessarily harm you to let your dentist know that you were shopping around.
Thanks for the suggestion, Felize but health tourism isn’t something I would consider. I wouldn’t like to contemplate what would happen if something went wrong or I needed aftercare treatment. I will continue to look/shop around locally to get the best price, which I think is probably my best option.
That’s a bit unfortunate, but it’s better now than after retiring as you still got the chance to keep your job income streams for as long as your numbers tell you.
Dental cost in the UK are insane, so perhaps it is something to bear in mind if you plan to stay here?. Apparently, some people book dental surgeries while traveling. I’ve heard about specialized dental clinics in Thailand, where they speak fluent English. Maybe it’s worth to do some research and see whether you can work it out with your holidays plan? I guess it is easier to trust a local clinic though. Just an idea.
Many people tells me that I don’t need a million to retire, but I rather have a large buffer for unexpected life twists.
All the best weenie.
Hi Tony
Dental costs in the UK are high but when I was complaining about it to my sis, she commented ‘That’s cheap!’ as she paid double to have hers done in Hong Kong so for that, I’m grateful I don’t live there!
As per my reply to Felize, I’m aware that it can be done cheaply and well in other countries but health tourism isn’t something I would consider.
Yes, I need a large buffer I think, just for my teeth!
I think you’re in great shape and would be reasonably confident that you can be FIRE in 5 years. You’ll be 55, you should have a pot of £300k+, you own your home, you have a work pension, you will qualify for a full state pension
Thanks John.
However, although I own a property, I don’t own my home – in the future, I’m likely to still be renting or will have a small mortgage. However, my FIRE plans do factor this in and yes of course, I will have my work pension and then the full state pension.
Something you may have mentioned and I’ve missed, and of course it’s your plan, but I’ve been wondering this for a while.
If your target date is 5 years hence and ISTR you’ve just turned 50, then you’ll be FIREing after your minimum age for pension access. If that’s the case, shouldn’t you be massively prioritising extra pension contributions (either AVC (possibly preferable if you can do salary sacrifice) or SIPP) over ISA contributions for the income tax advantages?
Unless you are a higher rate taxpayer, once you are in a position where you take more than your tax allowance from a SIPP the tax position is neutral, and getting cash out of an ISA is a little easier/quicker than a SIPP in my experience.
If you are a higher rate taxpayer then yes, you are right as the tax relief going in is greater than the tax coming out.
I agree an ISA is more convenient to access, but you get 25% tax free on the way out of a pension, and you only pay tax after that on what is above your annual income tax allowance.
Looking at diy investor (uk) ‘s comment above they’re talking about an annual draw down of around £10K, so you’d be paying _no_ tax on the way out.
Especially if salary sacrifice AVCs are an option (so you also save on NI) the tax benefits would seem very attractive.
Hi xeny
I’m likely to receive rental income when I retire so that will take up most of my tax allowance, which is why I would like the flexibility of the ISAs.
Also, I’m a basic tax rate payer so the advantages aren’t so great, although having read the recent Monevator post about pensions v ISAs, I’m not so sure and I may need a rethink…
You could take the 25% tax-free part of your pension and fill up your ISAs for a few years, you know? 🙂
If you’ve got access to a salary sacrifice pension scheme then it’s hard to beat a pension if you’re paying tax in retirement, even before you consider the 25% that is tax free.
Sounds as if sitting down with Excel and at least understanding the financial tradeoff would be worth the time.
Receiving a rental income and paying rent is really unhelpful from a tax viewpoint, but I presume there are constraints on the potential rental asset that stop you rearranging that.
Hi Weenie
I don’t think you have anything to worry about.
As you say, you are halfway there (After starting in 2014), and in the first half you have built up a portfolio of £188k. There should be no reason for you not to achieve the same in the second, but you will also have the growth on your £188k.
I have to say, as we approached my FIRE, I did have doubts about if I had enough money saved, did we have enough “buffer” against a falling stock market etc etc. In the end, it was a case of realising we can never know the future, and just going for it but always understanding that if things changed massively then we would have to adapt.
The main thing that settled my nerves was that at the age of 66 I will have a state pension and a small final salary pension that I could live a basic life on (as does Mrs FIUK), so even if everything did go “t@#’s up” that we would not starve or be homeless. It wouldn’t be an ideal position to be in but to be honest if my relatively blue chip investments went to zero we would have some other pretty big issues to deal with.
I think you will be fine, and that you should keep on doing what you have been as it has worked well so far.
As the poster says “Keep Calm and Carry On”
FIUK
Hi FIUK
Thanks, as mentioned, I’m just having a little stress attack oover myh numbers and I’m sure it won’t be the last time this happens. Agree that I do need to accept that I will never know the future and hope that I will be in a position to adapt when or if the time comes.
Yes, the fact that I will have my DB pension and the state pension means that I have that minimum income floor which means that I won’t be left starving and destitute. The rest of my FIRE pot at that stage (or what’s left of it) will decide the level of comfort and luxury I will enjoy in my elderly years.
I will (endeavour to) keep calm and carry on!
Happy new year, Weenie!
Sorry to hear about the tooth! What a total pain in both senses!! I guess health costs just get more and more apparent with (gulp!) age. Worth trying to see if the University Dental Hospital offers this service at a cheaper rate?? Just a thought. I had a supervisor who got his crown fixed there once.
Was reading just the other day about how expenses will always be higher than we anticipate and it got me thinking about re evaluating how much I need when not working. There’s always stuff that comes up…. unknown unknowns. :/
So you’ve defined your FIRE date by age / time rather than amount? Counting down from 60 does sound tougher than years, lol. Maybe think just 5 more winters to go?!
Happy belated new year, Firelite!
I will check out the University Dental Hospital to see what they offer, so thanks for the suggestion.
As we get older, teeth are probably known unknowns – there will be costs, just don’t know how much!
My FIRE goal is defined by age/time and amount, in that by end 2024, if I haven’t reached that amount, then I won’t be FIRE ready! I guess that means that my FIRE number is a minimum number – if I hit FI before my FIRE date, then that gives me option to FIRE earlier, or to just enjoying working whilst being FI. Does that make sense?
Hmmm…5 more winters to go, ie only 5 more winters to scrape ice off my windscreen in the mornings does sound more positive!
Great, hope the dental hosp can offer you something at a fraction of the cost.
Hehe, scraping ice off the car in the morning does seem like very much like it epitomizes the rat race here! Just 5 more of those n you’re done! Man, I’m agonising whether to leave work this year so I admire anyone who can stick with it for longer! Spoke to boss about it yesterday, which was pretty major for me, so guess I could post about that!
Catching up with posts atm and look forward to reading your goals!
Life is not easy and usually extra expenses just happen.
I started my saving and investing journey last year. To be honest, I am not looking for FIRE.
They are too many “if” in live. Plus I do not very good with my free time management. I will be more than happy to reach age 62 in a good health, have more than 30 years of paid National Insurance. Hope I will be able to reduce my working week to 3 days.
My idea of retirement: 6 months in South Europe, 6 months on Green Island
Match Betting is nice, extra income. Will you write some article how to deal with gubbed accounts?
Hi Almach9
Good luck with your own retirement plans – 6 months in south Europe and 6 months on Green Island sounds great!
The matched betting is nice extra income, I hope it continues to be viable! I wouldn’t know what to write about gubbed accounts, I’ve lost so many accounts. I guess they’re good for doing EW betting and some arbs until you are completely restricted.
Why not get the tooth fixed outside UK – probably would halve the bill!
Hi Colin
See above re being a health tourist – what would I do if something went wrong!?
Happy new year!
What a weird coincidence, the same has happened to me about 2 weeks ago, I too lost a crown due to a broken tooth which has to be extracted and I also probably need an implant that will cost me 2k!!! This is life. We can plan all we like but there will always be surprises, negative or positive. Good luck with the extraction. I have a consultation next week.
Belated Happy New Year, SYBN and sorry to hear about our unfortutnate tooth coincidence!
I’ve had the extraction, it wasn’t nice! 🙁 Hope yours goes/went well.
Weenie, don’t get stressed!
I would not put a 60 month timescale on it. Your aim is to obtain enough income to FIRE (with some contingency) this could happen before or after the 60 months so just don’t stress. By all means set a target, good luck.
It would be great if someone could review your spreadsheet for you but that’s not very easy is it!
Hi Tim
I know, just having a ‘senior’ moment I think! Of course it could happen before or after, I’ll just need to readjust.
It’s shocking how much dental work can cost isn’t it. So far I have been lucky but I know this kind of thing can happen for sure as I have seen it with other family members.
As for your FIRE target which is in 60 months and wondering whether you can now hit that. Was the reason this isn’t now being hit due to things such as these unexpected outgoings or saving less than anticipated or less growth than expected? I can completely understand why you would feel a bit disheartened but there’s plenty of time to turn that around and if it’s more fundamental or likely that it might not be hit, changing the goal or expectation might be needed as of course, we could all take a massive hit if a big decline were to hit round the corner and that could always happen.
There is of course only so much we can do and we need a fair wind to help us also. Chin up 😀
Chris@TheFIJourney
Hey Chris
I’m still moderately comfortable that I should hit my FIRE target (obstacles will make things harder, yes). It was more the thought that there were only 60 pay days left and whether what I would have in the pot would be enough.
I now feel (mostly) ok about it but at the time of writing the post, I was feeling a little anxious.
With that expense for dental treatment, have you considered medical tourism? I’m pretty sure you could have the work done in Thailand for example, at a fraction (well that may be a bit optimistic and deserves investigation) of the cost, even factoring in the travel expenses. (And the strength of the Baht).
Might be worth taking a look and considering an early vacation!
Hi James B
Medical tourism isn’t really something I would consider right now – yes, the cost savings might be huge but I wouldn’t relish the prospect of a 13 hour flight from Bangkok after surgery and there’s the question of what happens if I need aftercare? If I wasn’t working, I could just have an extended stay to recover so maybe it’s something to think about in retirement!