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40 years old, any advice on whether I can retire?
Old 02-03-2016, 02:45 PM   #1
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40 years old, any advice on whether I can retire?

Hello, I am considering giving up the 9-5 corporate life (which is slowly driving me insane) but just wanted to see what other people would do in my situation. Ideally I'd like to pursue a more creative life as I used to paint but that was ages ago. By the way I live a fairly frugal lifestyle, have a partner (no kids and no plans to have any) and we aren't big spenders (we buy cheap clothes from Primark/Wallmart!). Although I live in London I've also added dollars as I think many people on this site are from the USA.

Current Income - $65,000 / 45,000
Partners Income - $30,000 / 20,000

Home Value (2 bed flat) - $875,000 / 600,000 (no mortgage)
Rental Income if whole property let - $35,000 / 24,000
Rental Income if spare room only let - $17,500 / 12,000 (7500 tax free in UK)

Investments -
Property 1 value - $220,000 / 150,000 (no mortgage)
Property 1 net annual rental Income - $6,000 / 4100
Property 2 value - $260,000 / 180,000 (no mortgage)
Property 2 net annual rental Income - $6,000 / 4100
Property 3 value - $130,000 / 90,000 (no mortgage)
Property 3 net annual rental Income - $9,200 / 6300
Property 4 value - $130,000 / 90,000 (no mortgage)
Property 4 net annual rental Income - $9,200 / 6300

Cash savings - $0 / 0
Pension account - $24,000 / 16,000
No car.
No credit card debt.
Current monthly household expenses - $580 / 400
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Old 02-03-2016, 03:15 PM   #2
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Welcome to the forum!

You don't mention what your rate of spending is or whether your partner also intends to retire. Those issues will make a lot of difference. In the meantime, here are some issues to consider:

Some Important Questions to Answer Before Asking - Can I Retire?
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Old 02-03-2016, 03:40 PM   #3
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If you (truly) can live on $580/month (~7k/year), the rental income will more than pay for that. I assume that your partner keeps working ?

You have around $30k/year passive rental income. Or if you sold all the rentals could have ~$750k which if invested in a balanced nestegg portfolio would also give you around 30k sustainable income (using the 4% SWR rule).

So based on what you posted you should have an extra $23k/year for whatever. If you take on a border for the spare room you'll have another $17.5k/year. If you go live on a park-bench you'll have another $35k/year.

So unless I mis-read your post it looks do-able to me.

How about other things like cars/clothes/travel ? What about taxes ? What about some expensive repairs/upkeep to your house or the rentals? have you factored all that in ?


Per the inheritance, I wouldn't factor anything in. If you get it great otherwise plan based on your own assets.
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Old 03-08-2016, 01:58 AM   #4
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Would love to hear more from members here. I am also planning on early retirement.
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Old 03-08-2016, 08:18 AM   #5
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Master blaster outlines the op's situation very well. If op is confident in the numbers provided, looks good to go. Living expenses appear very, very low to me and worth the op's time to confirm. Make sure all expenses are really included. Personally it feels to me like a good case for working another year in "test mode". In other words save the entire paycheck and confirm you can live off the rental income and aren't really relying on that paycheck. Also worth considering any likely swings in rental income such as having difficulty keeping them fully rented. How to pay for major repairs or revamps is important also.


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Old 03-08-2016, 11:19 AM   #6
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Your household brings in 95K a year, you spend a mere 7K a year and don't have one cent in cash savings?
Something here doesn't add up..how much of this 95 is rental income and how much is job income. I have family in London and your figure of 7K seems very lowball, is this for 2 people?
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Old 03-08-2016, 11:48 PM   #7
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Since you didn't say explicitly that you want to retire and only asked what others would do in your situation, what I would do is quit the corporate 9-5, take 6-12 months to detox, then look for low stress, creative work I liked and that kept me in circulation. Even part time work on your low expenses would provide a very comfortable lifestyle with your investment income.
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Old 03-09-2016, 05:39 AM   #8
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If your plan is to stay in the flat and let out one room, you might consider becoming an Airbnb host, which could generate more income than having a lodger.
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Old 03-09-2016, 04:11 PM   #9
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Congrats on the nice real estate holdings, mortgage free!

I'm amazed you can live in London (or anywhere in the 1st world) so cheaply, even accounting for not holding a mortgage.

I'm surprised you don't have savings for emergencies. What happens if the properties need repair?
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