The post that considers an alternative path to retiring early. I’m rethinking early retirement (sort of).
There was an article in the Financial Times this week by Don Ezra entitled “Life Two: What we used to call ‘retirement’” (with thanks to The Detail’s Man over at Monevator for bringing this to my attention).
Don coins the term “Life Two” as a concept to replace traditional retirement. The phrase Life Two derives from the acronym from “life after full-time work” (LAFTWO).
Although Don seems to be addressing people planning to retire at a more traditional age, many of the principles he discusses chime well with would-be early retirees: Do you want to carry on working in Life Two? Do you want to do voluntary work? Do you want to sit on a beach and do nothing?
Rethinking My Life Two
Don’s article got me thinking about my current ideas for Life Two. For me, early retirement really does mean being retired in the traditional sense. I know we’re supposed to be entrepreneurial hustler types in the FIRE community, but I don’t think that’s really me.
I don’t have a dream job that I want to “retire” to from the day job – at least, not one that I’d be paid to do, as my post on my plans for retirement demonstrates.
For me, following FIRE always meant pursuing my current, well-paid job that I find mostly OK until I can retire completely. However, my attitude to London at the moment has given me pause for thought.
Let’s recap my retirement philosophies in life so far, with the aid of some pie charts. The pie charts below assume I live until 93, which, the last time I checked was average life expectancy for someone my age.
Pre discovery of the FIRE movement
Before I discovered the Financial Independence Retire Early movement, I was largely planning on a normal career trajectory: work until my 60s and then retire in the usual fashion.
Granted, I was still planning to retire early by most standards (around 62), but it still just meant ploughing a lot of money into a pension with a small bridging period until I could access said pension.
My life pie chart looked something like this:
The “Prologue” phase is the period up until I graduated from university and began full time work at 21. We then have Life One, which is my entire working life, running for an estimated 41 years (or 44% of my life).
Then we have Life Two (i.e. retirement). Even before I discovered FIRE this would have still been 31 years. A whole third of my life. It almost seems a bit self-indulgent to suggest that isn’t enough.
The Current Plan
After I discovered FIRE I realised that I could be accelerating that retirement date. Early on in the life of this blog I laid out my FIRE plans. My target retirement age has actually shifted forward a little since then, but broadly the plan remains the same.
There are several phases to my retirement goals. The final goal would see me, at current projections, fully retiring in my early 50s, around 52. That shaves a whole decade from my original forecast and gives me a life pie chart that looks something like this:
It essentially switches around the time spend in Life One and Life Two. I’d only be spending a third of my life working and a whopping 44% of my life completely retired.
A New Approach to My Working Life?
Given how good 44% of life retired sounds, why would I consider anything else?
The answer lies in how jaded I feel with the daily grind working in the City (a feeling that I expressed at the end of my 2019 goals post). My current model still sees me doing that for another 20 years.
Another 20 years commuting in to work crushed up against a carousel of strangers is sounding pretty intolerable right now.
For various reasons the prospect of moving to another city within the UK doesn’t appeal or isn’t feasible based on my personal circumstances. And law is a very jurisdiction-centric profession. So without some major changes, I’m fairly tied to London.
What regular readers of this blog will know is that I’ve got half a mind to move to Spain. Of course, this would only be possible if I’m either a) fully financially independent or b) had some means of earning enough money to live on from a job where I can work remotely.
Currently I’m working towards a). But what about b)? Could b) be my new “Life Two”?
Digging deeper into the New Approach
In reality I’m not ready to jack in the steady income and just abandon everything for Spain (not least because I’ve just bought a flat in London). I’m also willfully ignoring Brexit implications.
I’d at least want a fully paid off mortgage and a very healthy savings pot, which could cover significant unexpected property repairs and a long spell of unemployment, before making the leap. I’d also want to only work part-time in this new, remote/freelance life.
It’s difficult to know when this would be do-able exactly, but based on some rough calculations I’m putting it at age 41. This is the age at which I should be able to pay off my mortgage if I apply all/the vast majority of my savings to it. In practice I would keep most of my savings invested, but should have enough equity in the property to buy a place outright in Spain.
Thus I would look to cut the cord on London, sell up and move to Spain. With the significant (as things stand) property price difference I would have the ample cushion I need to feel confident in the switch.
I considered whether to call this new phase of my working life “Life Two”, with “true” retirement pushed to a newly created Life Three. Some people take a flexible enough approach to FIRE that they would label this part-time, remote-working “retirement”.
But I certainly wouldn’t be financially independent in this new life. So for consistency I’m keeping “Life Two” to mean full-time retirement. Instead, I refer to this second phase of my working life as “Life 1.2”.
Here’s the pie chart:
It’s almost impossible to know when Life Two would start in this scenario as I have no idea how much I’d save during Life 1.2. I’ve assumed that I could begin Life Two at 68, when my State Pension is due to kick in – although it’s admittedly quite arbitrary given I’d have been Spanish tax resident for the last 27 years and the UK State Pension might be fairly irrelevant to me.
This now leaves me only 27% of my life in full-time retirement but also replaces a good chunk of my working life with the far-more-palatable Life 1.2.
I may not be escaping work but I’d be escaping the rat race for an estimated 11 extra years.
The old “hit by a bus” argument
People always talk about how you might get hit by a bus tomorrow etc. If you look at this “New Approach” pie chart, if my life gets cut short there’s far more chance I’ll have spent my final years enjoying a more relaxed pace of life.
There’s also health/ageing to think about. I want to enjoy my physically fittest years as much as possible. With various genetic health problems running in my family there’s no guarantee I’ll be physically well in my 50s and 60s.
However, I also need to be honest about my chances of finding a job where I can work completely remotely. Law is the only thing I can realistically see in my future right now and it’s not the most forward-thinking profession in terms of flexible working. So this would need to change in the next 8 years or so to make it an option. There’s freelancing, but that’s not really a thing in law (although I believe changes are afoot).
Weighing up my options
Fortunately, I don’t have to make a decision now. Even under my new Life 1.1/Life 1.2 plan I’d have 8-9 years of pressing ahead as I am. But here are some thoughts.
|CURRENT PLAN||- Security: Will be cutting off the regular salary at a point when I am financially independent. |
- Gives me the most years of full retirement.
- No worries about becoming isolated or missing my friends.
|Still requires 20 years more of full-time work in a city I am growing to hate.|
|NEW APPROACH||- Escaping from the stresses of Life 1.1 earlier than expected.|
- Get to live/work in a beautiful environment.
|- Working remotely from Spain may not be practical or realistic in terms of job opportunities.
- I would need to sell my UK property meaning I have no UK base. This has implications in terms of becoming Spanish tax resident and losing access to UK tax-advantaged savings.
- I risk becoming isolated and would miss seeing my UK friends regularly.
In practice I will use the next few years to try and make working in London more tolerable (perhaps pushing for flexible working). It would be a far easier thing to keep pressing ahead with my current plan. However, I like having an alternative escape route in my back pocket.
What are your thoughts? Have you weighed up a Life 1.2 before hitting full retirement?