… which you’re welcome to take or leave.
Put things into perspective
On a full moon and when the sky is clear, I stop what I’m doing, pause and look up.
I don’t just glance at the moon, I really look at it, whether I’m in London, Pyrénées, Morocco, or Montenegro. I search for Venus and Mercury too, along with the other planets and stars, the distant galaxies, and the Milky Way. These astronomical scenes are wonderful.
Every time I do so it puts me, and my place in this world, into perspective. A tiny spec of life, standing on a ball of rock and molten lava, floating in a universe, amongst countless billions of stars and other planets. The wars we are fighting, and the reasons for doing so all seem rather pointless and irrelevant when my head is thinking in terms of light years and looking at light that was transmitted before dinosaurs roamed the Earth.
I am a classic over-thinker, over analysing minutiae and worrying about trivia – always have been, but thoughts like this help me recalibrate.
So why am I talking about the moon? Well, I am 59 years of age and if I manage to live the ‘average’ lifespan of a man in UK, which is 81, between now and the day I die, I will only have the opportunity to see the full moon in all its glory around 140 more times. (That calculation is based on full moon cycle over the next 22 years, minus meteorological cloud cover data). So I stop and look up – every time!
Time is precious
Full moons aside… I try not to waste a single day or weekend either.
If I’m lucky, I have got just over a thousand weekends left before I ‘pop my clogs’ (well 1,144 to be precise). That is why I am always as keen as mustard to get out and do something, listen to live music, meet people, visit somewhere different to take in a view, or travel somewhere further and experience something new. We live on an amazing planet and there is so much out there to see and do. There is nothing I get frustrated about more than a weekend, or day which is ‘lost’. So I set out to “win” them, as much as I possibly can.
One day, I won’t have the energy or ability to climb mountains or go on long cycling trips, and I may no longer want to “rough it” in hostels. This drove my decision to retire early and seize each opportunity now, whilst I still can.
Don’t work till you drop
I come from a working class background, but I’ve never succumbed to the notion of “work till you drop” and have always had a closer eye than most on an ‘early’ retirement. Growing up, I recall listening to stories of people who had shuffled off to ‘meet their maker’ within a few short years of stopping work.
Even in the late 1980s I distinctly remember being asked by a pensions adviser “what age do I plan to finish my career” as he wanted to run some calculations; I didn’t hesitate – it was 55.
I had a plan in my head from the very get go, and the last decade of my professional working life only increased my level of determination, especially as my income increased.
Indeed, in the final four or five years of my career, I invested huge chunks of my earnings and savings into my pension plan, maximising my personal allowance and government contributions to the limit.
For months, if not years, my personal gross pension contribution floated somewhere between 30% and 50% of my salary. That was until I reached the target I had set. Then I stopped. I didn’t have oodles of spare cash and lived a relatively sensible and frugal life during this period.
It’s also been tough on other fronts, especially as I’ve been through two divorces, the first of which took a fifty percent slice of my pension, and the second, around a quarter. But I don’t begrudge those for one minute, that’s part of the marriage contract, and I could argue both focused my mind on resetting my pension priorities so, in a perverse way, they helped.
Some advice – based on my journey
To anyone reading this, especially those still in work, my advice would be:
- Have a plan: and start a contributory pension plan as early as possible.
- Contribute more than the minimum: ALWAYS invest way more than the minimum amount that your employer automatically sets. Double it, or go higher if allowed. Pensions contributions come off gross salary so aren’t subject to tax and NI. The government also hands you a 20% or 40% top up, depending on your earnings and tax bracket. Think about it, that’s insane, where else would you get that immediate level of guaranteed growth on your initial investment, with a government to top up to that extent.
- Know your target: Understand the size of the pension pot you are aiming to save and use every ounce of your personal allowance to get there; that cash for a new car, house renovation or push-the-boat-out holiday might just be better off going into your pension. The earlier deposits can be made, the more you will benefit from compound growth, which over the long term will make a huge impact.
- Stay on track: Even if life derails you, keep your end goal in mind.
- Know when enough is enough: Don’t trade off life experiences for a bigger pension once you’ve reached your target. It’s daunting I know, but if you’ve done the maths and are able to go with the ebb and flow of the markets over the longer term – have faith in the numbers.
- Retire early: and do the stuff your mind or body won’t allow you to do in later years.
- Seek good pension advice: you wouldn’t buy a car without some really good due diligence, so make sure you shop around.
I could go on, but you get the drift.
Budgeting & Living within means.
A big part of my retirement plan was understanding how much I needed to spend during the remainder of my lifetime – now that’s a big question!
I calculated my monthly expenses for both essentials and the lifestyle I wanted, recognising that I’d need much less as I age, and when core commitments, such as my mortgage have been paid off.
Then, I applied the “4% rule” – the idea that withdrawing 4% annually from my retirement savings pot should maintain the size of my savings for as long as possible. This principle has been around for a long time and helped set my savings goal in the first place.
This is a very basic rule of thumb principle that can be applied to assist with pension planning, but absolutely needs to be considered along with a whole host of other factors too. The beauty of modern drawdown pensions is that they are incredibly flexible. I chose to take my annual 4% drawdown in 12 equal monthly instalments – mimicking a salary. The remainder of my savings remains in the pot and continues to be invested in the markets. The upside, is that over the long term (taking history as a yardstick), these perform very well. The downside is that there will be years when they don’t.
I then considered inflation, state pension, taxes, mortgage payments, and other investments too along with portfolio performance and my own risk appetite. In 2021 realised I had reached my goal (well, near enough) and made the leap.
Staying at work and sticking with my career may have provided more financial security and would have permitted me to grow my pension pot even more, but it would have meant sacrificing life experiences.
Consider a fall back plan
After I stepped away from my main career, I retrained and got a HGV license, mainly as a safety net.. On balance I think was a good idea as it gave me the confidence I required at the time, but with hindsight I probably didn’t need to.
For a few years, I worked part-time, driving trucks 5-8 days per month. This allowed me to prop up my bank balance, fund specific expenses, and have an option to manage any gap in my pension that may have cropped up, if and when the markets under-performed.
Working in the gig economy on a zero hours contract suited me perfectly, allowing me to control when and how often I worked. This flexibility provided peace of mind without the stress and commitment of a full-time job or consultancy.
So here I am…
I wanted to add this chapter to my travel blog mainly because I’m often asked how I manage to fund my trips and have the time to do what I love at this stage of my life.
Honestly, it mainly comes down to having a plan with pensions at the heart of it. I stuck with that plan steadily throughout my career, accelerating my contributions in the final years.
If I could start over, I might’ve contributed even more from the outset, even knowing that divorce(s) would cut into those savings. For me, my pension has been the single most valuable financial tool I’ve had – even with the Rachel Reeves ‘24 budget announcements.
Personally I’m quite sanguine about the recent budget changes (specifically IHT liability on unspent pension), as I’m considering the broader benefits I’ve had and continue to have as a result of decades of pension reforms from political parties of all colours. This includes the generous tax relief I’ve received over many years, the flexibility of access I have now, along with the ability to take 25% of my pension – tax free, which was retained in the budget and wasn’t hit as many feared.
That said, as a result of this year’s budget my children will certainly receive a tad less than I had planned for them (should I pop my clogs soon after 2027). I will add a section on what I’ve done (if anything) once I’ve looked carefully at the impact and my options.
In my view, pension and retirement planning deserves more attention in school, the workplace, or from the government. My own route to pension planning initially came about by chance. I owe much of it to my father, who, by luck and some foresight, managed an early retirement himself. He started work at fifteen on the London docks, transferred his pension to his next job as a municipal worker, and then finally into the fire service. It worked out for him in the public sector, as it has done for me in the private sector (with a lot of sacrifice and saving) but it’s a journey that could be made much clearer for all.
I hope this post inspires someone to pick up even one or two of the lessons I learned on this journey. If so, I’ll be happy.
Anyway, if I’m still around and traveling in twenty years, I’ll update you on how it all worked out.
Fingers crossed, and happy travels!
Hints and Tips
Seeing as most of my blogs have links to hostels, hotels, airlines and other tips for travel, I’ll leave the details of my financial chap below. I found him through an Internet search about four or five years ago, choosing him over a shortlist based on a set of criteria that was important to me. Like I say on my homepage, I don’t get any kick backs from any of the links I provide. I do this blog purely for fun and to share experiences. His name is: Guy Stout, he’s a Chartered Financial Planner, working for an organisation called Doyle and Palmer. Mobile 07765 408320. Office 01329 227421.