SalvorHardin wrote:I took very early retirement 16 years ago and have never regretted it. Whilst I liked my work (Actuary) the problem was the weekly commute to work (and living) in Central London. Fun when it started, at the end it was making me ill.
I second OLTB’s comments about modelling a fall in assets (nothing fancy is needed, try a 25% fall in year one and see what happens). Also Dod101’s suggestion of using investment trusts (ISA wrapper where possible) rather than just drawing down on capital. When I retired one of the first things I did was to top up my investment trust holdings to ensure that their dividends were sufficient to cover my basic living costs (I can live very cheaply – my supermarkets of choice are Aldi and Lidl).
Look closely at your current spending – itemise it for a couple of months and come up with an approximate post-retirement budget. It can be surprising to find out how much it costs to be in work. Whilst commuting is one of the biggest costs for most people, especially those who work in London, quite a bit of spending is much higher than it ought to be simply because you are working.
I remember junior colleagues spending up to £10 a day on coffees, sandwiches and cakes; so allowing for days off and cheaper days that was over £2,000 a year (out of after-tax income). If they were retired and kept the same pattern of consumption they wouldn't be need to spend so much; much of what they were paying for was the convenience.
Remember that you won’t be paying National Insurance and you won’t be paying the mortgage. In my career I was occasionally involved with retirement planning and many people I saw wanted 100% replacement income in retirement. But in retirement they are unlikely to be paying pension contributions, the mortgage, National Insurance and the costs of being in work, so they could manage perfectly well with less.
What to do with yourself? A lot of people identify so closely with their occupation that they go rapidly downhill after they retire, especially if a major part of their social life revolves around work. Amongst other things I’ve kept busy by doing four degrees since I retired (mostly Open University). As a fan of televised sport quite a bit of my year revolves around major sporting events (April = Indian Premier League Cricket, July = Tour de France, etc.). You may find that there's some part-time work which you really like doing (I know several retirees who work at the local county cricket ground on matchdays and local racecourses on racedays). Otherwise there's the joy every weekday morning of not having to go to work.
Exotic holidays and travelling. Get it done earlier rather than later – lack of energy and health issues are more likely you as you get older.
To quote Rabbi Harold Kushner; “Nobody on their deathbed has ever said “I wish I had spent more time at the office"”
You are one of the few qualified actuaries. I started as a trainee actuary in 1988 after doing an MSc in Pure Mathematics but sadly was not able to qualify.