Darka's FIRE Update (2022)
Posted: January 1st, 2023, 4:59 pm
Mrs Darka and I have been retired for just over 1 year and so it's time for an update - both for anyone interested and as a reminder to myself.
2022 proved to be an interesting year with war, high inflation, market panic and government screw ups making it all very exciting.
I'm pretty stoic in my beliefs and have become much more so during the last year; feeling mostly unfazed by it all as I couldn't do anything about it anyway.
There were a few moments of course, but overall didn't pay much attention to what was going on and I intend to continue this into 2023.
I don't read or watch the news and haven't for some time; apart from reading the odd weekend edition of the Financial Times on a Sunday morning as we enjoy some filter coffee.
We love our filter coffee and have separate blends for during the week and at the weekend, for no other reason than we can!
Income (Natural Yield)
2022 was the first year we lived off our retirement funds and it worked well.
We saved the dividends we received in 2021 (as cash) and that provided us with our "monthly salary" for 2022.
We intend to continue this approach of living off the previous year's income as it ensures we always have a year's worth of "salary" available and allows us to know exactly how much we have to spend during the year without relying on any kind of forecasting.
Having now received all of last year's dividends, our "salary" for 2023 will be 9.1% higher, due to a combination of the following, all of which were added to the pot for 2023:
- Dividend increases (we also continued to invest non-dividend income during 2021 which resulted in bigger dividends during 2022)
- Selling some individual shares and buying higher yielding IT's
- Over budgeting for expected increase in gas/electricity bills during 2022 - extra went into the pot
- Bank interest (sadly not a lot), etc.
Portfolio Overview
55.1% - Investment Trusts
27.8% - Individual Shares (HYP)
5.6% - Cash Reserves (2+ years' worth of spending)
11.4% - Mrs Darka's DB Pension
We only invest in Investment Trusts these days and at some point, I will sell some lower yielding HYP shares to improve our diversification and income stability.
Safety Margin
We do have a safety margin, but not strictly in the conventional sense of having more income than we spend and investing that extra.
Instead, our discretionary spending is around 52% of our "salary", some of which we spend and some of which we save, this could be cut if necessary.
In addition to that, my SIPP becomes available in late 2024 increasing our total current income by an additional 50%, with 2 x full State Pensions to come online later.
We have enough income although I did have one moment when I wondered whether we should continue to invest; but Snakey's comment on my question helped tremendously with my thought process and I'm grateful for that.
viewtopic.php?f=30&t=35446&start=20#p519805
I'm going to leave the portfolio to do the work for me, although of course I will keep an eye on things.
Even if I reinvested my entire SIPP's dividends each year it wouldn't increase our annual income by that much and I'm sure the market will beat that by itself most years.
And to be honest, I'd rather spend my SIPP income as we can always adjust in the future if it's required.
You're a long time dead and we'd prefer to have fun and experiences now whilst we can, rather than be an even richer corpse.
And like Snakey said, "I have faith that it will all work out in the end."
Things normally do.
Simplicity
I don't unitise and am reducing the amount of tracking I do; deleting large parts of my spreadsheet which contains calculations for things I no longer care about, and as I get older will care for even less.
I'm checking our investments less and less and hope to get down to a couple of times a month this year, and then once per month going forwards.
At some point I might stop using the spreadsheet altogether, but we'll see.
Life Experiences and spending during 2022
Amongst other things:
New Bathroom
External building decorations (still ongoing...)
Joined a gym and still do lots of running to keep healthy
Lots of decluttering in preparation for some decorating next year
Exploring a new biker coffee shop which opened close to us, never really been to coffee shops prior to retiring so this is enjoyable
Two awesome mini breaks to:
- Edinburgh
- London
We chose to be careful in year 1 to see how things worked out, especially with all the excitement around the World.
In 2023, we intend to have many more adventures as we finally get used to being free.
Retirement has proven to be as good as we could have hoped.
Happy New Year everyone!
regards,
Darka
Last Year's Update: viewtopic.php?f=30&t=32670
2022 proved to be an interesting year with war, high inflation, market panic and government screw ups making it all very exciting.
I'm pretty stoic in my beliefs and have become much more so during the last year; feeling mostly unfazed by it all as I couldn't do anything about it anyway.
There were a few moments of course, but overall didn't pay much attention to what was going on and I intend to continue this into 2023.
I don't read or watch the news and haven't for some time; apart from reading the odd weekend edition of the Financial Times on a Sunday morning as we enjoy some filter coffee.
We love our filter coffee and have separate blends for during the week and at the weekend, for no other reason than we can!
Income (Natural Yield)
2022 was the first year we lived off our retirement funds and it worked well.
We saved the dividends we received in 2021 (as cash) and that provided us with our "monthly salary" for 2022.
We intend to continue this approach of living off the previous year's income as it ensures we always have a year's worth of "salary" available and allows us to know exactly how much we have to spend during the year without relying on any kind of forecasting.
Having now received all of last year's dividends, our "salary" for 2023 will be 9.1% higher, due to a combination of the following, all of which were added to the pot for 2023:
- Dividend increases (we also continued to invest non-dividend income during 2021 which resulted in bigger dividends during 2022)
- Selling some individual shares and buying higher yielding IT's
- Over budgeting for expected increase in gas/electricity bills during 2022 - extra went into the pot
- Bank interest (sadly not a lot), etc.
Portfolio Overview
55.1% - Investment Trusts
27.8% - Individual Shares (HYP)
5.6% - Cash Reserves (2+ years' worth of spending)
11.4% - Mrs Darka's DB Pension
We only invest in Investment Trusts these days and at some point, I will sell some lower yielding HYP shares to improve our diversification and income stability.
Safety Margin
We do have a safety margin, but not strictly in the conventional sense of having more income than we spend and investing that extra.
Instead, our discretionary spending is around 52% of our "salary", some of which we spend and some of which we save, this could be cut if necessary.
In addition to that, my SIPP becomes available in late 2024 increasing our total current income by an additional 50%, with 2 x full State Pensions to come online later.
We have enough income although I did have one moment when I wondered whether we should continue to invest; but Snakey's comment on my question helped tremendously with my thought process and I'm grateful for that.
viewtopic.php?f=30&t=35446&start=20#p519805
I'm going to leave the portfolio to do the work for me, although of course I will keep an eye on things.
Even if I reinvested my entire SIPP's dividends each year it wouldn't increase our annual income by that much and I'm sure the market will beat that by itself most years.
And to be honest, I'd rather spend my SIPP income as we can always adjust in the future if it's required.
You're a long time dead and we'd prefer to have fun and experiences now whilst we can, rather than be an even richer corpse.
And like Snakey said, "I have faith that it will all work out in the end."
Things normally do.
Simplicity
I don't unitise and am reducing the amount of tracking I do; deleting large parts of my spreadsheet which contains calculations for things I no longer care about, and as I get older will care for even less.
I'm checking our investments less and less and hope to get down to a couple of times a month this year, and then once per month going forwards.
At some point I might stop using the spreadsheet altogether, but we'll see.
Life Experiences and spending during 2022
Amongst other things:
New Bathroom
External building decorations (still ongoing...)
Joined a gym and still do lots of running to keep healthy
Lots of decluttering in preparation for some decorating next year
Exploring a new biker coffee shop which opened close to us, never really been to coffee shops prior to retiring so this is enjoyable
Two awesome mini breaks to:
- Edinburgh
- London
We chose to be careful in year 1 to see how things worked out, especially with all the excitement around the World.
In 2023, we intend to have many more adventures as we finally get used to being free.
Retirement has proven to be as good as we could have hoped.
Happy New Year everyone!
regards,
Darka
Last Year's Update: viewtopic.php?f=30&t=32670