r/FIREUK • u/Exact_Photograph2056 • 1d ago
Another sanity check before making a silly mistake
I am a 55 year old with a partner (54) who is a teacher and 2 children aged 17 and 15. We currently live in the south east in a house that we own valued at around £1,000,000 mortgage free. Fully expect to downsize this at some point. We own cars with no outstanding finance. The children are currently in state school with 1 and 3 years remaining. Both expect to attend UK universities for 3 year courses. Both have a range of savings with each having an JISA, a JSIP and a savings account so dont need to really be included in the FIRE discussion.
I worked for a tech org with a current salary is £150k with a 20% bonus and a company share scheme that typically provides around $40k of shares PA paid in April (which vest over 3 years on a monthly basis). I currently have around $1.3m shares with a further $500k due to vest over the next 3 years. If I stop work these will be lost - so case of silver handcuffs. There would be a significant tax implication on CGT on these.
I have a number of pensions. My current employer one, which is still being contributed to is valued at £300,000. The others have an approximate value of £1.6m. Partner has a teachers pension. I have a number of investment accounts with around £700k in a GIA and £300k in ISA. Again, some CGT exposure. Easy access cash savings of around £30k and £30k of premium bonds. She has some savings and may inherit some money in the next 5 years (although care home costs are eating away at this).
We are both investigating taking early retirement and would be looking to finish working in July next year. We are also investigating moving overseas as a way of reducing living costs and providing a change of lifestyle once youngest finishes school.
Clearly know I am in a fairly strong position position but want to just hear what people think about FIRE at 56.
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u/mypersonalfinanceuk 1d ago
You're easily able to FIRE, you just need to understand how to optimise it. I'd question the £700k in a GIA; I know your wife has a teachers pension, but see whether pension contributions could work there too.
The $1.3m of shares with no diversification unnerves me. I'd be tempted to take a tax hit on a bulk of these in the name of diversification.
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u/Exact_Photograph2056 1d ago
Agree. It makes me very nervous.
WRT partner pension. Isn’t that the line from Shawshank… “do you trust your wife?”
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u/Fred776 1d ago
I'm not sure you really have many options for avoiding cgt on the shares. Gifting some to your wife to give you 2x allowance and potentially some of her standard rate tax band depending on what she earns might gain you a little but compared with the overall amount it's not going to make a huge difference.
It might be as well to take the hit to derisk your situation. This is what I did in a similar situation (though much smaller numbers). I sold the shares and bought a gilt ladder to partially fund the first few years of retirement. That gave me peace of mind and I didn't worry that I'd had to pay some tax to achieve that position.
How much of the value is growth? Even if you paid CGT on the whole $1.3M, which you won't, you would still get ~£740k out of it.
One option is to sell most of it but leave enough to sell for the first few years of your retirement when you don't have any other income. This gives you the lower rate of CGT on the basic rate band. But that might turn out to be a bad idea if the shares tank during that period.
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u/mypersonalfinanceuk 1d ago
Agreed with this, I think CGT is at a fairly attractive rate in comparison to other taxes and slim likelihood of getting better, with more chances of getting less appealing. I'd sell down the shares, because you'll have to at some point.
Wife's DB is likely to start at 65. Retiring at 55, OP, she'd leave £120k of personal allowance on the table if she's not getting income from other sources.
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u/zampyx 1d ago
Give me these two numbers Net worth including pensions Annual expenses that you should cover with that net worth
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u/Exact_Photograph2056 1d ago
Net worth… £4m without house
Annual expenses…£65k2
u/Educational-Rest-550 1d ago
I'd pack up tomorrow if I were you. You can easily spend more than £65k/yr. The benefit of waiting for the vesting doesn't seem worth it as it will only give you a slightly bigger cushion than you already have rather than being the difference between having just enough and a little breathing room.
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u/zampyx 1d ago
You can retire twice on a 3% SWR, which means you would likely leave a nice inheritance to your kids.
If I were you I would work only if planning on buying something very expensive, like let's say you want a boat or a Ferrari, them maybe extra cash would make it feel easier.
I would retire yesterday to be honest
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u/klawUK 1d ago
do you say anywhere how much you need per year? Didn’t spot it.
as for shares - thats a lot of shares vesting over 3 years if you’re getting 40k a year? I mean at some point its ‘one more year’ madness - if you have more than enough why keep playing the game?
also check your assumption on CGT - depending on the scheme etc it might not be so bad. Also consider what you’d intend to do wiht them eg convert to index funds or cash etc
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u/Exact_Photograph2056 1d ago
40k at today’s price is not 40k tomorrow.
Have been lucky the shares have continued to increase in value and I haven’t needed to sell them.
Lifestyle isn’t extravagant, fly economy, nice hotels but nothing outrageous. Don’t drink or gamble. Maybe I need to start ! Would say £65k a year would be where we are currently.
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u/klawUK 1d ago
then you’re more than done even with CGT - you’ll clear £1m in shares probably, not counting the ‘to be vested’ ones, have 1.9m in pension - you’re looking at 100k + per year gross just from your side not including any teachers pension or state pensions.
Its a big pot so I’d get advice but it won’t be ‘can I afford to go’ its more ‘how can I effeciently manage going asap without too high a tax impact’ - but some is inevitable
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u/Any_Try1238 1d ago
I think you need a sanity check for asking the question. Unless your expenses are huge, retire. You've made it
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u/Old-Amphibian416 1d ago
How did you amass such savings and pensions? Your salary is decent but I don't know how you managed to save all this on your salary and a teacher's salary.
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u/Exact_Photograph2056 1d ago
Been very lucky with investments. Have always put as much as possible in to pension - which has clearly been rewarded with the stock market recently.
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u/Exact_Photograph2056 1d ago
Would also add…. Not having school fees has been the biggest difference between me and a number of colleagues
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u/22savage12 1d ago
Many fucking congratulations mate. From a 22 year old (so no advice to give you).
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u/paulmccaw 1d ago
What's the forecast spend per month you're considering? You're looking fine unless you're spending 100k+ a year. You wanting to leave money after you "go" or spend until zero?
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u/Both_Ticket_4398 1d ago
you're good to go - congrats & GFY. in my experience everyone else (inc. kids) is far less interested in your RE than you may think they are! go at the right time for you & immediate family - the kids will value a stable base through key exams.
the only fly in the ointment is the RSUs, both from a risk concentration & CGT perspective, but they're almost unnecessary against the backdrop of £1.9M SIPP / £700K GIA / £300K ISA + substantial releasable home equity. I always used to sell RSUs on award day, eg: zero gain, and re-invest into index funds in SIPP / ISA, but they weren't at this level & my firm wasn't one I'd have chosen to invest in directly with my own post-tax earnings ...
there's never an ideal time to walk from unvested money, but you're well past that stage & it's not a reason to stay on if you've had enough. it might be worth looking for specialist help (on a one-time basis) to ensure you have the CGT completely nailed down.
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u/Exact_Photograph2056 1d ago
Thank you for this.
Agree re specialist. The potential to move somewhere warm for a period of time is very tempting and could have a massive impact on the cgt. Although I have a couple of years to improve my golf swing / learn to DIY
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u/bohemian_wanderer 21h ago
Please just do it! At your age and with your net worth, time is now worth infinitely more than more money. There are absolutely no guarantees on your health and you are already getting close to the age that some activities might be harder / impossible to undertake.
Have you thought about what you will do with your retirement? For me, that is the key question. Once you have a plan and you can taste how good freedom will be, then the money becomes secondary.
As Joe Kuhn ( you tuber ) often says, retirement will always be the worst financial decision that you ever make. You can’t avoid that!
I recently summoned up the courage to hand in my notice. It was a very hard thing to unlock those golden handcuffs. I spent a long time analysing it all both money and the merits of early retirement. But now the deed has been done, I feel as light as a feather.
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u/reddithenry 1d ago
I think if you leave it much past 56, its no longer RE.
You've easily got enough, especially since you're basically able to access your pension. Unless you have some big upcoming costs, time to call it. Unless you relaly want to bank that extra $500k, which you're entitled to wait out for (partly/fully)
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u/Exact_Photograph2056 1d ago
There will always be the next drop of shares… I guess it is just a case of making the break.
I do wonder about stopping work while 2nd child is still in school….
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u/reddithenry 1d ago
yeah, there's always going to be more; i think you just need to sit down and work out what lifestyle you want, and how you are lined up against that atm.
reality is, with £1.6m in a pension, you're golden anyway. You can afford a £50k/yr annuity without batting an eyelid, taking the full tax free lump sum, and you'll still have £1.25m in post-tax investments.
You probably cant do mortgage free gifts to your kids without at least thinking about it, but youo can definitely gift them deposits without batting an eyelid, and living a luxury lifestyle (good lodges/resorts, business class, etc) all without any issue
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u/klawUK 1d ago
RE is relative IMO just like FI is. If its earlier than you anticipated when you first started working, then its RE for you. I’d say anything pre-60 is early but thats again just my personal interpretation
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u/deegeemm 1d ago
The sub gives a link to this What is FIRE? as a starting point for reading.
Having a quick look one quote from the page is
The FIRE movement prioritizes greater financial independence through a program of extreme frugality and aggressive investment. FIRE devotees may hope to retire earlier than the conventional retirement age range of 65 to 70, or they may hope to gain greater financial independence.
I doubt that many people here go for extreme frugality so perhaps none of us meet FIRE requirements :-)
but for me I agree with the idea that retiring before the conventional 65/67 age is 'early'.
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u/reddithenry 1d ago
It's a slightly flippant comment, but I'd argue that if you're retiring about when you can legally access pensions, pretty much by definition it cant be *that* early
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u/OppositeSecret7144 1d ago
Is this a "my steak is too tender" post? I'm sure you've got some costly lifestyle living expenses unless your accumulated position is a result of modest living but even so - it's a question of why wait?
You do need to put the vesting shares thing out of your mind though because it's always an illusion (unless of course you can get made redundant and they somehow then vest).