Reply to: How close are you to retirement?

[ChimpMaster]

Don't you worry; once Gordon's hyper inflation kicks in, all that money will buy you a postage stamp.

Well that worked out well.

[Fred Bloggs]

I would have thought that with >£2m assets to look after, that would have been the full time job!

Actually, I think engineering is about 10 years behind IT in the low cost outsourcing scene. But it is happening. I might just get another 10 years out of this at which point I'll be 63 and just about ready to take the job in B&Q till 65. I look what's happened to all the engineering design and management jobs in the middle east and wonder if we're going to be taken over low cost highly qualified engineers here in the UK just like out there. I think only the defence and nuclear industries can survive with British jobs in them longer term due to the security issues.

[rootsnall]

The biggest long-term concerns are taxes, inflation, and healthcare costs.

Also, there is the issue of generating tax-efficient income from all of our diverse investments......

Unless you have a disaster then you haven't got any money worries short or long term. Devote a day or two a month to conservatively managing the wad and enjoy doing what you want the rest of the time. Easy peasy ! If you don't enjoy being retired then move onto Plan B.

[rootsnall]

Mrs. TP and I have about £2.5m in the bank. £500,000 of that is from our recently-sold house, and is separately invested in a safe vehicle that generates enough income to cover our basic housing costs (i.e. monthly rental, for now).

At a 4% withdrawal rate, the remaining £2m gives us about £80,000 per year, or about £6,700 per month, before tax. Our average monthly outgoings usually do not exceed £2,500 (calculated regularly since we got married in 1996!).

I think (well, I know) we're in good shape, but I just can't shake the feeling that it couldn't hurt to have a bit more.....

That is a warchest, I thought mine ( ours ) was a biggish one. If you are currently living on £30K pa then I think you can relax a little on your projected £80K pa. You'll be saving while doing nowt. I'd say looking after and preserving £2.5m would be enough of a job to keep me busy and on my toes.

[Tarquin Farquhar]

I thought you might be a young whipper snapper so was giving you a friendly pep talk. I really agree with you, we are all doomed

I think this is going to be a whopper of a recession that the general public ( plus IT people in banking and the public sector ) have so far been shielded from but most IT contractors have felt the full force.

Things will come back up but I agree it might be a long way off yet and some of us will no longer be solvent.

This "recession" is permanent IMHO

[darmstadt]

Not retiring if this happens

[rootsnall]

I hear what you're saying, but part of my point is that reality may not rule the day. Clients can remain irrational longer than you can remain solvent.

I'm not predicting doom lightly, not since I worried in the late 1970s whether I'd be able to make a living out of COBOL for another 5 years. Now I'll be happy with just another 5 years in IT, but I don't think I'll get it.

I thought you might be a young whipper snapper so was giving you a friendly pep talk. I really agree with you, we are all doomed

I think this is going to be a whopper of a recession that the general public ( plus IT people in banking and the public sector ) have so far been shielded from but most IT contractors have felt the full force.

Things will come back up but I agree it might be a long way off yet and some of us will no longer be solvent.

[Tarquin Farquhar]

I think it is always the same though. In my first ever job the old boy contractors were moaning that the end was nigh in that recession. I don't think we'll ever return to the boom time rates of the late 90s when some of us were getting paid more than senior bods at FTSE100 Co's. However supply and demand should leave a decently paid niche for onshore development projects. The main problem with rates in my game at the moment is the number of onshore independent contractors over here who have been happy to work on low(ish) rates. The demise of sterling and supply and demand should hopefully balance things out if/when we emerge from this recession. I don't think offshore development will ever be cost effective in most scenarios and again reality and supply and demand will eventually sort that out.

I hear what you're saying, but part of my point is that reality may not rule the day. Clients can remain irrational longer than you can remain solvent.

I'm not predicting doom lightly, not since I worried in the late 1970s whether I'd be able to make a living out of COBOL for another 5 years. Now I'll be happy with just another 5 years in IT, but I don't think I'll get it.

[rootsnall]

I think the Indian factor has killed it this time.

I think it is always the same though. In my first ever job the old boy contractors were moaning that the end was nigh in that recession. I don't think we'll ever return to the boom time rates of the late 90s when some of us were getting paid more than senior bods at FTSE100 Co's. However supply and demand should leave a decently paid niche for onshore development projects. The main problem with rates in my game at the moment is the number of onshore independent contractors over here who have been happy to work on low(ish) rates. The demise of sterling and supply and demand should hopefully balance things out if/when we emerge from this recession. I don't think offshore development will ever be cost effective in most scenarios and again reality and supply and demand will eventually sort that out.

[Tarquin Farquhar]

WTS.

Jobs and rates have always come back in past. The Indian factor might make it different this time but if sterling is also stuffed there must be a point at which supply and demand will sort things out.

Toolpusher, what size of warchest have you got to be able to retire at 42 !? I'm tight but with two youngish kids I reckon you need 30K a year minimum to tick over, so very rough calc says you need a million plus tucked away.

I think the Indian factor has killed it this time. Even if offshoring turns out not to be as cheap as expected, the market has been commoditised and the price expectation has been set low. Even irrationally, clients will keep projects on hold rather than pay a rate higher than what they think is "the market rate". If someone tells them it's £125 a day, thene even if they work out that a distant development team will not do it right, they will turn round and expect us to do it for that rate too.

I think your calc is too rough. Remember that you can plan on spending down your capital as well as using income (that's a plus). You have to cover bad periods in the market, with the unfortunate effect that if you spend unforeseen capital to cover such a period, it is gone forever (that's a minus).

A common figure for Safe Withdrawal Rate (DYOR) is 4%. At that rate, 3/4M would do.

There are other factors. Many personal lifestyle factors would change if you were retired, but whether plus or minus depends on you. Would you need to spend more money to keep yourself sane with all that time on your hands? Or would removing all the things about working allow you to spend less? (Off-peak travel, no rush, no commute, no work clothes, can live where you like, etc).

[rootsnall]

I think it's all of us.

WTS.

Jobs and rates have always come back in past. The Indian factor might make it different this time but if sterling is also stuffed there must be a point at which supply and demand will sort things out.

Toolpusher, what size of warchest have you got to be able to retire at 42 !? I'm tight but with two youngish kids I reckon you need 30K a year minimum to tick over, so very rough calc says you need a million plus tucked away.

[Tarquin Farquhar]

<this is my secret worry for my sector>

I think it's all of us.

[cojak]

I'm actually pretty content not doing much all day! I could happily continue not doing much forever.

The problem with my particular speciality is that the challenges no longer exist. The market has become flooded with contractors who are willing to lie to get a contract, and who have no problem accepting rock-bottom rates. This situation is not helped by clueless clientcos who are unable to recognize good talent. They operate purely on rate alone.

As a consequence of this change in the marketplace, expectations of everyone involved in the whole chain (clients, agencies, contractors) have been altered to the point where I no longer have the motivation or enthusiasm to continue doing what I have been doing for most of my working life.

What else can I do? I don't know.

<this is my secret worry for my sector>

[cojak]

Then why hasn't your login been revoked

If that happened we'd lose 50% of our regulars (you know who you are!).

[Tarquin Farquhar]

The problem with my particular speciality is that the challenges no longer exist. The market has become flooded with contractors who are willing to lie to get a contract, and who have no problem accepting rock-bottom rates. This situation is not helped by clueless clientcos who are unable to recognize good talent. They operate purely on rate alone.

As a consequence of this change in the marketplace, expectations of everyone involved in the whole chain (clients, agencies, contractors) have been altered to the point where I no longer have the motivation or enthusiasm to continue doing what I have been doing for most of my working life.

What else can I do? I don't know.

Did you write that, or did I? That's exactly how I feel. It's not just the ups and downs of rates and contracts, the whole thing has just gone and I don't ant to be part of it any more.