in April 2007, one week before my 40th birthday, I handed in my security badge to Barclays Global Investors Human Resources, completed my exit interview, and walked out the door into the courtyard at Royal Mint Court to begin my new life as a “retiree”. Achieving the goal just shy of 40 felt good – very good. The day marked the successful culmination of a plan put in place a little over two years before. With a lot of luck I’d figured it might take three years to come together, more likely five, and possibly seven. Reaching the goal in 2 years and 4 months was way beyond my expectations.
The plan first sparked into life whilst browsing overseas property listings one Christmas evening in 2004 and toying with the idea of buying a getaway holiday home. Ideas grow best when they roam free with no boundaries – something bigger, better and more ambitious will usually take root. Over the course of a couple of days the holiday home idea evolved into a full blown early retirement plan. If you’re the planning type, and you’re gonna plan, may as well plan big – and you can’t plan big with small ideas.
The plan fit quite nicely on the back of a cigarette pack, and went something like this:
– Step 1: Choose a lifestyle
– Step 2: Choose a location
– Step 3: Buy a property in that location to live the lifestyle
– Step 4: Set a target of total assets to retire on
– Step 5: Work towards the target
– Goal: Retire
Five clearly defined steps to achieve a motivating goal. Five steps to live a dream.
And this is how it all came together…
Choosing a Lifestyle
Whilst travelling during my sabbatical year in 1997/98 I spent much of it in the tropics – Fiji, The Cook Islands, Tahiti, and Hawaii. I also visited New Zealand, Australia and California. I loved all of them for one reason or another – the laid back balmy days of the South Pacific islands, the wide open spaces and natural beauty of New Zealand, the sheer size of Australia and the years of potential exploration, easy-going San Francisco and California offering anything and everything for anyone and everyone whether you be a hippy or wine-connoisseur, artist, entrepreneur or rock star, or all of those combined.
As a Londoner working in The City for the previous 15 years the contrasting tropical island lifestyle previously tasted on my travels appealed most. No suits, ties, commuters, or office blocks. No hustle and bustle. No deadlines or dull meetings, interminable telephone calls, or daily avalanches of life wasting e-mail.
Instead, flip-flops, colourful shirts, sand between the toes, blue seas, blue skies, palm trees and lazy melodies. Time and space to think, a lifestyle that let the mind roam free with no boundaries.
The choice chose itself. It was easy. The next step – where ?
Choosing a Location
California, Australia, and to a certain extent New Zealand, were all rejected by the lifestyle choice, and they all appeared prohibitively expensive in terms of property prices and long term cost of living. The first-world options would suck up funds at a frightening rate, and the aim was to live a comfortable and relatively modest existence and not go broke within a couple of years. The options narrowed to the South Pacific.
The Cook Islands
I cycled around Rarotonga, the largest of the Cook Islands, in five hours during my visit. The high cost of inter-island flights prohibited further exploration of the other islands. Aitutaki, a spectacular island lagoon, is still on my bucket list. Retire there ? Nice idea for an apprentice castaway, for my plan though too small with little infrastructure and a tad too isolated.
The island of Moorea is quite possibly the most beautiful island on earth. Soaring volcanic landscapes draped with dazzlingly green jungles all fringed by white-yellow sand and the clearest waters I’d ever seen. Unsurprisingly it all comes with a hefty pricetag. Visiting in 1998 my budget in Tahiti was between six and ten times that of the Cook Islands and Fiji. Thoughts of a future life spent ordering over-priced croissants – in French – overshadowed the stunning scenery. I would likely be spending my “retirement” forced into gainful employment to keep pace with the expenditure.
Very expensive. Very crowded. Beautiful
The upside – first world comforts, ease of access, high speed internet and reliable communications. The downside – Americans with their voices turned up to 11, Japanese brides jumping off hotel buildings to avoid a lifetime with Mr Wong, expensive real estate, and a high cost of living. Add to that the scarily attractive transsexuals on every corner – I may well be turning teetotal, home behind locked doors by 6pm every evening for my own safety.
(Yes, I know – Mr Wong is a Chinaman. The Japanese groom would have been Mr Wongafuki but my editor made me remove it)
The most relaxing time of my sabbatical was spent in Fiji. They spoke English. It was reasonably cheap. It had internet and phones, and sometimes they worked. There were beaches, and Fiji Bitter, and freehold land, and cool shirts and big smiles. Blue skies, blue seas and palm trees with coconuts. People, but not too many. Developed, but not too much. Almost as far away as you can get, but not a problem to get to. The pooftas and trannies were easily identifiable. My bum would be safe !!
Fiji it was. Fiji, here I come.
Buying a Property
At this point it’s still just the early days of the New Year 2005 with the two steps above quickly accomplished.
So, now the focus is on Fiji, and specifically Taveuni – an island upon which I reached a pinnacle of relaxation in 1997. It didn’t take too much research online to draw up a shortlist of potential properties – there weren’t that many. The top two choices were both located on Taveuni Estates, and both owned by the same person.
I contacted the owner, said I was interested and ideally would like to visit. A property hunt was a good excuse for a holiday, and an excellent reason to return to Fiji. April was the earliest I could get there, and the owner agreed to keep all his options open until I had the chance to check things out. Flights were booked – I was set to go.
Andrew, the caretaker for both properties, met me at Matei Airport, shoved a Fiji Bitter stubby in my hand as a welcome, and we set off south to the Estate. As passenger I was obliged to open more stubbies for the both of us along the way.
First impressions: likeable, bonkers.
By agreement with the owner I was accommodated in one of the properties on the shortlist. Andrew acted as guide, real estate agent and social organiser whilst I was on the island. Each morning I usually took a stroll and dropped by his place for a chat and a coffee, or in his case a glass of Fiji Bitter with two teaspoons of Nescafe sprinkled on top.
Andrew, the people and the island all endeared themselves to me very quickly. After 10 days or so I packed my bags and departed, doing so with very different feelings than my first departure 8 years prior. On that occasion I left wondering if I would ever return – it was a very sad goodbye. Not so this time. I knew I was coming back, and very soon.
On my arrival back in the UK I made an offer on the property I’d stayed in. The offer was quickly accepted and the wheels were in motion for the purchase.
Step 4 was on a roll.
Setting a Target of Total Assets
Running alongside the steps above I began setting a target for total assets. By total assets I mean cash, savings, investments, property, and pension funds. The target represented the level of risk I would be comfortable with – comfortable enough to jack everything in and embark on a new lifestyle in a new location with potentially no further income for many years.
I set the target.
One million pounds
It’s a nice number. It felt comfortable. It felt doable. Getting something done is a whole lot easier if the target is achievable, and you believe it.
Why not two million ? Or three, or five ? Too high. Too far away. Maybe impossible.
What’s the difference between one million and two in terms of feeling comfortable ? Not much really since my “retirement” goal had a second equally important objective: to live the new lifestyle with minimal financial worries whilst exploring new opportunities that fit with it. Basically, to spend as long as it may take to find (or create) a new career, or business, or a paid hobby, or whatever it would be that felt right. The intention was not to just stop, shut up shop, and vegetate for the next 20, 30, 40 years until the Grim Reaper called last orders at the bar. In essence I was buying a significant amount time and freedom to make choices and decisions in the interests of personal fulfillment.
A million it was.
Working Towards The Target
By May 2005 three steps were complete and a fourth (the property purchase) in motion. The final fifth step presented the longest haul.
At the time the total value of my assets came in at around £600,000 – cash, savings and investments accounting for a roughly a third, property another third, and pension funds the final third. As a ballpark guess I figured I might reach the Magic Million in five years by increasing total assets by around 10% per year. Additional funding would go regularly into savings and investments. Property values were on the up. For almost a decade I had contributed the maximum allowable amount onto a personal pension fund, and would continue to do so.
Barclays Global Investors, my employer, was the largest investment bank on the planet in terms of assets under management. I worked in the internal IT department designing, developing, maintaining and supporting a range of applications used by fund managers, client services, performance analysts and accountants. Investment banks generally pay pretty well, and IT professionals generally get paid pretty well too, so it was a good place to be. Annual performance bonus’s added to the attractive compensation package. I was in a fortunate position that my earnings exceeded my outgoings, and the excess went into investments. Some of these investments included the banks own financial products, iShares (exchange traded funds, or ETFs), that were managed by fund manager colleagues using software I had written.
Booming property markets and decent stock market returns saw all my savings, investments, property and pension funds increase in value much faster than my 10% target. Since the bank itself was having a great time too, the annual performance bonuses were also very healthy.
In February 2007 the annual staff performance bonus notifications went out. A couple of weeks later the cash was in the bank.
Thanks largely to a bull run in the markets I’d hit the Magic Million.
It was time to go.
In March 2007 I was working for a great company. I was getting very well paid. I was performing better than in any other role I’d had in my years with the bank. I was enjoying going to work.
– I would be mad to leave now.
I remember very well composing my resignation e-mail to my boss. My fingers trembled with every keystroke as flashes of self doubt ran around my head.
– Maybe just one more year, eh? Just to be safe.
I pushed those thoughts aside. I’d made a promise to myself. Reach the target and execute the plan.
For the previous two years I’d made my plan fairly common knowledge, and clearly signaled the intent by completing the Fiji property purchase. When the time came it still took many by surprise, including my boss. Luckily he was (and still is) a great guy, and genuinely applauded my motives and timing despite the imminent short term staffing problem.
And so my departure date was set. A month of handover documentation and tidying loose ends followed by a final week of shuffling papers and leaving drinks – a five day pub crawl with every lunchtime and evening spent at a different London pub to ensure I got to say goodbye to everyone – bar staff, landlords and landladies included.
It was a great way to finish and I stepped out the door that last time a very happy man.
On my 40th birthday I arrived in Fiji.
On the arrival form, a question: Occupation ?
Had I known what was going to transpire in the financial markets shortly afterwards – a global financial catastrophe as the banks teetered on the brink of collapse (with some actually toppling over) I would have cashed everything in on the day I left. But that’s another story for a follow up article – can you really retire at 40 on a million pounds ?
Have you retired early, or left a job to follow a dream ? Did you do it with safety net, or just jump ? Leave a comment below !