Generation Rent


When I started this blog and was trying to think up a suitable clickbait title, I asked myself what subjects would middle-aged, middle class, middle British people be likely to be interested in? The trouble was I didn’t think that the title, “Sex, Health, Money, Property” had the same ring to it.

An Englishman’s home is his castle – although he’s also very interested in the slightly bigger castle just along the road. His wife, meanwhile, is interested in about ten other bigger castles in a better location than the current dump, which hasn’t even got a moat.  

I’m approaching the stage of life now where I take being classed “middle aged” as a compliment. Let’s face it, I’m heading toward the Third Age and finding I’m starting to think that, instead of needing a bigger house, more space and trying to get a foot on the next rung of the property ladder, I actually need to downsize and release some of the equity in the property.

Over the last year, my wife and I decided we’d start to look around at likely places we’d consider staying in for that “Third Age” and, somewhat to my surprise, met a number similarly aged couples doing what we were doing (it was the amount we met that was the surprise, not the fact that older middle aged couples would want to downsize their homes.). They too were selling up, releasing equity and moving on. But, what was almost more interesting, was the fact that many were selling up with nowhere to go. They intended to rent until they spotted that house of their retirement dreams and could bid for it as a cash buyer.

We were considering doing the same, because we knew from previous experience that the only thing that trumps a ridiculous over-bid on a property is a cash buyer who isn’t in a chain and can be pretty flexible on moving dates. It’s a big advantage when a desirable property pops up to not to have to say, “Oh, we’d need to sell our house first before we can buy yours”. When you’re the seller, this feels like you have two properties to sell before you can move on – theirs first, and then yours – but someone offering cash, well, it’s a done deal.

So selling and renting was our “secret strategy” that would enable us to grab that little rose-covered cottage when it came up. That’s a laugh. It began to look like we’d be up against at least half a dozen grey-haired cash buyers trying to do the same thing. So, yet again on the property front, the question of whoever had the biggest pockets would come into play.

Now I’m pondering two things (1) has this come about because there is a massive amount of rental property options out there in attractive locations which offer quite good value for money? And (2) if so, and if we find a place we like, why shouldn’t we just rent until it’s our time to move on to the Big House in the Sky?

I’m finding the latter idea growing on me. There’s a lot of advantages to renting. For a start, we’d have to jettison a lot of the sheer junk we’ve accumulated over the years (one of the things that puts me off selling the house is the thought of literally packing up.) The thought of “living light” with a lot less material possessions appeals to me. Then there’s the money freed up – I reckon selling our house will transform those bricks and mortar into a substantial wedge of wonga that I can invest. I mean, over the years, my investments have pretty consistently delivered a return of between 5% and 10%. If I could keep that up, I’d be generating an income that would more than cover any likely rental charges.

Selling up and renting also gives an element of flexibility – I often fantasise about heading to warmer climes for the winter. Santa Barbara, California, from about October through to March would be nice. It might also be a real option if I could trust and count on the investment income generated from the sale of my home. I could live six months abroad and not worry about my house going on fire, the pipes bursting and flooding the home, if squatters had moved in and so on.

We could live the next ten years like that, until we became bored with it (or became seriously worried about falling ill in America!) Then we could buy a property more appropriate for a couple heading into their seventies and beyond which, I feel, would look a lot different to any houses we’re currently considering buying.

When you start thinking about how many years you have left on the planet, never mind in a house, you inevitably have to think about eventually leaving all your possessions behind. Of course I’m talking about that other middle class property obsession, Inheritance. Well, let’s say my wife and I both live for another forty years (assuming we haven’t killed each other by that time.) My son will then be sixty two. I’m sure he’ll appreciate getting an old house at that point in his life as opposed to getting some of that inheritance now, just as he’s thinking of getting into the property market himself. Right. Surely, as a concerned parent surveying the current housing market from the perspective of a twenty year old wondering how on earth to save for a deposit, that’s a no brainer? I mean, I know I’m in a lucky position to be able to consider the options, but it’s a fact that many of us are, or will be in a similar position. Like old age, it’s a subject that needs thinking about.

Pondering these questions makes me think back to the title of my blog. When I think that I have to admit I’m no longer middle aged, maybe I should shuffle and change the title to reflect an older age priority of obsessions: Death, Property, Health, Money (and Sex, If You’re Lucky). What do you think?

Keeping It Up

I noticed a tweet from Mr Money Moustache the other week that an article about him that appeared in the New Yorker magazine was one of its “most read” in 2016. He couldn’t quite believe it, but was happy to shout about it with a #Humblebrag handle to show he was proud, if somewhat abashed (I think), with this success.

Good for him, though. He is the preeminent writer on FIRE in my opinion and must have inspired tens of thousands of people to think about the way they are living and to make changes to both their finances and lives, inspired by his example. He wasn’t my original inspiration, though. That was Jacob Fisker with his book and blog Early Retirement Extreme, which I somehow came across back in about 2010, giving me almost five years to think and plan on how to get out of the workplace a lot sooner than I’d ever previously considered.

Fisker’s book, to be fair, can be quite heavy going and almost preachy. You can tell – and he often lets you know – that he’s a pretty smart dude. So smart, in fact, that he clearly pined for more intellectual stimulation than his Early Retired life was giving him, and returned to work as a Quant in finance, or something equivalent.

I often feel I struggle to put into words exactly why I went back to work when I probably could have stayed retired. I often ask(ed) myself if I just didn’t have the imagination, motivation or smarts to keep myself occupied? So I take solace from the fact that Jacob returned to work after literally writing the book on Early Retirement. There’s something about paid work as an employee that offers something different to both self-employment and Financial Independence. One day I’m hoping to be able to begin to formulate an idea of what that might be!

If Fisker is the philosopher of FIRE, Mr Moustache is the populist preacher, but what they have in common, from a British perspective, is that their blogs are very American in both content and tone. I hankered after something that related more to my own situation and cultural background and soon found the Monevator and Simple Living in Suffolk sites which, in addition to some great content, seemed to have a much more “British” take on FIRE. (I’ve listed some of the others I regularly read on my Blogroll and Books page.)

It was through Monevator that I recently learned about the demise of my favourite UK forum on the Motley Fool UK website. This was like a blow to my heart, because it was The Fool’s original book The Motley Fool UK Investment Guide that inspired me to take control of my own finances and start investing. They taught me about Index Trackers and passive investing which, prior to that point, I’d never heard of. They wrote with such an easy style and “You can do this!” attitude that I was totally inspired to take their advice. The fact that I was latterly able to financially afford full retirement at the age of fifty, more than fifteen years after I’d picked up their book, I put totally down to the simple core advice they gave: invest regularly in tracker funds and let the markets and compound interest (and one or two other factors) do their work over time.

It seems I wasn’t the only one dismayed about the demise of the Fool’s forum because a couple of regular contributors immediately set up an alternative, The Lemon Fool. The boards there are already quite active, and I was pleased to see that one of the most popular threads on the Retirement Investing forum is about FIRE. As Mr Moustache found in the New Yorker, there is definitely a lot of interest in this subject out there.

It’s funny though – I can sit for hours browsing the Fool’s forums or the investment advice in Monevator, or tracking back through ERE and Mustachian posts, but when Ros Altman (ex Pensions Minister) tweets a link to yet another dreary, but no doubt important, article on pension issues, I quickly lose the will to live. I know that, at the moment, populism is getting a bad name, but it is the blogging “investment poplulists”, including some of my own favourites that I’ve mentioned here, that have had a big impact on my life. Here’s hoping that they continue to flourish.

Dreaming the Dream

I was listening to Radio 4 on a drive home the other day, to the somewhat mysteriously titled “You and Yours”, and an episode entitled “Dreaming the Dream in the Third Age”. Ostensibly this was about people who had made life changes for their retirement and how those changes had come about, but what piqued my interest was some research that was discussed about which type of people fared best in retirement. Basically, it boiled down to two simple things. The first was that if you tended to lead a full and vibrant life before your retirement, with plenty of varied interests and pastimes that lay outside of family and work, you were likely to continue with these and add more in. If you’d let work and family life dominate and take up the hours in your life, you’d find a pretty big hole to fill in retirement. Secondly, the more planning you did for retirement, and all the related aspects of it – social, financial, health, relationships etc. – the more likely you were to enjoy it.

I found myself nodding in much agreement to these points. My bout of “early retirement” was forced on me when I found myself out of work. As it turned out, I was almost fully prepared for this financially and totally unprepared for it on almost every other measure. Firstly, and I suspect I’m not alone in this, my life before retirement had been pretty much dominated by work and family. When I wasn’t with one, I was with the other. I did try and fit in some “me time” around this – I tried to play golf once a week and I made an effort to visit the pub with friends for a few hours early doors on a Friday evening – but other events tended to involve either work or the family. I’m not about to give myself a hard time over this because I think that this is normality for a majority of people and, if you’re lucky enough to have a family, it’s worth devoting as much time as you need to keeping it a happy, functioning unit.

On the other hand, I’ve found that it’s a real challenge not to think that everyone else has masses going on in their lives compared to your own rather boring and staid “work and family” existence. “Every man should have a hobby” said Rod Stewart as he headed off to work on his train set – or another blonde – and all I can say is that’s easy for him to say. If I’m critical of myself, in my almost thirty years of working, a hobby was the one thing I felt I didn’t develop. I suppose I could point to golf, or reading, or cooking, or keeping fit, but these aren’t hobbies in the true sense of the word, or how I imagine a hobby to be. A hobby should be, I think, an interest that sits outside of these more regular pastimes I’ve just mentioned. It should be something like repairing old watches, restoring a classic car, building replica furniture, refurbishing classic computers and so on.

When I had what turned out to be my year out, people often suggested that I should look into finding such an interest – as if I wasn’t wracking my own brain trying to do so! I dearly wanted to think of something I could “get into” and grew frustrated that I couldn’t.  It was almost as if everyone, including myself,  felt that all I needed to do was sit down, think hard, and suddenly I’d discover the thing that really interested me that had been eluding me during all these years I spent in work. Aha, photography! Aha, community theatre! Aha, crochet! Aha, ten pin bowling! Aha, gardening! But I found that it’s just not as simple as that. You can spend hours in the garden – and I did – and still hate as much as you did when you spent five minutes in it.

In the end, I went back to work to help fill the hours, once I finally admitted to myself that, in a way, work had been my hobby and I missed it. These days I don’t dream about full time retirement, I dream about working a four or a three day week. Or, even better, finding something that leaves my mornings free and gives me something constructive to do in the afternoons and early evenings. The next stage is for me to come up with a plan that will turn that dream into something more concrete. But I won’t kid myself, as I used to do in my previous working days, that this is going to be easy. It’s going to require some mental hard work, application and, above all, taking action against a plan (which is unfortunate because it’s the planning bit I think I like best!) But I think I can say that I know from experience how much of a challenge retirement can be if you haven’t a plan to fill the hours, while telling  yourself that you’ll have time to work on that when you get there. My advice – in line with “You and Yours” – is to start working on it long before then.