Big Box Shop

Well, Black Friday passed me by. I did scan a lot of ads and websites in the hope that I’d see something that grabbed me, but it didn’t happen. It’s easy to get wound up about our consumer society, but I’m happy enough to see it robustly function for other people while I hold onto my money with a death grip.

I think we’re all aware how much shopping has changed in the last ten years with the move to on-line but, let’s be honest, when it comes to retailing, we Brits have been pretty good at it. We are a nation of shopkeepers and we keep the people coming back for more.

I worked for years with the major UK supermarkets and, for a long time, most of them were widely acknowledged to be “world class” businesses. Whether it was transforming their “Own Label” propositions, pioneering “Category Management” and building incredibly robust and efficient supply chains, UK retailers were – and still are – admired throughout the world.

As a supplier, the fastest way out of the major supermarkets was to consistently fall over on supply. The retailers don’t really sit on stock these days and expect product to turn up “on time, in full”, 365 days a year. After all, what’s the point of shops if nothing is on the shelves? Retailers expected stock to ordered one day and turn up the next, 100% correct versus what had been ordered, and booked into their major distribution hubs at a specific time.  These days, as a shopper, you almost expect to turn up to a Tesco’s on Christmas Eve and find fresh turkey on the shelves, sprouts spilling into the aisles, goose fat in which to roast your tatties and 56 varieties of gravy to bathe them all in. And that’s in any Tesco, Asda, JS, Morrisons (and so on) in any town throughout the UK the night before Christmas. The fact that the goods are there for you doesn’t happen by accident.

Meanwhile Amazon have applied this principle directly to household consumers. Again, the supply comes from the super-hub distribution depots built to service this demand. Most of us are vaguely aware of these mega box distribution centres that you sometimes glimpse from the motorway and probably wonder what goes on in there? I’ve been round a few in my time and they are awesome installations, but I won’t pretend that I really know how they do what they do on a daily basis. I just know that they’re incredibly effective at it. (As, incidentally, are the majority of suppliers and manufacturers who are supplying into these boxes on a daily basis.)

The future of retailing may be up for question but the future of shopping isn’t. We may all be sitting at home ordering our stuff instead of heading for the high street or mall to do it, but “do it” we most assuredly will. And those goods will need to be stored and despatched from centralised points, whether it be by driverless van or Amazon drone.

The future of shopping will be all about supply. It’s actually always been that way. So I was very interested to read of a new investment fund being launched in December, namely the “Aberdeen Standard European Logistics Income” trust.  This was highlighted and explained by Ian Cowie in this CIty Wire article which, as soon as I read it, I had a gut feel that it was a good bet. Generally speaking, I don’t really buy into actively managed funds due to the charges levied and sink most of my investments into Index trackers. Occasionally though, I make an exception, and it’s usually when something I read suddenly rings true with my own experience of the world.  Nobody knows what the future holds of course, and no doubt I could quickly think of an alternative distribution future that has a focus on micro-hubs, but I haven’t read much, if anything, about that. Investing is about taking calculated risks, even when picking trackers, and sometimes I think that a gut feel based on experience is almost as worthy as an in-depth analysis of a business or an economy. Gambling is a calculated risk too and, although we might hate to admit it, that’s what we’re doing with any investment.

As I’ve been sitting on some cash recently, I put a chunk of it in this direction. “Buy what you know”, they say, and I think I know that shopping isn’t going to die out anytime soon, even if the shops do. 

The Life and Loves of a Spendthrift

I’m tight. I always have been. On my wedding day, my brother stood up as best man and kept the guests entertained for ten solid minutes by cracking jokes about how tight I was. “Jim was up a ladder the other day cleaning a gutter when he felt 50p fall out his pocket. He caught it before it hit the ground”. Yes, yes, yes, how they laughed, while I wondered why I couldn’t remember it. After all, it sounded like something I’d do. And what had I spent that fifty pence on?

As I’ve probably mentioned before on this blog, I actually receive a bigger thrill from not spending money and from making little incremental savings than I do from making ridiculously big purchases. I do have one or two exceptions to this rule – I really don’t mind spending serious money on holidays and I’m a bit of an Apple fanboy, despite how shallow and pathetic I feel the latter admission to be. Still, they’re the exceptions to my rules.

Resultantly, I was a bit shocked the other day to sit down and calculate out how much our household seemed to be spending on “unbudgeted” items over the last year.

For someone who is proudly aware that every penny is a prisoner, I seem to have been allowing quite a few of them “escape” recently. I’ve been vaguely aware that I’ve been letting some of my standards slip – for example, these days when we head out for a Saturday night dinner with friends, I take the bill out of our “savings”, whereas for years this would have come out of our own personal monthly spend budgets. I don’t know why I made that change, but I do know that it has made a difference. When you can spend £150 a month socialising and allow yourself effectively not to “notice”, well, that’s just not good enough!

We also seem to have been buying “frivolous” stuff for the house, like new wooden flooring in a couple of rooms when, in my view, we had perfectly good and serviceable carpets. My car has cost quite a bit this year too, perhaps because it is five years old with over six figures on the odometer. Repairs, services and anything else has to come out the savings too, because for thirty years I was given “company cars” and never had to budget for them. That’s a habit I’ll probably have to break now to get back in control. (I won’t bore you with the fretting I’ve done over the past few weeks about whether or not I should trade my car in for a newer version. Suffice to say I’ve decided not to. For the moment.)

Looking at my “unplanned spend” caused me to think about our “planned”, or budgeted spend too. Our Virgin Media bill is frankly ridiculous as we’re paying the top package. I really have to do something about that. Then there’s those charities I’m giving to merely to salve my guilty middle class conscience. What have they done for me lately? And then there’s other “stupid’ stuff, like insurance – life insurance when my mortgage is all but cleared, annual holiday insurance. mobile ‘phone insurance, multi-car insurance, dental treatment insurance – I feel I’m single handedly keeping that damn industry afloat.

On the plus side, I’m still doing the weekly shop at Lidl, I’ve slashed personal spending on the Kindle due to rediscovering the local library and I’ve managed to cut the cat down to two pouches of food a day from three. These things add up, and tell me that I haven’t quite reached Kardashian levels of needless consumer consumption yet. On the other hand, reviewing my credit card spend for the year has underlined the fact that my “emergency fund” needs to be watched more closely going forward. When you stick to the rule of having an equivalent of three month’s salary available to you in cash to cover life’s unexpected spend, it’s all too easy to class that second bottle of wine in Pizza Express as a genuine “emergency” purchase. And my monthly budget needs a good talking to while I’m at it. These days, I might not be as agile as I once was when it comes to descending ladders at speed, but there’s no harm in keeping the training up.


Is anyone else feeling a bit dizzy as the markets seem to continue to climb ever upwards? For someone like myself, passively investing for years, 100% in equities across my pensions and ISA’s and forever looking forwards to a five or even ten year horizon, these should be heady times. I should be enjoying the ride, but at my back sits dark anxiety. Why? Because I’m nearing the finishing line.

In a few days I will turn 54 and the final year countdown begins toward cashing in the first slug of one of my DC pensions. This is so that I can take my 25% tax free cash from the pot before the government raids this perk as, I feel, they inevitably will at some point. This pension has, frankly, rocketed in the past 18 months. It’s not totally passive, as I have one or two managed funds within it, but I watch it growing well beyond the goal I’d set for it to achieve about three years ago, and increasingly fret about the markets undergoing a massive reversal.

I’ve lived through such things before – I invested over the dotcom boom and the 2008 crisis – stifling a yawn as the markets collapsed. For me, at that point, this was great news. My regular monthly contributions just gained me more units in the funds I was buying, and I never thought twice about converting to cash, buying gold or looking for value in property. “What goes up must come down”’ I told myself, and stuck to my “pound cost averaging” and my long term view.

I’m not so blase now, I can tell you, and hardly a day goes by without me telling myself that the sensible thing to do right now would be to convert all those equity funds into cash or something more stable than shares. Or at least some of it. Then I could set my 25% lump sum in stone. Okay, I might lose out on some growth, but at least I won’t lose out versus my projected lump sum. After I’ve collected, I can switch the remainder of the pension back into equities while I live off the sum that I’ve cashed – which will last me five years, I reckon, so I’m back to a “safe” investing horizon on the remaining funds.

As I write, I ask myself what’s stopping me doing so? I think a lot of it is that I’m frightened of change – I’ve not really altered the way I invest for over twenty years, and it’s served me very well so far. It ain’t broke, so why fix it? And I don’t really “need” that lump sum either. If the markets do collapse in the next 12 months, well, I can ride it out again. As a passive investor at heart, I’ve set my allocations, I’m following a strategy and therefore the best advice I can give myself is to “do nothing”. Stop worrying and go and do something more useful instead.

But this only gives rise to the next question: “If not now, when?” At what point am I going to relax and cash in some of my chips? I set a goal to cash that pension at 55 and I almost feel obliged to achieve it. If nothing else it might force me to look at other aspects of life that involve a bit more spending than saving because time is finite. Reaching pensionable age is a milestone that’s hard to ignore, much as you might want to tell yourself you’ve years and years left to gather the rosebuds. You haven’t.

Please forgive this “Woe is me” navel gazing. I know I’m lucky to have such problems. I can only justify submitting a post like this because I never knew that choosing to sell would be a hundred times harder than choosing to buy. It’s like in the same way that I found choosing to retire to be a lot harder (for me) than choosing to go back to work. And that was why i started to write this blog in the first place.

The Fearful Fifties

I chanced across a TV documentary last night about retirement entitled “Work ‘Til You Drop” which, unsurprisingly, piqued my interest. I’d admit, I’m pretty bored with my own views on the subject and often think I’m stuck in a privileged bubble where my biggest worry is protecting my wealth instead of accumulating more. I’m well aware that not everyone is in such a position and that within the FIRE community we’re all at least looking at the same hymn sheet if not actually singing from it.

The programme covered quite a bit of ground, I felt, and tried to give a positive spin on some alternatives to hanging up your boots and trying to live on the State pension. There was an old bloke still working in Asda at the rather incredible age of 92 – an outlier for the majority of human beings, I’d have thought, and not too relevant to the lives of most pensioners. The cynic in me thought that Asda probably role him out as their flag waver every time they’re asked about their policy toward employing older workers while conveniently not mentioning that he’s given the responsible job of collecting trolleys and stacking shelves. When I saw a similar clip of B&Q I did ask myself if this is the best we can do with the aged – checkout person or shelf-stacker?  

The programme showed two other notable alternatives – a female entrepreneur who’d started a cosmetic business at 65 and an unemployed hairdresser in her fifties who just couldn’t get back into the workplace and was living on £73 a week social security. My sympathy sat firmly with the latter – this, I felt, was an absolute reality for the majority of people. Yes, yes, yes, I know we’re all movers and shakers in the FIRE community, all self-starters and self-sufficient, but unemployment in your fifties without a means of income is a terrifying and almost hopeless prospect for most unskilled or semi-skilled people. Even for skilled people, losing your job in your fifties is a different world from experiencing the same in your forties. Anyone who isn’t worried about this prospect is either in denial that it will happen to them or is luxuriating in the knowledge that they’re financially cushioned if it does.

Clearly the best course is to prepare for the troublesome employment years that begin at fifty and ends, potentially, when the State pension kicks in. Writing that, it strikes me that not a lot is written on that subject when it’s such a scary reality for so many people. Thinking about it, it happened to both my parents, but they both had workplace pensions that they were able to draw upon at 60, and thus only had about five years to cover with the “pin money” jobs they managed to find. (Plus they picked up their state pensions many years before today’s trigger point of 67 years.) I can only guess that most people have to assume that somehow they’ll survive if they lose their job in their fifties and can’t find another – worse things happen at sea and life goes on. Yes, it does and it does, but is that the best you can hope for?

I used to worry about losing my job in my fifties quite a bit, and it was quite a driver behind the saving and investing that I did in my thirties and forties. In my line of work – sales and marketing – being over fifty isn’t a massive selling point and I was well aware of it. When it actually happened to me I was financially prepared for it, and I cannot imagine the horror of the situation if I’d not been.

I also thought I’d be prepared in other ways to get back into the workplace – my skills, experience, attitude and application – but it just wasn’t that easy, which is why I sympathised with the unemployed hairdresser in the programme more than the entrepreneur. In my experience, behind many entrepreneurs there often sits a boatload of cash that can cushion the early days and be put at risk. I certainly thought of risking some of my retirement pot to start out on my own, but ye Gods, it seemed a much bigger risk in reality than it did when it sat in my dreams! In the end, I never had to test myself on whether or not I really did have that entrepreneurial streak that I always imagined was there and, on the whole, I think I’m quite glad about that.

I really hope, as the programme inferred, that the workplace is changing when it comes to employing more elderly people and, if I’m honest, I hope I continue to be one of them! One thing does seem to be certain though, there’s going to be plenty of applicants for those jobs if and when they come around.

When It Comes to the Numbers

Here I am, fifty four years on the planet, over fifteen of them studying, over thirty of them working in corporate business and I still can’t work out my tax code’s relation to my pay. I can get it close but, for some reason, when I apply my code to my gross salary, I can’t get it exactly match what I see as my net pay in my pay packet. This drives me rather bonkers. Is it me or is it them, the tax boffins, and how we calculate percentages? Or is it because they’ve made it so complicated to someone who, I admit, has been intimidated by numbers since Primary Six in school, when I was aged about ten years old, and a male teacher went ballistic at me for failing to grasp the “simple” arithmetic involved with fractions?

I mean, if my gross salary is £50,000 and my tax code is 1,300L (say), then – simply – I should be taxed on £37,000, shouldn’t I? As I understand it, my tax code of 1,300 equates to a sum of £13,000 that I can earn tax free. Ah, but I take a company car allowance, plus the company private health scheme. And I also contribute to a company pension. Oh, and I shouldn’t forget my National Insurance contribution either.

Of course, the pension contribution is on the positive side because that’s a taxable allowance. I get tax relief on that. Just don’t ask me where.

I was chatting to one of the finance guys at work the other day on company cars – because I was thinking of taking one with all my petrol paid – and was trying to work out what was the better deal in my wage packet, after tax. As stated above, I currently use my own car and am paid an allowance (taxable) for that.

“Oh by the way”, he said, “Are you claiming the difference between your business mileage contribution paid by the company (13p a mile) and what the taxman allows?”

“What?” I asked, perplexed.

“HMRC allows you 45p a mile for miles done on company business. So the difference, 32p, multiplied by your annual mileage – you’ll get tax relief on that.”

Really? That’s nice of the taxman to tell me, which he didn’t. This is similar to pension relief if you are a higher rate taxpayer. You’re entitled to it, but the government isn’t shouting about it. For years I failed to claim that additional twenty percent through simple ignorance. It literally cost me thousands and today, according to my mate who’s an IFA, this nets the government millions. There are plenty of people making the same mistake as I did, not claiming their full tax relief on their pension contributions. Although it’s not a “mistake” as such, just a massive and costly gap in your knowledge

What else am I missing here? What other gaps do I have? What about charity donations? I donate to charities by direct debit every month and suspect I might be due tax relief on this, but I’ve never bothered to look into it. So I can add “laziness” to “ignorance”. At least I suppose this is a “known unknown”, but what about my “unknown unknowns”!

Never look a gift horse in the mouth though, unless it’s the taxman giving you the horse – in that case, check the numbers! I am good at submitting monthly expenses backed by receipts, so my annual mileage was easy to calculate. Next I logged on to my self-assessment account, made the relevant entry (not easy to find) and entered the cost differential on my calculated business mileage. Nice one!

To be fair to HMRC, the tax rebate was in my bank account less than a week later, along with the e-mail telling me my tax code had changed as a result of my efforts. Which leads me back to the start of this blog post – my code had changed, so what would my next net wage packet be?

Needless to say, until it turns up, I’ve nothing but a rough idea, give or take fifty quid. Which, I tell myself for the thousandth time, just isn’t good enough! And, thinking about it, that was what the teacher in Primary Six used to shout at me when I couldn’t calculate four fifths of eighty three. From today’s perspective, I think I blame him more than I blame the taxman when it comes to the numbers.


In God We Trust

What do estate agents, used car salesmen and fund managers have in common? Quite a lot, clearly, and none of it complimentary, but the thing that strikes me is their tendency to advertise and stick a picture of themselves onto it as if this is supposed to make us trust them more. We’re always treated to a picture of Neil Woodford in any article talking about him, even those recent ones where he’s trying to explain why his funds are going down the toilet. No doubt we could attach a speech balloon to all of them, stating “I’m in for the long term.”

If there’s one thing that’s lacking in the financial industry it’s this key word, “Trust”. Which is ironic, given the whole monetary system totally relies on it. As it says on the dollar bill “In God We Trust”, in lieu of anybody more credible being available. Even before 2008 there were very few of us who innocently handed over money to the big investment companies safe in the knowledge that they’d do their best with them instead of gambling them in the giant casino that the stock market so obviously is. But what choice do we have? Hand them to real estate agents instead? Which, actually, was exactly what millions of us did, and still do, as a preferred alternative.

I often wonder what people who aren’t interested in finance – i.e 99% of the population – think of the financial industry? Before I decided to take charge of my own investments, I really thought that stocks and shares was rocket science (and bear in mind I studied economics for a year at University). I still think that there’s a desperate desire to make out that investing IS actually rocket science, and that your average hedge fund manager is considerably more intelligent than you, despite mountains of evidence to the contrary. Even within the independent financial blogs I read, I sometimes have a sense that there is an underlying hope (need, almost) that, actually, investing is quite a complex system with underlying patterns and trends that can be analysed, understood and, if you have the right balance of smarts, predicted. What a joke. Who can predict the future of anything? It’s a massive gambling system, pure and simple, with as many wideboys, touts, crooks and charlatans involved as you’d find at your average night at the dogs. If not more.

So what can you do, given this situation? I invest a very small amount of my own cash into Zopa in the hope that they’d be an alternative to the financial establishment, but do I trust them with the cash? Well, no more than the next institution I don’t suppose, and possibly even less. I mean, who are they lending my money to? I have no idea what their lending criteria is, how it is tracked, monitored, measured, none of it. I have to let them get on with it and hope for the best, but at least I went into this relationship with my eyes open. If I get no return on my money, or even a loss on it, I see it as a conscious choice I made. I did it because I wanted to encourage a challenger to the status quo of the financial system and, if they buggered it up, there was at least some awareness that this could happen. This isn’t  “trust”, but it isn’t doubting suspicion either.

Needless to say, I have very few managed funds due to my belief that I can’t really trust a guy with a bonus riding on his performance to manage my money with my best intentions at heart. In this context, I kind of trust computers and index funds more, I suppose, a supposition which, when I think hard about it, should send me gibbering into the street. Trust computers? Am I serious? So nix that too on the Trust Index.

I do trust my mattress when I’m lying on top of it, but the real fact of inflation makes this option unattractive as somewhere to put my savings. Government bonds seem similar at the moment although a cynic like myself should also condemn this option as farcical. Trust the government?

It seems that I’m left with one option when it comes to money: trust myself. If I accept that, then when I’m doling my cash out to Fidelity, Zopa, Alliance Trust, Standard Life, whoever, well, I warned myself, didn’t I? I took on the responsibility of making a decision and had to trust myself that I’d done enough learning to make the call. At the very least, there’s a good measure of satisfaction in being able to say that, whatever way the ball bounces.


Old Age Doesn’t Come Itself

I read the other week that a baby born in Britain today can expect to live beyond 81 years of age. In Japan, it’s 83 and scientists there have proposed that people between the age of 65 and 75 should no longer be considered “elderly”.

Good news, I suppose, although the cynic in me sees government think tanks all over this wondering how they can use it to push the state pension out to 75. It wouldn’t surprise me in the least though to think that in fifty years’ time, it’ll have reached 90 – if it exists at all at that point.

All the more reason to plan for a long retirement and, as I’ve mentioned before, there’s not a day goes by where I don’t say a wee prayer of thanks to whatever inspired me to start really saving for the future when I turned thirty and, even more, signing up to a Defined Benefit pension when I started work at 23 when I didn’t even understand what that was.

As ever these days, I’ve been doing some work on my pension projections and wondering (a) how long I should plan for and (b) how I should phase income as the years progress. It’s a bit disconcerting doing this, as one of the first questions to be faced is your lifespan – should I plan to see 85, or 90? Do I even want to consider the quality of life at 95, when I might have to retitle my blog Death, Death, Death, Death? Then the second question is what kind of life will I be leading if I do see 85, or 90, or longer?

One rule of thumb I thought about was that if everyone defines “old age” as beginning twenty years from your current age, then I should want to maintain my current lifestyle, and expenditure, until I’m 73. At least for this snapshot projection – I realise I can’t extend that rule indefinitely as the years pass by. It seems to me, however, that there’s just no way I’ll be spending as much at age 73 as I do now.

But, as I project forward through the years, wouldn’t a sensible thing to do with the saving on the mortgage be to bank it instead for health provision? We have friends in their late sixties who have top notch medical insurance (and boy have they been thankful for it recently, following a couple of serious scares and operations.) Their joint policy costs them a cool thousand pounds a month. Okay, that’s maybe top end, but I mentioned recently that some root canal work I had last year cost me the best part of a grand. If there’s one thing I’d like to take into old age, apart from my marbles, it’s my teeth. My mate is currently getting a tooth implant and is not looking for any change out of almost two thousand pounds. He feels it’s worth it though and I suspect he might be right. I think if there’s one thing I asked my parents that they really wish they didn’t have in old age the answer would be “Dentures”.

Health is a touchy subject, especially in Britain. The press is always harping on about the state of the NHS and, through personal connections including my 77 year old mum, I can attest to most of what is written. The social care side of our current system must be breathtakingly expensive – my mum receives three healthcare worker visits per day, seven days per week. What’s the cost of that?

Then I remember my dad, who suffered from Parkinson’s and was on 22 tablets a day for the illness and its complications. Not to mention the physiotherapy, the visits to hospital and GP, the call-outs for the community nurse. All this was paid for by the state. The only thing that wasn’t was my mum, acting as his carer at the time, although I think even she eventually applied and received an allowance for that too.

The costs of funding the NHS are inconceivable at the moment and downright terrifying when you think of the future. You just have to visit a general hospital to understand the challenges we face. Once you’ve negotiated your way past the smokers in the carpark, start counting – how many people do you see that are overweight? (I generally don’t count my reflection in the window.) Is it two out of three? How many are over sixty? Is it eight out of ten? More than that? The system we have just cannot cope, and you can only feel that it isn’t going to get better without a radical cultural change toward what the NHS is supposed to provide, regardless of how much money is thrown at it. How long will “cultural change” take? Two or three decades, maybe, if we start today. In the meantime, if you can, perhaps you better start putting some money aside to look after yourself for the times when the NHS can’t or wont.

“Old age is not for wimps”, someone once said, and the scary thing is that for the many of us who see it, that could be an understatement. Maybe I’m being negative, but of course, pondering my doddering old age in the future doesn’t get me down – as it’s simply not going to happen to me, is it? I’m going to be that sky-diving, bungee-jumping pensioner you read about who’s about to head off to trek across the Andes. As are you.

But what’s the contingency, and who’s going to look after us,  if we’re not?

Going, going….


A podcast from the Mad Fientist about a Safe Withdrawal Rate got me thinking this week. Not so much about the maths behind it, or whether it is likely to work or not for me over the next thirty years, but thinking more about me over those thirty years instead.

You can’t take it with you, and as I head toward turning fifty four this year I increasingly wonder about how I will fare over the next thirty years? Because, in all probability, that’s about what I have left on this mortal coil.

We don’t do death very well in the Western world, so it’s quite difficult to focus on your own demise. Actually, I’ve read that it’s virtually impossible to imagine your own death in any meaningful way. Your mind can’t grasp it, and in a way the “4% rule” is a good example of this. If I read it right, and to make the maths simple, let’s say you have a million quid in a pension pot. If I withdraw £40k a year from that pot then, thirty years down the line, that million quid (allowing for inflation) will still be sitting there, pretty much untouched. It might even have grown. It might have dwindled slightly. Who knows for sure? But what I do know is that I doubt I’d have much need of a million quid at that age!

My feelings about this intensified at the end of the podcast where the interviewee, Michael Kitces, talks about “Lifestyle Creep” and lifestyle in general. He argues quite forcefully that you shouldn’t sweat the small stuff and, if you have your financial priorities right, then you’ve no need to worry about buying that Starbucks Mucho Latte or Big Mac (Large) for lunch, if that’s what you want. That sort of purchase just doesn’t matter in comparison to maxing out your mortgage with the first property you buy and then servicing the debt from your twenties onward. If you do that then you might not be able to afford a McDonalds for lunch in future.

Meanwhile, once you start living in a bigger house, buying a new car every three years, taking two or more holidays, hiring help for the gardening or cleaning and so on, it becomes very, very difficult to subsequently give those things up.

I can affirm the reality of this. Dispassionately I know I should downsize my property at some point for a multitude of good and financially advantageous reasons but, you know, I like the house I have, with spare rooms for guests or just to lounge around in. I like the garden, the spacious garage, the shed, the location and so on. Could I easily give them up? (Emphasis on the “easily”.)

The same could be said for cars. In my career, I’ve always had company cars that changed every two or three years. I’d really like to continue on with that, but does that really make sense? Financially, buying a new car every three years is jaw-droppingly dumb, but emotionally?

None of this internal debate matters if you’re loaded and are swimming in money through retirement, but it’s not hazarding a guess to think that most people will not be in that situation. If you ask me, it’s the middle classes that will be in for potentially the biggest shock. Talking to friends who work as pension advisors a 30k a year income is a desirable retirement income for many couples. This sits, however, very uneasily with the most popular middle class goal of retiring at 55. If I am calculating it correctly, and not allowing for any nifty tax manipulation, you’d need a £750k pot for that income on the 4% rule.

The Safe Withdrawal Rate is therefore quite a hard task master, especially if the point of it is to protect your capital and income generation.  But surely you have to ask yourself, as you head into your dotage, how much do you need?

For me, looking at retirement, this is one of the biggest puzzles I have – how much am I going to need to service my definition of “a comfortable retirement”? When I had my year out, I was quite amazed by how little I spent on a week to week basis versus what I used to spend when I was working. I feel that would almost certainly continue as I head into my sixties and beyond. I’m just not going to need as much money in my sixties as I did in my fifties, and I think that same rule will apply even more to my seventies and eighties (if I get there!) As each year goes by, the chances are that my annual budget will be shrinking.

(There’s a potentially big caveat here when it comes to health, because who knows how much you want to spend on that as you grow older?)

Assuming I stay relatively healthy though, the 4% rule seems either to assume that you’re going to live forever or that one of your goals in life is actually a goal for death, through leaving an inheritance. I can see the sense in it for early retirement, but traditional retirement at 65? Not so much


Spanish (and other) Practices

When I was in holiday in Krakow, we were with another couple, one Spanish, one Polish, who met and married in London. They’re quite far off retirement and were talking about how hard, financially, it is for them to live and work in the city. Saving for retirement is not top of their list of priorities.

“I envy my parents in Spain”, my mate stated, as we sat in some cellar bar. “They are on the state pension. Both were teachers. They retired in their early sixties and receive 1,800 euros a month each.”

I checked the beer I was drinking to see if the alcohol level was so high that it was affecting my hearing. Or was it affecting my arithmetic, because I was calculating that at around 22 grand a year in Sterling, at current exchange rates. Net. Each. That couldn’t be right.

“You mean 1,800 euros between them, surely”, I said, before adding “which will soon stop once you aren’t getting £8 billion in subsidy every year from the UK!” (well, I thought it was funny.)

“No, no, no. That is 1,800 euros a month. EACH. It is a good arrangement.”

I was trying to get my head around this when his wife joined in. “It’s a good arrangement when you consider the average salary in Poland is 350 euros a month. So their pension is almost six times what the average Polish worker earns.”

“That can’t be right either”, I said. “That must be 350 euros a week”.

“No, no”, she tutted. “It is 350 euros a month.”

I decided, as in all pub arguments, to go into Google for a quick search to see who was pulling my leg. Seemingly neither of them were. The state pension level in Spain is over twenty grand a year. Greece isn’t far behind, and Sweden is actually ahead of this amount.

Average monthly salary is a bit more difficult, but the Wikipedia page I checked states the average monthly salary in Poland to be around 750 euros a month – but that’s in the “enterprise” sector. My Spanish friend had actually challenged his wife’s number at the time, and she had replied that her number was correct, if you took into account all wages, not just cities like Krakow. (There is quite a bit of evident wealth in Krakow, which was why I was also struggling to believe her assertion.) Either way, however, it’s a pretty low number.

Now, this blog post could go off in a variety of ways, but the way it’s not going is any further in the direction of Brexit. It was quite a shock to me, however, to have two friends whose families are experiencing two totally different financial worlds within the European Union. Obviously I’m “aware” that different countries within Europe have different standards of living, but talking to people who have a real, live experience of it is a different thing entirely. It must throw up some challenges – for starters, you can guess which half of the couple is sending money home to their parents every month, and which one isn’t.

It’s all very complicated, so much so that I’m not even sure what the point of this blog entry is. Originally I was going to muse over the size of the British state pension and whether or not it’s enough in comparison to Spain’s, but that’s a pretty puerile exercise. And anyway,  I don’t have any of the other factors that might play a part In the argument – I’ve no idea what the Spanish tax system is, nor welfare system, nor National Insurance system (if they have one). As for comparing the average wage in Poland with that of the UK, really, what can you say?

Writing this post, however, has brought home to me just how astonishingly rich Britain is in the grand scheme of things. Okay, that wealth isn’t distributed fairly throughout the country and we could do a lot better at spreading it around, but that’s a massive debate that I hardly even have the energy to consider. Spread it around where, for a start? In Britain? Poland? Africa? It reminds me of the Mr Money Moustache post about how lucky we are to live the way we do and why we should stop and think about that sometimes. It might help put our “retirement dreams” into perspective.




Holiday in Siberia

Isn’t it a shame that now we have an opportunity to travel almost anywhere in the world, increasingly when we get there it’s just the same world as the one we left? I’m just back from a four day break in Krakow which, as far as European cities go, I suspected might be a bit different from the usual modern metropolitan experience that sees a McDonalds and an Starbucks on every corner. Please note that I’m not saying that I “hoped” Krakow was a bit different from every other city across the world in that respect. I like my home comforts, and sometimes that includes a good dose of globally branded outlets and hotels. But I did hope that Poland had retained an old world charm that corporations hadn’t fully snuffed out yet. Well, “yes and no” was the answer.

In terms of differences, I liked using the Zloty and my “cabbage rolls stuffed with rice and mince in a tomato sauce” was more satisfying in a number of ways than a Big Mac, although I knew this wouldn’t be the case every day. The centre of town was picturesque for sure, but it was bordered by McDonalds, Costa Coffees, United Colours of Benetton and the like. The underground bar and cafe scene was a bit different, but I suppressed a groan at hearing Coldplay playing over the speakers in the Black Gallery and what, exactly, were Polish pubs doing selling Grolsch and Heineken anyway? Their own beer is far superior. 

I liked the old Jewish Quarter in the city where, thankfully, Starbucks hadn’t arrived. Yet. But on the other hand the old coffeeshop/bookshop concepts felt just like that: concepts. Coldplay were absent, but only because they hadn’t ousted Dylan.

What has this got to do with early retirement I hear you ask? Well, at the top of the list of a lot of early retirees is the desire to travel and see a bit more of the world. To be fair, I’m noticing a couple of bloggers are acknowledging that this ain’t necessarily so, and that whatever it is they’re looking for might not be found on a Goan beach, the Australian outback or upon an old Patagonian Express. These travellers tend to be more the “long haulers” in terms of both time and distance, however, and I’m thinking more about those that are planning fewer, shorter breaks nearer to home. That weekend in Gothenburg or Pisa perhaps, taken on the ultra cheap Easyjet and Ryanair tickets on a Tuesday afternoon and maybe returning early Saturday morning on a half empty flight? Snaffling up some cheap hotel deals when the weekenders are missing and the businessmen are in the Hiltons and Marriotts?

Ha! Easyjet and Ryanair don’t do half empty flights, or not for long anyway. Bums on seats is what they’re about and they’d rather not fly at all as put up with three quarter full ‘planes. The probability is that you’ll be going City breaks on a full flight or you won’t be going at all.

Meanwhile the hotels are at a similar game. Occupancy is what they want and they’ll drop their drawers on price to get it. I booked my hotel through about four months ago and our friends, booking two weeks ago, got in for almost half the price we paid and were upgraded to a suite! Of course they risked not getting in at all, but luck and the algorithms were on their side. Either way the hotel is doing what it has to do: sell rooms. That’s ALL their rooms, every last one, and the internet helps shift them on a global scale. We think sites like Trivago are there to benefit us, and that’s true, but I’m beginning to suspect they benefit the hotels more. York has about three mid-budget hotels being built as I write, so the projected demand is clearly there. And increasingly full ‘planes arrive from across Europe to fill them up.

If Krakow is anything to go by, the future of city breaks in Europe is going to guarantee one thing: everywhere is going to be mobbed full of fifty and sixty something tourists. (And, of course, millennials). That includes your continental breakfast where you’ll be queuing with ten other grey-heads for a coffee out of an increasingly exhausted machine.

Krakow was unbelievably busy with tourists, but I travelled via Edinburgh which made the former town look like a dust bowl. I know it’s The Fringe, but ye Gods, doesn’t it portend badly when millions flock to the city desperate to find some “experience” that they hope will brighten their Tuesday? The Fringe is shit, take it from me. Not that I’ve ever been, by the way, I just find the whole concept to be shit. If I saw one “comedy” poster with a smart arse quip about Trump, I saw ten. Every comic sported a beard, including the women, and I wondered why they bother advertising with a big picture of themselves? Is their appearance one of their stronger jokes?

As for the theatre types, they are worse than corporates. They strut about Edinburgh wearing their backstage passes around their necks like they’re something to be proud of while the newly under-unemployed arts degree graduates wear “Road Crew” T shirts with the same smug expression I sported at their age when I wore a “Solidarnosc” one. But at least I wasn’t yapping down an iphone as I strutted the streets. Honestly, I couldn’t get out the place fast enough.

You might not have guessed it, but I did enjoy my weekend break. This, however, was because I felt I was learning lessons and building my mental retirement database, helping to shape my post-work dreams into more focus. Frequent city breaks abroad, I feel, have dropped down the priority list and I’m thinking more about farther flung and more isolated places. I’m going to be heading far from the madd(en)ing crowd, where the streets really have no name and the biggest brands are those that are burnt on a cow’s arse.

Siberia, anyone?