There’s an interesting discussion over at Finimus, who characterises the tl;dr as
So that’s my verdict after four years of early retirement: boring.
and over at Monevator TA fears the dying of the FI/RE light.
Every time one of these FIRE-ees announces their return to work, I think of another soldier falling to cannon-fire amid the thinning ranks of a Napoleonic line.
I am one of the old guard, I have passed the FI/RE event horizon, and it seems the chimera of reappearance from RE of some folk caused a disturbance in the Force. It’s time to start rolling the cannons to the front line and fight for the noble cause. For the record:
I am not working a few hours a week because:
FI/RE didn’t work out and I am skint
The step-changes at the end, while clear, aren’t important, they are one-off windfalls. You really shouldn’t charge around shorting stocks in a pandemic, Do Not Sell but if you are going to sell, double down and short. Still, if Monevator can ‘fess up to a bit of non-passive jiggery-pokery, well, so can I. The first lift in 2019 is not investing win, it was a dialled down PCLS and not all of the lift in 2020 was shorting – a lot was simply the market roaring back. We should also remember that this is denominated in Great British Pounds, and Brexit has made them more British and less Great. You need more of ’em to represent a given value. But what is clear, in a more understated way, is the trend of decline has been arrested and reversed, since mid-2019.
of valuations and safe withdrawal rates
When I left work I did not have enough ISA+SIPP capital to match the safe withdrawal rate. That was okay strategically because I had a DB pension to come later/ From 2012 to 2014 the market crawling from the wreckage of the GFC beat out what was a too high spending rate, but the fall showed up in 2014, as the irresistible force of spending overwhelmed the immovable object of ROI. I had to fall back, fall back, fall back and hope the engines restart in the low-water mark by the time I started to draw the pension.
It’s not supposed to, and perhaps it doesn’t if you accrue over many market cycles. I didn’t. Imagine the trajectory of 2015-2018 imposed upon the start. You’re never allowed to say that valuation matters to the passivista crew, but I would say that trajectory shows just that. I started out at low valuations into the GFC. I was able to make a SWR of 5% work – that’s what people said was OK back in the day. Don’t even think about that now. 3% is probably racy on current valuations.
The tilt upwards is because I have a pension now, ie a regular income, which means I am not drawing down capital. And: Covid. You can’t spend as much as you might otherwise(IFS). The ECB is even more emphatic than the IFS on that. Obviously, you must have the good fortune to be on the upper leg of the K shaped recovery. I have that good fortune. So will most reading this. Because:
It’s not pretty, and it will seed shit further down the line. Even the Torygraph, hardly a bastion of bleeding-heart liberalism fulminated thusly earlier on this year
‘Some people are sitting there with piles of cash in the bank and others will be wondering how they are going to buy food’
nor because I am bored
This one’s more nuanced. I have less opportunity to do the things I want to do this year. That does reduce the opportunity cost of working a bit. But I have considered this conundrum earlier, in 2016. I am still true to my values, which I will pinch from that post:
- I want to earn through doing something that is congenial √
- and interesting√
- has some originality or novelty√
- creative in some way
- with decent people who aren’t dickheads in general√
- that helps people or causes that I know or care about personally √-ish
- that is specifically something I bring to the party from skills, temperament or talent if any (tough – this is not a field of engineering I have prior experience of, though I have seen it over a 30-year career)
- I want to spend less than a day a week on this, √ but I favour that being in all-or-nothing chunks with long gaps in between√. Part of this is that I am limited by the tax system, I don’t want to work for the government 20-40% of my time. I have done my share of that over the last 30 years.
- I don’t what to sell my time for money. Obviously doing something creative takes time, but I don’t want it in the form of billable hours, more billable results ×
- I don’t want to ever see performance management. An engineer’s work speaks for itself, should that be the field I use √
- I don’t want regular or ongoing time commitments. Hit and run jobs are what I want, get in, do, then get out ×
- I don’t want to carry a smartphone all the time √
- I am happy with no fix no fee and no guarantee of regular work – but if you aren’t there regularly for me there’s no guarantee I will be there for you 😉 and yes, that is sort of at odds with 9 ×
- I prefer to sell Mind, not Stuff. Stuff gives warehousing and cashflow problems, and regulation is a bitch. It’s not hard and fast though. √
- I do not want to be derivative or routine. I don’t want to be a replaceable work unit. No chuntering out ebooks or matched betting which seem common fave side hustles in the PF scene. I am rich enough not to have to do this, and old enough to know my time is limited. √
- no franchising, if I am not original enough to make a decent return then I will just walk away √
A √ means I met that condition, a × means I didn’t. I met 11 out of 16 criteria, and failed 3 and 2 neutral/uncertain. 4 was tough. I defined creative in the artistic line, but I do originate. I start out with a blank computer screen and I end up with something that real people can make a real thing, which hopefully matches up with other real stuff and does what is required of it.
The initial engagement did satisfy 11, it was a specific quote for a specific job. I could see that there is a dynamic tension between fire and forget and some sort of dependability. The timescale matches the strategic Brexit Covid 19 hazard (I would say two years before the rubble stops bouncing at a guess), enough for them to get the product to market and then decide where to go.
So you know what? Reader, I jumped over myself. They are decent guys and I’m not going to stiff good people for the sake of principles decided against the backdrop of a toxic working environment. See Walt Whitman. Of course the project might all go titsup at any point in between, well, OK, time to put that networth lift to work, eh? It’s one of the tragedies of life – when you are young and keen, reliability of income is important, else you have to live in expensive hellholes like London1 with lots of employers in the hope of being able to get another job if you get iced, because otherwise really Bad Shit happens in your life. When you are grizzled of fur, if it all goes wrong then well, there’s always the beach. You’re much more insulated from the jobs market because your human capital is all out. But there’s a price for that peace – you’re a working lifetime closer to death.
If I could take some of that spare wedge and go back in time to the early 1980s, when I graduated into Thatcher Recession#1 and my unemployed younger self didn’t borrow the money to go to the US and see my favourite lady singer in concert at the high-water mark of her career, and reach over a furred claw with a wad of fifty pound notes and go
I am the ghost of your distant future. Take this gift from your older self and fly to the US, enjoy and chase her tour across America, stay in decent hotels and not the cheap sticky motels you will do in a decade’s time. But my greatest gift to you, dear younger self, is for God’s sake don’t buy a house in the Lawson boom. Mark my words, because on the current track buying that overpriced house in less than a decade you will perpetrate the single greatest personal finance mistake of your life.
then the grizzled ermine will fade from sight, leaving a sprinkling of dust from 2020, a grey whisker and a pile of banknotes. It is not to be.
Not borrowing that money for the wasting asset of an experience was a first symbolic step of my younger self on the steps to fiscal probity, but it was an anti-YOLO moment. But if you haven’t got a job, you shouldn’t be borrowing money for entertainment. Now if I’d shown the same financial wisdom with overpriced housing a decade later…
The key to successful early retirement is above all to be curious, to pursue novelty, and learn. Still now, hardly a day goes by where I haven’t learned something new, and part of the trick there is to be insanely curious. They’ve pointed a multimedia firehose at your inquisitive snout, so you might as well use ’em:
Pantalaimon is a CGI mustelid, in His Dark Materials but the movement and curiosity is true to form2 😉
Be protean. You change over time, and life changes. This rather dense study, pithily summarised by the British Psychology Association
Matthew Harris and his colleagues at the University of Edinburgh failed to find a significant correlation between their participants’ personality scores at age 14 and their scores on the same items at the age of 77. “Personality in older age may be quite different from personality in childhood,” they said.
I think the BPA over-egged it for the headline, when I read the paper I did not get this overwhelming impression that you are totally different at 77 than 14. My valedictory primary school report said ‘
lone wolf. Doesn’t tolerate fools gladly.’ My mother got the headmaster to take out the lone wolf comment, because that looks bad, I’d be marked down for not being a team player. I never was a team player, it’s overrated – teams are for sheep IMO. I was an introvert then and I still am. As for fools, four decades of research has never shown me why they should be tolerated rather than run out of town at the earliest opportunity.
This year is different, because: Covid 19
I changed my policy on not having a TV with the start of the pandemic in March, because while the Web is OK for the news, we were spending more time at home, and lean-back viewing sucks on a computer.
It was good to see mustelids on the screen, and one of the things I learned today was how to break the encryption on my 10-year old Foxsat-HDR freesat box so I can copy HD recordings elsewhere. I am intrigued that eight years after I wrote that post they are still showing antique and auction programmes that grated on people then.
It’s quite scary installing a modern TV, I seem to have skipped three generations, jumping from analogue SD CRT to UHD whatever, and it’s really hard to stop it spying on you. I don’t want a flippin open microphone sending anything I say to Amazon to save me pressing a few buttons. Didn’t Orwell have something to say about that a while back? In 1984 at least the Ministry of Truth paid for and installed the technology. I will favour the Humax broadcast recorder for content, because broadcast TV is still anonymous, so it stops the bleeders3 spying and tracking you.
So I started work not for the same reasons as Finimus, though there is some overlap. Covid trashed a fair amount of what I was going to do this year too. I had plans of more hillwalking, more stones, messing about with amateur radio outside, plus taking some pictures and doing more sound recording – well, I did get the opportunity to do some recording with the reduction in aircraft noise, but only in the local area.
Am I Finimus, without his honesty?
“Do I contradict myself? Very well, then I contradict myself. I am large. I contain multitudes.”
I’ve spent an inordinate amount of time on here snarling4 that work ≠ life. Was I wrong, guilty as charged 😉
Methinks the ermine doth protest too much…
Finimus still has kids at home, and it hasn’t escaped my observation that there is a hell of a lot of drudgery associated with children – so I could see work being attractive in that situation. But he’s clearly more driven than I ever was. He was a much higher flier. Exceptional brilliance is some things is not always conducive to all-round balance in people, and it can make it tough to turn away from that exceptionalism.
Many in the FI movement have been taught that success is associated with projecting power in the world, and oddly enough Pantalaimon showed this to me. Apparently they used the dining hall in New Hall, Oxford for the TV series.
Look at the design of the dining hall. Unless you’ve been to a public school, or Oxbridge, have you ever eaten in a place like that? It is designed to maximally expose people to each other, to build the networks of power and privilege, and to inculcate that this is an ancient institution, you are part of the way things have been and will be. Peter Turchin has a word about that later.
The FI movement has an awful lot of really driven people
It’s only after leaving work that this has become apparent, and I think the nature of the FI/RE movement has changed over the ten years I have been blogging. In the early days, through the global financial crash of 2007 to 2009, there were more civilians in the movement. Now there are more people who are really driven, they have always been taught to be successful, and they are often part of the elites of the country – people who have gone to Oxbridge. They are not my tribe, and in Finimus’ post this highlighted this for me:
I missed the buzz
Probably hardest to admit: I know quite a few seriously rich and powerful people (I went to the sort of university where that’s inevitable). Everyone else was doing more important things than me, which left me feeling pretty inadequate. I mean every time I hear one of them interviewed on the Today programme, I can’t help but think: FFS!
I don’t know any rich and powerful people. I can’t even think of anybody that I went to university with who I have seen on the telly, featured on the Web on a newspaper article. Before you quip that I clearly did sociology at a redbrick poly, I went to Imperial college and did Physics, and then a postgraduate degree in electronics at Southampton5.
The difference is cultural – the difference can be seen in the style of the Imperial alumni magazine and Cambridge’s CAM is clear, and Oxford’s6 alumnus magazine introduction lets you have it straight between the eyes:
Our alumni are amongst the most influential and well-known leaders and thinkers, teachers and researchers worldwide. You can maintain your links with the department, and other undergraduate and graduate alumni, through our programme of publications, events and networks.
Compared to that, Imperial’s mag lacks chest-beating about the thickness of the rind on their Big Cheeses. Oxford’s mag is about who you are, and the power you wield, not what you do… CAM is sort of in between, though more towards Oxford’s style.
According to rad reads H/T Monevator you’ve only got about two hours of decent knowledge work in you every day.
Indeed, looking back on my career, I did my best work in short, fast and furious bursts and coasted a lot of the rest of the time. Particularly after the WWW became a thing 😉
That would imply doing a few hours a week of knowledge work is a win-win. It’s a capacity I don’t particularly use, being an Ermine of mediocrity rather than an elite Big Cheese, so I may as well sell it. I can do better than when working full-time, because I can sell them just the good couple of hours, and the rest of the time I can deepen and broaden my mind.
Or get out into the countryside when it’s allowed and do the modest physical exercise of walking, which curiously enough also helps thinking in some bizarre crosstalk. That sort of thing tends to be frowned on by The Man if it’s done on his time…
Hari Seldon Peter Turchin. Psychohistory Cliodynamics foretells ten years of darkness, ere the citadel falls into the sea.
It’s too late, we are almost guaranteed five hellish years, and likely a decade or more.
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
The bear case always sounds smarter – it’s interesting that of the things I was fearful 10 years ago only two came to pass.
Some part of me still sees an incoming crapstorm, as the West surrenders its economic and intellectual fire to the East
tick. See Donald Trump, Brexit, Huawei, South China Sea…. The straws in the wind have become a hurricane
The dynamics of Turchin’s argument about elite overproduction does ring true. And they ring true across the FI/RE scene. 10 years ago it was about cutting costs. Lean FIRE was a thing, and it was people I could relate to. Lean FIRE in the early days is the reason why as the Ermine piloted a damaged craft out of the GFC and switched off the power on leaving work in 2012 to avoid burning out, the networth graph did not pitch into the drink.
Whereas increasingly now, I would say now FI/RE is a bigger thing among the overproduced elites who are detecting that the bell tolls for them. How do you identify elites? Private schooling – they’re buying it, and usually attended it. Fat FIRE is a thing here – if you don’t have well over a million pounds you are nobody, you need enough to keep your entitled progeny in public schools7 and get them to Oxbridge, because you fear them going down the pecking order. Everybody’s all for upward mobility, right up until the point where its evil twin downward mobility rings their doorbell calling for their kids. It’s like Labour politicians’ tremendous dedication to non-selective comprehensive education, which disappears like summer rain when it comes to sending their kids to one of these bastions of meritocracy, because, well, their kids are special. Every parent thinks their kids are special. It’s the Dunning-Kruger effect writ large.
The hinterland problem
I grew up in a working class part of London. Children walked to school. Everything was more local, and the parents’ dead time to commuting was less, because people generally lived much closer to work, and work was more evenly spaced. When the factory whistle blew, they were off the clock. They could do something else with their time. Working from home just isn’t a thing for a machinist or an assembly line worker.
Specialization is for insects.
Heinlein, Time enough for love
People were more generalists, and they travelled less. They were poorer – the modern world is much richer in experiences and possibilities. We’ve achieved some of that by specialisation, but that comes at a cost. It seems higher for the driven people who aim high – the specialisation drains the hinterland, the stuff you do outside work. It’s not surprising that high-flyers have a hinterland8 problem – when something that consumes an awful lot of their energy and time goes away, what do they do then?
You need hinterland. I have interests and hobbies, as well as the usual occupations of retirees, travel to some extent and fine food. If you are hyper-driven, the transition to retirement can be tough. The thickness of your rind you cultivated over a working life doesn’t matter now you aren’t a Big Cheese any more. You feel the draught, and the loss of relevance. It is this that makes retirement hard for high-flyers – all their life they have worked for and achieved things, and this is reflected back to them from the outside world. They leave work and – well, they’re not used to investigating that which is unknown or unexplored about themselves. They didn’t have the time for unproductive frippery like that.
It’s well expressed in SHMD’s The Returned, as he retired from retirement. It didn’t work out for him.
I am not The Returned. Covid has shrunk the action space. One of the reasons I retired early because I failed to stick my snout out and scent the winds of change which were going to do for my career. I ain’t gonna be had the same way twice.
The networth chart trendline seems to imply those fears are overcooked, but I expect Brexit to be Very Bad for the UK economically. I’m not the only one, and with disaster capitalists in charge of Getting Brexit Done we are likely to go for the shit option out of a bad set of choices.
I’m not living proof that FI/RE doesn’t work or that RE is boring. Hopefully I got it all wrong, and unleashed from the dead hand of the EUSSR Britannia will soar, and all those mendacious promises written on the sides of buses will deliver. In that case, I will end up misallocating a few hours of my time a week for a little while. You can’t get everything right in life.
- How London has become a workhouse for the young, Telegraph, 2014 ↩
- I am chuffed that mustelids are getting a better press in fiction these days, after the character assassination of Wind in the Willows set the cause of the weasel family back for decades, as well as the British ruling classes’ penchant for feeling manly by shooting grouse which has been bad for stoats and drove the beautiful pine marten to the brink of extinction. There’s some case to be made that Pantalaimon’s neck is a little bit long and the eyes a little bit larger than Nature’s Mustela erminea. ↩
- This is how you can get a 43″ UHD TV for a few hundred quid. It’s a loss-leader, it’s your data exhaust that they want and will monetize. The aim is to choke that off at the knees. Broadcast, not catch-up, I don’t do subscriptions like Netflix and beware of anything using an app. The HDMI connection to the Humax stops the app ad serving, and Pi Hole is your friend otherwise – mine stops over half of data requests from my tablet, which I mainly use for checking the weather to avoid getting wet going for a walk. Presumably the mobile website is rammed with ads. ↩
- to save you the trouble, for example CalvinistWatch – Happiness is having a job, according to Civitas, What’s up with this Calvinist Work Is Good For You Thing? ↩
- I am surprised that Southampton is so weak now in its world university ranking in electronics, 35 years ago it was one of the premier places for that. But the world has got bigger in those three decades. Sic transit gloria mundi ↩
- I do not understand Oxford’s collegiate structure. Mrs Ermine went to Cambridge, and I think CAM is Cambridge-wide, but I was not able to detect a corresponding Oxford-wide magazine ↩
- in Britain we call schools you have to pay fees for public schools. I think the more logical Americans call them private schools, sometimes we also call them private schools, so you have to infer it from the context. We never call government-funded schools public schools, we sometimes call the State schools. Go figure. ↩
- in the that which is unknown or unexplored about someone sense of the term, not the Welsh TV series. ↩
50 thoughts on “early retirement isn’t boring. Brexit and Covid are”
I couldn’t endorse this move to doing a few hours a week more. I think it’s an excellent experiment, Covid or no Covid. I literally see no downside; I know you’ve always felt like even a bit of work is almost a state-change on the circuit board of your post-work lifestyle set-up but I disagree. It’s a few hours!
Anyway, even if it is a state-change I think it’s for the better. You won’t miss the few hours, and if you do it will add a bit of useful eustress. And multiply the pay for a few hours a week by 48 weeks, and then capitalise it at today’s annuity rates, and you’ll see how much *not* sacrificing these few, usefully deployed hours, is.
But you knew I’d say all that, right? 🙂
Anyway, looking forward to seeing how you get on. At least if it’s a failed experiment I can’t moan that you never tried now. 😉
Cheers for the links as always.
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Hmm, the result of a 30 year working life and nearly another third of it retired was that… the max correct work life balance is a few hours a week 😉 I’m no Tim Ferriss, so it’s never going to add up to much!
I’m intrigued – who is the “favourite lady singer” ?
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Hahaha – I’ve never ‘fessed up, and most folk even then considered her wet as hell, but I would suggest as someone who was in to Van Halen in the late 1970s she’s definitely not to your taste 😉
It was a totemic moment, because while it was something that I did really want to do, and could have raised the money on an Access card, my early twenty-something self could see that there was a tough downside. If I couldn’t have borrowed the money at all the choice would have been easier. Some of the choices you make early in your independent life set the tone for your style afterwards. If it had been a one-off, then my grizzled self would say that was an error. But if the debt would have cascaded across my personal finance life then I did the right thing, and passed the marshmallow test. Interest rates were quite high at the time. Observation of other people suggests that borrowing for things you should save up for easily gets out of control.
Credit is much more normalised now, YOLO and all that. I recall that time because it was my first conscious personal finance decision as a young adult to try and get a hold of things. That early 1980s Thatcher recession was very tough indeed, and drove general unemployment sky high. Starting out, of course, I had no perspective – adapting to what is without a past is the grace given to the young.
I take your point – that the issue you are raising is not really about the music.
Having said that, we are of a similar age and whilst I was pretty financially delinquent in my younger days I lived to tell the tale. Furthermore, I have always had a pretty eclectic taste in music – for example, I was into Anita Baker too! So go on – fess up!!
1. “in Britain we call schools …”: in England. In Scotland, at least in my youth, a school owned by the County was a “public school”, a school that wasn’t was a “private school”. So there!
2. “New Hall Oxford’s dining hall”: utterly decadent – the buggers have chairs rather than benches. Poor show!
3. All this chat and no mention of the strange modern habit of going to the gym to indulge in solitary exercise. In my day I went to the gym to play five-a-side football. Fun in company rather than lonely narcissism.
4. Nor any mention of lashing out on an expensive bike, draping oneself in lycra, and pedalling off in a style that, in a healthier age, would positively invite small boys to throw insults and perhaps even stones.
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5 years into ER here… boredom? Oh, hell no!
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Hahaha, re: tolerating fools, I also inadvertently upset my mother (at 6 years old) by getting a ‘doesn’t suffer fools gladly’ report card. It took a while though for my 6-yr old version to understand why it was deemed a negative and I guess it worried her that I was in for a hard life if I couldn’t frolic in a pack of drooling labradors, picturesquely offending none. Sadly for me she was dead right on that one. Later as another minion in The Workforce, when it was explained that there was no I in TEAM, I saw a lot of mouthbreathers with no creativity, individuality or gumption.
As for the direction of UK plc, the current Trumpian-blatantly visible corruption of awarding instant enrichment, no-bid covid contracts to friends, relatives and business network connections, is what Brits used to sneer at tinpot dictatorships for. (Ditto the daily circus drama in Westminster portrayed on our screens as a sort of comedy hour of the day) These feudal licenses to loot the public finances trough, handed out to the favoured few, are a throwback to much more autocratic times. So who’s the banana republic now? Bring on brexit, what could possibly go wrong.
FWIW, my ex-employer recruited 100+ electronics graduates per year, and in terms of numbers, Southampton always came top of the pile, with Imperial second. They also do a fantastic outreach programme with summer schools to persuade sixth-formers to study electronics. I’m not convinced that research ratings count for very much in university electronics departments, because the groundbreaking stuff is being done in industry, not academia. It’s not like Physics.
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Another thought provoking post.
I loved the Turchin “We are all doomed” bit. Everyone loves a horror story.
Maybe we are but I’ll stick to Morgan Housel’s – things are getting better idea.
Just go and look up the data for the world rates in infant mortality, child poverty, education, living standards, malnutrition, crime rates, democracy etc etc. Guess what? Things are getting better and they have been getting better for quite a while.
Ain’t science and technology wonderful?
Even you Imperial Engineering types can spot a decent trend line.
(Salford and Oxford Material Science for me)
I’ve actually eaten in New Hall dining room. There is a balcony where the choir sang during dinner. I enjoyed it immensely. Glad you are enjoying His Dark Materials as well.
So I am 4.5 years into FIRE and I am doing voluntary stuff.
There is no way I am going back to paid employment – it was just too horrible.
If it is voluntary, you are in control.
Thanks again for stimulating read.
I always look forward to your blog
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Heh, where’s Hans Rosling when you need him, eh, rest his soul 😉
I am of course older, and we should remember that the perspective of age is always that fings ain’t what they used to be. I’d agree that in general tech is greatly improved, where I have reservations is whether we as humanity are on the right track. Sociologically I am not sure.
This could be a perspective of living in the West, where I would say that for many people living standards aren’t rising. Some of that is because we were in a privileged position, and large amounts of competition were walled off behind Communism and/or bitter poverty. Tim Harford made that case that capitalism has been good for the wealth of humanity in general, but it’s always a tough sell to say to any community that your end of the boat has to go down for the common good, and there’s an argument that some of the ructions of the last five years or so are a result of that. So Turchin may still be right as well – humanity doesn’t make progress as a homogenous entity and never has done.
“I can’t even think of anybody that I went to university with who I have seen on the telly”
Nor me, but there are some close ones. I studied Physics at Imperial in the 1980s which I think may have been a similar time to you. What about Pallab Ghosh science correspondent at the BBC and Susan Watts of BBC Newsnight? I would have overlapped with them during my 3 year period of study but I think I would have been a year or two behind them. I wasn’t very outgoing at college but I probably would have remembered Watts if I knew her as there were so few women studying the subject at that time. I think there were about 200 in my year group so the chances of getting to know someone in a different study year were slim unless you shared accomodation in one of the student houses or halls of residence. The more likely people I would have known from Imperial to have popped up on TV were some of the lecturers – I was disappointed that Prof Kibble didn’t get to share the Nobel with Higgs for the work he did, I do remember having a vent about that to my partner when it was in the news!
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Yep, we will have overlapped, and possibly even drunk the same plastic coffee from the machines in the basement of the Blackett laboratory.
In some ways it makes my point, however. It’s not so much that Imperial didn’t produce people worthy of note, of course it did. It’s more that it didn’t inculcate the complex interpersonal webs of connections, which are part of what you go to Oxbridge and Ivy League universities for. These people were there, but the connections weren’t. I know a few people still from that time, I was talking to a couple of my classmates (well, year-mates – one was Physics but t’other Elec Eng) on Zoom a few days ago and we all agreed that if we were starting out again we’d never have got in. Which goes along with the people have to be more driven thesis of this post. I venture early retirement will be harder for the class of 2010 than that of 1980.
The lecturers we will have recognised, but I guess time is not on their side, these will have been in their 40s 40 years ago, and there is some argument that scientists and engineers do their best work in the first half of life.
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Interesting you mention the connections of those universities. Someone I used to work for, who founded 2 companies that went public, studied for an MBA at Stanford. He was once asked if the MBA was worth it (cost now $240k). He said for what he was taught, no. But, for the people he met, 100% yes it was worth it: those super-wealthy he met funded his businesses, both the failures (lost of $1m of other peoples money with attempt 1) and subsequent successes. Life, for most, is all about who you know…
How can I have forgot that coffee 😂
Yes, I don’t think I would get into Imperial today. My offer at the time for entry was to get minimum of two Cs at A-level, although a C then is maybe worth a B in today’s money. Perhaps I was lucky and they needed to fill their quota of country lads like me! Looking at current minimum entry requirements they are “A* A* A”, I have no idea what an A* is compared to my time but that must take some work to get top grades in maths and physics and some other subject that is not general studies or critical thinking.
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@Andy > Life, for most, is all about who you know…
I’m not sure ‘for most’ is accurate. I’d go as far as saying this mainly applies in the higher echelons, that Turchin was on about. It’s not so applicable lower down the pecking order.
It was 2p a cup ISTR. Although the plastic cups were small.
> I have no idea what an A* is compared to my time
I fear nobody does, though grade inflation is a thing. I think about 11% of school leavers went to university around that time, and the exams were norm-referenced so they did select for comparable ability in any one cohort.
“there were so few women studying the subject at that time. I think there were about 200 in my year group”
Ha, Bill! One would have been me. As I recall, Pallab Ghosh was the Felix editor in my first year. And how about Simon Singh – he’s quite famous 😉
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Aha I hope Imperial worked out well for you Pendle you rarity! It did go well for me, good memories. I’ve still got some old copies of Felix somewhere, yes I remember him as editor – he was already established when I started I think and also on that STOIC TV channel they had which we couldn’t get in my first year, I think it was piped to halls but not the student house where I was. I forgot about Simon Singh.
Really enjoyed your article as usual and it struck a chord with me.
As a former YTS kid in Thatchers Britain and then a 1 in 10 UB40 before the mid 80’s were done a university education was not for the likes of “us”. Fortunately some opportunities are created by yourself despite the obstacles placed in your way by the lack of “life chances”. So a social sciences degree can at least help you understand why you are not one of the “masters of the universe”. Still “things can only get better” Labour told us and I felt positive about meritocracy and mortgaged my freedom away.
How horrified to find another old Etonian (who is very similar in age to me) in charge of the country and ready to sort out the elite. I mean come on, who are you kidding. Sadly things don’t change. I suspect a full circle is about to be completed with a large rise in unemployment next year but that’s ok for Boris’s chumocracy “mates”.
Probably most of the people reading on this site will be fine, me included but that does not make me feel positive about the UK.
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I believe you can “not suffer fools gladly” and still give advice to a colleague you respect and needs your help. I was the most introverted of introverts and I still managed to be an informal leader in my long-ago workplace. Always ready to help with stats, computer problems, spreadsheet design. It’s when the “fools” start taking credit for your work that I draw the line.
I am far past the point where any sort of return to work makes sense. I did my volunteer labour at the beginning of my retirement. The small coffee roastery I assisted soon got too large and started to obtain the same institutional BS I retired from. Nowadays I fill my time out rebuilding old computers so my granddaughter can remote learn with something decent.
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Ah, but those were not fools – they knew that they didn’t know. And set about rectifying the situation. Knowing that you don’t know is a skill that seems in short supply these days – it isn’t a lack of knowledge that defines fools. It is a dedication to ignorance that is the hallmark of a fool IMO.
> same institutional BS I retired from
I couldn’t agree more. Institutional BS is the time time o get the hell out of there!
If you don’t suffer fools gladly, presumably you scorn lockdowns and dismiss masks?
Not. Going. There.
Trip down memory lane triggered by comments above re the grades required to secure a place at university back in the Dark Ages.
Trawling back through the muddy depths of my increasingly eccentric memory, I applied to five unis to read physics (five institutions was standard via UCCA at the time, early ’70s), I can remember three of them: Glasgow, St Andrews, Leicester; iirc the grades required in A level maths and physics were two ‘C’s at St Andrews and a ‘C’ and a ‘D’ at both Leicester and Glasgow. I suspect that these quite undemanding requirements were driven partly by an inbalance of more places to fill than students who wanted to tackle a STEM subject as the drift away from hard sciences gathered pace. I guess the much higher grade requirements now are partly due to a reversal of this inbalance. I’m fairly sure (too lazy to Google) that the pro rata number of physics places on offer in UK universities will be significantly lower now than then.
In those days I seem to recall that only about 5 or 6% of kids ended up at uni, even lower than ermine’s figure of 11% a decade or so later.
> I suspect that these quite undemanding requirements were driven partly by an inbalance of more places to fill than students who wanted to tackle a STEM subject as the drift away from hard sciences gathered pace.
I’m not sure that passes scrutiny on two counts:
Up until 1990 graduate numbers moved slowly. I think 1990 was when university started to become a product for sale with the establishment of the Student Loans Company. The result measured in terms of sales seems to reflect that:
The obvious explanation is A-level grade inflation, supported by the very clear transition from the time of norm-referencing to criterion-referencing (a.k.a. everyone’s a winner)
Source – cited paper, Are A levels what they used to be? Channel 4 fact-check
Not to forget, there was also the re-badging of Polytechnics to Universities following the 1992 Act.
And for any one in any doubt that this years A -level exams debacle did not lead to even more grade inflation, these provisional figures from the DFE earlier this week should make interesting reading:
In summary, some 38% were awarded A*/A grades – an increase of nearly 50% versus 2018/19 academic year!!!
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> some 38% were awarded A*/A grades – an increase of nearly 50% versus 2018/19 academic year!!!
I can’t actually hold that against the poor devils that were sold university this year. I have no idea what we should have done about the (im)possibility of holding exams. but what we have done to university entrants this year is really astonishing shameful. Hopefully it will be held against the Tories for the next 20 years by this cohort.
We are prepared to throw money in buckets at supporting airlines, which actively bugger up the environment and provide some marginal utility, but we don’t seem to have been prepared to support universities. So we made the students pay, but charging them full whack for a pretty pale reflection of the university experience, which seems shockingly bad faith to me, so they could drag up the numbers not filled by the lucrative overseas student sector which is also a decent source of foreign exchange and indirect exports.
Personally I think that’s taking the piss in spades. They should have been allowed to defer. There’s already a cost/disincentive for that – you lose another year of your working life, which is already set back by three years in going to university. These students were sold a pup, and are entitled to be hopping mad.
It’s tougher to see what the right answer would be for second and third year undergraduates, but the shitting upon from a great height done to the first year undergraduate entry shows what you get when there’s no such thing as society.
I’m not a bleeding heart liberal when it comes to education. I am in favour of norm-referencing A levels, university being for the academically able, though the percentage should perhaps be greater than the 11% is was when I left university to reflect the different demands of the economy. You should be able to fail exams if you are no good at the subject. I failed Eng Lit, because I had no aptitude. I have a much faster reading speed than normal (because my mother taught me to read before going to school, despite being visually impaired), and got an A in Eng language O level. But my fail in Lit correctly indicated I have no talent for the subject – four decades since that fail I have still only read about 10% of Penguin’s 100 great classics and given up on nearly as many as I’ve read. Because: I have no sense for literature. The fail was a fair cop.
In return for the possibility of failure and the academic elitism, we should twist the balls off anybody who even mentions the word student Loans and feed them to the dogs. Let’s craft a decent graduate tax if we determine that the extra taxes paid from the hopeful increased salaries graduates earn doesn’t compensate for funding the system. In my case, I venture the fact that I paid higher rate tax for many years whereas my Dad never paid HRT as one form of a graduate tax 😉 Back in the day there was a return for the individual, and the taxpayer.
In lieu of sorting out the problem, we have bought our universities income stream with the tears of our undergraduate first years, who are in hock for about fifty grand if they eventual get to t’other side. We didn’t have the guts to tell half of them they have so little academic talent that they shouldn’t have wasted three years of their lives doing that, and they definitely shouldn’t have borrowed fifty grand to do it.
Interesting couple of graphs – the first in particular! In 1990 kissing the good old days goodbye when the county council would pay your fees, and give you a support grant, and you could sign on over the summer vacation…
Grade inflation, too, undoubtedly. It hadn’t registered with me that normal distribution grade allocation had been abandoned, but that would certainly change things. Around the mid-80s from your second figure? In the early noughties I worked with a guy a few years older than me who was an inveterate hoarder and used to show up with various items from his past; once his ‘O’ level Maths paper from 1965. It was pretty tough compared even to my own experience of sitting ‘O’ level in 1970 and 1971 (two different schools), included some calculus. I also used to fall back on tutoring maths from time to time when other work was quiet, most recently around 2010, and certainly the GCSE maths syllabus has slipped. A lot of the material was stuff that I was doing in the first couple of years of grammar school, or even earlier.
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> In 1990 kissing the good old days goodbye when the county council would pay your fees, and give you a support grant, and you could sign on over the summer vacation…
True, but university was rationed to the academically able, that was the quid pro quo. A levels were originally university entrance exams.
Re grade inflation – The transition was in 1986. Although I have called it norm-referencing before then, there was some wiggle room, and a multiplicity of examining boards. However, the graph shows functionally it did achieve norm-referencing, despite this learned fellow spending many pages claiming pre-1986 wasn’t exactly that if you define the terminology narrowly. The multiple examination boards did seem to result in some levelling, because they seriously reduced sample size, compared to a nationwide system. I think the multiple boards arose was because of their history as university entrance exams- the first paper (the buckingham one) says on page 2
The fact that you could have people fail subjects seems to make some people hopping mad and spit bricks – Is everyone OK with fact that we force 30% of children to fail their GCSEs? – er – yes, I am. Academic ability is not evenly distributed. People endlessly harped on that you could be unlucky and be in a particularly bright year as a charge against norm-referencing. This strikes me as bullshit – when we look at the numbers taking A levels we’re talking tens of thousands of candidates a year.
Let’s take a sample of 5000 and assume aptitude is normally distributed. It’s hard to qualify the standard deviation of the results, but the literature doesn’t seem to cite huge annual cohort variations. The standard error of the mean will be good to 2% of the standard deviation, in the more mainstream subjects with cohort sizes of 50k it will be good to less than 1% of s.d. That’s good enough for government work – somebody’s little Tarquin didn’t fail his Maths A level because his year was suddenly twice as good as last year’s and ‘snot fair. Tarquin is NBG at Maths.
Talking of Maths, my mid-1970s Maths O levels had calculus in them. Calculus was something were a significant part of the class got off and never recovered. In primary school that had been fractions – about a third of the class couldn’t wrap their heads round arithmetic with fractions. In secondary school it was differentiation, and about a quarter of the class either did it by rote of were wiped out entirely. Maths seems to have these level jumps that shed a significant part of the cohort – I was on the losing side of that in second year maths, where solving differential equations by substitution tipped me off the wagon. It was odd to find that my fifty-something old brain was able to follow how to do that where I couldn’t at 20, but the conditions were more relaxed and the result didn’t matter…
What we should have done is hold the exams – they managed in places like Germany.
Believe it or not, the lack of sufficiently socially distanced halls to hold examinations in German schools was overcome by building temporary beer tents ala the Oktoberfest – which can seat (albeit not socially distanced) up to nearly 8500, see e.g. https://en.wikipedia.org/wiki/Oktoberfest#Large_tents
Furthermore, all the schools in England were actually empty at the time too!
Thus, as far as I am concerned the exams could and should have been held – but what HMG did was “kick the can down the road” without a moments thought for where it might lead.
The real cost of which is that A-levels have effectively reached BOGOF status these days!
Do not start me on the “selling kids a pup” re Uni – IMO, this has been the case since Maggie was PM!
“my mid-1970s Maths O levels had calculus in them”
That’s interesting, as far as I can recall neither the traditional Oxford Board 1970 maths O level nor the ‘new maths’ 1971 paper that I sat stretched to calculus. Although I do remember being introduced to the subject at the end of the 4th year when I was 14. Maybe optional questions? Christ, it’s all too long ago! Finding the more taxing parts of the syllabus more accessible in later years was also my experience when I had to refresh my knowledge of A level maths to be able to tutor. It was slightly mysterious finding it less of a struggle the second time around. It could be that by one’s fifties one has evolved both a greater degree of persistence and better strategies for cracking potential difficulties. I also found the subject matter more interesting.
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There was no calculus in the ‘Elementary’ Mathematics O Level on Oxford & Cambridge board that I sat in 1968 while in Lower V form. By the time I sat my main O Levels in Form V in 1969, the school had switched to London board and I sat Additional Mathematics. This did, of course, include calculus. I believe those who sat plain Mathematics on London board (equivalent to Elementary Mathematics on O&C) did not study calculus.
> neither the traditional Oxford Board 1970 maths O level nor the ‘new maths’ 1971 paper that I sat stretched to calculus.
I dug into the certificates. it appears that I sat maths O level a year early, Physics six months early, and took something called Additional maths in the normal year I took O levels. So perhaps calculus was in the additional maths stuff. Or not – I guess it was all forty years ago now…
I’m very much looking forward to an early retirement, precisely because I don’t want to work for someone else. Maybe I just have issues with authority and having zero control – sometimes it seems I’m the only one in the FI/RE world who wants the RE over the FI.
I just get too much enjoyment from being at home and working on my own projects.. it’s a means to an end now but I don’t really want to sacrifice my agency for too much longer.
Thanks for the post!
> Calculus was something were a significant part of the class got off and never recovered.
I didn’t even get that far! My limit was reached by the time I got to basic algebra and long division, ultimately leading to a very poor GCSE maths result.
I never attended university, although it was heavily pushed when I was at school. I left after A levels in 1997 and, bar a brief attempt at Spanish evening classes a couple of years back I haven’t touched formal education since.
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> The first lift in 2019 is not investing win, it was a dialled down PCLS
Could you say a few words about the thinking behind your decision to take a lump sum from your DB pension please?
Pretty much all said on this thread.
I’m a way into paying BRT as it is. I wanted to pay a little bit less, and I am mindful of less than ten years to go before I will have even more taxable income via the State Pension. So I exchanged a little bit of taxable income for a bit more ISA capital. It was nowhere near the max PCLS I could have taken, but enough to give me a feeling of having snatched something useful from the taxman’s mitts.
I fully get maintaining some headroom versus possibility of paying higher rate tax.
But, on the other hand, is it not the case that reducing your immediate tax bill via the PCLS could, in some circumstances, cost you “guaranteed” post tax money in the longer run.
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> s it not the case that reducing your immediate tax bill via the PCLS could, in some circumstances, cost you “guaranteed” post tax money in the longer run.
Absolutely. Bearing in mind:
My DB pension covers all my needs and a large proportion of wants – more than all of the latter this year, as evidence by the incremental creep in NW –
I have a full SP coming in due course
in an extreme tail risk I might live four decades
Mrs Ermine is younger than me, in some curious anomaly I don’t understand her widow’s pension is not impaired by taking some PCLS. If I die earlier, she is likely to inherit the ISA, hopefully still tax-sheltered
I envisage higher inflation is one way governments will pay for their promises
I figured that the balance was worth shifting a little bit. Analytically, given my viewpoint I should have commuted the entire PCLS, because fully diminished DB pension + SP is still enough to pay my needs and significant wants, but the more conservative me is prepared to eat some longer term loss to inflation in return for more nominally defined floor. That increases my risk tolerance on the ISA, which was deployed in the shorting episode earlier this year.
Thanks for the additional info/context.
In your case then, literally: jam today or jam tomorrow! A nice place to be.
FWIW, under these circumstances I would have been tempted to shorten the Gap more.
In most cases, barring an overriding need for the lump sum – say to clear say a debt/mortgage – it is a tricky decision which IMO has not been made easier by the complete absence of new NS&I index-linked (and tax free) savings certificates/bonds.
As a BRT payer, in order to ensure you continuously get what you called the post tax commutation factor I believe that you must get the lump sum into ISA’s (or some other tax free vehicle) asap and then earn at least the pension indexation – which today probably means taking some risk. Even then, assuming that all works out AND you are lucky enough to live a long life you may well still lose out in terms of total post tax “income”.
On the other hand , some people view taking a lump sum as a form of risk reduction against later pension scheme failures (i.e. PPF reductions).
The issue around not diminishing a spouse pension is a definite win though!
> FWIW, under these circumstances I would have been tempted to shorten the Gap more.
It’s curious, the different risk tolerances people have. That is the one thing that almost above all else I didn’t want to do. Although we architect stories to justify our actions, I will have a go:
I never managed to get a handle on how to qualify the actuarial reduction. I only drew my pension a few months early because The Firm’s pension modeller indicated I would actually be worse off drawing it from January this year rather than in Q4 2019. I have no idea why this is the case, I rang them up to query, they said if that’s what it says then that’s it. Perhaps a triennial revaluation comes in or something like that. The cumulative extra pension I am paid over the few extra months beats out the very minor ongoing actuarial reduction until I am quite a bit older, plus I was able to load my ISA this March. But generally, I never wanted to take any actuarial reduction, because a DB pension is only defined at NRA.
Commutation, however, I found an acceptable risk/reward tradeoff. Perhaps that’s because I have 10 years of investing behind me, albeit in an exceptionally favourable period. So I felt able to make that call and qualify it, though I was more conservative than I could have been, being mindful of Warren Buffet’s injunction to beware
So I probably left money on the table, to be inflated away. For the sake of peace of mind.
Perhaps the inability to qualify the actuarial reduction relative to my longevity or otherwise is part of an existential fear of death along the whole Terror Management Theory principles. OTOH I am in decent health, no I am not as fit as when I was 20, but fitter than when I was 30, 40. So it’s not unreasonable to bet on me loading The Firm’s DB pension for a while, and also I wanted enough income that I didn’t have to putz about with investing when I am 80 for my needs.
So here’s the situation from my view point.
FIRE, is increasingly “ for the few not the many”
A DB pension provides that guaranteed element in retirement planning that other forms of assets find hard to match. Giving up work too early and relying on dividend income is a risky business, unless you have a large safety margin, I.e you can pay your living costs from 50% of generated income.
> few not the many
It was always for the few. I said that and upset a bunch of people awhile back. Let’s face it the reason most people work until State Pension age or longer isn’t that they have a deep undying passion for their work and can’t imagine life without it. It is more because tremendous crap starts happening in their lives when they don’t have the income to pay for their needs.
At the very least, you need to be in the upper 1/4 of the earning bracket. Which is not the same thing as 25% of the working population….
You also need to live different. Higher earners have more spendy lifestyles. I have had fewer holidays and have fewer consumer gewgaws than people I know, particularly in the last 10 years.
> A DB pension provides that guaranteed element in retirement planning that other forms of assets find hard to match.
True, though note that they, along with the State Pension, are a particular form of annuity. You can buy annuities on the open market. The FI/RE community being generally young folk who believe they will live for ever with full mental capacity, ignore annuities because they don’t like the numbers coming back when they qualify the annuity rates on their RE dates. Annuities get better value as you get older – there’s a case to be made to start with a SIPP and then being prepared to shift to annuities when you are 70+
Totally agree with your comments but just wanted to point out the DC pension on offer from most employers is no where near as generous (contributions in) as the DB pension of old. However, the annuity is still a useful tool to achieve a guaranteed income later in life.
My continued concern is with a younger generation being sold FIRE as something that anyone can achieve. Being debt (including mortgage) free and building up a big enough fund to pay living costs is a big challenge and a good one to aspire to. But manage your expectations and remember things do happen in life that can knock you off course.
>That is the one thing that almost above all else I didn’t want to do.
Yup, I reckon we all see this decision through our own particular lens and/or filters.
> I never managed to get a handle on how to qualify the actuarial reduction.
As I understand it (and ignoring any death benefits to keep it fairly simple) in principle the actuarial reduction is designed to protect the scheme. That is, assuming you live to the schemes average expected age, the gross payout (to this age) irrespective of when you pull the plug should be about the same. I dare say a bit of prudence is also applied by the actuaries. In practice, to an individual this means that if you live a long life you are better off drawing at NRA (or delaying beyond NRA if late payment uplifts are available), if the contrary is true (and you pass early) then the earlier you drew the better.
>Commutation, however, I found an acceptable risk/reward tradeoff.
As you say, each to their own.
I believe that the only way your DB could be “inflated away” is:
a) if/when inflation exceeds the cap on the pensions schemes indexation or,
b) not all of your service is actually indexed – which incidentally is true of the PPF
By my rough calcs, if you are lucky enough to pull the plug and continuously get an after tax CF of 26, then with inflation/investment both at 2.5% (for example) the lump sum (assuming you use it to generate the foregone annual income) is exhausted after 26 years. If you want it to last 40 years you need to get more than 5% returns, all else the same! But, if you can generate 6% returns then the Pot will last over 50 years, and at 7% it just keeps growing! Given you are fully floored, taking that risk may well be perfectly rational.
> a) if/when inflation exceeds the cap on the pensions schemes indexation or,
I am a child of the 1970s. I do not find that hard to imagine It favoured that balance
If I live as old as my Dad when he died, and look back that much, it is 1994 again. If I get as old as either of my grandmothers and look back, it is just about when I started work (when incidentally inflation was above the indexing cap). More generally, for God’s sake, Brexit 😉
> That is, assuming you live to the schemes average expected age, the gross payout (to this age) irrespective of when you pull the plug should be about the same.
They seem to predicate the actuarial reduction of 5% p.a on people living to 80 on average. It wasn’t totally linear, however, the annual % actuarial reduction dropped a little bit as you got closer to NRA
>I am a child of the 1970s.
Ditto – and I have a reasonable handle on UK inflation history. What would really be required to deflate away your DB pension is a run of many [several] years where inflation exceeded [significantly] the indexation cap. This has not happened since around the early 80’s.
Could 70’s inflation levels be repeated and would stocks be a good hedge – who knows.
As I said above tricky decisions – but not the worst problems to have either.
Another lockdown for Xmas with hints at more in a never-ending chain to come, how will the >99% who survive this viral drama then survive the economic collapse they accepted as the cure? Just over a year of teflon tory reign now and we’re on the cusp of finding out if the turkeys voted for……….