Financial Independence and the cycle of life

The UK PF scene has expanded a lot of late, and this is all to the good IMO – there are many ways along the path to freedom from The Man. Some are slow and steady, some have Sturm und Drang. Most writers are far more ambitious that I was. As yet there aren’t that many other reporters filing reports from across the FI event horizon, indeed there are more from the US side than from Blighty.

There are, at heart, two different sides to personal finance, as epitomised in the classic highwayman’s salutation and title of the seminal PF book Your Money or Your Life. You start out in an industrial consumer society as an adult with nothing, indeed, increasingly with less than nothing due to student debt[ref]there’s a strong case to view this as a graduate tax, due to its peculiar nature and to try and not normalise debt[/ref] but with a stupendous energy, ability to learn and ambition. You gradually exchange this capacity for financial income, and if you are part of the PF community, you try and accumulate some of this income as wealth.

The financial side – it’s all about the money

There is the finance side, this is all about SWRs, reducing fees, seeking opportunities, evaluating risk. I’ve drawn back a little bit from writing about that, because a) there have been a lot of new authors entering the market that fundamentally know more about these things, Monevator is still there and there’s not much that I can add, b) some of the changes Osborne has made have given me the opportunity to seriously derisk my pension savings by allowing me to buy out some of the actuarial reduction to my pension; my ISA will be paying for wants rather than needs, and c) personal finance is interesting but not fascinating for me now – it was fascinating while I was working for The Man and it was an enabling technology to shorten that period. The essential takeaway I have learned by experience is still the same as was taught me by my parents and that I largely followed  –

Don’t spend more than you earn, son, and never borrow money for Wants, and only for those Needs that are non-wasting assets[ref]the common examples are a house and education[/ref]

I can count the number of times I used more than a month-long consumer credit on my fingers, which is uncommon in the modern world. Once when starting work to buy a hi-fi preamplifier on 9 month’s 0% credit, which although stupid didn’t cost me anything because it was paid on schedule (and is still in service over 30 years later), one bank loan to buy my first car which was also stupid but was paid back on time and never repeated, a 0% credit card loan to pump up the deposit on my first house, paid back on time, a mortgage for 20 years, one time with credit cards when first going out with DxGF where I failed Micawber and started to fall behind but corrective action was taken within two months,  and more recently to avoid having to sell more than a capital gains tax allowance worth of shares.

The personal and the cycle of life

The young, of course, bless ’em, know they will never get old. So you start work, and life is good, you’re earning money, and of course you will always have the capabilities you’ve always had. Age shall not weary you, nor the years condemn – after all you have not seen the changes that time wreaks on the human spirit. Or indeed the quieter rewards of wisdom if knowledge is integrated over time.

It is as it should be, life is not a rehearsal, you pass through the stages but one time, and each of them has value. Unfortunately, to make a decent fist of financial independence/retiring early you need to have some feel of these stages, because the demands on your finances will never be the same as when you start work. As a rough obvious qualification, and making tremendous generalisations:


huge changes in these years, between possibly university and getting the first job. People often pair up in these years, bringing a different set of rewards and challenges. Deep within the British psyche is the concept that you should be able to buy a house in this period, but I would venture this is unrealistic at the current time. I was 29 when I bought my first house in 1989, which is a time that has similarities to now, that was both unwise and also jobs are less stable now.

These are the years when you set the foundations of a professional career, because of this, taking time out (to have children or take a break) tend to have a serious adverse effect on your lifetime earning power. This is particularly bad in technical fields like IT – a year out of IT is pretty much ‘hello world’ time again


Four-fifths of people will be wrangling children and work in these decades. Taking time out in the first half of this decade has some adverse effect on lifetime earning power. People start to slow down towards the second half of this decade – particularly those with children are run ragged, and their focus is not as single-minded as it once was. Mark Zuckerberg summed it up well

“Young people are just smarter,” he said with a straight face. “Why are most chess masters under 30?” he asked. “I don’t know,” he answered. “Young people just have simpler lives. We may not own a car. We may not have family.” In the absence of those distractions, he says, you can focus on big ideologies. He added, “I only own a mattress.” Later: “Simplicity in life allows you to focus on what’s important.”

He got slaughtered for it because it’s not politically correct, but I believe he has a lot of point in that the simplicity of young people’s lives is a great asset for work areas that deal with roiling change.

In the second half of this decade it’s often about domain knowledge, contacts and leadership. You better have some of these, because towards the end of this decade if you don’t, you start to become expensive and replaceable.


These are often the hardest years for many people, and they coincide with a statistical low-water mark of psychological well-being[ref]Is well-being U-shaped over the life cycle? Blanchflower and Oswald, Social Science & Medicine 66 (2008)  [/ref] in people

likelihood of depression in the UK labour force, by age
likelihood of depression in the UK labour force, by age

I personally wouldn’t casually draw a U through this – the peak in the late 20s I think is real – a quarter life crisis, the disappointment is ‘is this all there is’ and to me there seems a clear deterioration from the 30s to the early 50s. I like the personalTao’s explanation

Quarter life crisis in a nutshell is all about how a person shifts into society. Midlife crisis is the reflection of Quarter life crisis. Midlife transformation is all about how a person shifts out of society to become their own person.

I’m going to barge off the scientific into the anecdotal. The part of The Firm I was in never had great mental health. It hired people who were already a bit unbalanced, in the early days before a big purging in the late 1990s they had a significant number of serious outliers and downright weird people – stupendously brilliant in some areas and almost dysfunctional in others. They got rid of most of these folk by 2000, as they decided to get out of R&D. But the background radiation of the selection was presumably still there. Every so often someone would top themselves, this always got hushed up but I knew someone on the site fire team who got to hear about incidents. The windows in one of the towers aren’t openable any more, but the paving slabs were still cracked last tie I saw them.

I saw some people go off with stress. I saw heart disease claim the lives of some colleagues, and towards the end of this age decade is when that starts catching up with you.


In the early part of my career, this age cohort was well represented. After all, the human lifespan is typically three-score years and ten, even 30 years ago, and in something soft like electronics and studio engineering it’s hardly like the Grim Reaper comes to call early. Indeed, in the late 1980s and early 1990s these guys formed the typical 25% of workplaces that elementary arithmetic would lead you to expect, given my decade grouping and a 40-year working life. Early retirement was not a thing then – I went and got truly hammered at my first BBC boss’s retirement bash – he was 65 ISTR although I’m pretty sure the BBC NRA was 60. At The Firm I saw a fair few old gits swan off into the sunset at 60.

Something changed in the last decade and a half. Now The Firm ran out a lot of their 50-somethings in the dying days of the dotcom boom. But I went to very few retirement celebrations in the last five years of working there, when some of the late 40’s people in 2000 would be coming up to 60. Some of that is due to other changes in the workplace – The Firm shattered the esprit de corps with some of the changes. But I saw a lot of people go off sick and there were a few funerals. Now I don’t know enough of longevity to know if this is the natural slope of the bathtub curve of reliability, but I do know that in the rest of the community I know I haven’t seen any 50-60 years olds get planted…

This age cohort is prime target for redundancy at the level of middle management. They’re often expensive, Zuckerberg’s thinking abounds. To be honest, if you are working for The Man, just don’t expect to for most of this time. As a test, look around your office and take the average age of the oldest 25%. It should be in the 50s. If it’s less, there’s a message in there for you that’s worth listening to.


You’re in extra time, bud. Though you’re probably feeling more chipper 🙂 By definition you aren’t interested in early retirement.

What’s with this U shaped curve?

Two things. One is practical and by observation – work and raising kids is no fun when both partners work, and even if you are part of the child-free 20%, work is no fun. As you progress higher up the greasy pole, youfeel less secure, because the last few years in business have been challenging and wider changes are making your position more precarious. It isn’t entirely enough to explain it, and I’d venture that some of the explanation is to be had in these words

It seems to me that the basic facts of the psyche undergo a very marked alteration in the course of life, so much so that we could almost speak of a psychology of life’s morning and a psychology of its afternoon. As a rule, the life of a young person is characterized by  a general expansion and a striving towards concrete ends; and his neurosis seems mainly to rest on his hesitation or shrinking back from this necessity. But the life of an older person is characterized by a contraction of forces, by the affirmation of what has been achieved, and by the curtailment of further growth. His neurosis comes mainly from his clinging to a youthful attitude which is now out of season….

Carl Jung, 1929, CW 16, ¶75

There is a change and a reorientation to be had across this time, and in a consumer society this is a particularly pathless land. The changeover of perspective is felt, and it is never comfortable

“The truth is that our finest moments are most likely to occur when we are feeling deeply uncomfortable, unhappy, or unfulfilled. For it is only in such moments, propelled by our discomfort, that we are likely to step out of our ruts and start searching for different ways or truer answers.”

M Scott Peck

In a materialist world-view, it’s hard to square these changes that seem universal enough to be part of being human, and all too often the discomfort is projected upon the outside world – the hoary new sportscar of the mid-life crisis, the trophy younger wife, the endless striving to avoid the uncomfortable truth that wherever you run to, still yourself you see in the mirror in the morning. To pinch some more of the wisdom of M Scott Peck in The Road Less Travelled

“Life is difficult. This is a great truth, one of the greatest truths. It is a great truth because once we truly see this truth, we transcend it. Once we truly know that life is difficult-once we truly understand and accept it-then life is no longer difficult. Because once it is accepted, the fact that life is difficult no longer matters.”

Many, many people fail the test of mid-life – because as they come to the signal-box where the switches will be thrown they project their past upon their future and fail to give the right instructions

“Thoroughly unprepared, we take the step into the afternoon of life. Worse still, we take this step with the false presupposition that our truths and our ideals will serve us as hitherto. But we cannot live the afternoon of life according to the program of life’s morning, for what was great in the morning will be little at evening and what in the morning was true, at evening will have become a lie.”

Carl Jung, Modern Man in search of a soul

You may disagree with some of Jung’s background, and some of the surrounding text is of its time, though I would say still translatable to the modern world.

the iconography says it all :)
the iconography says it all 🙂

Corroboration is to be had in the Harley Davidsons, sports cars and the existence of (tagline – where the classy, attractive and affluent meet). Thank you to the Daily Fail’s Helen for the tipoff!

Ok Ermine, WTF has all this psychology/metaphysical shite got to do with FI/RE?

tl:dr – Life is short, use it well. You will change if you grow well through the life-cycle, else ossify and atrophy. Don’t count on a 40 year working life in a stressful field.

Welcome young PF reader (if you’re an old git you’ll have gone meh way back). Think of the grizzled Ermine as the Ancient Mariner in Coleridge’s Rime of the Ancient Mariner, and you as the Wedding-Guest[ref]I failed Eng Lit so here is a secondary interpretation of the meaning[/ref] – because if you are still reading by now then the hidden menace of the tale holds reader in thrall

The Rime of the Ancient MarinerIt was kicked off by Mr Z’s great post – Sprint, Walk or Jog and it reminded me of a long three-year journey I undertook, in adverse conditions, to try and get out. Believe me, I would have given a lot ot kick back from the sprint phase – The Firm was desperate for people to go part-time and offered decent terms. I considered it, but then lifted my eyes to the glittering prize, and kept going.

It’s hard to make the figures add up to retire early, and to be honest to do it at all compared to your fellow wage-slaves you need to sprint. Mr Z’s walkers will never get there – subtle trends in the economy are running away from the workforce, and if you do the same old same old then you will probably retire at 70+ if at all. Some of these forces are the same ones that make saving for a house run away from the average punter. FWIW to some extent I am absolutely guilty as charged by Mr Z

It’s whirlwind at the end, pulling together what ever resources are available and blaming everyone else for not letting you know that this day would come.

although in my favour I would say that I took corrective action with extreme prejudice when I did realise I had been asleep at the switch…

but I can return the favour. Beware of the siren song of sabbaticals – because if you plan to get to FI/RE working for a company the cost of taking time off is high and variable, and you are unlikely to get much beyond 50. Many people will think they see lots of 50+ people in the workplace, and it’s true. But there’s a dirty little secret about the whole FI/RE community that is rarely acknowledged – income matters. If you are talking about early retirement you are unlikely to be on the UK average household income of £27k p.a.

UK taxpayer mean and median earnings by age (taxpayers only)
UK taxpayer mean and median earnings by age – taxpayers only (source ONS data) Mean reflects the fortunes of the typical striver for FI, median for the average Brit.

Note that this is taxpayers only – it doesn’t include those with an income below £11k p.a., the unemployed, welfare claimants, Ermines. Now think about the odds, you’re somewhere between the blue and the red lines, and I’d say you can’t necessarily count on a long, highly paid working life of 21 to 65. The signs of the 50-60 flameout are written all over that chart.

It isn’t predetermined – but the odds ain’t great.

Like anything else in life, you can shift the needle on the dial. Certainly working for The Man post 40 is a hazardous thing to rely on for FI/RE, but maybe you will run a business or become a contractor, as long as you can stay ahead of the game you can do well. But when setting direction in your 20s and early 30s you don’t know how well this is going to turn out. Right up until the month[ref]Hindsight shows that the evidence was scribbled all over the place in the preceding couple of years, but that’s hindsight for you[/ref] before I recognized the writing on the wall I was expecting to work to 60 and then retire. Why 60? That was NRA for The Firm when I joined. It would have been a terrible waste to have done that – to call in M Scott Peck again

“Until you value yourself, you won’t value your time. Until you value your time, you will not do anything with it.”

I hadn’t got my head round the fact that I really should have been asking myself what do I want to be doing with my time – I was guilty of using the program of life’s morning into its afternoon, without even a celebratory drink when the sun passed the yardarm!

You’d be unwise to assume a 30-40 year working life in a highly paid/stressful job. Your late forties onwards is when the cracks are likely to start showing up. And the blighters don’t take no for an answer. One of the computations I did was if I bailed early, how many years of working minimum wage at Tesco were going to be needed. Let’s just say that the answers was enough to get sufficient intestinal fortitude to keep going, discard the blandishments of going part time or taking a year out and getting on with it.

The life-cycle favours doing your sabbaticals either before you start on the treadmill, in which case they are called gap years or postgraduate degrees, or taking them at the end of your working life – as I am doing now. If you want circumstantial evidence of the magnitude of that hit, then look at this chart

earnings by age (taxpayers only)
earnings by age (taxpayers only)

and ask yourself when in the age grouping do women typically  start having children – and remember this is taxpayers only so a SAHM presumably does not feature. Having children may be a very rewarding activity, but it’s not remunerative work, and it has consequences for earnings. Everything worthwhile has a cost; and if a sabbatical is worthwhile than of course it also has a cost. That cost does not appear to be trivial. Although I’m not comparing like with like, since a sabbatical is a one-off setback, it still not zero and it’s more than the pay you forego.

If you want FI/RE, the odds favour keeping your nose to the grindstone. Extraordinary results demand extraordinary effort to achieve. There’s a damn good reason why most people don’t retire early, and of the rest, many just retire early (50+) like me, rather than extremely early (40+). If you want to make easy money, do something hard.