This article signifies the start of a new post category which I’m going to name, ‘Thought Experiments’! The way this type of post will work is by starting off with a question, like “What would you do if you got given £1 million?”, and the blogger will have to write whatever they first think of. No pre-planning or major editing allowed and blabbering is definitely encouraged! It should read like an internal monologue. Right at the top of the post, I’ll post a link to all of the other bloggers that have participated in the thought experiment (I encourage other bloggers to do likewise!) You’ll then be able to see a vast array of different opinions to the same question. I’ll also be taking question requests in the comments below! So, without further ado…Thought experiment number 1! What would you do if right at this very instant you got given 1 million great British pounds? This could be from a lottery win, an IPO, a scratch card, you name it. No tax needs to be paid, it’s just been plopped directly into your run of the mill bank account.
Thought Experiment #1
Tweet @SavingNinja if you’ve participated and I’ll add you to the list!
One million pounds is a lot of money. It’s actually 4x the amount that I currently need to be financially independent. It would allow me to ‘safely’ withdraw double my current annual expenses (2%), but…I don’t know if I’d actually retire if I was given £1m today. I think the difference between me and lots of other FI seeking individuals is that I’m not burnt out; I actually quite like my job. I’ve definitely got a few good years left in me at least! The temptation with the £1 million would be to just invest it all and let it compound for another 5-10 years. If I carried on at my current savings rate I’d have a hefty £2.4m net worth in about 10 years time and that’s only with a modest amount of interest! I’ve now got images of Scarface in his golden bathtub flying through my head. The possibilities are endless! I could actually be rich-rich?
The temptation to do this would be massive. I guess this is the same feeling people who are close to FI get; the one-more-year syndrome. It’s crazy though as I would be able to retire right that day and ‘safely’ withdraw over £30k per year. That’s more than enough for me, surely? Ah, but is it enough for me and my partner to stop working?
It probably is, but it wouldn’t leave too much room for our future endeavors. Would working for just a few more years and letting that massive pot compound some more not be the easiest option? Especially when we’re both in our career peaks and earning decent salaries. I’m now seeing a few possibilities:
1) The nothing’s changed route
This would mean investing the whole lot. I’d probably have to get an accountant to ensure that tax is properly paid and then I’d carry on working full time and saving as much as I could. I’d aim for at least another few more years of saving and hopefully end up with a pot of over £1.5m. At this point the pot should hopefully be big enough to compound above £2m or even £3m after I stop working as I’m a big believer in the notion that Spending Less Makes You Happier , so my spending probably wouldn’t increase that much. It would probably mean that money is truly no object and that when I reach my ‘traditional’ retirement age I really could live like Scarface and invest in that golden bathtub! I may consider increasing my holiday spending if I took this route. I’d love to go on a big snowboarding holiday each winter and an adventurous holiday during the summer, I currently just pick one or the other. That sounds good!.. But, isn’t this breaking all the FI/RE rules? I would have more than enough to retire early, why would I continue working? Would I really not change jobs, or work part-time? I can tell this is going to be something I’m going to have to think about a lot. I’m a self-professed workaholic, I’m actually not happy unless I am doing something productive. I may deem it necessary to take a ‘gap-year’ and go traveling to try and soul-search for a greater purpose. Surely I’ll find my true purpose somewhere in the world?
2) Retire early and win the game
That’s it! I’ve won the game of life, I should just quit right now and retire…Right? I’d have more than enough to cover my current expenses and then some. I could leave Mrs Ninja working and spend all day playing video games and blogging…Sounds fun! But do I really want to be doing that for the next 50 years? Probably not. I would most definitely end up doing something, as Mr Money Mustache puts it - You’ll end up doing what you love, and most things end up generating money, potentially more money as you love what you’re doing! But…Would I get depressed? I’d be stuck in my current house and country, as my partner would still be working. I wouldn’t be able to leave her behind and go traveling or work abroad. I’m not exactly in the most enticing residential area for fun-loving early retirees to participate in activities. If I was by the mountains in Canada, this would be a different matter entirely! I’d probably rather work an additional few years and then move away to a fun place with my OH than turn into a couch potato with an excellent KDR on Overwatch!
3) Go part-time
This could be a great option. I’d be able to ‘test the waters’ of retirement by becoming semi-retired. I could work a few days a week or take off half the year. My new found free time could give me a great opportunity to try different hobbies and business ideas and see if I wanted to quit work entirely. Even if I chose to retire fully, it would probably be a good idea to do this for at least a little while first. The problem is; I’d have to work longer before moving to my dream retirement life. If I carried on working full time, that life could potentially only be a few years away. Working part-time is also pretty shitty as it brings a lot of the same stresses of a full-time job; interacting with a**holes, having to commit to someone else’s schedule, and being forced to work on those days where you really rather wouldn’t. It also doesn’t have a lot of the same benefits of being fully retired; being able to bugger off and go traveling for a year or two, being able to say yes to anything that crops up (business or fun), or being in control of your own schedule.
So many choices!
What would I choose? I’m leaning more toward option 1 - To carry on working. I’m not in a position where I feel I have to go part-time; I’m not burnt out and I don’t have kids that I need to ferry around. I really want to live life on my own terms. I want to build things, travel and move to the mountains. Working part-time wouldn’t allow that and it seems like a waste to retire completely when I feel I could go for a little bit longer and have so many more possibilities available to me. I would probably invest it all and use my remaining working years to gain citizenship for Canada or the USA. The 5 or so years it would take me to get citizenship would be a sufficient amount of time to create a big enough pot that I truly wouldn’t have to worry about money for my whole family again. I’d then also be in a country where I can retire to the mountains and fill out my winter seasons with my passion; snowboarding. I’d be able to bring my future kids up snowboarding and potentially have enough land to be able to build things. Wouldn’t it be awesome to build your own barn or a log cabin! In theory, the £1m would just speed up the time it would take to get to this dream. Even though my FI date is set for 5 years from now, I wouldn’t actually retire at this point. I’d probably relocate and buffer it out. I also don’t plan on retiring without my OH. Things may change. No one knows what the future may hold, although thought experiments like this are great to see where your mind takes you and they really help you think about what you truly want from your life.
These thought experiments work best when as many people get involved as possible, so I invite you to create your own answer to this question. When you do, send me a Tweet @SavingNinja and I’ll add your article to the list up top. It’s always interesting to see other peoples views!
- Do you like the idea of ‘Thought Experiments’, do you think this should be a monthly feature?
- What other ‘Thought Experiment’ questions would you like to see bloggers answer?