Our Freedom Fund is a pot of money we have been building steadily for years. The intention was to reach a level where the passive income produced, comfortably covers our outgoings, making paid work optional. The freedom fund does not include the equity in our home, and our post-retirement budget does not include any mortgage payments or rent. We paid off our mortgage at the start of 2018.
From 2015 to 2021 we averaged a monthly savings rate of around 50%, ramping up to 70% once the mortgage was paid off. Mr Wombat gave up the office job at the end of 2019. From May 2021, when I went part time, we stopped making significant contributions to the fund, but we didn’t draw anything down either, as my part time salary covered our outgoings. This allowed the fund to continue to grow until I stopped working altogether in July 2022.
From August 2022, the freedom fund will provide the majority of our income (I am not ruling out the odd side hustle along the way).
Before we took the plunge and gave up our jobs, I was comparing the theoretical passive income available at a 4% safe withdrawal rate vs. our actual monthly spending at the end of each month. As we move into the decumulation phase, I will monitor our actual spending (and associated withdrawals) as a % of the fund and also any earned income we generate in addition to this.
Although I have been tracking the value of my investments since 2014, Mr. Wombat only really came on board in 2017, so I have only been tracking the value of our combined portfolio since then. We hold mainly ETFs in SIPPs and ISAs, with total wealth currently being split approx. 46:54 between pension and non-pension assets. I have a small LISA balance, which I include in the pension category, as it is not accessible until 60. We do own a few individual shares, but this is a very small proportion of the overall portfolio. It just adds a bit of interest to the general ‘set and forget’ approach.
The green dotted target line shown on the graph was our FIRE target number.
Our plan was to have approx. 2 years worth of expenses in cash and premium bonds before we pulled the trigger on ‘retirement’. We are currently well above this. This cash is included in the non-pension assets part of the fund. We reached this target before we started using the fund as our main source of income, to prevent being forced to sell when the markets are down.
Total Net Worth: As well as the value of our freedom fund we also keep tabs on our total net worth. This figure includes the equity in, and funds set aside for renovating our new home, the current value of vehicles and a small number of other valuables that we own. This figure is less important, as we have no plans to sell any other assets to generate an income. We update this figure less often, and it is also less accurate as it is necessarily based on estimated valuations, but we try to keep estimates conservative.
Our current net worth is approx. £2,047,928
Finding Enough 