Originally Posted by
Ninja chauffeur
I wouldn't say any age is too late to start though.
@Macdo, I def don't have 3 to 5 years of spending, need to work on that. (Been buying inflation adjusted government backed assets whenever I can lately)
I do have a bit of savings but I keep thinking my EOSB would last me a year or two without working, since I don't have any loans or debts except for mortgages paid by tenants.
Would you recommend building up more cash? I'm more into cash flow than cash reserves, but it's all about finding the right balance I agree.
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When I got my first airline job at the age of 40 an older Captain, who had been made redundant 3 times, advised me to always keep 1 years money in the bank to survive the time taken to get the next job. That was in the late 1990's a decade which was mostly bad for pilot employment. I think we are about to enter another bad period for pilots employment, so the advice is still good.
Some years later I became a fan of the FIRE concept. Financial Independence Retire Early. The basics of this is first, set out your goals in terms of how and when you want to retire and on what level of income. My target was age 60 on 70%. I assume I will live 30 years post retirement. Generally, you need to remain fully or mainly invested in the stock market to maintain enough annual growth in your portfolio to live off. The trouble is equity growth is not linear and occasionally has a big set back, such as we have right now. The Cash cushion is there so that you can live without taking money from your equity during the recovery. Most books suggest 2-3 years is sufficient to allow recovery from the worst of stock market corrections and subsequent recoveries recorded over the last 100 years. I was more cautious and planned for a 5 year recovery. In the current crisis I may be proved right, or things may be better. Major corrections tend to happen once every 20 years of so, although minor ones happen more regularly. So, once this is over, even if all my cash cushion has been spent, I should have a recovered equity pot to live off until I die. The worst case scenario is living off a smaller pot of money, but there are no guarantees. So, with your situation at mid 30's, you have plenty of time to plan where you want to be at retirement. I was lucky (?) in that I inherited a small lump sum about 10 years ago, which helped along the way. It could have been a nice Porsche, but it actually turned into basis for a long and happy retirement. For a year I put 80% of my salary into my pension scheme as I could see the recovery from the 2008 banking crisis. That was probably the best decision I made as we entered the longest bull market in history. And, although it was tempting at time, I avoided getting divorced!