I have been tracking a FatFIRE age of 41 for the last 3-4 years! As far as I could tell, my models predicted that on my 41st birthday I would retire or be ready to retire.
I had been running a small IT Management Consultancy Practice for 11 years. I had a handful of clients and was providing advisory services to them fairly successfully. This was producing just over £153k a year after tax. It’s a significant amount of money and I was very grateful to be in such a fortunate position to receive it (although they did work me to the bone in the process)!
My expenses were high-ish but I was still able to save around £73k a year or 47% savings rate. This put me on a fairly straight path to a comfortable retirement at 41. I diversified my investments across Stocks & Shares ISAs (Wealthify RoboAdvisor Platform) and Property Investment (a number of Buy to Let investments dotted around the UK). My target was (and still is) £1.5M across these two asset classes that would deliver a £100k a year income stream.
Everything was going swimmingly. It was too good to be true at times! But then one by one the dominoes fell.
I first got hit by the strengthening of the IR35 regulations. It didn’t impact me immediately but the market basically dried up for IT Consultancy work (especially if you, like me, were are Small Firm of 3 people). My existing clients were forced to assess my company in January to ensure that we were outside IR35. We passed with flying colours but that was too late. Most companies had already overreacted and got rid of all of their consultants and contractors (even though they really didn’t need to do that).
Then on 23rd March 2020 the UK went into Lockdown. It was fine at first, both my active clients had budget and were looking to accelerate the cloud migrations and digital strategy initiatives. But once the emergency programmes drew to a close in June, funding dried up, our contracts were not renewed and we were kicked out!
IR35 had already killed the market, then COVID-19 decimated what was left of it. I re-connected with older clients and colleagues to see whether there was an in-route into other firms. But nothing bit!. With the prospect of COVID leaking into next year, I realised I needed to hedge my bets. So, with a heavy heart I went looking for any job I could find, even perm. I landed two perm roles, one with a Cloud Provider and one in Financial Services; and ended up taking up the Finance Position.
New Perm Job with half the money
I am super-grateful for this role and the fact that I am allowed to work from home, with a higher bracket salary etc but…
I am earning significantly less after tax than I was before. Almost 50% less! This means my budgets are now incredibly tight. I am just about able to pay out family expenses every month. I am not saving a penny and if anything I am occasionally drawing money out of the property business.
This means my savings rate is 0%! It has pushed FatFIRE date back to 46-47!
So although its disappointing, we are absolutely grateful that we are still alive and have some sort of income coming in. I do want to get back on track to retirement at 41. So I plan on leaving this Perm job, once things stabilise, and get back into my Management Consulting business. I am predicting that there will be unprecedented growth in the global economy as the Vaccine is discovered and delivered and this will spur another historic bull market that we can all ride.
Only time will tell, but fingers crossed!
Have you been impacted by COVID-19? How far has it set you back? Is there anything you would have done different knowing how such a Black Swan can wreak havoc with peoples lives? Let me know in the comments…
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