The Boat Plan is our (current) why of FI. This is what we’re planning to do when we hit CoastFI. Financial freedom will make this possible!
So that I don’t mislead, the boat in the featured image above is so much shinier and bigger than the boat we’d be looking to buy. I just thought it was a cool photo.
Why of FI
I recently posted about upside risk. To be honest, I wrote that post as a philosophical prelude to this one, which is the one I wanted to write as my first-ever blog post.
One of the big criticisms by non-financial independence people is “Won’t you be bored if you retire early?“. This is a question so depressingly lacking in imagination that it tends to end conversations about FIRE really quickly.
We have no intention of being bored with early retirement. There’s literally a whole world out there and we’re confident that with a bit of courage we could push out into the big wide unknown and magically find things to do that are better than working a desk job.
Call it a hunch.
The Boat Plan in simple terms
We intend to achieve CoastFI based on our present lifestyle, then sell up our worldly possessions and disappear on a liveaboard boat – indefinitely.
The dream is that while we could choose to come back, we wouldn’t feel compelled to. As long as we were willing, we would be able to travel indefinitely, taking our home with us.
Whose brilliant idea was this?!
My partner is the sailor of the two of us. She’s naturally talented at quite a lot of water sports, having grown up as a dinghy and yacht racer in the Channel Islands, and she really loves sailing.
I’m a novice sailor. When my previous job sent us up to Moray, I learned to sail dinghies. Sort of. By feel. I’m not sailing mad, by any means – but I love travel and adventure.
Could I learn to tolerate sailing to live a life of adventure? Yes, yes I could. Thus, the Boat Plan was born.
Caveat
I completely reserve the right to change my mind later on this bold and unorthodox plan!
There are a lot of moving parts to this plan, including me learning to sail a yacht. A lot could happen between now and when I reach CoastFI, and sometimes life gets in the way of these things. Assuming no surprises though, Boat Plan is the dream.
The parameters of Boat Plan
It’s true that we could try the YouTube Channel thing and just disappear on a cheap boat, filming as we go, and see how far we get before going bankrupt or becoming full-time YouTubers. Sure, why not. That’s not our plan, though.
We have the following planning parameters to achieve our dream:
- We won’t set off while we still have our dog. It’s not fair on him: he’s an old boy now and he really hates swimming. We reckon we have at least 5 years of living on terra firma before we can possibly set off on a boat. I love my dog, I’m not giving him up.
- I need to learn to sail yachts. Well, actually sail, rather than blag it by feel. You can get away without knowing many technical terms when you’re only on a single-person dinghy, but when you’re part of a team you need to know stuff.
- Because we plan to have no restrictions on our ability to remain travelling indefinitely, we’re pretty much assuming that our pension pot will need to grow itself. We’re not expecting to make much meaningful progress on pensions after we set off. I’ll explain this further in another section, but it means we want a decent chunk in our pensions or invested assets to compound in the background.
- We’re not above working or topping up our income as we travel. That’s why I’m willing to take on a bit of risk and achieve CoastFI before we go, rather than achieving full financial independence. It’s also why I do a bit of side hustling: I want to try and find income streams that I could work remotely or flexibly when we’re at sea.
Training and learning essential for Boat Plan
As I said, I need to become more technically proficient as a sailor. I don’t need to be an expert, but a bit of proficiency and an ability to learn as I go would help.
In 2022, I plan to do the RYA’s Competent Crew course. My partner is already what’s known as a Day Skipper, so she’s able to charter boats. This will allow us to train ourselves. I’m hoping for a nice sailing holiday in the Med in 2023, but we’ll see how the pandemic evolves.
The Boat Plan also means that I will invest in myself closer to the time with courses that allow me to maintain a boat with less assistance, reducing our expenditure. I guess that’s a nice segue into the next section.
Boat Plan and FIRE number
Living on a boat and sailing the world is remarkably cheap. Well, compared to owning and maintaining a house.
Obviously, this depends on the size of boat you have and the level of comfort and convenience you’re willing to sacrifice. It also depends on how much maintenance you’re willing to do yourself.
We’re still working out the details and won’t be certain until nearer the time, which makes planning a little difficult. Still, we have estimated the following:
| Initial buying of a used sailing boat and fitting it out ready for indefinite adventure. | £30,000-£70,000 |
| An immediate cash or cash-like buffer, for the kind of emergencies a sailing boat might have. | £15,000 |
| Estimated cost of sailing around the world on a sailing boat of no more than 37 feet long | £16,000/year |
There’s a great blog post by one of our favourite YouTubers, Sailing Yacht Florence, which breaks down their costs over a three year period. Another example is a YouTube video by Sailing Millennial Falcon (cool name), which reckon they spend $1,300 per month(ish). We’ve added a healthy buffer to both, for planning purposes.
That’s actually pretty reasonable, when you think about it. At first glance, this means we want to find £100k for the first year and initial set-off, then have a FI number of £400,000 by the 4% rule.
Our actual target number will be a lot lower. I’ll break this down below.
How to fund the Boat Plan
We’re presently 33. We don’t expect to be leaving until we’re 38 at the earliest.
I have a military pension worth £8kish (inflation linked), which kicks in from age 68. On this alone, I’m basically home and dry after state pension age – it’s just my partner we need to fund!
That means we’ll need to fund both of us for 30 years, plus one of us indefinitely after that.
Assuming we earn no income at all when we travel, that means we’ll need 30 years’ assets generating £16,000, followed by an unknown number of years generating £8,000. All these figures are in today’s money.
With this in mind, I played with the Vanguard retirement simulator. I put in a portfolio of 60:40 equities to bonds, as I figured volatility might not be desirable when we launch (although I’m against bonds generally, so our portfolio might look a bit different; I just needed something for the calculator).
We’re also not against working the odd small job or side hustle when we go, as this will reduce the required portfolio size by quite a bit.
Here’s what I got from the simulations:
| Amount drawn from portfolio | Amount earned through other means | How much needs to be in the portfolio for >90% chance or better of maintaining expenses |
|---|---|---|
| £16,000 | £0 – doing nothing to earn money. | £390,000 |
| £13,560 | £2,400 – combined earning £200 per month through side hustles | £340,000 |
| £11,200 | £4,800 – combined earning £400 per month through side hustles | £290,000 |
| £10,000 | £6,000 – combined earning £500 per month through side hustles | £250,000 |
| £8,800 | £7,200 – combined earning £600 per month through side hustles | £220,000 |
I’ve stopped at earning £600 per month each through side hustles. Obviously, if we were to take the Tim Ferriss 4-Hour Work Week approach, we might be able to launch with quite a modest portfolio.
That said, we could have zero current assets/ISAs and live only in our pensions from age 68 onwards.
As we will in fact live on the boat, our equity in our home could be part of either the £100,000 first year payment or the £220,000-£390,000 of assets in the portfolio. This is because we can either sell the home or rent it out, using it as an asset.
How realistic is this funding plan?
Outside of my military pension, we have about £25,000 plus my partner’s defined benefits pension years already. Simply by topping up the pensions and leaving it to compound in the market for 30 years, assuming an average return of only 4% above inflation for 30 years (which is reasonable, bordering on conservative), we would need about £70,000 in pension pots on the day we leave.
We could then let compounding do its thing and reasonably expect the £220,000 we’d need to keep us afloat at true retirement.
In the meantime, we think we’ll need a total net worth of £320,000-£490,000 in non-pension assets to make this go, or an (online) income stream that brings in £1,200 per month.
Or some combination of the two. We presently have a net worth in non-pension assets of around £125,000, and we’ve managed to position ourselves into fairly well-paying careers by investing in our qualifications early on, so it’s actually quite credible.
Which brings me nicely to our strategy.
Our strategy to achieve Boat Plan’s funding
Cunningly, our strategy is the same as it ever was. That’s because this had always been in mind when we set off on our financial independence campaign.
1. Invest in ourselves
We have invested in our knowledge of investing already. I did that financial advisor’s diploma last year and you can see the kind of things I’m reading in the book reviews post category.
We will continue to invest in sailing and boat maintenance, as previously mentioned.
Both of us are also investing in our skills to maximise our income before we go and to generate a side income that can be done remotely. This blog is a pretty good example: I’m planning to use it as a portfolio piece to get freelance writing jobs.
2. Spend intentionally
We’re pretty frugal and we became accidentally minimalist in recent years. When your plan is to eventually sell or your stuff, you become naturally uninterested in buying much. You’ll only need to get rid of it later.
I mentioned in the 2022 campaign plan that we are hoping to relocate to the Channel Islands this year. The earning potential when you consider the tax breaks dwarfs the fees of relocation, so it makes sense for us. However, when we buy a house, we’ll be considering its potential to either become a rental property later or to maintain (or even grow) its value in 5 years for sale. We’ll be thinking of the house as a future asset, unusually.
3. Invest. Heavily.
We’re looking to maintain a savings rate of 40-50% for 5 years, perhaps longer if my dog lives a long and fulfilling life – which I hope he does!
In this time, we’ll be taking lots of risk to maximise the pot. We’re reasonably hopeful of raising the £220,000 minimum liquid assets, but to make sure we’re also going to try and invest our time in side hustles and scalable sources of income that we might be able to maintain when we set off.
It’s a bold strategy, and one which might fail. Still, the upside potential is that at least one of our lines of investment might be enough to sustain us on the high seas.
Contingency plan
If we fail, but we have enough to disappear for a few years, we may depart anyway and look to work remotely.
As long as we can get that £70,000 in pension assets, we know that we’ll be in a good position to CoastFI: our pension pots should be enough without further contributions, meaning that we would only need to earn enough for day-to-day survival needs.
That might be as easy as working 6 months then travelling for 6 months, or working while travelling.
Frequently Asked Questions
This is quite an ambitious and optimistic plan. We’ve had quite a lot of feedback on it, both positive and negative, most of it well-meaning. I’ve collated our more common questions below.
What happens if you’re wrong and run out of money?
We will report back to the UK, presumably after 5-10 years, and take up temporary employment for 6-12 months. We will then go again, but accept that we will have to change to 6 months’ travel every 18 months. Shame, but not game-ending.
I make a really good dishwasher. I’m sure the hospitality industry will love me.
What if you don’t like it or you get bored?
We’ll have tried it and found out!
If we don’t like it after 2 years, we’ll resume a regular job and aim for regular financial independence, having only eaten part of our portfolio pot. That should still give us a decent deposit on a house, and we’ll still be OK for regular life.
Will you want to be sailing as a pensioner?
Possibly. A lot of retired people own boats, doing their own Boat Plan, so presumably it’s OK for quite a while. When we’re too old to do it, we’ll return to land: our bodies tired but our lives filled with weird adventures. The dream.
Yes, that could mean that we don’t own a house again. Which is the next question.
If you return to land, will you still be able to buy a house?
It’s quite possible that we return to land with significantly less capital, with house prices having shot up in our absence, and an inability to get the high-paying jobs we’re currently doing.
Such is life: you take your chances, you own the consequences.
In this case, we will plan to live somewhere cheap and will probably need to rent. Still, we should have a tidy pension, and we ought to have some cool stories. We think the upside potential of this plan outweighs this risk, but I agree that it’s definitely one possible outcome.
Won’t you want to kill each other after living that closely together?
Fortunately, 2020-2022 has tested this thesis. We think we’ll be fine.
How do you know you won’t get seasick?
That’s actually a really good question!
I’m presuming from prior experience of travel on boats that I’m not super-sensitive to seasickness. However, it also turns out that a lot of sailors get seasick at some point, but they seem to get over it after a few days.
I’m guessing I’ll get seasick at some time or other but it shouldn’t matter too much.
And on that note, I guess I’ll end this blog post!
