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Early-retirement wannabe
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Marriage/kids - of course, you may be right, this could well be open to change, but it's not on the cards right now. Kids would likely mean no early retirement!
R this point I was ADAMANT I wasnt having children. To the point i told my OH to look for someone else when the idea of marriage came up. So you never know?
But if you plan as you are doing, you will be fine to readjust and still retire early even if you end up having kids. Just maybe not as early as planned? in the end, delaying retirement for a few years was worth it. Our life would have been VERY different if we didnt have them. Not better, not worse. Just different.0 -
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Finally back and blogging again - our first retirement road-trip (hopefully the first of many):
http://earlyretirefree.com/day-1-2-travel-las-vegas/Money won't buy you happiness....but I have never been in a situation where more money made things worse!0 -
I'm 53, can retire with my pension from work October next year at 55. Currently off sick- due to return next month following a heart attack. I have been sent by my employer on a Pre-Retirement Course. This was really good. You need to think of what you will do with the time off, currently most have 8 hours sleep, 8 hours work and 8 hours travel/ leisure per day. Retire and you have 8 hours sleep and 16 hours leisure.
I sort of agree with this. My father switched to part time work when he was 60, but 6 months later had to reture due to a heart problem. He did not know what to do with himself. After a while he started playing more golf, eventually 3 days a week instead of just Sunday afternoons. That saved my Mum's sanity.
I lost my job when I was 54 and have effectively retired. Though this was unplanned I have had no problems. I didn't have enough leisure time to do everything I wanted to do before, and I still don't. Luckily many of my interests are fairly cheap.0 -
FUTURE PLAN
The intention is to try to build up a pot of between £250k to £300k (in today's money) in savings (ISA etc) by age 50 - this I have modelled using annual savings of £13.5k a year and an real return of 3.5% (inflation + 3.5%) based on having the funds invested in global index tracking funds.
I would then use this pot to stop full-time work around age 50, draw down on this pot until mid-60s and then start drawing my actuarially reduced civil service pension. I'll need around £105k from age 50-55 (£21k p/a - living expenses will be a bit less than now due to not paying annual rail ticket costs and expensive work lunches!) then only £10k a year from 55 onwards (due to mortgage being paid off).
This all sounds pretty frugal? But will still allow a few hundred £ a month for leisure activities. If I keep the pot of £250k-£300k invested in the markets whilst drawing down then I should still have £100k-£150k left by mid-60s, (I will have also drawn down my stakeholder pension pot to zero) at which point I'll have a healthy pension income of around double my living expenses + some savings left for 'whatever'.
PENSION
I have an option to buy up to £6,600 p/a additional Civil Service pension, which I worked out will cost me £175 net (after tax) per month over the next 13 years. I think this is a pretty good investment - even if I decide to take the pension early (actuarially reduced).
For info - some of the actuarial rates:
At age 57 - 56%
At age 60 - 65%
At age 65 - 85%
At age 68 - 100% (my state retirement age)
So my pot would be worth £23k p/a currently (by age 50) and I could up that to nearly £30k p/a with the added pension - then even if I took this at say age 60 - it would net me c£20k p/a with the reduction (more than I should need). I haven't factored in state pension, but obviously that would add some additional income too (and I am aware of the benefit of delaying this too).
CONCLUSION
Does this generally sound 'reasonable'/realistic?
In short, I'll save up some cash, quit work around 50, live off my savings/minor stakeholder pension till 60-65ish then coast along on a decent DB pension scheme + rest of my savings till I die!
I don't really see any point working beyond 50 if at all possible? I mean it's a lot of time (inc travel) for little personal benefit (besides money) - I'd much rather be doing any number of other things.
Any fatal flaws in my plan?
Many thanks!,
Luke
The 10k/yr part seems too low to me.
I lost my job when I was 53. I had plenty of savings, but tried to live on my income, which gradually increased as I bought properties to let. At £300 pm contributory JSA I was having to tap my savings fairly frequently and £400 pm from my first property wasn't ,uch better. With my second property I was getting £900pm - close to £10k per year. That was enough for all my day to day expenses living frugally, but there were still times I had to tap my savings such as getting my car fixed. My mortgage was nearly paid off, I was paying £17pm. It was only with my third property when my income jumped to £1500pm that I could cover everything from income. I could even afford small lucuries such as eating out in other than the cheapest places.
Have you looked at the What's my NUMBER thread?0 -
Hi all,
I've enjoyed reading this thread (mostly whilst at work - wishing the hours away!) and it's been interesting reading the stories of how people have reached a position of financial independence. I'd appreciate any thoughts/feedback about my current plan - aiming for early retirement around 50 if possible! (earlier would be great, but probably unlikely).
DETAILS
Age: 37
Marital status: single
Kids: none and no plans
Mortgage - c£175k (due to be paid off at age 55)
Home - value c£320k
Private stakeholder pension - value c£25k
Civil service pension - projected value of c£23k p.a at age 50 (pot builds up at 2.32% of salary p/a)
Savings and investments - value c£25k (cash, P2P and S&S ISA)
Gross salary c£51k (take-home £35.5k p.a) + 8.5% bonus
SAVINGS v EXPENSES
Net pay (after bonus, pension, tax etc) - c£38k
Living expenses - c£23k p/a
Savings - c£15k p/a
FUTURE PLAN
The intention is to try to build up a pot of between £250k to £300k (in today's money) in savings (ISA etc) by age 50 - this I have modelled using annual savings of £13.5k a year and an real return of 3.5% (inflation + 3.5%) based on having the funds invested in global index tracking funds.
I would then use this pot to stop full-time work around age 50, draw down on this pot until mid-60s and then start drawing my actuarially reduced civil service pension. I'll need around £105k from age 50-55 (£21k p/a - living expenses will be a bit less than now due to not paying annual rail ticket costs and expensive work lunches!) then only £10k a year from 55 onwards (due to mortgage being paid off).
This all sounds pretty frugal? But will still allow a few hundred £ a month for leisure activities. If I keep the pot of £250k-£300k invested in the markets whilst drawing down then I should still have £100k-£150k left by mid-60s, (I will have also drawn down my stakeholder pension pot to zero) at which point I'll have a healthy pension income of around double my living expenses + some savings left for 'whatever'.
PENSION
I have an option to buy up to £6,600 p/a additional Civil Service pension, which I worked out will cost me £175 net (after tax) per month over the next 13 years. I think this is a pretty good investment - even if I decide to take the pension early (actuarially reduced).
For info - some of the actuarial rates:
At age 57 - 56%
At age 60 - 65%
At age 65 - 85%
At age 68 - 100% (my state retirement age)
So my pot would be worth £23k p/a currently (by age 50) and I could up that to nearly £30k p/a with the added pension - then even if I took this at say age 60 - it would net me c£20k p/a with the reduction (more than I should need). I haven't factored in state pension, but obviously that would add some additional income too (and I am aware of the benefit of delaying this too).
CONCLUSION
Does this generally sound 'reasonable'/realistic?
In short, I'll save up some cash, quit work around 50, live off my savings/minor stakeholder pension till 60-65ish then coast along on a decent DB pension scheme + rest of my savings till I die!
I don't really see any point working beyond 50 if at all possible? I mean it's a lot of time (inc travel) for little personal benefit (besides money) - I'd much rather be doing any number of other things.
Any fatal flaws in my plan?
Many thanks!,
Luke
I have a couple of things for you to consider -
I presume you are considering additional pension contributions because your employer will add to them as well as you receiving tax relief on them? If your employer is not contributing I would invest in a SIPP (like your S&S ISA strategy) because you can draw that down without actuarial reduction a little earlier than your CSP, should you need to (for greater flexibility).
The other element I would consider is to pay off your mortgage by the time you stop work. - There's a thing called "Tilly Tidying" that lots on the debt-free threads do - basically on a regular basis, you round down your bank account to a round figure and move the pennies and odd pounds (I round to £50) - and similarly I round up my mortgage payment to the next hundred. These scrapings gradually overpay your mortgage (most lenders allow 10% per year overpayment and mine lets me change the term for a small fee) - it will really make a difference over 13 years, and you will hardly notice it.
My mortgage rate is only 0.74% but I still paid over £1000 interest last year. All the time I have it, it is stopping me ramping up the retirement savings a bit faster.Save £12k in 2025 #2 I am at £4863.32 out of £6000 after May (81.05%)
OS Grocery Challenge in 2025 I am at £1286.68/£3000 or 42.89% of my annual spend so far
I also Reverse Meal Plan on that thread and grow much of our own premium price fruit and veg, joining in on the Grow your own thread
My new diary is here0 -
Suffolk_lass wrote: »
The other element I would consider is to pay off your mortgage by the time you stop work. -
My mortgage rate is only 0.74% but I still paid over £1000 interest last year. All the time I have it, it is stopping me ramping up the retirement savings a bit faster.
Hi ICO99
I'd second what Suffolk lass suggests, we've just re-mortgaged hopefully for the last time to a better rate, fixed for 3 years and will clear the balance at the end of this - a slight change of plan as our current deal expires in Jan 18, but we are keeping our payment at it's present rate thereby not changing our outgoing to the mortgage but overpaying it by £100 per month, ever little helps!CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!0 -
Hi, great to see Tilly Tidies still being used. It cleared on average £45 of capital from my mortgage each month.
Good luck xxx
Tilly2004 £387k 29 years - MF March 2033:eek:
2011 £309k 10 years - MF March 2021.
Achieved Goal: 28/08/15 :j0 -
Soddit, just emptied ISAs that we've been working on for 25+ years to provide inlaws with a bridging loan after their house sale fell though. It sodding well better be back in there by April 5th!
This cruise to retirement is proving to have some rapids!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
That's just bad for those who want a mortgage paid off as their first priority but it's even more harmful for those who want to retire early. It's easy to make more than normal mortgage interest rates from investments at the moment so a Pound off a mortgage is a Pound losing you money compared to investing it.Suffolk_lass wrote: »The other element I would consider is to pay off your mortgage by the time you stop work. ... These scrapings gradually overpay your mortgage (most lenders allow 10% per year overpayment and mine lets me change the term for a small fee) - it will really make a difference over 13 years, and you will hardly notice it.
My mortgage rate is only 0.74% but I still paid over £1000 interest last year. All the time I have it, it is stopping me ramping up the retirement savings a bit faster.
With an early retirement desire some approaches that get there faster include:
1. P2P investing. Easy enough to get 10%+ interest rates after allowing for bad debt.
2. VCT investing (to eventually get rid of your income tax bill and make some investment gains)
3. Pension investing (nice tax relief, though not as good as CVTs, and investment growth).
4. ISA investing
Even with a get rid of the mortgage first priority those approaches will get there faster because of the compounded growth on the difference between investment gains and mortgage interest cost.0
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