The 4% Rule
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The financial industry would have to embroil the world in a disaster based on greed, or a totally unsuitable leader of the free world would start WW3, or UK led by a leader totally out of touch with reality exits EU in such a kack handed fashion British plumbers are going to Poland.
How likely is that to happen?
Exactly. If you'd timed it right and put a £1 accumulator bet on Leicester winning the league, Brexit and Trump becoming president, you'd have won £4,530,906!
http://uk.businessinsider.com/odds-leicester-brexit-trump-betting-winning-ladbrokes-2016-11
Nobody knows what the future will hold so if you plan "worst case", you won't be disappointed.
If you wanted to have a pension close to the national living wage (c £17k a year) and you can be sure of the state pension of £8,300 pa, then you still need to top that up with £8,700 a year. Based on a 4% drawdown scheme, you'll need pension pot of £217,500 when you reach state retirement age. Much more if you want to retire early.
Plenty of calculators online to work out how much to save to achieve this, needless to say, the earlier you start, the better since Einstein said compound interest is the 8th wonder of the world.
As an example, take someone who started saving at 21 and stopped when they were 30. Then take another saver who starts at 30 and stops when they retire at 70. Due to compound interest, the first person, who only saved for 10 years, would have a bigger pot than the second who saved for 40 years.
Even more impressive, if a parent put the same monthly saving into a newborn baby account for just two years and stopped, that baby would have even more than the two examples above when they retired at 70.
The earlier you start saving for a pension, the better. Unfortunately this would come at a time when life itself has greater demands on your spare cash.
http://www.telegraph.co.uk/finance/personalfinance/investing/10742396/When-saving-for-10-years-pays-more-than-saving-for-40.htmlSignature on holiday for two weeks0 -
Mutton_Geoff wrote: »
Plenty of calculators online to work out how much to save to achieve this, needless to say, the earlier you start, the better since Einstein said compound interest is the 8th wonder of the world.
"All you have to do is deposit one penny in a savings account in your own era, and when you arrive at the End of Time the operations of compound interest means that the fabulous cost of your meal has been paid for."“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »"All you have to do is deposit one penny in a savings account in your own era, and when you arrive at the End of Time the operations of compound interest means that the fabulous cost of your meal has been paid for."
That's not an an American quote.0 -
bostonerimus wrote: »"All you have to do is deposit one penny in a savings account in your own era, and when you arrive at the End of Time the operations of compound interest means that the fabulous cost of your meal has been paid for."That's not an an American quote.
Sounds a bit Hitchhiker's Guide to me.0 -
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Surely 'The resturant at the end of the Universe'?I think....0
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bostonerimus wrote: »No it's not, neither am I, but if I was, I could still quote it. There's no tariff on quotations.... yet. And yes, it is from HHGTTG.
But currently not offered as an investment option by vanguard I believe.....0 -
But currently not offered as an investment option by vanguard I believe.....
US Vanguard does offer Certificates of Deposits, but the terms max out at around 10 years, so you're right, they don't over an interest bearing investment that will mature when the Universe ends. That's why I haven't put much effort into the time machine.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
Interesting. I retired last March aged 56. I think my 20s and 30s were the toughest years for us financially with a mortgage and two children. I certainly didn't have my biggest pay rises in those years.
Financially things began to get much easier around 45-50 after our kids finished university and ultimately when I paid off my mortgage when my father died and left me enough to do so.
By then I had started buying new cars though nothing super extravagant. Currently have a 3 year old Corsa.
Looking back then I should probably have not used all the money to pay off the mortgage and maybe should have used our increased salaries to build up my wifes pension more i.e. started her SIPP at about 50 rather than in the last 18 months before I retired. Looking even further back, it would have been good to increases our pensions at the same rate in parallel so we each had a pension that used up our full tax allowance, rather than the 85% to 15% pension value split we now have with me paying tax and her not. Having said that I only found this forum 2 years ago. Better late than never!
We were both lucky to have DB pensions and of course we never really imagined the kind of equity we would have in our house. Equity is of course of no use unless you can release it, which would only be our back stop if needed.
So far we are surviving reasonably comfortably on £1600 a month with no debts.0
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