Early-retirement wannabe

Marine_life

mennie wrote: »

Have been reading with interest


I am currently 33, with a 3 year old, so this is a way off, but never too early to start thinking right?


At the moment our combined group pensions will only give an income of £8Kpa. Our mortgage will be paid off by the time I am 46. Giving us 10 years to chuck everything at savings so we can retire before hubby is 60.


Did you all produce your own spreadsheets for planning or is there something available on line for free?


Thanks

I think the online pension calculators have a value to an extent but it depends on what your savings will consist of and what you want to model! specifically if you think you will use a number of venicles to save to generate your income then there is not one single online calculator that will help you with that. For example you may have a company pension, ISAs, Other savings, income from property etc. etc. So (if you have decent spreadsheeting skills) I would start a model now, you are young enough to check the results against reality (on a regular basis) and adjust your saving accordingly.

Marine_life

I was reading a retirement blog today about what to do with all the spare time once in retirement and it went something like this:

"One of the things I tell new retirees that are having trouble figuring out what they want to be spending their newfound time on is to look back at what they loved to do when they were kids. The piano is like that for me. I used to get lost in practice for hours and hours when I was a kid."

My problem is that as a kid I liked setting fire to stuff.....;)

elantan

http://m.youtube.com/watch?v=2IjdnMvBW_A


This will be right up your street then

JasonPr

Snakey wrote: »

New to the thread - I've spent all afternoon reading the whole thing and picked up some interesting pointers and things I had not thought of.

Thanks Snakey for your insightful post. I really appreciate your post because I'm in a similar position as you -- you're just 7-8 years ahead. I've been putting around £45k into a pension per year for the last four years, just enough to avoid paying 40% tax. I can make use of the carry forward rule when the £40k limit comes into effect but I'm worried I'll actually have to pay 40% tax on some of my earnings in 2-3 years if I cannot find another clever solution. VCT, as suggested by jamesd, are something I need to check out. Setting up an Ltd would allow other possibilities, but I'm employed and I don't see my employer paying me through an Ltd.

I am concerned about the new lifetime limit. I intend to make £40k pension contributions for the next 6-7 years or so, so I'd end up with a pot worth around £500k. It's hard to tell though how that will grow over the next 20 years and what the government will do to the lifetime limit...

I agree with gadgetmind about signing up as self-employed and paying NIC 2 so you can build up the 30 years of contributions needed for a full state pension. The only downside is that you'll have to complete a Self-Assessment tax return annually but it shouldn't be too much work. In addition to allowing you to make cheap NIC payments, you can actually do some self-employed work and earn some tax free money by making use of your personal allowance.

I'd like to hear from other people... what strategies do you employ to reach early retirement. What has worked and what hasn't?

BeatTheSystem

JasonPr wrote: »

Thanks Snakey for your insightful post. I really appreciate your post because I'm in a similar position as you -- you're just 7-8 years ahead. I've been putting around £45k into a pension per year for the last four years, just enough to avoid paying 40% tax. I can make use of the carry forward rule when the £40k limit comes into effect but I'm worried I'll actually have to pay 40% tax on some of my earnings in 2-3 years if I cannot find another clever solution. VCT, as suggested by jamesd, are something I need to check out. Setting up an Ltd would allow other possibilities, but I'm employed and I don't see my employer paying me through an Ltd.

I am concerned about the new lifetime limit. I intend to make £40k pension contributions for the next 6-7 years or so, so I'd end up with a pot worth around £500k. It's hard to tell though how that will grow over the next 20 years and what the government will do to the lifetime limit...

I agree with gadgetmind about signing up as self-employed and paying NIC 2 so you can build up the 30 years of contributions needed for a full state pension. The only downside is that you'll have to complete a Self-Assessment tax return annually but it shouldn't be too much work. In addition to allowing you to make cheap NIC payments, you can actually do some self-employed work and earn some tax free money by making use of your personal allowance.

I'd like to hear from other people... what strategies do you employ to reach early retirement. What has worked and what hasn't?

My strategy was simply:


1. Bunged all salary into Pension
2. Bunged all bonuses into Pension
3. Lived off Wifes salary


I did this for about 10 years, lived reasonably well did not waste money on cars etc. I was lucky as my mortgage is very low as I bought during the last crash. I was also lucky as post 'A' day and after the last stock market crash I had some very decent bonuses that were invested and have grown well.


Age 45, with 1.1M in pot, applied for fixed projection now started investing in VCT's end EIS.


I have bit of a thing about not paying tax.


So glad I did it, I was so busy with my career I didn't miss the money not being in my account.


Challenge now is to build enough outside of pension so I can retire before 55.


Just a quick calc, lets assume you are 35, if you invest 40K pa for 10 years to age 45 and nothing thereafter by the time you are 55 you would have 1653K assuming 10% growth (what I have actually had for the last few years net of charges)




good luck, sounds like you are doing the right thing by maximising contributions.

atush

mennie wrote: »

Have been reading with interest


I am currently 33, with a 3 year old, so this is a way off, but never too early to start thinking right?


At the moment our combined group pensions will only give an income of £8Kpa. Our mortgage will be paid off by the time I am 46. Giving us 10 years to chuck everything at savings so we can retire before hubby is 60.


Did you all produce your own spreadsheets for planning or is there something available on line for free?


Thanks

If you have a repayment mtg, and 13 years is the term left, fine. If you are overpaying, oinstead of pther long term savings (while rates are low) i'd cease overpayments and up pension + S&S isas instead.

reddleman

I'm enjoying reading this thread.

I worked in engineering from 1970 to 2006. I enjoyed the early years, but gradually became disillusioned and started thinking about getting out about 1995. I'd paid my mortgage off early (before my 40th birthday) and saved up all the money equivalent to what I'd been paying for the mortgage. I invested the money in banks, building society bonds and the stock market. By 2003 I was hating work and I had decided to leave in the spring of 2007. However, the company was going through a rough patch at the end of 2005 and By March 2006 they were asking for volunteers for redundancy. Music to my ears! After spending a fortnight unemployed (and enjoying every minute!) I got a part time job in a shop and enjoyed working there. My intention was to work for about two years then pack in completely, but four and a half years elapsed before I made the decision to go. Since that day I have enjoyed the total freedom that retirement allows. I get up when I want, go to free lunchtime concerts, visit art galleries, have long walks in the local countryside, grow vegetables and flowers on my allotment. In all, my life is now wonderful and I am so content.
It had been my intention to retire early from being about 30 and I had planned it on a spreadsheet. I have kept records of expenditure from 1992 to the present day so I have a good feel for the figures and have been able to make predictions for future years. My plan enables me to give myself 15% annual increases until I am old enough to receive my pension.
My advice is to start planning early, only spend half of ones salary, and live frugally. I don't run a car or go on extravagant holidays abroad and time my shopping trips to get the yellow label bargains. I hoard things, as they often come in useful, or sell them on eBay.

Goldiegirl

reddleman wrote: »

My advice is to start planning early, only spend half of ones salary, and live frugally. I don't run a car or go on extravagant holidays abroad and time my shopping trips to get the yellow label bargains. I hoard things, as they often come in useful, or sell them on eBay.

I think planning is vital, and the earlier the better - however, I also feel it is important to live in the moment, and spend some money on the journey.


I know of people who have thousands and thousands in the bank by retirement, but are unable to spend any of it. They've been saving for their retirement their whole life, but when retirement comes, they are unable to spend any money, because they've forgotten how to. They even begrudge spending money to make themselves comfortable, for example on heating


I've had some fantastic holidays in my life and don't regret any of it - but I've also been saving for retirement, and hope to have more holidays when I'm free of work

reddleman

I do have holidays, just not extravagant ones. I went to Tenerife last year and had a wonderful time staying at a self catering cottage on an organic farm. Sheer bliss! Handy for the beach, walking distance from local shopping and the excellent bus services. Not to mention the lovely locally produced wine!

Every day is like a holiday nowadays!

scottiescott

I too have gained great inspiration from this thread and a year ago started logging my expenditure on a spread sheet to establish "the number".
I am starting to get an idea of how much I will need in retirement which hopefully will be in 5 years or so when I am 59 and (hopefully) about to take my 39/60ths of final salary pension.
No doubt I'll have many questions to ask over the next few years but I am enthused and entirely confident that the great people on here will be able to help.
Keep up the good work!