Early-retirement wannabe

gadgetmind

Marine_life wrote: »

So financially very much on track but mentally starting 2012 with an altered view.

We also had a health scare this year, and as in your case, it all seems to have been sorted thanks to early diagnosis and surgical skill. Yes, it does change your perspective on life!

We're definitely going to enjoy life in the here and now, but also know that being able to retire early, and to enjoy the freedom of not having to work while our bodies still have at least a few miles left on the clock, is important.

Well done for getting past the heath issues and also on what's obviously been hard work tackling pension savings and mortgage debt with all of that going on!

rictus123

Ok how about this one folks. You are 20 years old. Earning £52k per year. You wish to retire/semi retire as soon as it allows.

By semi retire i mean can have own little part time business income of about £10-20k per year but not being employed by anyone. Total income needs to be enough to get by, a few holidays a year, takeaways every month etc plus upgrade car once every 4 or 5 years.....SO the big question....how do i do it? And is £1,000,000 cash enough for me to live off for the rest of my life?

jem16

rictus123 wrote: »

SO the big question....how do i do it?

Have you joined your pension scheme yet?

rictus123

Cannot contribute more than i am through employer apparently i am at the maximum already.

jem16

rictus123 wrote: »

Cannot contribute more than i am through employer apparently i am at the maximum already.

As a higher rate taxpayer you might want to open a personal pension and make use of the higher rate tax relief.

rictus123

Where would i go about this? However if i am seeking to retire before 55 then surely i might be better off putting my money elsewhere?

jem16

rictus123 wrote: »

Where would i go about this?

See an IFA or DIY with a discount broker.

However if i am seeking to retire before 55 then surely i might be better off putting my money elsewhere?

You could also save into a S&S ISA to cover the gap until age 55 but you will not get the tax advantages by doing this.

gadgetmind

rictus123 wrote: »

Where would i go about this? However if i am seeking to retire before 55 then surely i might be better off putting my money elsewhere?

Yes, but you won't need anything like as much to bridge the gap between retirement and age 55 as you will to get from age 55 to death. Well, hopefully not ...

So, you want to max out pension to make best use of the 40% band, ideally via employer's scheme, but otherwise via a SIPP. Are you sure your employer won't let you contribute more? Normally what they will contribute is capped but your contributions are limited only by taxable income.

Anything else needs to go into a combination of cash savings (NS&I certs when available are great) and equity investments for longer-term saving for retirement.

Buy a copy of Smarted Investing by Tim Hale and read it. You need a sensible asset mix and low-low fees. After that, time is your friend.

rictus123

Ok well i will buy smarted investing and have a good read. I think its just quite daunting, i am only 20 yet dont get the pension payout until 55. So cash ISAs could well be the way until then. Filling my isa from 21 to 40 should accumulate around £100k + interest if im right? So with just 3% interest then a total of around £130k?

That would most definatly be enough to go along side part time income. Things might change though, if i can find myself in a decent business that pays well(simular to what i am on now will still be a good enough wage id imagine) and i still have a great life/work balance in favour of life then i would carry on full time, all of the retirement planning would be great along side this and my income would infact be large enough to get liquid rich/invest into assets providing an income with little work that i would then manage to still retire early and possibly at 50 - 55 bearing in mind pension would then kick in at 55.

Obviously i have time on my side and lots of it. I just have to take full advantage and try to plan out as much as i can.

jem16

rictus123 wrote: »

So cash ISAs could well be the way until then. Filling my isa from 21 to 40 should accumulate around £100k + interest if im right? So with just 3% interest then a total of around £130k?

Cash ISAs are not really suitable for long term planning as they will lose value with inflation. Inflation is running at around 5% just now so anything earning less than that is losing value.