Early-retirement wannabe

gadgetmind

rictus123 wrote: »

Ok well i will buy smarted investing and have a good read. I think its just quite daunting

Of course you do, we all do. However, you seem to be prepared to put in the time to learn the ropes, which is great. After reading Smarter Investing, it will hopefully all seem less daunting, but I know you'll have a load more questions!

So cash ISAs could well be the way until then.

Do not confuse savings with investments. The former are a predictable way to slowly lose money while the later are an unpredictable way to slowly make money. You will need "rainy day" money in ISAs and index linked certs, but everything that's intended to be invested for the long-term (10 years plus) needs to be in a balanced portfolio of equities and bonds.

Read the book and it will all make sense, or at least more sense than it does now.

Thesmiths

OUR PLAN

We first decided to plan for an early finish about 15 years ago after seeing my Dad have to finish early when he was not financial ready, it really made me think hard and recognise things will continue to change in the UK workplace. We dont want to assume anything.

We are both 41 now. The aim is to have a lifestyle change at 50. This does not equate to retirement but will be work we want to do and likely to be low paid, possibly based on subsistance living. The main reason is that we both feel our jobs are too challenging in the long term, we would probably never see retirement and we will be sick of corporate life by 50 anyway.:mad:
Basically life is too short for too much of this *$#¥!!:

The investment so far:
Both have 22 years in company pensions which secure us from 63
Both started AVC payments at 30 years old
Started small regular savings ten years ago which we increased year on year and changed to ISAs some years back.
Overpaid the morgage until completion this year.

Main investment aim has been tax avoidance with good growth.

Now deciding where to invest extra for the next ten years, more AVC, property, shares etc, just not sure.........

The aim is have assets worth £1M and to have as much flexibility as possible by 50 to see what we end up doing. We might want to stick to investment growth or switch to income.

Our main concern is around pension changes by government, sustaining our current incomes and thay ISA allowances only go up.

rictus123

Thanks Thesmiths....i think once iv moved out the first few years will be getting plenty liquid behind me in ISAs and trying to clear the mortgage asap. Then i will most likely come back here and try again, see what is better for myself once im in that situation. Can i ask your combined salary if you are aiming for £1m in assets?

cyclonebri1

jem16 wrote: »

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.

But cash ISAa are fine if you consider them against similar easy access savings accounts. God would have you believe never to touch the tax free staus of them but what the hell, when you need the cash and they are returning less than other methods, well....

jem16

cyclonebri1 wrote: »

But cash ISAa are fine if you consider them against similar easy access savings accounts.

Nothing wrong with Cash ISAs if it's cash you want to hold as part of your portfolio.

However to only have cash in saving for your retirement would be foolish.

gadgetmind

cyclonebri1 wrote: »

God would have you believe never to touch the tax free staus of them but what the hell, when you need the cash and they are returning less than other methods, well....

Since I started putting funds into PEPs in the late 80s, which turned into ISAs in the late 90s, I have never dipped into them as I've always viewed them as retirement savings.

However, they might serve different functions for others, so each to their own.

dlorde

I retired at 55 over a hectic weekend in July 2010, two years earlier than planned. I was making good money as a software developer, and being single with no dependents, had been able to pay off my mortgage early, and was maxing out my pension contributions and AVCs, as well as ISAs and other low-risk savings (NSI bonds, etc).

Retirement at 57 seemed a good balance between pension return and time to enjoy it, and a pensions advisor I spoke to agreed. However, the company I worked for was suddenly put up for sale, and the final salary pensions (from the previous owner) would then be deferred. I received the calculation of the pension income for retirement pre and post deferment (the formulae were different), and discovered that if I retired after deferment, I'd have to work another two years to make up to what I'd get if I retired immediately. The company had promised that anyone affected would have time to take retirement before deferment, but I then discovered that the company sale (and pension deferment) would take place the following Thursday, so I basically had the weekend to decide...

After sleepless weekend hunched over the calculator, sweating, double-checking my figures, and hoping I hadn't miscalculated, I met my IFA on the Monday who agreed my calculations, went into work on Tuesday and handed in my retirement request, and was officially retired on the Wednesday (we came to an amicable agreement about the missing month's notice and a job handover).

Two thirds of my income is now my RPI-linked FS pension, and a third is from an annuity I took out with my AVC contributions - fixed rate, but I calculate I'll get my state pension before it becomes too badly eroded by inflation, and there's savings & investments in reserve. I saw the huge uncertainty in the markets and decided I'd rather have a little less and be absolutely certain of my income.

I've always been lucky in being paid well for a job I enjoyed doing (despite the 3.5 hours daily commute), but in the couple of years before I retired, I'd begun to feel a bit down and generally lacking interest. It seemed like a mild depression, but antidepressants didn't help. Within a month of retiring, the cloud had lifted - I was smiling almost constantly for six months After 30 years developing software, I had just become tired and bored with it. I haven't missed it in the slightest. I have a different life now, and the constant low-level background stress of work-related concerns and anxieties is now a memory.

As it happens, the pension income I get now is the same as I'd (conservatively) calculated I'd get by retiring at 57, thanks to unexpectedly good AVC investment performance and a good annuity rate (I got in just before the rates slumped).

I now find myself comfortably off - I have a low-key lifestyle and don't really go for luxuries - probably a habit due to saving most of my income while working. I try to get plenty of exercise, not spend too much time in the pub, and I've got a huge stack of unread books, unwatched videos, and music for entertainment when I'm not out in the sunshine. Plus, of course, that procrastinator's friend, the internet.

I do keep reminding myself how lucky I've been - in the last generation to benefit from a final salary pension, a well-paid job, retiring just before pensions, annuities and investment returns tanked, etc. But on the other hand, I did the work, and saved as much as I could; I stayed in a small house with a small mortgage that I could pay off early, and completely avoided problems with negative equity. Having no partner or dependents also helps - no school fees, etc.

cyclonebri1

gadgetmind wrote: »

Since I started putting funds into PEPs in the late 80s, which turned into ISAs in the late 90s, I have never dipped into them as I've always viewed them as retirement savings.

However, they might serve different functions for others, so each to their own.

Don't get me wrong, I was the same, the Tessa's (I think), that became ISAs are still there but after retirement I now see little point and have treated recent years contributions as available cash, considering that I managed a few 5 year lock ins on saving accounts compared to the poor isa rates at present.

atush

And interesting story Dlorde.

I will not be able to follow your path, as I was 'blessed' with 3 boys who although they take up huge amts of money and time have so far seemed to be good investments in and of themselves lol.

But I hope to follow behind you around 60 or so ;-)

dlorde

atush wrote: »

... I will not be able to follow your path, as I was 'blessed' with 3 boys who althouh they take up huge amts of money and time have so far seemed to be good investments in and of themselves lol.

Yes, it's a curious trade-off; my friends with children say that, regardless of the difficulties, they could never contemplate life without them, however comfortable. I, on the other hand, don't really miss what I've never had. Fortunately, we're all different - that's what makes people interesting