Early-retirement wannabe

BeatTheSystem

Marine_life wrote: »

Running through a lot of the recent posts I think what a lot of people forget is that we are heading into a perfect storm.

1. Interest rates and therefore investment returns are going to be low for a long time to come. Forget historical averages, forget 7%, its not going to happen. Western Europe will (IMHO) remain fragile for many years to come.

2. People generally have less spare cash to spend. When I look at my children and their generation, university fees and high house prices will likely keep disposable income in check for some time (and most likely hit the generation ahead of them - like me - to meet their needs). My son will go to university next year - he does not have the 50k to pay for three years at university and I don't want him to start his life with debt, so that puts a massive hole in the budget.

3. The demographic time bomb means we can look forward for a long time to reducing public pensions and (potentially) increasing taxes. Who after all will pay for the extra 40-50 billion that the government needs to find over the next 10 years?

What does this all add up to?..........Uncertainty.

I think it means whatever your position - wealthy or middle earner - you will need a much larger buffer when the day comes to retire or at least the flexibility to reverse the decision.

I personally think you might be too pessimistic on item 1. I think we will see significant growth over the next few years, the banks will start to lend soon and more cash in the economy will cause asset price increases across the board.

On items 2 and 3, if we get a dose of inflation then debts will effectively reduce, the challenge for wealthy individuals is to try and maintain spending power.

BeatTheSystem

AlwaysLearnin wrote: »

If it's monthly contributions, should it not be FV(7%/12,28*12,-1000), which would actually take it over the £1m mark.

There are a lot of assumptions there though (sustainability of 30% contribution rate, 7% returns, impacts of inflation etc ). Appreciate the sentiment, but not sure it brings it within reach of 'the average man'...

yes you are right, better to express it monthly.

I sacrificed far more than that and had as a consequence less than 10K a year to live on for about 7 years running, had wife's modest salary to help, I was too busy to spend it anyway. Went without cars and bling. Average man (and woman) seems to need new cars and other trinkets, so you are probably right.

AlwaysLearnin

There's a balance between living today and having more tomorrow, and the tipping point is different for everyone. You've clearly got a lot more focus and determination than most, but then that's probably why you're in the position you're in. Good on you. :T

I'm planning for my minimum 'number' for financial independance early/mid 50's, then every year that I decide to carry on after that is just more in the pot. Thankfully I thought about it early enough to spread the load (living on £10k a year for 7 years would be a bit too far for me, which in fact emphasises the need to plan for more in retirement!), but it still involves saving ~50% of our nowhere near top 5% salaries in a combination of pensions and savings.

I take on board what an earlier poster said about lower earners needing to live on a larger share of their earnings, therefore having less to save, but you have to start somewhere and hopefully as your income increases, and/or your costs settle (e.g. you're settled in a house and it's ticking over as opposed to 'making it your own', etc), as long as you don't make the seemingly typical mistake of simply living the 'lifestyle' of that new income, then you should have more to save. I know of people on >£50k, which would allow a lot of savings for many, saying they need every penny. That's just a product of their over exuberance in earlier years though. All about choices.

Marine_life

BeatTheSystem wrote: »

I had been thinking about the should I pay my kids uni fees or give them a house deposit question. Having read a bit of the millionaire next door and a bit more thinking I had come to the conclusion, bo11ocks to them; they are going to have to make their choices and pay for the consequences. The point being is that they will need something to motivate them, as having SFA is what motivated me. Of course I might have to change my tune if they are still living with me in their 30's

There's something in that of course but if it comes to them being indebted to someone (other than me!) then that involves cash 'leaking' from the family as a whole i.e. I would prefer to lend the money and they pay me (a very reasonable) rate of interest than pay a bank and / or pay me back when they move house.

atush

bigadaj wrote: »

Ethnocentric isnt my point specifically, its primarily that Americans will typically have a more right wing view than the average Brit, and Brits will be slightly more right wing than most other Northern Europeans, etc



Surely the point here is that anyone would take a pragmatic approach based on the information available, if you want to do a worthwhile but lowly paid job that requires a degree then the debt route is sensible and potentially low risk. If you have rich parents then they are going to pay these things off anyway, either initially or down the line after taking the loan. I just don't think the current system is efficiently making the best use of the talents of our young people currently, if you are a thick rich kid then you are going to do better than a poor intelligent kid, or certainly relatively so compared with the case over the last few decades. Which was a conversation I had with a us postgrad whilst doing my degree in the eighties, though then there was obviously a starker differen e in the two systems then.

Again you are making a HUGE ethnocentric generalization about americans (perhaps from watching too much Fox news?).

We aren't necessarily more right wing than the average brit, but even those among us who are registered democrats largely understand that being fiscally conservative can be the way forwards for economic health. I am sure the last pres who balanced a budget was a democrat, and given the current incumbent is not a right wing lunatic might show that the majority of the US population are not right wing.

It could be the far right shouts the loudest (think Nigel F?).

And I am not sure about the future of british higher education. I have seen among acquaintances that both those from high income and lower income families are thinking twice about university education in light of the costs. I know several A students at A Level from middle class families who have decided against University instead taking up positions training to be chartered Accts with the big firms.

I am also seeing less wealthy parents willing to foot the bill for junior to study fairly useless subjects. And this year, many russell group unis did not fill their courses for the first time.

mildredalien

If only it were as easy as 'worthwhile low paid' vs 'less/not worthwhile high paid' in terms of making decisions about going to uni or not. There are plenty of people, myself included, who are average earners but needed to go to university to be able to do what we do. So we get stuck with the worst of both worlds - having to pay back student loans but not in a position to make it easy to pay them off quickly. And plenty aren't in the position of being able to pay fees upfront.

It'd be much easier to save for retirement if I wanted to be say, an accountant or engineer, or some other financial sector worker. Unfortunately for my finances I have no interest in those things and my strengths are in other areas So, saving a million pound pension pot is probably well out of my reach. However the fundamental principles (being relatively frugal, starting retirement savings early, being aware of how much you need to save to get by) at least means that I will retire comfortably even if it is at 60 not 50.

bigadaj

Atush, take your points and acknowledge them, I sometimes worry about these forums becoming a. Little too consensual and cliquey and think an honest exchange of opinions is really healthy.

Of course your right in terms of individuals in terms of being left and right wing, but the us politically is well to the right of the UK, and there have been times in the not too distant past where the democrats have been right of the conservatives. There are many examples but healthcare being the starkest, and this is from someone who considers the nhs to be a very inefficient system, certainly compared to other Northern European systems, but i digress.

Lets be honest, Blair was clever in the expansion of the higher education system, particularly in passing costs onto students or their families. Rapid expansion of the education system meant that the less intelligent rich kids could now boast a degree which they wouldn't have qualified before, and those families are happy to pay for it. MOre importantly this provided several years where the transition took hundreds of thousands out of the unemployment figures which is a brilliant political plus.

We could certainly consider that ukip success is arguably a strength of the system in the UK, when parties become bland and consensual and the natural protest party becomes part of teh government then people look elsewhere to voice their concerns. The main parties can then move back away from the centre to adopt those expressed views. The us comparator for ukip would surely be the tea party, were starting to make farage look reasonable!

Interesting point about Russell group unis not filling their quotas, suppose we are back to the good old law of supply and demand, in which case the suppliers should naturally Reduce prices to maintain demand one would have thought.

Marine_life

mildredalien wrote: »

If only it were as easy as 'worthwhile low paid' vs 'less/not worthwhile high paid' in terms of making decisions about going to uni or not. There are plenty of people, myself included, who are average earners but needed to go to university to be able to do what we do. So we get stuck with the worst of both worlds - having to pay back student loans but not in a position to make it easy to pay them off quickly. And plenty aren't in the position of being able to pay fees upfront.

It'd be much easier to save for retirement if I wanted to be say, an accountant or engineer, or some other financial sector worker. Unfortunately for my finances I have no interest in those things and my strengths are in other areas So, saving a million pound pension pot is probably well out of my reach. However the fundamental principles (being relatively frugal, starting retirement savings early, being aware of how much you need to save to get by) at least means that I will retire comfortably even if it is at 60 not 50.

I think you make some valid points but I don't agree with everything you say.

There is a tendency to make generalisations about different jobs and about the amount of money you can earn. But there are so many variables that need to be taken into account that its impossible to generlaise.

In my own example, I am an accountant by qualifications but what does that get you? It actually gets you a decent job in a number of fields some of which i would not consider in a million years (e.g. being an auditor), I am not technically minded so anything to do with accounting polices or tax is a complete mystery to me. I regard myself as a commercial accountant which is essentially the ability to look at a business and see how it makes money and see how it could make more money!

The other important point is that opportunities will only open up if you are prepared to move (possibly jobs and possibly locations). One of my nephews has been unemployed for the last 5 years but that's largely becasue he refuses to move away from his home village with the consequent limitation of options.

In my first 10 years of working I moved jobs five times before i found something that i really wanted to do. i have now been in that job for 17 years. Finding something I wanted to do meant something I enjoyed, something I was good at and something I could see growth prospects in.

I also think that if people want to 'move on' they need occasionally to get their elbows out. That doesn't mean treating others as a doormat but it does mean occasionally a bit more foreceful.

I would not claim to be hugely talented but I believe I have maximised what I have.

This isn't a criticism aimed at you but just an observation that I think some people are where they are becuase they took a decision at some point not to push on (either through personal or professional reasons). We see it in my organisation at the moment, in that we have huge demand for people to go to Africa - the opportunities are fantastic but nobody wants to go! Nothing ventured etc.....

So what's my conclusion? I think it's fine to enjoy a lifestyle that meets personal goals at the sacrifice of professional goals but that might mean also sacrificing financial potential. You know how the saying goes .....you can't have it all!

gallygirl

Marine_life wrote: »

i have now been in that job for 17 years.

Shouldn't you be retired by now? No, don't tell me, I'm only on page 19 and finding it fascinating .

elantan

It is a brilliant thread GG have been following it from the start ( I kept losing it though so have added it to tell me when someone posts )

I love all the discussions, it's great hearing different ideas etc

Have really enjoyed following the changes with Marine life himself he is really working through this decision