The road to financial independence.

caveman38

I cannot see the logic in saving half my salary to finance an unrealistic retirement till of 90-100 years of age.

srcandas

Student_of_£ wrote: »

1) My definition of financial independence is getting to 60 and having the passive income to support me in a comfortable retirement for the next 30-40 years.

Same here and I achieved it by building a business. Get others to work for you I guess is a parallel to getting money to work for you. Of course if you go down the family route even your saving aspiration may get derailed. But c'est la vie.

Student_of_£ wrote: »

2) I am studying French and Italian at university and have just spent 3 months in France and will spend 4 months in Italy. I am also conversant in Spanish and Portuguese.

Good range of languages. Interesting no German? My business partner's wife qualified in French and Italian at Cambridge but had to add German to her repertoire to increase employment opportunity. Will you make languages you career focus, as in teaching, or will you use your linguistics alongside other skills?

Obviously my example was related to adding skills to your core. So I guess in your case it would be some other skill set that has synergy.

Recently we offered a position to a guy who had amateur dramatics in his hobbies. When questioned he demonstrated good enthusiasm, dedication (2.5 years), oration skills and memory skills. It certainly differentiated him. He found it fun and rewarding socially but it certainly aided his career.

Student_of_£ wrote: »

3) As for pensions, I was thinking of first of all establishing a healthy emergency fund and then trying to max out my S&S ISA every year until I reach retirement, I heard that if you do this it is possible to gain a portfolio of £1-2 million, I understand the risks involved!!

You might be lucky but inflation can be a cruel task master.
If you have your home paid off and your kids off your hands and you have given them a solid education such that they do not need your help - you might be lucky.

But tucking away £10k at today's rates every year for 40 years is a tough ask. But good luck with what will be an exciting adventure :cool:

lvader

caveman38 wrote: »

I cannot see the logic in saving half my salary to finance an unrealistic retirement till of 90-100 years of age.

Saving half the salary sounds a lot, but financing retitrement until you are 90-100 isn't unrealistic, if you plan your retirement income correctly it shouldn't matter how long you live.

caveman38

Obviously what we say on here is only a matter of opinion as no-one know what the future holds.
Me, I am used to be a bit cautious and thought about retirement seriously. These days I am not so sure for may reasons.
a) I would fully expect that the population of UK to be up to 70+ M by the time the OP retires.
b) If the third world expands as it is and the UK economy never recovers (which I doubt it will) only 20% of adults will be working
C) those that do work will be taxed up to the hilt and be unable to save a lot
d) if living to 90 becomes the norm, annuity rates will be rubbish and one would need a £1M pension pot for a reasonable pension
I would therefor advocate enjoying ones ligfe while you can and not over committing to the future.
Only my opinion.

Student_of_£

Stubod wrote: »

Be carefull!!!!....I don't want to put a dampener on your plans, which I think are basically sound.....but you may spend a lifetime saving and not "having some fun"...only to get to 60 (or earlier), and find you have health problems, or that you have become so used to saving that you can't bring yourself to spend anything...and its too late....!

Its important to get the balance right.

I fully agree about the balance, but in the same vein, I don't want to spend life like my brother who is pushong 30, has no grasp of financial responsability, has to borrow money off me in order to make up the short fall because he spends all his money in bars "having some fun"

As for my career I think I'd like to be a translator/interpreter but I have a burgeoning interest in banking so I'd like to think my language skills could help me get a career their. I think education is a no no for me, kids are VERY cruel!

atush

3) As for pensions, I was thinking of first of all establishing a healthy emergency fund and then trying to max out my S&S ISA every year until I reach retirement, I heard that if you do this it is possible to gain a portfolio of £1-2 million, I understand the risks involved!!

Yes, a cash emergency fund is a must. As is saving in cash for other short term needs such as buying a property to live in.

but after that, I would split my investments into BOTH S&S ISAs and pensions. As they both have their advantages.

Pensions mean every 80 invested become 100 immediately (or more if you are paying HRT). The equiv ISA would only have the 80.

Then accessibility. The ISa is accessible which is more flexible in an early retirement. But, should emergencies occur before then, from redundancy to having court judgements against you, then they are accessible for that as well meaning being forced to spend this as it could put you out of getting means tested benefits and being claimed as assets in court. They are also open to impulse expenditure.

Pensions are not accessible for means tested benefits, nor most court judgments (nor impulse expenditure). And can be accessed as early as age 55.

Student_of_£

lvader wrote: »

Saving half the salary sounds a lot, but financing retitrement until you are 90-100 isn't unrealistic, if you plan your retirement income correctly it shouldn't matter how long you live.

In your opinion, what would be the best way to finance retirement? Especially as it is obvious that one has to look to oneself in order to finance retirement.
My main goal is not to get to retirement and realise I have to work for 15-20 years more. I want to know I can sustain myself indefinately.

atush

Also, you will hav a personal allowance once you retire, and if all income is coming from a tax free source such as ISAs, then you will be wasting this. It makes sense to have some income from sources such as a pension that would use up your personal allowance.

Student_of_£

srcandas wrote: »

Same here and I achieved it by building a business. Get others to work for you I guess is a parallel to getting money to work for you. Of course if you go down the family route even your saving aspiration may get derailed. But c'est la vie.

Sadly I really don't think I have the entrepreneurial bent that others have. My grandfather owns a plant hire business, which I think will pass to my dad, but I have no interest in that!

Student_of_£

atush wrote: »

Also, you will hav a personal allowance once you retire, and if all income is coming from a tax free source such as ISAs, then you will be wasting this. It makes sense to have some income from sources such as a pension that would use up your personal allowance.

So all in all, I should split my savings between a Cash ISA (emergency fund) S&S ISA and a private and/or workplace pension?

Thanks for the replies everyone!!