Enough money to retire at 26?

System

pigpen wrote: »

Why would you want to write yourself off at 26?

You aren't planning on working or doing anything to gain experience or enjoyment from life it looks like you sit on the sofa waiting to die.. boooring!!!

I'm pretty sure that at under 26 my OH couldn't ever have imagined himself with a partner a family or anything related to the life he has now at 33... just live your life.. do things.. go places.. learn things.. LIVE!!

On your deathbed what do you want to remember? .. Amazing places and experiences or regretting the things you could have done or should have done?

I think utterly unrealistic.. and the words 'get a life' would escape my lips

I will have lots of free time. I will not spend my life spending 50 hours a week travelling to work/traffic/sitting in an office.

What is more valueable, free time or money for luxuries.

lazer

berbastrike wrote: »

Mortgage paid off and will have £300k saved which is around £7.5k per year until I reach state pension age.

Yearly budget - £7500

To spend:
Council tax = £1000
Food = £1000
Gas Elec = £300
TV Licence = £150
NI (so I get full state pension) = £150

Broadband = £150
Clothes = £300

New car every 10 years = £500 (per year)
Car Ins = £200
Car Repairs = £250

Gadgets/computer/tech = £250


Total necessary spend = £4250

Which leaves £3250 for luxuries/treats




Do you think this plan is depressing, unrealistic, or a good idea? Just looking for some thoughts. Should I follow the plan, is it enough to not get bored each day.

Or use the £300k to generate an income for you to live on!


Buy a house for say £140k, rent it out for say £700 a month (assume profit of £500 a month). that's your £6,000 a year to live off and you still have £160,000 left.


PS - your retirement is likely to be at least 68 probably 70 - so make sure you factor this into the calculations.


Make your money work for you, don't just put it in the bank and live of it - live off the income from it instead.


(And make sure your annual expenses are realistic - don't forget home insurance, travel costs, some entertainment etc)

pigpen

berbastrike wrote: »

I will have lots of free time. I will not spend my life spending 50 hours a week travelling to work/traffic/sitting in an office.

What is more valueable, free time or money for luxuries.

balance.

Why could you not do a lower paid/fewer hours job closer to home and have extra money to do things all the other days?


You are lucky enough to be able to do something that you WANT to do.. an interesting or enjoyable job rather than humdrum working to stay afloat and pay bills.. expand your knowledge, helping others, experiencing all manner of things.

And using the money as an investment in property here or overseas and gaining income is a great idea.. make it work for you.. Have you heard of The Parable of the Talents (Matthew 25:14-30; Luke 19:12-28) I'm not a Bible bashing type by any stretch of the imagination but this is a perfect example of what I mean.

13 “Therefore stay alert, because you do not know the day or the hour. 14 For it is like a man going on a journey, who summoned his slaves and entrusted his property to them. 15 To one he gave five talents, to another two, and to another one, each according to his ability. Then he went on his journey. 16 The one who had received five talents went off right away and put his money to work270 and gained five more. 17 In the same way, the one who had two gained two more. 18 But the one who had received one talent went out and dug a hole in the ground and hid his master’s money in it. 19 After a long time, the master of those slaves came and settled his accounts with them. 20 The one who had received the five talents came and brought five more, saying, ‘Sir, you entrusted me with five talents. See, I have gained five more.’ 21 His master answered, ‘Well done, good and faithful slave! You have been faithful in a few things. I will put you in charge of many things. Enter into the joy of your master.’ 22 The one with the two talents also came and said, ‘Sir, you entrusted two talents to me. See, I have gained two more.’ 23 His master answered, ‘Well done, good and faithful slave! You have been faithful with a few things. I will put you in charge of many things. Enter into the joy of your master.’ 24 Then the one who had received the one talent came and said, ‘Sir, I knew that you were a hard man, harvesting where you did not sow, and gathering where you did not scatter seed, 25 so I was afraid, and I went and hid your talent in the ground. See, you have what is yours.’ 26 But his master answered, ‘Evil and lazy slave! So you knew that I harvest where I didn’t sow and gather where I didn’t scatter? 27 Then you should have deposited my money with the bankers, and on my return I would have received my money back with interest! 28 Therefore take the talent from him and give it to the one who has ten. 29 For the one who has will be given more, and he will have more than enough. But the one who does not have, even what he has will be taken from him. 30 And throw that worthless slave into the outer darkness, where there will be weeping and gnashing of teeth’” ([URL="javascript:{}"]Matthew 25:13-30[/URL]).

MandM90

As others have said, you can't predict the future. I certainly wouldn't risk it in your position, though if I did have the time I'd be looking into travelling, studying or retraining to do something I love. I'm more concerned about your future mental state than finances. 50 years+ is a long time!

peachyprice

berbastrike wrote: »

you are quite harsh! I am not saying this plan is definite.

I budgeted £3250 for fun/treats/holidays/eating out. £60 a week. So a couple meals out, 1 takeaway and 1 trip to the cinema.

There will be a savings account that gives the same rate as inflation, so it is not a problem.

Sorry, did you only want fluffy answers? You should have said.

You budgeted £3250/£60 for fun/treats/holidays/eating out but left things out of your budget.

You'll also need at least 4 of those 'rate of inflation' bank accounts as you're only covered for a max of £85,000 if the bank goes bust.

There is a middle ground between working 50 hours a week and commuting to sitting at home for 60 years doing nothing.

You seem to have missed the point entirely that your 'free time' will be a miserable life sentence due to lack of money, just ask someone living on benefits how miserable it is having all that time to yourself but only just scrimping by. I mean real people, not the type you read about in the Daily Fail.

Bitsy_Beans

What about the cost of maintaining your home? You need to factor in the cost of home repairs. No point being mortgage free if your home is crumbling around your ears.

System

Bitsy_Beans wrote: »

What about the cost of maintaining your home? You need to factor in the cost of home repairs. No point being mortgage free if your home is crumbling around your ears.

Like what costs?

GreyQueen

berbastrike wrote: »

Mortgage paid off and will have £300k saved which is around £7.5k per year until I reach state pension age.

Yearly budget - £7500

To spend:
Council tax = £1000
Food = £1000
Gas Elec = £300
TV Licence = £150
NI (so I get full state pension) = £150

Broadband = £150
Clothes = £300

New car every 10 years = £500 (per year)
Car Ins = £200
Car Repairs = £250

Gadgets/computer/tech = £250


Total necessary spend = £4250

Which leaves £3250 for luxuries/treats




Do you think this plan is depressing, unrealistic, or a good idea? Just looking for some thoughts. Should I follow the plan, is it enough to not get bored each day.

Hmm, I think it's interesting.

But have a look at this https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

The closest match I can get to your circumstances on the list of those eligible to make voluntary NI contributions is 'unemployed and not claiming benefits' which means your weekly voluntary NI rate will be £13.90 which is £722.80 per year. Or nearly 10% of what you believe your annual income will be.

Holding money on deposit won't keep you up with inflation, because real inflation is a lot higher than the published figures; your capital will lose it's spending power, even if you only draw down interest and don't touch the principal. Your £300,000 at 26 won't have the same spending power at 40, 50 or 60. By the time your state pension kicks in it could be bordering on pocket change. If you think I'm taking the mickey, please don't - in the mid-1960s my Dad earned £13 a week at about your age, by the time he retired it was £7.50 an hour, but he wasn't any richer, because of inflation. Try exptrapolating that to your nest egg and see what happens.

In terms of cars, it isn't at all unreasonable to expect 10 years' good life from a modern car, but I'd question your idea of the running costs of even a modest car as being £450 per year with £500 per year towards the eventual replacement.

You need to account for the road tax, servicing (unless you are a whizz who can fully-service your own car, which isn't something I can know), plus MOT once its a three-year-old, consumables like tyres and exhausts, fuel, roadside rescue if you feel that's necessary, and insurance. As you are still relatively young, you'll probably get hammered for insurance. I used to work in the motor trade and you'd be surprised how expensive car parts can be; most people consider themselves lucky to get out of the garage with change from £200 for even relatively minor repairs. And the VAT man taking his 20% gouge, of course.

Re your council tax, what is the actual bill for your house? £1,000 seems a bit cheap for a whole house to me, although I guess if you're single you have the 25% single occupancy discount. Council tax has been held down in the past several years by central government ordering local government to cap the rate of increase. It has formerly gone up a lot more than it is now, and as a local government worker, I can tell you that the sector is running on fumes now, and it is likely that there will have to be bigger increases in council tax in years to come.

Homes do have running costs beyond the council tax, of course. You'll be looking at a new CH boiler every 15 years or so. And a boiler needs an annual service and that costs. Electric showers will probably last well under 10 years. Re-roofing will need to be done on most houses at some time, probably about every 50-70 years, could be more or less; when was your roofing done last? Properties will probably need a rewire about every 30-40 years. Windows will rot or degrade and doors need to be repaired or replaced. Taps wear out, as do WC cisterns. Floorboards need attention, radiators leak, things can go badly-wrong with subsidence. Garden fences rot and blow over. You are responsible for the part of the drains which join your property's plumbing to the main sewer, and any repair to those could easily run into several thousands. I book repairs on thousands of council houses which are anything from pre-WW2 to modern, and you'd be astonished at the many and varied things which can go wrong with a house.

I don't like to p*ss on anyone's daisies, and I genuinely think that your idea is interesting. But it needs a bit of work, and perhaps a downsizing of expectations, such as ditching the car and riding a pushbike instead.

You might want to have a look at some early retirement blogs such as http://www.mrmoneymustache.com/ and others.

Retiring can be done very young, but you need to think beyond being mortgage-free and having a nest-egg and move towards owning wealth-producing assets and maybe having a small side-income to top up your everyday expenses.

Anyway, good luck, and all the best. I happen to think that time is more important than money, so if you can fathom a way to get your necessary expenditures covered, why not go for it?

oozy

berbastrike wrote: »

Mortgage paid off and will have £300k saved which is around £7.5k per year until I reach state pension age.

Yearly budget - £7500

To spend:
Council tax = £1000
Food = £1000
Gas Elec = £300
TV Licence = £150
NI (so I get full state pension) = £150

Broadband = £150
Clothes = £300

New car every 10 years = £500 (per year)
Car Ins = £200
Car Repairs = £250

Gadgets/computer/tech = £250


Total necessary spend = £4250

Which leaves £3250 for luxuries/treats




Do you think this plan is depressing, unrealistic, or a good idea? Just looking for some thoughts. Should I follow the plan, is it enough to not get bored each day.

Out of interest, what job are you doing that you would want to retire at 26?

It must pay a lot-approx 100k a year if working since 21(assuming 200k house/mortgage)-for you to have paid off your mortgage/saved 300k (500k-ish).

I'm assuming a lot but surely you can carry on for a few more years at that rate?

pigpen

berbastrike wrote: »

Like what costs?

new roof, rewire, new heating system/boiler, replaster, replacement of floor joists, chimney repairs, new windows/doors (uPVC only last 15-20 years apparently), new locks, new bathroom suit, replace kitchen cupboard, guttering, flat roof repairs.. ALL of these have been done in my house over the last 9 years!! I don't even want to think about howmuch it all cost but as a rough estimate it was at least £20,000 probably more!

Then you will need to replace appliances, they don't last forever, fridge freezer washing machine dishwasher.. and small appliances.. kettle, microwave, toaster etc