Early retirement advice - how would those who have done it do it today?

Gen_Y_Saver

Thanks anotherjoe and triump13 - you are both right; a balance needs to be struck. I go on holiday twice a year and do treat myself. I just think, overall, all our lives are pretty awesome (all things considered) and lots of materalise shiz isn't going to make me that much happier.

OldMusicGuy

You are Mr Money Mustache and I claim my £5!

Seriously, if you haven't already (and I suspect you have), read these blogs:
http://www.mrmoneymustache.com/
https://theescapeartist.me/

You seem to be following their advice pretty well.

The main advice I can give is save as much as you can from as early as possible, and you seem to be doing that. Secondary advice is to decide what you want to do with your life. Do you want a high paid job in the corporate world (which means you will be able to save a lot more in future years) or do you want to enjoy life focusing on hobbies and interests, doing a few side gigs? You sound like you are more the latter, so be clear on what your goals are, and make sure your partner shares the same goals as well. And also ask if things will change if you have a family. That will significantly increase your expenses and you need to be sure you aren't "imposing" your lifestyle choices on your kids (if you have any). Or if you do choose to live that lifestyle with kids, make sure you both agree it's what you want to do.

Gen_Y_Saver

OldMusicGuy - yes, love those blogs. Stumbled across MMM and TEA a while back and it genuinely did change my perspective on life. I feel very liberated from certain pressures (flash cars/houses/lifestyle). I am genuinely a lot happier. Weird considering we spend almost of entire youth being bred to want a lot of things that aren't really neccessary.


Note: i understand that not everyone agrees with the above etc!


Peace and love all


Gen_Y

bostonerimus

You are doing all the right things......well done! But don't become inflexible. Life happens, you might have kids or your goals might need to be changed, but if you can do that within a simple and frugal lifestyle you'll do well.

Have a look at this blog by a famous early retiree.

http://www.mrmoneymustache.com/

The key to financial independence is to have an income requirement that can be met by your sources of unearned income.....pensions, rent, investment returns etc. So the lower your income requirements the lower the size of the portfolio required. If you can be frugal while you're earning and save a large proportion of your income into a sensible portfolio that will compound over the years.

I retired early at age 52 (4 years ago) by doing much the same as you.

I started investing at age 25 and contributed to a company pension and also saved extra income to a regular investment account. I made it a goal to save at least 20% of my gross income and set up automatic deductions from my bank account; I used Vanguard mostly (I'm in the USA). I have a budget to track my spending and food and housing are always the biggest items so I save on those. I cook and bake a lot and DIY there instead of buying pre-made meals and cakes saves me a lot. I also DIY on invetsing and use a passive indexing approach with rebalancing that keeps fees to a minimum. I like your use of VLSxx!

Back in 1997 I bought a two family house. I rent out the downstairs apartment and live upstairs. I split my investable money between Vanguard index funds and extra mortgage payments. I paid it off in 2007 and now get a nice rental income and some capital appreciation. Once the mortgage was paid off I ploughed that money into investments. I'm also lucky enough to have spent 10 years as a government employee and get a final salary pension which with the rent more than covers my spending needs......so I don't actually withdraw anything from my investments, they just continue to compound.

So if you can couple sensible investing with a plan to reduce your income needs I think you'll do really well.

bostonerimus

....also check out this site.....lots of people who have retired early in the US. There is a strong passive indexing contingent, but also lots of active stock picking and esoteric investing discussions.

http://www.early-retirement.org

Gen_Y_Saver

Thanks for the tips, bostonerimus - I'll check out ER.org! And congrats!!!

kidmugsy

Restricting your pension contributions to the 5% seems pretty wise to me. You might want to increase them if (i) you become a higher rate tax payer, or (ii) you get access to a salary sacrifice scheme.

Filling your ISAs also seems wise: I can't imagine the £20k p.a. limit surviving under a marxist government. But then your savings might not survive anyway unless you'd found a way to hold some of them abroad. In fact I wish I knew something about that myself.

BLB53

Me and my partner have been investing in the Vanguard Lifestrategy funds (VSL 100 and VLS 80). My partner is 27.

We are saving 50-60% of our net income. I have cut all expenses to the bone (cycling to work, no car, home cooked meals etc).

This looks good to me and if you continue you should be on track to reach your target in around 15 years. Keep it simple, low cost and diversified and most importantly, keep it going through the inevitable market pullbacks. Good luck and keep us posted with progress.

BTW I assume you will be familiar with Retirement Investing Today site?

Gen_Y_Saver

Thanks BLB53. Lets hope so!


Yes, familiar with RIT. I find the writing quite techy, but he is obviously a very clued up guy. I really like TEA as his style of communication is very clear for an amateur like myself.


RIT seems to have a much more hands-on approach to managing his portfolio to me (as does TEA). I am just sticking with VLS for now. I may add Vanguard's All-World EFT at a later date to minimise some of the UK bias.


Still learning lots!


Thanks for all of your help. Its great to connect with people who think about stuff like this. Haven't met many people my age that interested...


Gen_Y

Triumph13

Gen_Y_Saver wrote: »

Thanks anotherjoe and triump13

I'll forgive you stealing my 'h' - just so long as you don't take the 'i' as well!