Early Retirement - Starting A Little Late - Help and Advice please

CeePeeBee

Hi all,

I'm hoping some of the knowledgeable people on this forum might be able to assist.

A little background. I find life hard. That's not a statement to derive pity from the masses - I'm just stating it how it is. The everyday grind is difficult for me (whereas crisis situations are, strangely, more easily dealt with).

My job involves quite a bit of travel and for me, as a person, a level of stress I simply don't wish to continue any longer than necessary. Whilst many of my peers and colleagues see work as part of their life, a part that is large and varied and positive, I find work a hindrance to a much more simple and peaceful existence. Suffice to say I'm fully aware that the social structure I'm in dictates I need to continue, but there's nothing stopping me having a plan is there

So, here's a low down. I'm 37, and have worked since 21, and haven't ever really added money to my pension pot at either organisation I've worked for. I am currently looking to opt in to salary sacrifice at my current employer and hope that starts to bulk up my pension.

Age: 37
Status: Married with no dependants - Wife is part time (now) working 3 days earning c. £23,000 pa
Mortgage: c. £40,000 left (constantly overpaying here with around a 3 year due date to completion)
Annual salary: £42,000 pa
Current old pension pot: £11,000

I am awaiting the new details for my current pension to understand where that pot is and will then think about consolidating and perhaps changing a percentage of the pot to a more risky investment fund to see if I can bolster it as I know I'm playing catchup.

Now, in my head, there is ZERO way I'll be working into my 60's - I feel (and have done for the last decade) that work will kill me way before that if things continue as they are. Therefore the magic number in my head is around 50.

Now I'm not looking for any guarantees here - I'm not naive enough to think that I can put everything down on paper and then just watch it play out identically. There will be twists and turns, I might end up working part time instead of full time, etc, but I need to actually HAVE a plan.....this is where I'm hoping somebody might be able to point me in some quick win directions so I can get started.

I need to lessen my stress for my own well being and I'd be quite happy slowing the pace of my life down somewhat, so any advice is greatly appreciated.

bigadaj

Best solution is probably find another job that you actually don't mind.

You don't state any other savings but your pension provision is very minimal, state pension age is obviously increasing meaning that you won't be able to draw that until your late sixties.

Even if you pull your finger out now you will be doing incredibly well to retire at 60 with anything like a reasonable lifestyle.

Paying down the mortgage is probably costing you money rather than paying into a pension, as pension growth with tax relief is likely to be higher than your mortgage rate.

To give an idea then assuming you could get by on ten grand a year you're looking at building a pot of well in excess of a quarter of a million in the next thirteen years, so need to be contributing in excess of ten grand a year and hoping for a lot of growth.

Triumph13

The key question is how much do you need to live on? That drives both how much you can save whilst working and how much you need to save before you can quit.
Take a good long look at what you are spending now and agree with your OH if there is anything that can be cut to work out how little you need to have a happy and fulfilled life. Invest everything left over in the most tax efficient way possible consistent with being able to get enough of it out to live on before pension access age - which is likely to be closer to 60 than 55 by the time you get there.
And check out Mr Money Mustache to get yourself enthused:
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Triumph13

bigadaj wrote: »

Best solution is probably find another job that you actually don't mind.

You don't state any other savings but your pension provision is very minimal, state pension age is obviously increasing meaning that you won't be able to draw that until your late sixties.

Even if you pull your finger out now you will be doing incredibly well to retire at 60 with anything like a reasonable lifestyle.

Paying down the mortgage is probably costing you money rather than paying into a pension, as pension growth with tax relief is likely to be higher than your mortgage rate.

To give an idea then assuming you could get by on ten grand a year you're looking at building a pot of well in excess of a quarter of a million in the next thirteen years, so need to be contributing in excess of ten grand a year and hoping for a lot of growth.

That all seems a bit negative to me. OP and wife are pulling down nearly £50k pa post tax. If they are happy living on half that and saving the rest, then retirement at 50 is not that far beyond the bounds of possibility.

xylophone

No dependants - is there any reason why your wife should not work full time?

Have you only just changed jobs? If so, why have you chosen a job which seems designed to make your life a burden?

Have you obtained a state pension statement?

https://www.gov.uk/check-state-pension

What is on offer via salary sacrifice?

And you won't be able to draw on your private pension at age 50.

CeePeeBee

Hi all,

Thanks again for the replies. You're right I didn't give much info in the original post.

I put £100 a month away in savings but frankly that goes at Christmas and I start again in Jan.

My actual short term aim is to go part time as soon as we have paid off the mortgage - I want to live life and enjoy time with my Wife now - who knows what the future holds. However, I'm also happy to live on less than half of my income as I get older.

My Wife is a lot older than I so the chance are (being realistic) I'll be living on my own from about the age of 65 anyway. I want to use the time we have together now to actually enjoy ourselves (that's not necessarily buying everything and splurging...but spending time together) so as long as I can cover modest outgoings I'll be happy.

It's a weird set of circumstances I grant you...thanks to @triumph13 for being a little more positive

Triumph13

CeePeeBee wrote: »

My actual short term aim is to go part time as soon as we have paid off the mortgage - I want to live life and enjoy time with my Wife now - who knows what the future holds.

That does rather conflict with the aim of giving up entirely at 50!

My Wife is a lot older than I

Now that IS a useful fact. It means your wife will be hitting the point where she can access pension funds much earlier than you and therefore opens up the chance to bung most of your savings away in her pension without having to worry about what you live on until you can access them.
If you do want to target early retirement then I would seriously consider trying to live on your income alone and putting 100% of her pre tax income into a private pension. She would get tax relief on all of it, even though she'd only paid tax on half.
The best option of all though is probably to try and find a job you might actually enjoy. It's a long way to go until you reach 50 and it will seem a lot longer if you spend it in a job that does your head in.

Mnd

If she's earning 23k for 3 days why would she want to work full time. Between you you could aim to save 20k a year into your pensions as long as you are happy living on the difference

xylophone

How old is your wife? What pension provision does she have?

Has she obtained a state pension statement?

If she likes her job and would be willing to work full time, could you then work part time?

Or would this permit you to work full time at a job you would enjoy/find less stressful/both?

atush

First of all, stop overpaying your mtg.

Second, as wife is older, she can put 23K into a pension each year, and access at age 55. The TFLS could pay off your mtg then?

So bung enough into her pension to fill her AA, and put more into yours if you want to give up working early.

You arent going to do it by overpaying a mtg.

CeePeeBee

Interesting - my assumption was that without a mortgage within 3 yrs or so I'd have more disposable income with which to invest eleswhere.