Early retirement sense check

marlot

PipPip wrote: »

Thanks. It’s £500pm to wife’s SIPP and two kids junior ISAs.
.

Oops - I missed that bit.


As you're aware, the secret to early retirement is to live a fairly modest lifestyle whilst in work. One of my work colleagues was moaning that I "was so lucky that I could contemplate retiring", but he drives around in a £100k car and has made little provision for his retirement.

k6chris

Figures such as 80% or 'two thirds of salary' are completely meaningless! Many people who manage to retire early, do so becuase they are in someway saving a large percemtage of their gross income, either in pensions, ISAs, paying off mortgages etc. Also once kids have left home (and come back and left again) costs go down. I used to earn a 6 figure income and am now living on less than the national average income - other than having to stop lusting over shinier cars, I am basically living the same lifestyle (because other outgoings are zero) and enjoying it far more that when I was in the rat race. Work out your number, be honest about the retirement you want (ie don't low-ball spending if you really do want to do a lot of skiing etc) and ignore what other people say! Good luck.

bluenose1

PipPip wrote: »

I think I am gradually discovering this! Eldest is already demanding an iphone (not gonna happen!).
I do put the max into pensions and I’m using a bit of rollover of previous unused allowance. HRMC actually challenged me on this last year as they believed I had exceeded the £40k limit and did not have any previous years surplus to use. Luckily I keep a good spreadsheet on this and proved them wrong.

Off topic but my youngest is now 15 and had had an iPhone since he started Senior School.However I have always bought him a second hand, in mint condition boxed one off Ebay, always a model or two behind. Costs a fraction of the price of a new, latest version one. He has had no idea that they weren't brand new.

BLB53

You will be fine so stop worrying. Your investment will continue to grow at 6% each year and you only take out 3.5% or 4% so factor this into the calculations. You will be bridging the gap before the state pensions kick in...a further £20K p.a jointly so I really don't see ant issues.

You seem to have all the angles covered but if you want to run things to double check have a look at the drawdown article on DIY Investor
http://diyinvestoruk.blogspot.com/2016/08/a-look-at-sustainable-drawdown.html

PipPip

bluenose1 wrote: »

Off topic but my youngest is now 15 and had had an iPhone since he started Senior School.However I have always bought him a second hand, in mint condition boxed one off Ebay, always a model or two behind. Costs a fraction of the price of a new, latest version one. He has had no idea that they weren't brand new.

This is what my wife and I do for our own phones. We both have an iphone 6 bought in good used condition with low cost pay as you go sim cards. Another example of where my peers waste money on their constant upgrades. Similarly we don’t have any Sky TV packages or that kind of rubbish (just freeview) and our TV is 10 years old. No gym memberships either. We are definitely prudent and have never lived like I earn over £100k. We put so much away that we live like any other sensible family on an average wage. But with the kids getting older there is definitely growing demand on my income.

PipPip

BLB53 wrote: »

You will be fine so stop worrying. Your investment will continue to grow at 6% each year and you only take out 3.5% or 4% so factor this into the calculations. You will be bridging the gap before the state pensions kick in...a further £20K p.a jointly so I really don't see ant issues.

You seem to have all the angles covered but if you want to run things to double check have a look at the drawdown article on DIY Investor
http://diyinvestoruk.blogspot.com/2016/08/a-look-at-sustainable-drawdown.html

Thanks. Not sure I’m so optimistic about 6% growth. Markets are due a crash in the next few years and I view this as inevitable in the next 7 years. I’ll keep my money invested for the long term though and use drawdown to extract income in retirement.

ColdIron

PipPip wrote: »

our TV is 10 years old.

Seriously, blow a few hundred quid and get a new telly A lot has happened in 10 years, is it even HD?

kinger101

Many would argue 4% is too much, particular for early retirement. But at the same time, you've probably been cautious in assuming there will be no growth in your pension funds (only additional capital input).

We don't have a crystal ball, but if it crashed 40% in two years, you'd have another five years of buying relatively cheap funds/shares.

The key is probably building a reserve to ride out stock market crashes in cash/bonds (say 5-7 years), and having some flexibility in your drawdown. That way, you don't have to cash-out in a trough, or can adjust the drawdown rate if you're eroding capital too quickly.

Depending on interest rates at the time, you might want to weigh up the pros and cons of using the tax-free lump sump as a reserve rather than paying off what is a sub-inflation mortgage rate.

Sea_Shell

We're working on pretty much half those numbers (no kids) and we're fairly sure it's doable.

atush

I would aim to get rid of Both mtgs by retirment. So using your TFL sums or other investments could do that for you.

This will lower your costs when doing the 'number'.

How much does the chalet cost to run? Do you rent it out now when not using it? Seems if you arent it would be good to do this. Even when retired you wont be spending all of ski season there, will you?

How old will your kids be when you are 55? We had ours late to had to delay retirement til they were out of Uni/law school.