Plotting for an early retirement - anyone want to join me?

Anonymous101

MrSaver96 wrote: »

Will follow this thread with interest. I’m only 22, currently contributing into a pension alongside my employer via salary sacrifice. Currently don’t save outside my pension as just applied for a mortgage. It would be interesting to know what people do/did early on in terms of their retirement plans? Any advice/ thoughts welcome!

I'll give you some advice I wish someone was around to give me at your age. Read and listen to everything you can on Financial independence Retire Early (FIRE). All of it may not be applicable to you but since you're looking in on here at a relatively young age you seem like the type that would be open to it. You can be as radical or as laid back about the approach as you like, its not all or nothing, but I feel like the principles would benefit anyone and everyone.

I'd recommend that you start by reading the two links below. Particularly the Mr Money Mustache article. If you've never heard of him he's an American chap that managed to retire by 30.

The choose fi links below is a good place to start with a good overview. They also do a podcast which I've put a link to the introductory one below. Most of their podcasts are interviews with people that are working on their own terms after adopting the principles of FIRE in one way or another.

https://www.choosefi.com/the-why-of-fi/

https://www.choosefi.com/financial-independence-beginners-guide/

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Hopefully you'll find them interesting and useful. :money:

bugslet

I'd not seen the choosefi links before, thanks Anon. I see the first link mentions Your Money or Your Life, which is when something pinged in my brain and made me think that you don't have to work until you die!

As you say, it's about balance. At the moment I drive a second hand van which I will run into the ground same as I did the last one...but I have a confession Father Anonymous101, I once bought a brand new car, a silly two seat thing that went very fast and that you couldn't get a pallet in.:o But oh boy did it make me smile:D:D:D. A lot.

I think mostly I make sensible choices, my house is very average in a very average part of town, but every now and then it does me good to loosen the reins a little.

As you say, there is no one path that is right or wrong.

itwasntme001

Be very careful of listening to people who go on about the "4% rule". Many studies have concluded that the 4% rule may not and probably will not work - it is more that the sequence of returns matters more unless you have a LOT of flexibility in your spending (delaying it when markets are tough). The flip side is that i have not seen anyone mention technological advancements that are possible that could bring down the cost of living substantially and so there is less need to save.



If you are thinking of retiring early when you are in your 20s or 30s, why not focus instead of getting a job you would enjoy and like to make a career out of as well as the usual good advice on saving?

Anonymous101

bugslet wrote: »

I'd not seen the choosefi links before, thanks Anon. I see the first link mentions Your Money or Your Life, which is when something pinged in my brain and made me think that you don't have to work until you die!

As you say, it's about balance. At the moment I drive a second hand van which I will run into the ground same as I did the last one...but I have a confession Father Anonymous101, I once bought a brand new car, a silly two seat thing that went very fast and that you couldn't get a pallet in.:o But oh boy did it make me smile:D:D:D. A lot.

I think mostly I make sensible choices, my house is very average in a very average part of town, but every now and then it does me good to loosen the reins a little.

As you say, there is no one path that is right or wrong.

No problem. I came across Choose FI fairly soon after they started the podcast. They're very enthusiastic (sometimes a bit too much so for me) but their twice weekly output, along with the Bigger Pockets podcasts, keep me going on my long daily commute.

I've not read Your Money or Your Life but the co author Vicki Robins has been on several podcasts that I've listened to and its on my list along with many others.

Have you read The Millionaire Next Door? Thats a very book which has lots of statistics, all be them American, to back up the fact that the real wealthy don't live in big houses and drive flash cars.

:A:A:A
:rotfl:

Since we're on confessions I'll have to hold my hands up to making the same mistake.... fast cars :eek:

You're exactly right though, its not about deprivation just sensible choices.

I just feel like I didn't understand the most important lesson of all until I was in my mid 30's. You are in control of your life, there are no real rules other than the law. You don't need to work until you're 65, or even 50 if you choose not to.
Its just about taking action and designing a life for yourself rather than just going with the flow of what you think you're supposed to do.

Anonymous101

itwasntme001 wrote: »

Be very careful of listening to people who go on about the "4% rule". Many studies have concluded that the 4% rule may not and probably will not work - it is more that the sequence of returns matters more unless you have a LOT of flexibility in your spending (delaying it when markets are tough). The flip side is that i have not seen anyone mention technological advancements that are possible that could bring down the cost of living substantially and so there is less need to save.



If you are thinking of retiring early when you are in your 20s or 30s, why not focus instead of getting a job you would enjoy and like to make a career out of as well as the usual good advice on saving?

I agree. I tend to think of it as a 4% rule of thumb. As you say instead of thinking of having a number and getting to a finishing line I tend to think in terms of having built investments to act as a support and enable me to plan on scaling back my long hours fairly stressful job in my 40's rather than my 60's. If I had discovered F.I. in my early 20's then I would have been able to do that in my 30's.

Also the principles of F.I. enables you to unlock the power of F.U. money!
Anyone thats familiar with either the film The Gambler or is a fan of John Goodman or JL Collins will enjoy this...
https://jlcollinsnh.com/2016/03/19/f-you-money-john-goodman-v-jlcollinsnh/
I prefer the JL Collins version over the John Goodman one

The power of FU money is very powerful, even at relatively small amounts.

bugslet

Anonymous101 wrote: »

The power of FU money is very powerful, even at relatively small amounts.

Absolutely, it changes the mindset completely. These last four months are proving a real grind now that my mind is made up, I need to remember I have choices many others don't.

I have to say, the car was not a mistake. I loved it, don't regret it.

Your Money or Your Life is a bit dated now but it was ahead of its time when it came out and it's one of the few books that I won't get rid of.

Anonymous101

bugslet wrote: »

Absolutely, it changes the mindset completely. These last four months are proving a real grind now that my mind is made up, I need to remember I have choices many others don't.

I have to say, the car was not a mistake. I loved it, don't regret it.

Your Money or Your Life is a bit dated now but it was ahead of its time when it came out and it's one of the few books that I won't get rid of.

I think of mine as a financial mistake but likewise love it. :j

I guessed YMOYL would be dated, hence why I've not really bothered with it. The podcasts gave enough of the principles.

Rich Dad Poor Dad is another of this type that is very good perhaps still more relevant. Lots of those interested in FIRE rave about this. I enjoyed both that and the follow up.

JoeCrystal

MrSaver96 wrote: »

Will follow this thread with interest. I’m only 22, currently contributing into a pension alongside my employer via salary sacrifice. Currently don’t save outside my pension as just applied for a mortgage. It would be interesting to know what people do/did early on in terms of their retirement plans? Any advice/ thoughts welcome!

I made an early start at 24, eight years ago when I realised that I need to start a pension when I stumbled into this helpful forum. Otherwise, it would never occur to me to start one. Especially on finding out that my employer at the time do not contribute anything and the pension scheme they offered only had a limited choice of funds. Once, I found an IFA, and I managed to set up one then with a very reasonable fee. All I can suggest is making sure that you get much money as possible from your employer and the fact that you have salary sacrifice will help a lot.

You should make sure that you contribute a sufficient amount (Auto-enrollment at 8% is not enough for most people). In my case, I always try to aim for 25% of my basic pay which is a bit overkill, but I much rather contribute what I can while I have a good income even though it means I would not be able to do everything I would like to do at the time. Who knows what the future brings after all, especially if it means minimum wage jobs.

Thrugelmir

MrSaver96 wrote: »

Will follow this thread with interest. I’m only 22, currently contributing into a pension alongside my employer via salary sacrifice. Currently don’t save outside my pension as just applied for a mortgage. It would be interesting to know what people do/did early on in terms of their retirement plans? Any advice/ thoughts welcome!

When I started work at 17 on my late fathers advice. I put £10 a month into a pension plan. That was over 4 decades ago. Never looked back. Same advice passed onto my son. Too easy to fritter money away on non essentials. What you put in will determine ultimately what you get back. Compounding is your best friend in life.

Terron

MrSaver96 wrote: »

Will follow this thread with interest. I’m only 22, currently contributing into a pension alongside my employer via salary sacrifice. Currently don’t save outside my pension as just applied for a mortgage. It would be interesting to know what people do/did early on in terms of their retirement plans? Any advice/ thoughts welcome!

I disagree with those FI websites. Rather than look to reture very early from a job you don't like I suggest changing to a job you do like whilst you are young. I did find a job I liked, and did not save much to begin with. The company pension scheme was only open to managers. After a few years I was doing a lot of overtime so I started a pension. A few years later I moved jobs and the new company had a final salary scheme. Later the part of the business I was in was taken over by our main competitor. We kept doing the same job supporting our existing customers, but there was no longer any real effort being made to sell the products I worked on. It looked like there was a time limit on our jobs so I started saving more especially through the pension scheme. I survived a couple of rounds of reductions, but lost my job when I was 54.



I had enough savings outside my pensions to live in reasonable comfort (~20kpa) until I was 60 when my pensions were set to start. However rather than living directly off my capital I put it into BTL and have been living off the income from that. This year my pensions will start and I will be close to the HRT threshold. I took 5k out of my SIPP last year to make the change more gradual.