Where to start?

BachSoon

DH and i are looking to begin planning properly for an early retirement and would be grateful for any recommendations of books etc that may help with our planning for our long term goals. We are not hugely mathematically literate. I am comfortable with the basics of personal finance and DH has less knowledge and is happy for me to take the lead/suggestions etc. We will in time seek advice from an IFA, but right now, don't really have pots for them to advise on!

Along with literature recommendations, I'd be grateful if anyone wanted to advise on our initial plan/circumstances.

We are both 31, with 1 child currently, but another 2 planned. We would like to retire at 55 /56 in order to travel, giving us 24/25ish years to achieve this. We own our 'family house' and have no intention to move. We both work full time in professional jobs with a combined gross salary of circa £65,000, before DH's overtime, which is not included as it varies from quarter to quarter.

We currently have limited savings as we recently renovated our house entirely to future proof and are rebuilding savings. DH has a final salary pension and i have a defined contribution pension into which i pay 10 percent and my employer 5 percent.

We are working on the following, in this order
1. 3 months emergency fund / maternity leave savings.
2. Mortgage overpayments
3. General future savings / retire early / travel the world
4. House/garden improvements / holidays.

Does anyone have any comment or initial advice on our circumstances which they would provide please? Any is most gratefully accepted.

TIA :beer:

Anonymous101

I could write a huge long post about this. There's so much to say!
I'm 37 and looking to retire in about 10 years or so myself, i'd have been done by now if I'd have gotten onto this when I was your age!

Best bet which I've posted about several times on here is just to start to do some reading and listen to the podcasts on F.I.R.E online. Their strategies can help you even if you have a slightly different goal to some of these guys.

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/

crv1963

Work out what your target income is, what your current pensions will give you when and then work backwards, when potential savings/ pensions/ investments reach the point that they give you your target income then that is the age you can retire.

We broke it down by age pensions can be taken, age we want to go and plan when different things start paying, so in our case we're saving now to fund age 57-67 when SP kicks in.

BachSoon

That's great, thanks. I will have a read. I love MMM! His blogs are great. I'd semi forgotten about him tbh, since mat leave etc.
If it was just me, i could save like the clappers as I'm quite frugal generally, as i saved a house deposit on my own pre-DH, for my first house! DH is the polar opposite and terrible with saving, despite having the higher income. So effectively we balance each other out. He keeps checks on me being too frugal, so we sometimes spend the bit extra on luxuries in the shopping, holidays etc. i keep checks on him in that no he can't have a jaguar in the work lease scheme...!!

cns06

If it were me I would:


Ensure I am reducing all overspending, ensure you have the best mortgage rate as top priority.
Utilities, phone, gas, broadband, electric, sky. You can save (IMHO) several hundred pounds a year just by making sure you are on a good deal. No need to go anal on it but reviewing what you are paying can often bring a bit of a shock.


Then build at least 3 months EF (check!) but ideally 6 months expenses.


Pension wise, for now you are covered but monitor.


ISAS, I would try and use as much of your ISA as you can as the income at a later date would be tax free.


You are likely to downsize later on in terms of property so I would not go too crazy on that front. You may think you are in a forever home but when you are 60 and rattling around in a larger house its pretty much pointless.


Mortgage overpayments would be lower priority for me at this stage in your life, maybe in another few years if rates creep.


Read MMM forums!


All IMHO!!

atush

I would forget no2, and up pension and savings. Once savings are where you want them, open a S&S isa.

kidmugsy

BachSoon wrote: »

DH and i are looking to begin planning properly for an early retirement ...
We are both 31, with 1 child currently, but another 2 planned. We would like to retire at 55 /56

If you are prepared to have some money tied up until 60 open LISAs. You get to take the money out tax-free at 60, and the money remains available to you until then, after a stinging but not savage penalty.

What's the scheme retirement age for your husband's final salary pension?

BLB53

DH and i are looking to begin planning properly for an early retirement and would be grateful for any recommendations of books etc that may help with our planning for our long term goals

Can certainly recommend 'DIY Pensions' by Edwards as a good introduction.

k6chris

For most people, FI or retirement means you swap the need to work (swapping time for money) for a 'passive' income which is less than you had when you were working. This 'having less money' thing can be addressed in a number of ways - 1) "Just one more year" , where work continues beyiond your planned FI / RE date in the hope of saving more money and putting off the day when you have 'less' - 2) "Trial retirement", where after a few months of actually living off 'less' (and / or not having a job) the person decides that they need to find another job. 3) "Go ugly early" where you decide to adapt your lifestyle to the lower income whilst still at work - which means you can save more money towards FI, start adjusting your lifestyle and see how much money you actually need to live off.


Simply put, the less money you need to support a life style you are happy with, the sooner you achieve FI or RE. Finding a lower-cost lifestyle whilst still working, allows you to save, save, save towards your FI goal. It's the complete opposite of what many working people do when they get caught up in the 'bigger car, better holiday, nicer clothes' cycle, as a 'reward' for working hard. If you want the latter, great, but be clear you are prioritising 'stuff' over FI and RE. If you want FI / RE - Go ugly early!

Anonymous101

k6chris wrote: »

For most people, FI or retirement means you swap the need to work (swapping time for money) for a 'passive' income which is less than you had when you were working. This 'having less money' thing can be addressed in a number of ways - 1) "Just one more year" , where work continues beyiond your planned FI / RE date in the hope of saving more money and putting off the day when you have 'less' - 2) "Trial retirement", where after a few months of actually living off 'less' (and / or not having a job) the person decides that they need to find another job. 3) "Go ugly early" where you decide to adapt your lifestyle to the lower income whilst still at work - which means you can save more money towards FI, start adjusting your lifestyle and see how much money you actually need to live off.


Simply put, the less money you need to support a life style you are happy with, the sooner you achieve FI or RE. Finding a lower-cost lifestyle whilst still working, allows you to save, save, save towards your FI goal. It's the complete opposite of what many working people do when they get caught up in the 'bigger car, better holiday, nicer clothes' cycle, as a 'reward' for working hard. If you want the latter, great, but be clear you are prioritising 'stuff' over FI and RE. If you want FI / RE - Go ugly early!

I like the principle, I just don't like the terminology as being UGLY. To me that suggests that its a struggle. Its absolutely not a struggle for me. Its just about being intentional with my spending and saving as much as possible.

I'm only a couple of years into it but once I got into the F.I. mentality I definitely noticed a shift as I prioritised buying my time back from needing to be fully employed over buying anything else I previously valued.
Now I couldn't care less about designer clothes or fancy cars where once I did. I still look presentable and drive a nice car, but I don't feel the need to push myself financially for them because I'd rather invest my money and give myself the option of choosing to work or not in a few years.

OldMusicGuy

BLB53 wrote: »

Can certainly recommend 'DIY Pensions' by Edwards as a good introduction.

This. Full title is "DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning" by John Edwards.

Get some basic knowledge about how pensions and investments work. You may not need an IFA. If you want to know more about the investing side of things, "Investing Demystified" by Lars Kroijer and "DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing" by John Edwards are also good.