Early Retirement - (nearly) one year on

rosiest

finding this post so interesting . I'm 37 with a decent paid but stressful job. I'm definitely now thinking what needs to be my plan to retire at 55. I've got a good size house on 50% ltv rate and 100k to pay. I'd like to pay it off at 50 and save mortgage payments for 5 years . I also pay 7% into pension and the company I work for pay 12% so have a starting place for my plans . which threads would you recommend reading on the forum and what advise would you give ?

Thorsson

uk1 wrote: »

It is ironic that on this board and on this thread we haven’t even touched on how different the retirements of this generation will be very different compared to ours. We are able to retire and it is my sense that most of my grandchildren will not have a completely non-working retirement as we know it ie without mandatory work. This alongside the more difficult environment to own a home and build up equity will make their longer later life very much harder.

I'm going to disagree (again) with you. Both of mine have joined workplace pensions from the moment they started work, whereas I didn't save a penny until my mid thirties. From speaking to others, I think all the sensible ones are doing the same. They'll be fine; OK there probably won't be as many of the lucky few on fully DB Pensions, but there also won't be as many on nothing but the SP.

Thorsson

rosiest wrote: »

finding this post so interesting . I'm 37 with a decent paid but stressful job. I'm definitely now thinking what needs to be my plan to retire at 55. I've got a good size house on 50% ltv rate and 100k to pay. I'd like to pay it off at 50 and save mortgage payments for 5 years . I also pay 7% into pension and the company I work for pay 12% so have a starting place for my plans . which threads would you recommend reading on the forum and what advise would you give ?

I'd say that rather than pay off the mortgage early, as long as interest rates are low you would be better to pay of the mortgage more slowly and put more into the pension, because your contributions will be tax deductible. Even better if your firm does salary sacrifice, because you save NI too.

uk1

Thorsson wrote: »

I'm going to disagree (again) with you. Both of mine have joined workplace pensions from the moment they started work, whereas I didn't save a penny until my mid thirties. From speaking to others, I think all the sensible ones are doing the same. They'll be fine; OK there probably won't be as many of the lucky few on fully DB Pensions, but there also won't be as many on nothing but the SP.

http://www.opalliance.org.uk/archive/decline.htm

The above plot shows the decline in the number of active members of private sector occupational pension schemes with the dates at which new regulations were introduced. The decline in fact began in 1994 and accelerated in 2001. Despite this evidence the main reason frequently quoted in the popular press is the "£5 billion raid on pension funds by Gordon Brown". The fact is there are many reasons as explained below but the dramatic falls in share prices in 2000-2003 and 2008-2009 together with the the introduction of FRS17 and the increase in longevity have had a far greater influence.

DairyQueen

Thorsson wrote: »

So here's another question. How many of those retiring early have had substantial financial help (I'm not going to attempt to define substantial, because it depends when it happened) from their parents post-education?

Our parents were brought-up with a culture of self-reliance and that's how we were raised. Neither of us have received one penny in financial support from parents, although both sets could have afforded a modest amount of support.

My step kids, on the other hand, were given every financial advantage. Private school, six years of higher education (the eldest), three years plus house deposit (the youngest). Both had driving lessons and the eldest (who actually passed her test) was provided with a car FOC.

I could go on.

The youngest is very appreciative of the support she has received. The eldest, unfortunately, simply acquired an attitude of entitlement.

I have a friend (almost 70) whose youngest daughter is now in her early 40s. Whenever the latter whistles mum & dad drop everything and come running. When challenged, friend's justification was "she's our girl and we like helping her".

Doesn't seem to cross her mind that in a decade or so she and spouse will be the ones in need and the daughter has yet to learn the basics of independent living.

Our generation has molly-coddled our kids. I began working on Saturdays age 13. I worked holidays from age 15. I was buying my own clothes from age 14 and repaid my parents for my first car during the first year I worked full-time. I left home before my 19th birthday and initially lived in a mobile home whilst saving the deposit for my first house. This was not exceptional, this was the norm.

House prices are the only advantage my generation has enjoyed over that of my step kids. Even then, neither OH nor I had a holiday for several years before and after the purchase of our first houses. Younger step daughter and boyfriend managed to 'scrape' the funds for multiple overseas trips (including the US and Japan) in the periods before and after buying.

The big cost of raising his kids hasn't impacted OH's retirement date. He would have carried on working regardless. He has, however, significantly sacrificed his standard of living in order to give his daughters the best start in life he could afford.

Silvertabby

“ So here's another question. How many of those retiring early have had substantial financial help (I'm not going to attempt to define substantial, because it depends when it happened) from their parents post-education?
Originally posted by Thorsson ”

Not a penny - both sets of parents had barely enough for themselves. Mr S and I both left school at 15 and comfortably retired at 60 (if you count that as early retirement) through our own hard work.

bostonerimus

crv1963 wrote: »

I agree with your thoughts! Having been divorced and had a pension sharing order, then marrying again I (we) have taken a hit on our pension and have a reasonably large (to us) mortgage to pay down.

I got divorced 15 years ago. We divided joint possessions by picking lots to see who'd go first and just made alternate choices, we sold the house and divide all regular accounts and walked away with around 50k each. My ex didn't want to bother with the pensions even though her lawyer and I tried to change her mind, but I've kept her as the beneficiary on those accounts as that seems right. She's 5 years younger than me and as women generally live longer than men there's a good probability that she'll see that money.

My first house was bought for $150k in 1991 and sold for $190k in 1996. In 1997 I bought my current home for $330k and it's latest online valuation was $975k. I paid off the mortgage before I retired as I just didn't want to deal with that large monthly bill.

rosiest

thanks. yes it is salary sacrifice and I'm a high rate tax payer. upped it from 6% to7% in Nov and will do again in April. my mortgage fixed doesn't feel great I think it's 2.7% but due for renew June 2020 and will be under 50% ltv then so looking to get a better rate and take 5 years off the term. Will look into upping pension . my works 12% contribution is at its max but I can put more in

MallyGirl

Thorsson wrote: »

So here's another question. How many of those retiring early have had substantial financial help (I'm not going to attempt to define substantial, because it depends when it happened) from their parents post-education?

Nothing here. All 6 parents/step parents/in laws still living and spending their money on themselves, as it should be. DH also received nothing.

happyandcontented

uk1 wrote: »

http://www.opalliance.org.uk/archive/decline.htm

Again, that perhaps illustrates choices being made erroneously. My kids all joined and pay into workplace pensions to get the maximum employer contributions. There are many fewer DB schemes around though so DC schemes need to fill that gap.

uk1 wrote: »

If you don’t mind me saying so, the tone of your earlier note gave a rather binary harder and different impression than this one. You used phrases like “we made it clear to them” ie you set a mandate, rather than the more conciliatory tone you infer here ie “talk to them” That is why I inferred as I did. I agree with all you say in this version

It is ironic that on this board and on this thread we haven’t even touched on how different the retirements of this generation will be very different compared to ours. We are able to retire and it is my sense that most of my grandchildren will not have a completely non-working retirement as we know it ie without mandatory work. This alongside the more difficult environment to own a home and build up equity will make their longer later life very much harder.

In out talks with them we 'made clear' that choices have consequences and some of them are better than others.

For example, we have friends whose children did subjects at University which had no defined career path and they are now the ones who are in jobs which are not that well paid, not as fulfilling and have fewer long term prospects. We didn't want to see our children take that route so we steered them, advised them and guided them, fortunately, they saw that what we were saying was correct and they thought long and hard about what it was they wanted and how they would achieve that. Consequently, all of them chose subjects with direct links to defined careers in Law, Engineering and Education and when they graduated they all found jobs in those areas.

Again, you refer to a 'more difficult environment to own a home' but that is not our experience. It may be yours, but it is not universally true.