Millionaire by 65

AlanP_2

To return to the OPs questions:


Is it doable - YES

Is it worth doing - YES

What does it mean - Save / Invest as much as you can afford to for as long as possible for when you won't be getting an income from selling your time and skills as an employee.

LISA , S&S ISA, Pensions, Cash Savings and BTL are all valid options and ideally a selection of these is likely to be the best (but perhaps not the optimal) option.

That assumes you have purchased a property to live in by the way as paying rent once retired doesn't look like an appealing option to me.

The earlier you start the greater the benefit you will get from compounding.

Malthusian

fun4everyone wrote: »

I reckon about £300,000 invested is about the minimum you need to be at the point you can live off it and keep the capital rising in line with inflation.

Þe olde 4% rule says that would generate £12,000 a year which is more than a large chunk of the population lives on. And most people in the UK would receive another £8,000-odd a year from their State Pension on top of that from State Pension Age.

A large proportion of the world population lives on less than $1 a day, which implies that $9,125 is enough to live on if you cut your cloth right and live in the right area. (In reality, of course, these people have an income from subsistence farming or other labour which is not valued in dollars, and the $1 amount does not take into account purchasing power parity.) It is all about your own personal goals.

Whoever at AJ Bell decided to release a survey which assumed a return of 10% per year after inflation and fees needs a slap. It may be masquerading as a thought exercise but it is an advert for AJ Bell and implying investors can expect a return of 10% per year after fees and inflation is extremely misleading. If it does not take into account inflation then it should, because the potential nominal value of your investments in 40 years is useless information of no value. That's why statutory illustrations had to start taking into account inflation years ago.

Fatbritabroad

Like you say given a million isn't what it used to be the lifetime allowance is plain daft nowadays I think. This gives 40k a year. Nice don't get me wrong but hardly luxurious. If you're fortunate e out to be able to max your pension contributions you'd hit that in probably 10 to 15 years with a reasonable growth

talexuser

fun4everyone wrote: »

I reckon about £300,000 invested is about the minimum you need to be at the point you can live off it and keep the capital rising in line with inflation.

When my mum passed last year I had been investing her ISA for over 20 years and it had a capital value of 304k. With POA I had it in 4 monthly income funds (for her care home fees) and the income was nearly 13k a year. The capital kept more or less the same with small increases, enough for someone of her age and expectations, but not enough to keep up with inflation over say another 20 years if you were 65. Assume you take less income to get more growth potential and add in the state pension and you have a realistic idea of what to expect.

Flobberchops

Articles like this really grind my gears - I sometimes pass the time by annoying myself reading similar "one simple trick" posts on Pinterest. "Assuming 10% return" - yes, easy as pie when the base rate has been hovering between 0.25% and 0.75% since 2008! The relatively recent appearance of LISAs unquestionably assists but those who can't (age over 40, already fully subbed into S&S, not tax resident, etc), or won't (aren't willing to lock away long term), pay into one are snookered.

reeac

bostonerimus wrote: »

Many people will find it impossible because they are on low salaries and have poor benefits and the shifting of pension contributions from the employer to the employee over the last few decades has made things harder for most workers. But we are where we are and so the brutal truth is that people need to save a lot, start early and manage their money well to be comfortable in retirement. Everyone should have a budget and the top items should be food, housing, insurance, energy/transport to work and saving. I try to minimize the first four so I can maximize saving.

You minimise your food and housing costs in order to save? What are you, a Spartan?

eskbanker

Flobberchops wrote: »

"Assuming 10% return" - yes, easy as pie when the base rate has been hovering between 0.25% and 0.75% since 2008!

I'm sure we all agree that as assumptions go it's not a realistic one, but to be fair it does relate to investment returns, which wouldn't be expected to correlate with base rates, as seen during the bull run over that period.

Flobberchops wrote: »

The relatively recent appearance of LISAs unquestionably assists but those who can't (age over 40, already fully subbed into S&S, not tax resident, etc)

While the above growth rate projection is highly ambitious, tax residency doesn't seem an unreasonable assumption in a UK article.

Flobberchops wrote: »

or won't (aren't willing to lock away long term), pay into one are snookered.

Again, in the context of how to accumulate £1m by age 65, it doesn't seem unreasonable to highlight that this entails long-term thinking and commitment of funds - there's no point in kidding people that they can build a fortune in easy-access cash savings!


Anyway, just playing devil's advocate a bit here, I do agree that it's a poor article!

fred990

Fatbritabroad wrote: »

Like you say given a million isn't what it used to be the lifetime allowance is plain daft nowadays I think. This gives 40k a year. Nice don't get me wrong but hardly luxurious.

40K year without having to get out of bed isn't too shabby?

bostonerimus

reeac wrote: »

You minimise your food and housing costs in order to save? What are you, a Spartan?

Certainly, housing and food are big ticket items and it's usually best to start with the big items when you are looking to control costs. This does not mean being spartan, but a frugal nature helps and it might mean cutting out pre-packaged food or reducing the amount you drink etc. I have a very nice home, but I bought it because it's a 2-family home and I rent out the ground floor apartment which helped pay the mortgage and now provides half of my retirement income along with some capital gains.

You should spend money with a purpose rather than letting it slip through your hands because of unquestioned habits.

John_G_Jones

fred990 wrote: »

40K year without having to get out of bed isn't too shabby?

But it’s a lot less than many people are used to, and less than many would choose to spend in retirement.