Early retirement calculations help

sluisdejesus

Planning to retire in 15 years
My age 28
DH Age 25

Current costs (don't think I've missed any):
Housing and utilities - £1050
Food - £250
Car - £150
Phones/mobiles/internet - £120
Kids - £150


Planning on using Vanguard LS100 to fund first 20 years of retirement by investing £350pcm each for the next 15 years?

Investing into stocks and shares LISA £150 each (plus 25% bonus while it lasts) for the next 22(me)/25(husband) then letting it mature for a further 10 years when it can be accessed.

Mortgage will be paid until we're 60 unless we decide to overpay.

Do these calculations seem realistic taking into account compounding and growth.

Planning for a drawdown of 1.5k each per month maybe?

jonnygee2

Do these calculations seem realistic taking into account compounding and growth.

Not really to be honest, no. I haven't done the maths but I'm sure someone more qualified than me will do that soon. But, for comparison I save about £700 / month into my personal pension, and that is only likely to get me to a position where I can withdraw 1.5k a month after working until the age of 60 - 65, if it ever gets me there at all.

In total in 15 years you'll save £180,000. That's not getting you anywhere close to retiring at 40, even when interest etc is added. And for the income you want (£36ik a year!) you are going to need closer to £1 million.

Marcon

sluisdejesus wrote: »

Planning to retire in 15 years
My age 28
DH Age 25

Current costs (don't think I've missed any):
Housing and utilities - £1050
Food - £250
Car - £150
Phones/mobiles/internet - £120
Kids - £150
Clothing? Holidays? School trips? Entertainment? Optician, dentist, prescriptions? Insurance on house/contents? Life cover?

Planning on using Vanguard LS100 to fund first 20 years of retirement by investing £350pcm each for the next 15 years?

Investing into stocks and shares LISA £150 each (plus 25% bonus while it lasts) for the next 22(me)/25(husband) then letting it mature for a further 10 years when it can be accessed.

Mortgage will be paid until we're 60 unless we decide to overpay.

Do these calculations seem realistic taking into account compounding and growth.

Planning for a drawdown of 1.5k each per month maybe?

At what age are you planning to start drawdown? You won't be able to access your pension fund for many years after you 'retire' at the grand old age of 43.

£120 a month on phone/mobile/internet looks excessive. Have a look around e.g. https://www.moneysavingexpert.com/broadband-and-mobile/ and see how much you could save.

sluisdejesus

Sorry, looks like I've messed up posting - small sleep thief has no mercy! Should be 18k ish combined (probably more like 20k if I'm honest) to last from 40-60. I really don't think £1m is anywhere near necessary in any case but I'm happy to be shot down.

sluisdejesus

Drawdown would start at 42 from ordinary stocks and shares ISA (£350pcm investment each)

232607

Investing £700 PM over a a 15 year period in a 100% equity fund may build up a pot of £220K if...
Equity returns match historical’s, IE 5% + inflation.
I’ve ignored inflation to keep the £220K in today’s money.
The problem you have is can’t get hold of this money till 55 (possibly more) so how do you intend to bridge the gap until then?

Marcon

sluisdejesus wrote: »

Drawdown would start at 42 from ordinary stocks and shares ISA (£350pcm investment each)

Any pension savings, with their associated tax advantages?

jimi_man

Hi. Welcome to MSE.

Well it looks ambitious!

Adding those figures up comes to £1700 a month. I’m guessing you are relying on the kids being off your hands by then, so that could bring it down to £1500 a month. However I don’t see any allowance for things like holidays, house maintenance, capital expenditure, car depreciation and other sundries like dental treatment, gifts, haircuts, etc etc.

To put it into context, another poster on here Seashell who is fairly well regarded as being particularly frugal, (look at the thread about ‘squirrelled nuts’) spent around £11k last year. However she stated that once all the costs were added in like depreciation and capital expenditure then the true figure would be closer to £20k. With no kids and no mortgage and probably twice the amount of funds as you might have.

One other point is that after another 15 years, it’s unlikely you would have built up enough NI contributions to qualify for full State Pension. You don't say what other pension provision you have.

I’m not saying its unachievable, there is not enough information available to say really, but as I say it looks ambitious. But to retire at 43 means that you may need 40 to 50 years worth of income - maybe £700K to £900K at £18K per year.

However you’ve obviously got the right idea by saving hard at a relatively young age, which is great.

One thing I am curious about is why you'd want to retire at such a young age?

jonnygee2

Sorry, looks like I've messed up posting - small sleep thief has no mercy! Should be 18k ish combined (probably more like 20k if I'm honest) to last from 40-60. I really don't think £1m is anywhere near necessary in any case but I'm happy to be shot down.

What's 18k sorry? You mean you need an income of 20k between 40-60, to be provided for by your savings&investments?

sluisdejesus

I can't quite figure out how to do quotes on this thing yet!

232607 - we were hoping to fund the period until 60 using the initial investment which would be in an ordinary S&S ISA so accessible before 60.

The post 60 period would be funded using the LISA *insert more efficient saving method*

Marcon - currently husband has standard workplace pension but we are looking at increasing those once we know what the maximum employer match is.

Jimi_man - we've got young ones and once they have their own littles we'd like to be on hand to help so they can go to work without worrying about childcare! Plus why work if you can save hard now and not need to?

jimi_man

sluisdejesus wrote: »

I can't quite figure out how to do quotes on this thing yet!

232607 - we were hoping to fund the period until 60 using the initial investment which would be in an ordinary S&S ISA so accessible before 60.

The post 60 period would be funded using the LISA *insert more efficient saving method*

I would investigate the husband's workplace pension first and see if that could be maxed out or whether he could use salary sacrifice. Pensions are are reasonably tax efficient though if you or your husband are (or are likely to be ) higher rate tax payers then they make a lot of sense.

sluisdejesus wrote: »

Jimi_man - we've got young ones and once they have their own littles we'd like to be on hand to help so they can go to work without worrying about childcare! Plus why work if you can save hard now and not need to?

I understand that and planning for the future is commendable. However if they are that young then it's maybe a little early to think about them getting married, having children etc. They might not have them until mid 30's, so possibly 30 years away (I don't know how old 'young ones' are!).

As for working. Well I guess that depends on your attitude to work. But if you don't work and you don't need to look after grandchildren, then what will you do?