Early retirement calculations help

jonnygee2

can I make it clear that no one is starving or going without in order for these saving figures to be achieved.

I'm sure they are not :-D

I was talking more about the calculations for when you stop working. While you are working it's fine for things to fluctuate, especially if you have savings, if anything hits you you can cope with it.

But stopping working is different. It's a bit like starting to abseil down a cliff face. You need to have enough rope, or at some point you are going to end up with a choice between trying to climb back up, or a very hard landing.

sluisdejesus

jonnygee2 wrote: »

I'm sure they are not :-D

I was talking more about the calculations for when you stop working. While you are working it's fine for things to fluctuate, especially if you have savings, if anything hits you you can cope with it.

But stopping working is different. It's a bit like starting to abseil down a cliff face. You need to have enough rope, or at some point you are going to end up with a choice between trying to climb back up, or a very hard landing.

Sorry I didn't mean to be abrupt :beer:

Looking back through and adding everything up...

Current spend without savings is just over 19k PA. Add in a generous 5k PA maintenance allowance (which we plan on having in easy access cash ISAs - a F**k it fund as we call it here) leaves us at 24k PA

POT1 (40-60) will be suitably full (with clearly more than £700pcm)

POT2 will need filling up until 50 so I will need to budget for that for the first 10 years of retirement so an extra 4k (or more)

So retirement drawdown will need to be (generously and accounting for housing, maintenance and feeding expenses - though I hope to not still be feeding all the brood by then!) more like 28k PA as joint income.

Better?

atush

Having raised 3 kids, your costs for them and food are too low

sluisdejesus

atush wrote: »

Having raised 3 kids, your costs for them and food are too low

Open to suggestions

jonnygee2

So retirement drawdown will need to be (generously and accounting for housing, maintenance and feeding expenses - though I hope to not still be feeding all the brood by then!) more like 28k PA as joint income.

That sounds more realistic yes.

So essentially, to fund that you are going to need a lot of savings. Some people use a basic rule that you can withdraw about 4% of an investment each year without depleting it. Some say it's less than that, but also maybe you don't mind a small, steady depletion so let's go with 4%. You are going to need around £700k saved before you can think about retiring on that income level.

If I were you, I'd say your best bet is definitely to concentrate, for now, on saving as much as you can through your company pension schemes because of the tax efficiency, accepting that unless things change you are unlikely to retire before 55. Remember, there are other options like moving to part time work or finding less stressful jobs once your mortgage has been paid - you can think about those later.

crv1963

sluisdejesus wrote: »

Planning to retire in 15 years

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

In a word- No.

That said good to be looking at it all now. I would respectfully suggest that you are looking at this the wrong way round. Have a read of a few threads- what's your number? is a good one.

Work out first how much you need and then the when, then how to fund it.

I'd suggest- purchase your house, build your Emergency Fund, keep options open by using LISA and Pensions, ISAs and always go for the free money accepting that there are usually strings attached such as the restrictions on when you can access it.

Have a rough plan but don't be a slave to it, be disciplined but not draconian about it. You're young so also enjoy yourself and have a plan about what you are retiring to.

I was always (from age 21) going to retire at 55, now 56 I am not ready to leave the workplace yet. That is due to several things- life events, personal attitude, a determination to have a last "push" to get our home ready for our retirement- lots of work to be completed still and finally a spouse who thinks she is too young at 53 to retire.

As for cutting costs on current spending- you could get an allotment? I have a colleague who doesn't buy any veg at all and only buys fresh fruit because they are self sufficent with their efforts growing things and they encourage their children to have their patch too.

One of my sons (age 23) is planning on retiring at 40 but has a savings rate of around 70% and he thinks he'll have to possibly have to develop a side hustle to meet that target so has started his own business in addition to his regular job.

sluisdejesus

Do you have a link to that post? I can't seem to find it!

ffacoffipawb

sluisdejesus wrote: »

It looks like you're serious about these calculations... perfect! (now on laptop, replying is much easier)

Following the MSE budget sheet I'll break things down further - costs are current as we are renting but almost have enough deposit to buy current rental property at 160k.

Rent- £750
Council tax - £156
Gas and Electricity - On key meter averaged over 12 months (taking last 4 years into account) £70
Water and sewerage - £43
Car insurance, tax, fuel - £150
Food - £250
Phone, internet, mobiles - £90
2x ISA (for house deposit) - £400
Loan payment (and overpayment) - £300
Home education and associated costs £150

Husband income 18.2k basic (plus around £200 pcm bonus)
My income £6k (maternity leave) then back to £10k
Child maintenance - £2.6k
UC top up £500 pcm
Matched betting - around 1k per month WE DO NOT RELY ON THIS

By my calculations when we manage to buy the property we will have lower mortgage payments than the rent but the surplus will be taken up by insurances etc

The money currently being paid into ISAs and loan payment can then be used to invest into POT1 and we will then have to find £300 pcm for POT2.

UC top up will disappear when we are no longer renting but I will be back to work by then.

Thoughts?

My main thought here is if you amass £16,000 in savings outside of a pension then your universal credit of £500 per month will stop I think?

This is because it is means tested.

I may be wrong however, as I have never claimed it.

sluisdejesus

ffacoffipawb wrote: »

My main thought here is if you amass £16,000 in savings outside of a pension then your universal credit of £500 per month will stop I think?

This is because it is means tested.

I may be wrong however, as I have never claimed it.

Yes that's right. We're expecting it to disappear once we've bought the property anyway.

crv1963

sluisdejesus wrote: »

Do you have a link to that post? I can't seem to find it!

Pensions Planning: The NUMBER

I think the above is a link! If not you may need to use the search option.