Advise on possible early retirement (Savings/Pension/Property)

dirk_

Afternoon all

I am looking for some saving advice.

We are in the fortune position of having paid our mortgage off a couple of years ago (house would be valued currently at £150k) and by the end of this year will have around £70k in a easy access low interest savings account.

We currently save in the region of £3k per month and we're hoping to increase this in 2021 as we both have secure jobs and are both expecting increases.

Our plan to both retire before or around 2025-2030 (in 2030 I will be aged 52 and my wife will be 55) and buy a smaller place on the continent; probably in Spain or northern Italy, looking at current house prices, we could get something that would suit us for between £80k - £100k –  we would look to fund this via our savings – we would be looking for this to be our permeant home and would sell our current home

My question is what we should do with the savings we currently have and are going to have in the coming year/s

The options we have though of are

Carry on saving as we are – but gaining no interest (move to a higher rate account/premium bonds) 

Buy a flat to let out

Increase our workplace pension contribution

I think doing all three would be best as we could continue saving at a much reduced limit, eventually giving us the savings to purchase a new home abroad as well as invest in a UK flat that we let out (understanding the current market) as well as increasing our pension contribution; currently between us our pension contribution (employee & employer for both of us is around £700.00 per month; I was thinking of upping this by £500 each)

Obviously other things would need to come together as if we use our savings to buy a property abroad we would at that point be looking to sell our current home and possibly keeping the flat on as this would give us a source of monthly income.

Sorry for the ramble; I wanted to give as much info as possible; hopefully it is clear and thanks in advance

xylophone

How much do you know and understand about being a landlord and in particular a non-resident landlord?

It seems to me that if your aim is to fund early retirement, paying as much as possible into your pensions (and gaining tax relief) would be the option of choice.

You could keep your emergency fund in NS&I while it is paying reasonable rates.
https://www.nsandi.com/our-products

Have you both obtained state pension forecasts?

enthusiasticsaver

You would get better returns by investing in stocks and shares isas although obviously that is not guaranteed but interest rates on savings are so poor now.  If you need cash to purchase a property though then look at premium bonds or national savings. Definitely you should be maximising pensions although bear in mind you cannot access them until 55. I would definitely look at maybe investing in a multi asset investment fund and research on beginner investing. Stocks and shares isas give you a way of tax efficient savings and an alternative source of income before you draw on your pensions. I personally prefer these to buy to let as they are more liquid, do not rely on having good tenants and don't need maintaining. They are also more tax efficient. 

Albermarle

Couple of questions
1) You are able to save £3K per month but only have built up £70K in savings. Have you had recent big increases in salary and were not able to save before ? I know you have paid off the mortgage but there seems some imbalance somewhere.
2) How big are your current workplace pension pots ?

The reason for the questions is that at first glance , you want to retire very early ( and quite soon) but although you have assets they do not seem that large when you think you may live for another 40 years, and a big gap between retirement and receiving the state pension.

xylophone

although bear in mind you cannot access them until 55. 

And may yet increase to 57 - https://www.thisismoney.co.uk/money/pensions/article-7856699/When-does-minimum-age-cash-pension-rise-55-57.html

And state pension age

https://www.pensionsadvisoryservice.org.uk/about-pensions/the-state-pension/know-your-state-pension-age

As a poster above comments you could be using some of that £3000 a month (after increasing your pension contributions) to invest in a stocks and shares ISA for the next ten years.

https://moneytothemasses.com/saving-for-your-future/investing/the-best-stocks-and-shares-investment-isa-the-cheapest-fund-platform

https://monevator.com/passive-fund-of-funds-the-rivals/

dirk_

Thanks for everyone's comments, I will have a proper read over them tonight as well as the links, 
Albemarle, we had a couple of large bills and a wedding over the last couple of years that wiped out all our savings so had to effectively start again, my wife would like to retire in 2025 but I have always said we may need another 5 years on top of this.
I will find out the pension fiqures and post them, we also have free access to a pension advisor through my work so will organise a call with them. 
You time is much appreciated guys

dirk_

Also just to add, we hadn't been saving at this level until the last couple of months ago.