I want to retire early - how can I plan for it?

FIREDreamer

Exodi said:

barnstar2077 said:

MX5huggy said:

Have a look at this before deciding to pay off the mortgage. 

https://youtu.be/9MfCVkRvjQs?si=iJcf9mul1J8hvwcw

You clearly value the comfort of paying it off, but do you know the cost in missed opportunity of paying it off. 

I like what he has to say, but I find him hard to watch as he moves his head around so much.  I guess I am not very animated myself! :  )

I was hoping it was the James Shack video and was pleasantly suprised it was.

Extremely knowledgeable and useful youtuber (though I'd say it requires a decent understanding of finances beforehand).

If you find him hard to watch, I'd steer clear of most finance youtubers! I've lost count of the amount that make their career off thumbnails with flames in, big red downward arrows and laser-eyes photoshopped on people - typically coupled with exaggerated or controversial titles like "THE END OF THE S&P500?" or "WHY RENTING IS BETTER THAN BUYING". He's definitely one of the more relaxed and less click-baity. He also doesn't shill sponsorships every 5 minutes.

He's probably my favourite finance youtuber at the moment, definitely underappreciated.

Meaningful Money and Pensioncraft are good too.

barnstar2077

FIREDreamer said:

Exodi said:

barnstar2077 said:

MX5huggy said:

Have a look at this before deciding to pay off the mortgage. 

https://youtu.be/9MfCVkRvjQs?si=iJcf9mul1J8hvwcw

You clearly value the comfort of paying it off, but do you know the cost in missed opportunity of paying it off. 

I like what he has to say, but I find him hard to watch as he moves his head around so much.  I guess I am not very animated myself! :  )

I was hoping it was the James Shack video and was pleasantly suprised it was.

Extremely knowledgeable and useful youtuber (though I'd say it requires a decent understanding of finances beforehand).

If you find him hard to watch, I'd steer clear of most finance youtubers! I've lost count of the amount that make their career off thumbnails with flames in, big red downward arrows and laser-eyes photoshopped on people - typically coupled with exaggerated or controversial titles like "THE END OF THE S&P500?" or "WHY RENTING IS BETTER THAN BUYING". He's definitely one of the more relaxed and less click-baity. He also doesn't shill sponsorships every 5 minutes.

He's probably my favourite finance youtuber at the moment, definitely underappreciated.

Meaningful Money and Pensioncraft are good too.

PensionCraft is a favourite of mine as well, very knowledgeable and always bases everything on data and easy to understand graphs. 

barnstar2077

Exodi said:

barnstar2077 said:

MX5huggy said:

Have a look at this before deciding to pay off the mortgage. 

https://youtu.be/9MfCVkRvjQs?si=iJcf9mul1J8hvwcw

You clearly value the comfort of paying it off, but do you know the cost in missed opportunity of paying it off. 

I like what he has to say, but I find him hard to watch as he moves his head around so much.  I guess I am not very animated myself! :  )

I was hoping it was the James Shack video and was pleasantly suprised it was.

Extremely knowledgeable and useful youtuber (though I'd say it requires a decent understanding of finances beforehand).

If you find him hard to watch, I'd steer clear of most finance youtubers! I've lost count of the amount that make their career off thumbnails with flames in, big red downward arrows and laser-eyes photoshopped on people - typically coupled with exaggerated or controversial titles like "THE END OF THE S&P500?" or "WHY RENTING IS BETTER THAN BUYING". He's definitely one of the more relaxed and less click-baity. He also doesn't shill sponsorships every 5 minutes.

He's probably my favourite finance youtuber at the moment, definitely underappreciated.

I agree, the actual content and subject matter of his videos are well thought out and presented, but the gentlemans mannerisms are not for me.  I wish him well though, and am glad that so many people enjoy his channel. 

Gaberdeen

Short update on how things are going

Mortgage reduced to £95,000 (valuation £320k) with a 5 year fix at 4.11% - it's with NatWest so we can overpay by 20% as opposed to the normal 10% which we plan on doing - my calculations are that if we fully utilise the over payment each year the mortgage will be paid off in 3 years.

(First year 20% = £19k)

Some of the riskier ISA investments were divested into cash for lowering the ~£200k mortgage - yield on the portfolio now around 9% - total valuation of portfolio is £580,000. Projected yield per month is around £4,250.

Flat (mortgage free) is still being rented out - no issues there. Still valued at ~£85k and still pulling in ~£660 per month

Pensionable Salary has increased to ~£81k - increased pension contributions to 54% (~£36,000) and tuned a take-home pay of £2,500. That plus the ~£660 from the BTL allows me to overpay the mortgage by around £410 per month. My plan is to use ISA income / dividends at the end of the year to overpay the full 20% (i.e. £14,900 paid in December 25)

So long as there are no surprises or curve-balls (touch wood) the next major milestone should be in 3 years when the mortgage is paid off.

Previous advice received on on this thread will be enthusiastically followed, i.e. living off the ISA & BTL dividends / yield as and when I need to and increasing my pension contributions so my take home = NMW.

Thanks again for all the help and suggestions received.

Gaberdeen

Short update on how things are going;

Good Bits

Mortgage reduced to £78k, 9 months into a 5 year fix at 4.11% - plan is still to pay this off within 3 years (Jan 2028)

ISA portfolio now valued at around £630,000. Dividend yield is now ~£5900 per month

Flat (mortgage free) is still being rented out - no issues there. Still valued at ~£85k and still pulling in ~£660 per month

Pensionable Salary still at £81k with a review in December - pension contributions still 54% and pension value has increased to around £393k from £327k in January.

Bad (ish) bits

Treated myself to a new timepiece on a 15 month 0% card - already started to allocate funds to pay this off outright when it comes due.

Labour Party's obsession with running down oil & gas has put the shitters up the industry, looking at the possible loss of 30,000 jobs within the next 5 years if capital allowances at the very least aren't reinstated. Moreover, the supply chain knock-on from COP is forecast to be in the 100' of 000's.

Still not a "net zero" job in sight for anyone up/out here.

Strummer22

Gaberdeen said:

ISA portfolio now valued at around £630,000. Dividend yield is now ~£5900 per month

Blimey, what are you invested in for an 11% dividend yield!? 

Unless you meant per annum.

I'd retire now if I had £5,900 monthly tax-free income ;-)

Gaberdeen

No, monthly, 11% is about right although the PF value fluctuates +/- £20k every few weeks

PF is a diversified mix of Equity, Trusts, Bonds and Funds, impossible to list them all as there's around 80+ positions but the highest yielding LSE tickers are NESF, PTAL, AA4, DNA3, GCP, FGEN.

I should note that I don't currently "spend" the PF income, I match it to whatever is underperforming and average down on the relevant holdings. I very occasionally make disposals where an asset has gone up ~25% and that also gets reinvested in a "new" holding.

The hope is that when I can draw my pension, I won't need to wait to down-tools and indeed if I wanted to give helicopter rides and 2-weeks in a bunk bed a back seat beyond 47, there's nothing stopping me taking another job, even if it doesn't pay as well.

Gaberdeen

(Another) short update on how things are going;

Good Bits:

Mortgage reduced to <£44k (from £95k) 18 months into a 5 year fix at 4.11% - still on track to pay this off completely by Jan 2028 (2 years early) - 20% overpayment option with Natwest really making a big difference.

ISA portfolio valued at around £600,000 after paying-off 20% of the mortgage, buying a car (2025 Suzuki Jimny), paying off £16k on a credit card & cutting my losses on a bad investment. Investment yield now averaging around ~£5000 per month

Flat (no mortgage) is still being rented out. Still valued at ~£85k and still pulling in ~£660 per month - been hounded by letting agent that I can get a lot more (it's a 3-bedroom maisonette on two floors) but I'm not really interested - its more tax I have to pay HMRC and I'm happy if the tenants are happy.

Pensionable Salary still at £83k following review in December - pension contributions now a flat £5000 per month (+ whatever I can claim back in a SIPP before the end of the tax year from unused allowance / carry forward) and pension value has increased to around £537k from £393k in September 2025.

Still own 1 x rare sportscar - valued between £40-50k, handful of Rolexes - valued around £20-25k

Bad bits:

None at the moment.

mrklaw

you’re doing smashing obviously. But I’m surprised you’ve not had more pushback on heavy dividend focus in your S&S ISA. Are you similar in your pension or is that more traditional global index fund?

you’re living off way less than your income which has the obvious double benefit of being able to save more, but also reduce the amount you’ll need in income (vs your salary at least).

I’d personally at least be looking to model adjusting your S&S ISA into a more traditional model - there is another good James Shack video out there looking at dividend stocks - they’re mechanically neutral vs growth stocks as they give up value in return for the dividends. If you’re reinvesting those in theory that should be net neutral overall. But by focusing on heavy dividend stocks you’re increasing concentration risk in a particular sector - dividend stocks. so you’re almost stock picking not necesarily based on peformance over time but by what they pay out. That headline sounds great paying 8-10% but needs to be compared with alternatives IMO)

I’d also be modelling if you genuinely can live off 20k a year from your side of things - perhaps aiming at 50 with a good ISA to provide a bridge and stress on your portfolio dropping significantly at state pension age. and with an older wife that’d like up with her being around 60-61 so potentially looking to retire anyway.

Gaberdeen

Hi mrklaw,

The pension is pretty much the 70/30 global equity / bond fund you'd expect, more geared toward capturing long-term growth than what my S&S is, which is income-focused.

I do understand the reticence of some with regard to dividend stocks - they can be cannibalizing and feed-off the NAV to maintain attractive dividends, most I'm invested in however are at significant discounts to NAV and none are single ticker equity - all are either ETFs, Trusts or Funds - and despite it looking like I'm caught in a bad investment choice, there is a reason for it - my income from S&S dividends allows me to grow my pension aggressively - I should explain;

Instead of being paid £7000 a month from my employer in order to pay my bills with whatever is left after paying 42/45/48% tax - I sacrifice down to NMW and I use my tax-free ISA income to pay my bills, reinvesting the rest.

I run a regular stress-test on my financial position, from outcomes as optimistic as "nothing changes" until I hit 57 and as pessimistic as "lose my job tomorrow" and in all market guestimate cases (3%, 6%, 9% growth) - I can maintain my current standard of living indefinitely. i.e..even if I stopped work tomorrow and lived only off my ISA income, I should never need to make any changes to my budget. In reality, I'd find another job - that perhaps won't pay the same, but the margin of safety is increased as a result.

Whether there is scope for me to tune my investment choices so that i capture more growth while still covering my NMW expenditure is something I'd be keen to look at - I do like efficiency.

From here until I retire, I don't intend on taking-home any more than £43k a year as the absolute maximum - so I don't get spanked with tax on my income - it might end up the case that in retirement I need to drawdown more than whatever the marginal rate of tax is in 2038 - so I can enjoy the fruits of my labour instead of leaving it to the govt - but that's a "good" problem to have in retirement, relatively speaking.