How close am I to my early retirement?

JoeCrystal

Well, you are missing important information: How much do you two or your family need to live on for your retirement?

IamWood

My wife and I are both very moderate in our lifestyle. We only spend on what’s necessary and though enjoy holidays. Last year, we spent about £35K in total, which covered everything including a few aboard trips. However we gift aid about 5K to charity.

DT2001

You could go anytime with £1.4m savings plus either £600k or £19k p.a. rent if your spend in retirement is going to be £40k especially bearing in mind SP (although a little way off). A very conservative withdrawal rate of 3% = £42k plus rental.
What will you do in retirement and how does that effect your budget?

Albermarle

IamWood said:

My wife and I are both very moderate in our lifestyle. We only spend on what’s necessary and though enjoy holidays. Last year, we spent about £35K in total, which covered everything including a few aboard trips. However we gift aid about 5K to charity.

So you earn as a couple £0.25 Million a year ( before tax ) and only spend £35K pa.
That is quite amazing..........

Cobbler_tone

TBH I think if your motivation was actually to retire ASAP and considering your financial position and obligations....you have already worked for longer than you needed to.
Hard to give up a £250k salary though, unless you really hate your job and have more enjoyable hobbies that you could fill the time with. 
There are hints of 'rate my CV' about this discussion.

Arthurian

I have only recently realised that if I want to leave my life savings to my children, I might need to have a pension high enough to cover care home fees, which could be £60,000 a year. Before that realisation, I had been happy following the usual "How much do I need?" discussions, thinking I only need to cover my usual expenses (which are far lower).

artyboy

This isn't about finances, it's about mindset/psychology. From the standpoint of income/children/age, we're in a very similar situation to the OP, but with significantly higher pension/property assets.

Could retire today. Could have done years ago. Haven't. Because there's still a sense that we are 'too young' to shift into decumulation mode.

The IHT thing on pensions has got Mrs Arty thinking now though. Richest corpse in the cemetery etc etc. I suspect that if she got redundancy from her job now (people don't just tend to 'walk away' in our industry), that could well be it, done, sail off into the sunset. Let's see. I'm certainly ready.

Cobbler_tone

Arthurian said:

I have only recently realised that if I want to leave my life savings to my children, I might need to have a pension high enough to cover care home fees, which could be £60,000 a year. Before that realisation, I had been happy following the usual "How much do I need?" discussions, thinking I only need to cover my usual expenses (which are far lower).

The problem with that mindset is that most people would have to work until they needed a care home to fund that.
The reality is that it better to gift to children when you are about, as opposed to trying to guarantee wealth at the end….IMO of course.
You also get the satisfaction of seeing the impact of doing so too.

Albermarle

Arthurian said:

I have only recently realised that if I want to leave my life savings to my children, I might need to have a pension high enough to cover care home fees, which could be £60,000 a year. Before that realisation, I had been happy following the usual "How much do I need?" discussions, thinking I only need to cover my usual expenses (which are far lower).

However the chance you will end up in a care home is relatively low, at least until you get very old and then you might not be there very long.
Some care at home is more likely ( but many never need it) and this normally will be significantly cheaper.

So you have to balance the relatively small risk of needing to stay in a care home for years, against the need to save much more today, to cover that risk. 

Cobbler_tone

Albermarle said:

Arthurian said:

I have only recently realised that if I want to leave my life savings to my children, I might need to have a pension high enough to cover care home fees, which could be £60,000 a year. Before that realisation, I had been happy following the usual "How much do I need?" discussions, thinking I only need to cover my usual expenses (which are far lower).

However the chance you will end up in a care home is relatively low, at least until you get very old and then you might not be there very long.
Some care at home is more likely ( but many never need it) and this normally will be significantly cheaper.

So you have to balance the relatively small risk of needing to stay in a care home for years, against the need to save much more today, to cover that risk. 

I do struggle with the whole care home debate and must be largely driven on lived experience and personal situation. I personally don't know one person who has been in one. My relatives and friends have either died at home (some after short term care or suddenly), others have died in hospital. I guess if your family had all passed, or are living, in care homes it may make you think differently. 
With the financial risks and decisions we make throughout our lifetimes, saving a small fortune on the chance of needing hundreds of thousands of pounds to fund a long term care home must be up there with the most risk adverse decision you could take. It could also depend on the support network (or not) you have around you.

Different story if you want to fund a residential home for your last 20 years with cocktails at 3pm!