On track to retire at 50? Pension diary

DT2001

Just read this thread and it is interesting to see people planning early. Well done. In comparison my plans, at your age, were haphazard. Plans need to be adaptable  - I was made redundant at 35, went self employed, invested in a start up, had 4 children, bought a property overseas to name but a few. Having said that we’ve managed to save year in year out and some investments have produced excellent returns. We’ve now got our investments in just ISA’s, SIPP’s and our overseas property. Our youngest has 3 more years in school so full retirement is on hold but we have a very good work/life balance. Children can be expensive - however it does vary hugely (private education, hobbies, holidays, assisting with Uni etc). I think I am trying to say, whilst you have an admirable goal, don’t stress too much when your plans are not going as expected as upturns will come along.

If your OH retires at 55 you have one income until then. At 55 with a pension of £20k (?) you only have a shortfall of £15k until SPA when you’ll have more income than required. So your ‘pots’ only need to fund 20 years in total. Your BTL if mortgage free could produce £5k p.a. 

I did a spreadsheet starting at OH’s SPA (she’s younger than me) and worked back to see how much capital I could utilise to plug any income shortfall in the early years. I decided I needed less than I originally thought as by the time OH reached SPA all of our expected ‘necessary’ expenditure was covered 1.25 times by guaranteed income.

 

MallyGirl

Simon11 said:

Here is my current pensions at age 33 (yes I got my age wrong last year! ):

* Defined contribution pension: £98k [60k LY] pot with target to put in £40k from pay/ bonus
* Defined contribution pension: £18k [foreign pension]

* Defined benefit pension: £940 annually

* State pension: Expenditure of £1k to fill two years, would give me 35 years of NI credits by 50
* B2L: Currently worth £180k and should increase due to major infrastructure being built close by. Expect to have tiny mortgage by 50. I am aware of capital gains tax however if I sell once I stop working, this will minimise my tax.

Don't get sucked in to thinking you only need 35 years - that figure is for people who started after 2016. You may well need more, or less, so you will need to check your pension forecast.

Simon11

So slightly longer than a year than my previous post, but the squirreling away has continued and taking onboard all the advice here!

I now have a 2 year old with lots of toddler tantrums plus a newborn on the way (hopefully coming into the world on Friday!!! ) 

After a client projects drying up at work, I have had to reconsider my options and last December plunged myself into job hunting mode. Not ideal when you have a child on the way, but I couldn't risk it. The outcome was that I had two job offers and I have chose a job with a small decent pay rise, but more importantly the employer puts 12.5% into the pension -v- existing employer at just under 6%. I plan to keep putting 39% of salary into the pot for now, so this new job will increase annual amount into the pension pot but also increase monthly cash flow after tax.

I still have the plan to want to have the option to retire at 50 and focus more of my time on my volunteering interests. I would estimate that with my partner (who may retire around 55), we would need £35k together to live comfortably.

Here is my current pensions position at age 34 (nearly 35) compared to 13 months ago:

* Defined contribution pension: £135k [£98k LY] pot with target to put in £30-40k from pay/ bonus per year. Bonus was rubbish this year, but with pensions picking up this covered the shortfall.

* Defined contribution pension: £20k [£18k LY] foreign pension pot, only investment growth now

* Defined benefit pension: £969.79 annually

* State pension: On track to have 34 years of NI credits by 50 years old [Currently have the option to pay £800 for missing year but holding off]

* B2L: Currently worth £175k [£180k LY] but should increase due to major infrastructure being built close by. Expect to have tiny mortgage by 50. It isn't really tax efficient and I am aware of capital gains tax however if I sell once I stop working, this will minimise my tax.

Partner (35)
* Defined benefit pension: Government pension with 9 years collected so far [but now working 4 days a week]
* State pension achieved hopefully by 55

Based on the above with average life expectancy, our pension pots together are worth around £250k [£183k LY]

Only major debt is the mortgage which is around £485k [£500k LY] with 2.5 years still to go on the cheap fixed rate so may need to hold back some savings to reduce this at a later date.

I think we are still on track, however there will be lots of challenges ahead!

Simon11

Time for an annual (ish) check in

Things are still ticking over nicely in terms of growing and generating wealth for the future. I am currently chucking in 44.5% of salary into the pension this year, to squeeze under £60k threshold to take advantage of the child benefit. This does mean I have to dip slightly into savings to cover everything over the course of the year but now partner is back from maternity hopefully things should mostly balance out in terms of month to month spending although spending on childcare will be expensive until they both get 30 free hours of childcare by April/ Sept 2025. 

For now with current Government policies, it makes sense to continue with the strategy to throw everything to maximise wealth although our low interest mortgage term comes to an end in mid-2026 which may mean a different strategy. Another line of thought is that if I start to near the annual £60k pension allowance (particularly if there is a bonus) then it may be worth taking off some extra weeks of leave unpaid (parental ordinary leave) to get the right balance of future/ now.


Here is my current pensions position at age 35 compared to 12 months ago:

* Defined contribution pension: £189k [£135k LY] pot with target to put in £45k from pay/ bonus per year. 

* Defined contribution pension: £23k [£20k LY] foreign pension pot, only investment growth now

* Defined benefit pension: £969.79 annually

* State pension: On track to have 35 years of NI credits by 50 years old 

* B2L: Currently worth £176k [£175k LY] but should increase due to major infrastructure being built close by. Expect to have tiny mortgage by 50. It isn't really tax efficient and I am aware of capital gains tax however if I sell once I stop working, this will minimise my tax.

Partner (35)
* Defined benefit pension: Government pension with 9 years collected so far [but now working 3 days a week]
* State pension achieved hopefully by 55

Our pension pots together are worth around £313k [£250k LY] and £117k held in the B2L for retirement.

Only major debt is the home mortgage which is around £473k [£485k LY] with 1.5 years still to go on the cheap fixed rate so may need to hold back some savings to reduce this at a later date.

Finally, [I love my numbers] here are some fun stats:

• Our current retirement age is 61.5 years old based on money we have saved so far towards our retirement and living to around 85
• Will become a 'millionaire' by October 2025 (If we were to sell everything and move, we would have this amount to live off)
• To retire at 50, we need around £1.6m in wealth/ assets/ investments and currently will reach this goal at the age of 44!  Alternatively, this equates to around 1,900 working days left to do!
• Currently 62.7% of my way through my career before I have the option to put my feet up or put them up more often! 

I think we are still on track, however there will be lots of challenges ahead!

Simon11

So now into year 4 of this diary and have already seen some huge growth in the investment in our pensions which now exceed £400k in value. I've calculated the defined contribution aspects of our pensions have increased by £30k over the last 12 months through growth and that alone should cover a year of our retirement before we consider new money that we are throwing at pensions!

With my other half now working part-time on minimum wage to spend more time with our children, I have been planning to keep throwing everything (>£50k) at the pension this financial year [eating into savings in the process] to maximise tax/ child benefit. However from April with a very healthy pension pot now in place, the plan is to reduce salary salary sacrifice to the minimum to match employer rate and live a bit more. If I am lucky to get a promotion, I will put forwards more into the pension especially over the £100k threshold.

Here is my current pensions position at age 36 compared to 12 months ago:

* Defined contribution pension: £269k [£189k LY] pot. 

* Defined contribution pension: £26k [£23k LY] foreign pension pot, only investment growth now

* Defined benefit pension: £969.79 annually

* State pension: On track to have 35 years of NI credits by 50 years old 

* B2L: Currently worth £160k [£176k LY] as has fallen as the flat is less desirable however we are very close to obtaining 'Right to Manage' so we can kick out the expensive property manager to reduce cost/ improve management and should increase due to major infrastructure being built close by. With renewal of mortgage soon, planning to stretch out this B2L mortgage to 35 years and focus any spare money on investments, rather than paying off this mortgage which has very little benefits.

Partner (35)
* Defined benefit pension: Government pension with 10 years collected worth £93k so far but now only working part-time
* State pension achieved hopefully by 55

Our pension pots together are worth around £410k [£313k LY] and £103k held in the B2L for retirement. There is a risk that my partner really needs to build up her pension, however she has struggled to find a decent job since leaving education. Maybe in the future once finances are really strong, she could return to education and I could move to consultancy part-time.

Only major debt is the home mortgage which is around £458k [£473k LY] with 0.5 years still to go on the cheap fixed rate. Have already begun looking at renewal and with extending the mortgage out to 35 years and with rates slowly reducing, hopefully our monthly payments remain similar to now (although paying off less of the mortgage). If we have any spare money, we can always pay off more of the mortgage if wanted however it would make more financial sense to invest instead now that we own 50% of the property.

Finally, here are some fun stats:

• Our current retirement age is 58.7 years old [61.5 LY] based on money we have saved so far towards our retirement and living to around 85
• We became 'millionaires' in September 2025 (If we were to sell everything and move, we would have this amount to live off)
• To retire at 50, we need around £1.6m in wealth/ assets/ investments and currently will reach this goal at the age of 43.1 [44.0 LY]!  Alternatively, this equates to around 1,373 working days left to do!  [1,900 LY]
• Currently 71.6% [62.7% LY] of my way through my career before I have the option to put my feet up or put them up more often! 

We are in a fantastic position with just six years of really hard work to be in the position to retire at 50, however now is the time to slow down, get the balance right and let the money work for us, while we fully enjoy life now!

Smudgeismydog

* State pension: On track to have 35 years of NI credits by 50 years old 

Just wanted to highlight the above, due to your age, I would urge you to check your NI forecast.

Simon11

Smudgeismydog said:

* State pension: On track to have 35 years of NI credits by 50 years old 

Just wanted to highlight the above, due to your age, I would urge you to check your NI forecast.

Thanks for the message. I've just done another check on Gov.UK

I already have £141.95 a week locked in and it says if I contribute another 14 years I can get the full amount of £230.25 a week. That takes me to 50. I think its all down to having a large paperround around the age of 14/15 and working lots of hours while at university- I've only had one year gap in NI when I was abroad for the full year.

Marcon

Simon11 said:

Smudgeismydog said:

* State pension: On track to have 35 years of NI credits by 50 years old 

Just wanted to highlight the above, due to your age, I would urge you to check your NI forecast.

Thanks for the message. I've just done another check on Gov.UK

I already have £141.95 a week locked in and it says if I contribute another 14 years I can get the full amount of £230.25 a week. That takes me to 50. I think its all down to having a large paperround around the age of 14/15 and working lots of hours while at university- I've only had one year gap in NI when I was abroad for the full year.

You don't start paying NI until you are 16 (and earn enough), so the paper round won't be counted.

Alexland

Marcon said:

You don't start paying NI until you are 16 (and earn enough), so the paper round won't be counted.

It may be the earnings related S2P in their early 20s gave them a higher starting amount for the new SP.

That's what happened to me so I'll have earned full SP before completing my 40s.

artyboy

Alexland said:

Marcon said:

You don't start paying NI until you are 16 (and earn enough), so the paper round won't be counted.

It may be the earnings related S2P in their early 20s gave them a higher starting amount for the new SP.

That's what happened to me so I'll have earned full SP before completing my 40s.

Ditto, even with a 2 year break from work, I was 'full' by my mid-40s. The whole entitlement thing is a real black art (albeit it will eventually be simplified to 35 years for everyone)