24 and wanting to retire early

diystarter7

Your first house, stay with parents, rent it out then rent out a room, then you will have enough money to buy your own place via a mortgage, nothing too flash but somewhere you like, before you know it you will be mortgage-free on both properties. As time goes on buy another BTL, I'm pretty sure you could retire at 50-si. We left work just before 55 as have several pensions but never , too sacred re BTL, was now considering but fear high-interest rates and too many rights for T's and LL's being shafted but we are much older than you so you start from somewhere

Btw, never borrow money other than when buying property.

Your choice, your risks, your money, good luck.

hugheskevi

FireRetire98 said:

I'm currently earning around £26k a year and have agreed with my parents that I don't need to pay rent to them if I'm saving most of my income.

 Salary is a priority to increase, at younger ages investing in yourself has amazing returns, so seeking out training, skills and new opportunities is key, especially in your 20s. I think the ideal salary to aim for would be at least £50,000 so you can fully use 20% income tax band and ideally up to around £80,000 as then you can use pensions to stay tax efficient, anything more than that leads to very high tax rates so isn't such a priority.

I contribute a lot to my pension (at least for my age). £943 a month goes into a workplace pension - this is before tax so I gain tax savings and employer contributions.

Is this salary sacrifice? If not, and you don't benefit from matched employer contributions for additional contributions then putting lots into pension now probably isn't very attractive. You may find it better to put in S+S ISA (assuming you are maxing LISA) and putting more into a pension at a later date when you would benefit from employer matching, salary sacrifice or higher rate relief (contributing from salary, and using S+S ISA savings to augment income if necessary).

Don't get married or have kids.

100% agree on kids (and also pets), very much disagree about married. But do make sure spouse is a decent earner, and that you take full advantage of both sets of tax allowances. Make sure you don't get divorced, it ruins finances (but at least tends to remove Lifetime Allowance issues).

Avoid car ownership if possible.

I don't think car ownership is very expensive, and may well be overall a net saving once taking into account the cost of alternative travel. The important thing is that you can spend huge amounts on motoring or very little, and if wanting to save don't get sucked into regularly buying expensive cars.

When you buy a property aim for at least 2 bedrooms for an additional income and to split bills etc.

I aimed to buy the largest property I could use all the space in (even if that is under-using). I didn't use the spare bedrooms despite living in London, but the capital value appreciation was far more valuable, and all free of capital gains tax. The tax treatment of primary dwelling is so advantageous it incentivises  larger investment.

I'd also suggest taking an active interest in your health. That will hopefully avoid medical costs, avoid costly drinking and smoking and lead to activities which are inexpensive such as running. It might also reduce food expendture too hopefully, remembering that 2/3 of adults in UK are overweight so are spending more than necessary on food whilst adversely affecting their health. Eating out is expensive, so cooking own food and doing social activities that do not revolve around pubs and restaurants saves a lot as well as being beneficial for health.

More generally, understand what you are spending money on and why. I've seen so many people paying crippling amounts of money for phones and contracts that they only use for basic functions that any phone could perform. Ensure you are getting value out of all expenditure (which is different to not spending anything at all).

FireRetire98

cobson said:

According to MMM you should be able to retire now 😊

Unfortunately I still need to buy a house! I would love to live rent free in my parents house forever but I think I need to move out sometime haha 😃

Sea_Shell

Don't neglect S&S ISAs, once you've bought a home.   By all means put the majority in pensions, but also put some in ISAs to cover the period between early retirement and being able to access your pensions.   

You may need to be 60 to do so by then, not 55.

Don't have kids 😉

Marcon

FireRetire98 said:

Hi all, I'm 24 and eager to retire early if possible! 

I'd love to hear your opinions on how I'm doing, and if there's anything I'm missing that I could be doing.

I realise there are two major obstacles for me:

1. I need to buy a property so I'm not paying rent forever.

2. I need to build up retirement savings.

I'm currently earning around £26k a year and have agreed with my parents that I don't need to pay rent to them if I'm saving most of my income.

Each month I save & invest about £1300 (which is most of take-home pay) in LISAs, stocks and shares ISAs, and savings to build up a house deposit.

The main things you seem to be missing are getting a job you really enjoy, and enjoying life now. Planning for the future is great, but a bit of short-termish might not go amiss?

FireRetire98 said:

I contribute a lot to my pension (at least for my age). £943 a month goes into a workplace pension - this is before tax so I gain tax savings and employer contributions.

You get the same tax savings and employer contributions whether your pension contribution is made from pre-tax or post-tax pay; it's just the tax relief mechanism which differs.

Are your contributions made by salary sacrifice? That would give you a saving in NI.
 

FireRetire98

Brie said:

you're doing really well to be so organised about it all but all work and saving and no play makes for a dull life. You don't want to be able to afford to retire at 50 but not know what to do with your time at all. 

Thank you, a few people have mentioned how I should be enjoying today and that's a great point. Me and my girlfriend went on holiday to Tenerife last month so we are still having fun ☺️

cfw1994

I think the key in many answers here is that the financial side of things really is only a small part. 
The fact you are already putting away as much as you can suggests to me you will not have problems being in the top few % of the country with regard to retirement by your late 40s, early 50s.

But....at 24 you are in the prime of your life - live it!

It is great to be stoozing away what you are, but please, please, please - spend some time/money/energy on building friendships, taking healthy activities (hiking/cycling/swimming/whatever!), eating healthily (learn to cook well!).   Don't be the one at group meals trying to pay exactly what you had - be generous with friends & friendships.
I see many 50+ year olds who really look like they don't have much time left after a lifetime of desk work and too much food and drink.

Oh, & maybe insist on your parents taking £100+ pw - I assume they are feeding you, letting you use appliances for washing clothes etc - it's a good habit to get into paying your way, even if they are happy to let you take their hospitality for free.   We currently have one back at home (likely to move in Sep), taking £200 from him weekly.   When he moves out, he will be £200pw better off, and between you & me, if he needs a fiscal hand, we have it safely invested ready to pass back 😉

UrbanAchiever

Sounds like you are doing everything right so far and have the right attitude. A couple of observations/questions from me:

Why are you so keen to retire early when you've not been working long?  Does this mean you don't like your job very much?  If so, perhaps you should look to find one that you do like?  I know when I was 24 I was enjoying working life and whilst carefully investing for the future, I felt like there was a lot I wanted to achieve in my career before considering retirement.

The comments people have made about not having kids is interesting.  Yes, children cost a lot.  And I'd be retired now at 48 if I hadn't had my two boys.  However they are worth every penny and more. You cannot put a price on the pleasure you get from having children.  Life is for living and my life would be so much poorer without them.  I took my 13 year old to watch some motor racing on the weekend and we had a blast.  We share the same interests and you cannot beat spending quality time with someone you love with all your heart.

Ibrahim5

Brie said:

don't smoke.

Yes not much point retiring early and dying early or suffering strokes, heart attacks, blindness, impotence, amputations, lung cancer, emphysema etc etc

MEM62

Thus far, nobody has stated the obvious - don't stop living today and look after yourself.  Many have lived frugal lives in the hope of a long and comfortable retirement only not to live long enough to enjoy it.  Tomorrow is not a given.