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Retirement planning at 29

Hi all,

I am planning my retirement, currently 29 years old and would ideally like to retire at 45. 
My current stats are as below.

cash in bank (incl. Savings account): £22k
Pension: £75k (I contribute 19% and my employer contributes 12%)
Stocks and shares ISA via Vanguard: £54k (45% in s&p 500)
Employer shares: £50k - only realised at leaving the company or if I sell internally once a year
Current salary in London: £80k, bonus c. 20% 
Current monthly spending: c £1.3k including £500 budget for holidays as we enjoy the outdoors.
Current liabilities: one dog - no kids.

I do not own any physical assets and lucky to be living with my spouse who owns her home outright. 

I am seriously considering a buy to let to help with retirement income, however with the interest rates at an all time high, I am reevaluating this option. However, one of my insecurities is not owning a physical asset (e.g. house) and how this may affect my ability to grow equity. I would like your opinions on anything else I could consider in my current situation and from your experiences, anything I could do to reach my retirement goal by 45.

Thank you.
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Comments

  • Robin9
    Robin9 Posts: 12,473 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Hi all,
    .......................................
    Current monthly spending: c £1.3k including £500 budget for holidays as we enjoy the outdoors.
    ......................
    Are you sure?   

    £800  doesn't go far -  CT, Water, Utilities, Food alone would soak that up. -  add the dog !  Then transport , clothes, entertainment,  life insurances. Sit down and do a real State of Affairs.

     Is your spouse retiring at the same time ?  

    I would suggest you need a pension pot of £1,000,000 - that would give you an income of £50k - and even then you would need to cut back on those holidays.

    By the time you get to 45  -  the State Pension will be over 70 -  that's a long time to fund from investments.
    Never pay on an estimated bill. Always read and understand your bill
  • By the time you get to 45  -  the State Pension will be over 70 -  that's a long time to fund from investments.

    Plus the 15-20 years that would need funding on top of the state pension (unless you were happy to live off just that at ~£10K in today's money).

    I retired early at ~55 - you are going to need a lot more money in your pension pot (or wealth overall) than you think you need now and you only have ~16 years to build that wealth.

    'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it' - Albert Einstein.
  • Albermarle
    Albermarle Posts: 25,956 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    By the time you get to 45  -  the State Pension will be over 70 -  that's a long time to fund from investments.

    I agree, 45 is very early to retire. Usually it is only for very highly paid individuals, successful business owners or very low spenders ( or all three preferably)

    I would suggest you need a pension pot of £1,000,000 - that would give you an income of £50k - and even then you would need to cut back on those holidays.

    Taking 5% withdrawal rate from age 45 would be a bit risky ( of the pot running out) For an income of £50K pa rising with inflation, I think you really need £1.5 Million. More than a Million anyway.

    OP - Have you heard of FIRE ( Financial Independence- Retire Early) - it is a kind of movement, and if you really want to retire that early some of their ideas could be useful. Just do not take everything said as absolute certainty.


  • Simon11
    Simon11 Posts: 783 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    edited 28 July 2023 pm31 1:42PM
    Two things that will change your goal posts.

    Owning a home- will you stay with your spouse and get a bigger place?

    Whats about kids, are you and your partner thinking of having them? That pushes back retirement too.

    50 generally seems like where most early retirees aim for if really keen.
    "No likey no need to hit thanks button!":p
    However its always nice to be thanked if you feel mine and other people's posts here offer great advice:D So hit the button if you likey:rotfl:
  • Pipthecat
    Pipthecat Posts: 108 Forumite
    100 Posts Second Anniversary
    edited 28 July 2023 pm31 3:14PM
    As a higher rate tax payer you may struggle to make any money with a buy to let.  Unless you find a bargain which will appreciate, the taxation situation and other headaches mean it's no longer the no-brainer it once was.

    Monkeysinatree how much do you want to 'retire on' aged 45?
  • Rich1976
    Rich1976 Posts: 617 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Why do you want to retire at 45 ? That seems incredibly early to even consider stopping working .
    what do you intend doing with the extra 40 hours a week until your old age?
  • p00hsticks
    p00hsticks Posts: 13,942 Forumite
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    Robin9 said:
    Hi all,
    .......................................
    Current monthly spending: c £1.3k including £500 budget for holidays as we enjoy the outdoors.
    ......................

    By the time you get to 45  -  the State Pension will be over 70 -  that's a long time to fund from investments.
    And unless the OP is prepared to make some voluntary contributions for at least some of the years between 45 and 70 (at a cost of  > £1k a year plus by then) they are unlikely to qualify for a full state pension even when they reach 70.  
  • Doctor_Who
    Doctor_Who Posts: 917 Forumite
    Part of the Furniture 500 Posts Name Dropper Photogenic
    Robin9 said:
    Hi all,
    .......................................
    Current monthly spending: c £1.3k including £500 budget for holidays as we enjoy the outdoors.
    ......................

    By the time you get to 45  -  the State Pension will be over 70 -  that's a long time to fund from investments.
    And unless the OP is prepared to make some voluntary contributions for at least some of the years between 45 and 70 (at a cost of  > £1k a year plus by then) they are unlikely to qualify for a full state pension even when they reach 70.  
    Good point that I overlooked in my comment! Even retiring at ~55 with 32 years of full NI, I'll need to buy another ~6 years to get a full SP (asked and answered on the Pensions board!).
    'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it' - Albert Einstein.
  • hugheskevi
    hugheskevi Posts: 4,346 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Speaking as someone who has pretty much retired at age 45, a few things to think about:
    • You need to be carefully planning everything with your spouse as you will need a shared plan. This is both in terms of what you want to do in life, and also shared financial planning. 
    • A future divorce/separation will ruin all your plans and is one of the biggest risks to consider.
    • Children will massively complicate everything, are these part of your plan? If so, very careful planning will be required around them, as well as flexibility in the plan to deal with unknowns such as university fees, support with house deposits, living at home longer than expected, etc.
    • It would be sensible to consider putting all higher-rate income into a pension - this both increases future resources and also reduces current income, which both help to smooth the amount you need to live on. It also mitigates risk that higher rate relief is removed. Personally, I also tried to make full S+S ISA contributions for both my wife and I each year. This can be reviewed in future as pots grow bigger.
    • Plan how both yourself and partner will get a full State Pension. You can probably do this from pension income after age 57, so at least the cost should be from tax-relieved funds.
    • You might want to consider working less in the years before age 45 (eg travel, or part-time work, or just not pursuing promotions and having an easier life) and working a bit beyond age 45 - this helps manage investment risk by having a shorter time until all your retirement resources become available
    • Consider whether you are content to work very hard to age 45, then retire. It is a very abrupt change, and a smoother transition into retirement may be desirable, especially as then you do things such as efficiently use tax allowances, get State Pension qualification and so forth.
    It is all doable, but requires careful planning and a flexible approach as inevitably things will not go as planned.
  • @Monkeysinatree

    Where will you live if you split up from your partner?
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