Retiring at 50?

kimwp

You say here that you have lots of savings and are confident of paying off your house due to your wife's family's money, which puts you in a good position. If you know how much you spend each year, you can work out how much more you need in pension pot/savings. If you don't know this, then filling out an SOA (link in my signature) is a good start.

https://forums.moneysavingexpert.com/discussion/6502656/moving-home-vs-early-retirement#latest

gadget88

kimwp said:

You say here that you have lots of savings and are confident of paying off your house due to your wife's family's money, which puts you in a good position. If you know how much you spend each year, you can work out how much more you need in pension pot/savings. If you don't know this, then filling out an SOA (link in my signature) is a good start.

https://forums.moneysavingexpert.com/discussion/6502656/moving-home-vs-early-retirement#latest

Yes thats right. My mortgage is exactly 50% of my house bills so paying this off would help. I can’t be 100% sure I can pay it off but it’s possible. I think I may need to save another 7-10 years worth of savings to make it possible. Another option is semi retire so use to work 4 days cut to 3 and maybe I can reduce to 2 days. I last worked 2 days around 2009 and it was enough to cover NI contributions. Perhaps 3 days I do is already sort of semi retired and perhaps 2 would be even more. It depends some people would say they don’t work or work part time where as some people say semi retired? 

gadget88

I read opening pensions mean you get taxed heavily if you take it before 55 so perhaps an ISA or something I can’t access the money would work best? 

swindiff

You can't start to draw on a pension before the age of 55 at all (raising to 57 in 2028), except for some very special circumstances, terminal illness being one.  A good place to start would be to calculate how much money per year you think you will need in retirement.  You can then get an idea of the size of the pot you will need to finance that retirement.

Tucosalamanca

gadget88 said:

I read opening pensions mean you get taxed heavily if you take it before 55 so perhaps an ISA or something I can’t access the money would work best? 

I intend to retire at 57 (when I can access pensions), I don't intend on paying any income tax.
I'll be debt free and will only need a modest income for a fulfilled retirement.

Even with my simple needs, my 'pot' needs to be well into six figures to avoid the need to downsize home or equity release.

As others have mentioned, you need to decide what you're retirement aims are and how much you will need, then work back from there.

If you seriously want to retire early, only working part-time in your mid-thirties is ludicrous.
It's the time in your life to do the heavy lifting. The sooner you can pay big lumps in pensions or ISAs, the sooner compounding will take over and pay for your early retirement.

barnstar2077

As I have said many times on here, I plan to retire at 55 with a combined (Pensions and ISA) pot of £330k plus.  £30k of which would be an emergency fund, for house maintenance and white goods replacement only.

I will use the ISA for the first two years until I can access my pensions.  I would like about £18k a year, which would mean I will need at least £216k to get me to 67, and that is without adjusting for inflation.  Anything left would be used to top up my state pension after age 67.

As you can see this does not allow for a lot of wiggle room and I may well have to wait till I'm 57 to retire.  Even though my mortgage should be paid off by then, and my current monthly bills come to less that £550, it will be tight (I need spending money or I will go insane!)

You need to start by working out how much money you would like to retire on, then build up your ISA and pension pots accordingly.

I am 47 now and work four days a week, but I used to work full time, including all the overtime I could get my hands on.

I would suggest that you create a plan that would allow you to retire at 57 (when you can access pensions) and go from there.

The sooner you get started the better.

Mr.Generous

I have finally retired fully, I would suggest you need a bit more than you think. Our boiler went, I changed my car, we weekend away more than before, we holiday more. Mortgage paid off years ago, we have rental income from 5 houses plus a small monthly drawdown. I keep income to just below the 40% tax threshold and some months there's not much left in the bank.

We have had frugal years when we were building the property business, so I know it can be done. But who wants to retire having to watch the pennies all the time? All those years of hard work should allow some enjoyment before the health goes. There will be people on here who think almost any given budget is a lot, and those who think it's not enough. Remember whatever figure you are thinking of the spending power is erroded over the years, when I was thinking of retirement in my late 40's I was imagining £25k as a reasonable pension, probably almost double that now required.

Estimate that costs will approx double every 12 years and see how much you need.

Bostonerimus1

gadget88 said:

I read opening pensions mean you get taxed heavily if you take it before 55 so perhaps an ISA or something I can’t access the money would work best? 

But you will hopefully live well passed 55 and a pension is the best way to save on your current taxes. So a pension needs to be combined with something like an ISA and maybe things like rental income to allow you to retire at 50.

kimwp

I think to progress any further to answering the question, you need to figure out/share your plans for what you want to spend after 50 and your plan for accumulating the funds needed (starting with current savings and pension fund).

Simon11

I am in my mid-30s and have been quite savvy financially and in the last few years have focused heavily on the pension. In my model, I have forecast that I need £1.6m in 'wealth' by the age of 50 (in today's money) to retire (or to work part-time doing something I really love).

I live in London, so yours may be lower however this amount covers owning my house & cars in full, providing a joint-income with my wife of £30k p.a. until a few years after we forecast to pass away, emergency saving pot of £30k and setting aside £50k for each child (uni house deposit ect).

As you can see, there is quite a lot of work required now to really save to build your wealth and to give you the option to retire early.

Well worth getting a spreadsheet to begin calculating everything!