Can I retire now? (age 40)

NoMore

So people contributing 60k per year to pensions using relief at source can't build a significant Pension pot but people using Salary Sacrifice can, that's the OP point. I disagree, yes it will be a 'smaller' pot than the SS one but it would still be a large pot generally. Yes it's a larger drop for some people but the amount of people SS 60k to minimum wage (the worse case) for a significant amount of time will be tiny.

Anyway this is going OT. 

Ibrahim5

There is so much that doesn't make sense. My hobby is my career, but I have to stop everything now. The only objective seems to be the ability to tell everyone "I retired at 40". Your daughter would probably prefer you to do a bit of work for holidays and entertainment and securing her future rather than just sit at home with her eating porridge.

Dead_keen

Ibrahim5 said:

There is so much that doesn't make sense. My hobby is my career, but I have to stop everything now. The only objective seems to be the ability to tell everyone "I retired at 40". Your daughter would probably prefer you to do a bit of work for holidays and entertainment and securing her future rather than just sit at home with her eating porridge.

To be fair, I went three days a week at 37 so that I could pursue a hobby and see my kids more.  It worked out very well for me and then I retired at 53.  If the OP wants to make it work then I am sure that they will be flexible enough to make it work.

From my perspective, living on the equivalent of £32k per year may well have been possible for most of the time. But not when I had two kids at uni costing about £6,000 a year each.  It would also mean that we'd have less experiences with the kids (e.g. taking them and their partners on holiday, taking them to see Taylor in concert, etc).  Also, healthcare costs can also be surprisingly expensive if decide you do not want to wait for the NHS.  

I did skim this thread and can see that the OP has posted a model that shows life from 40 to 65 and the default assumes that the returns can never be negative.  Hopefully the OP will live longer and that will be the case.  Tweaking returns to +/- 30% (and keeping everything else equal while using the mark-one eyeball) suggests that the OP runs out of money by age 65 about half of the time.  If it were me and I was not confident about making realistic assumptions, I'd go for a free subscription of VoyantGo and see what that comes up with.  But, if you are flexible, running out of money while you are relatively young is much less of a problem than when you are twice the age.

I doubt that software engineering will stay the same.  As someone who (i) used stack overflow a lot until December 2022, (ii) then did a lot of copying and pasting without understanding things properly until July 2025, I now, in January 2026, just speak to my computer and it produces code (that I rarely need to review) to play with massive amounts of data in ways that I never envisaged.  The last three years has seen more changes than I can possibly have guessed at (whether when learning Coral 66 or in summer 2022), and it is only going to get better. Whether anyone will need software engineers (without a particulat niche) in five or ten years time on £200,000 is beyond me, but I would not bet on it.  Whatever, I wish the OP luck.

NormalNorman

kimwp said:

NoMore said:

ent_moot said:

It's really about the point above:  in order to avoid paying a literal fortune in tax, I've built up a very large private pension (note this soon won't be possible under labour who will change the salary sacrifice cap from 60k down to 2k !).

No they haven't, you will still be able to put 60k into a pension receiving tax relief, they are capping the amount of NI you can save to 2k via salary sacrifice. So you lose a 2% (8% if basic tax payer but if you can afford 60k into pension you're not a brt) saving on 58k instead of getting it on the full 60k, but still get full 20%/40%/45% (depending on your marginal rate) tax saving on the whole 60k. It is not as bad as people make out and if you don't use salary sacrifice nothing has changed.

It has a small effect for people using salary sacrifice but they will still be able to build up large pensions.

I think you are underplaying the impact of the 8% NI. In my case, I have been salary sacrificing to min wage, which means 30k ish of my pension contribution is in the 8% NI bracket. Happily, my contribution plans shouldn't be significantly affected because of fortuitous timing, but it would be a significant chunk if I continued to do this after this change is brought in.

The loss of sal sac as it stands would be a huge loss for myself but fortunately I'll be quitting full time work as it ends anyway. 

Cus

ent_moot said:

OP, I don't think you have fully outlined this so suggest you also consider what you would do with your new found time. I very much doubt you want to turn your hobby into 'full time' hours, so what are you going to do that's low cost? Big garden and like gardening for example is quite a time sink, but its not for everyone.

I'm a Software Engineer. It's basically a zero-cost hobby, as most of the best tools are free/open-source... apart from physical hardware (PC, monitor etc. ) which is maybe £2k every 5 years, if you like to have a high-end developer station. 

I do enjoy gardening / landscaping,  which can be done very cheaply if you do the work yourself. 

But am I the only person wondering how the OP only has £1.5M assets (a third of which is their home) when earning £200K+ (and wife is earning too) and yet only spending £32K a year, especially with stock market returns over the past year.

It always makes me chuckle when people ask this, given that 98% of 40 year-olds on my salary will have accrued a fraction of the wealth I have, due to a more expensive lifestyle. 

Obviously I didn't start on £200k.  As I mentioned earlier, I started on ~30k.   

Also, do you realise that on a £200k salary you pay £76,203 a year in tax?  (if one does not majorly salary sacrifice into a pension).

Some people earning well aged 40 enjoy spending lots of their hard earned money on an expensive lifestyle at that age, others earning the same find comfort in saving loads. 

Hopefully those who are spending their high earnings also enjoy their work and don't worry about retirement at 40.

ent_moot

There is so much that doesn't make sense. My hobby is my career, but I have to stop everything now. The only objective seems to be the ability to tell everyone "I retired at 40". Your daughter would probably prefer you to do a bit of work for holidays and entertainment and securing her future rather than just sit at home with her eating porridge

I didn't say my hobby was my career. I said the skills that I'm valued for in my career are the same skills that I use for my primary hobby, which is to create software. My job is extremely stressful - I suspect most high-paying high-responsibility jobs are.  

This may help you make sense of it: The company that I work for has a scheme whereby employees can buy an extra 1-2 days of leave. It's pretty darn expensive - more than what they would earn in those 2 days... but guess what, the scheme has really high uptake.  Why do you imagine that is?  I think it's because most people value free time above almost all else.

However, I've always thought it really bizarre. Why waste enough money to keep one going for 2 weeks for the sake of 1 extra day now?  I guess most people are resigned to the treadmill, and adjust their spending habits upwards as their salaries increase instead of working towards actual freedom.

I'm not sure what there is not to "get" about living somewhere beautiful without the pressure and strain of work, and with plenty of free time to use the skills I have to create things that bring me both joy and satisfaction with zero pressure to make money out of the process.

>>Your daughter would probably prefer you to do a bit of work for holidays and entertainment and securing her future rather than just sit at home with her eating porridge

I think not. My daughter loves spending time with me more than anything. I've already started teaching her software engineering.  If anything, it would be selfish to squander these years where she loves spending time with me so that I can be vastly more wealthy than I have any need for. 

Given that I will have zero housing costs, I calculate that we'll be better off than 53% of households.  Accounting for the fact that we'll have slightly higher bills because we'll have a nice house,  we'll be bang in the middle.  Then factor in that we're a small family with inexpensive hobbies and preferences, and I think we'll be quite comfortable and happy. 

What I really struggle to make sense of is people who don't know what they would do with their time if they didn't have to work. I can literally think of thousands of things to do, many of which take a lot of dedication and would be extremely hard to find the time, mental energy and discipline to fit in around full-time work.

Cus

I actually think the above attitude is really positive tbh. It appears that you've got very low costs needed to meet the future lifestyle you want, and a lot of plans for the future.
A lot of high earners enjoy an element of the stress and responsibility, and can miss it when it ends. (In my personal experience) Others see it purely as a means to an end and it seems your 'end' is achievable (just) due to highish earnings and diligent saving at a young age compared to many.  
Unfortunately a lot of highish earnings roles involve long hours and stress, I always saw it as a means to an end, others thrived on it, each to their own I guess.  

I would personally advise to not see the whole situation as black and white, there can be balances in between ( other similar work at lower pay that is more rewarding, giving back to others etc) enjoying the elements of the work you do today without the bad stuff, but still extracting the good bits that drove you to the career in the first place.

rich-accountant

Really interesting post, thanks. 

I'm similar aged to the OP (40 this year) and earn similar amount, at least for the last couple of years. I've much less saved, £350k pension, £130k S&S/cash isa and £250k house equity, plus my wife's small pension. We have seen lifestyle creep, I can't get away from that, but having grown up with very little money and not being able to do things, I've been able to spend now, and for me, that includes creating some great memories with my family on some luxury holidays - that's our vice. (I understand you don't need to do this to create memories and having grown up without some of these holidays I still have fantastic memories with my parents). I would say we're frugal in some ways, I don't like wasting money, but don't watch every penny. 

Do I enjoy work? Not really - as the OP said, it's stressful and takes away a chunk of family time in evenings and some weekends. Equally, I'm not entirely sure what I would do with my time if I retired now. Work has become all encompassing, which has meant I have few hobbies. Maybe I'd find some if I had more time, I don't know.

As with any high paying job, I think, it feels slightly insecure and I worry about redendancy, technological changes etc. Equally I'm trying to balance YOLO... 

noitsnotme

ent_moot said:

There is so much that doesn't make sense. My hobby is my career, but I have to stop everything now. The only objective seems to be the ability to tell everyone "I retired at 40". Your daughter would probably prefer you to do a bit of work for holidays and entertainment and securing her future rather than just sit at home with her eating porridge

What I really struggle to make sense of is people who don't know what they would do with their time if they didn't have to work. I can literally think of thousands of things to do, many of which take a lot of dedication and would be extremely hard to find the time, mental energy and discipline to fit in around full-time work.

I agree with you.  I hear it a lot from people that don’t appear to have any/many interests outside of work.  My father is nearly 80 and is still working.  He still enjoys it but has also admitted he hates the thought of having to give up work as he has literally no hobbies or interests to fill the time if he wasn’t working.

I still don’t think I’ll have enough time to do everything I want to do when I eventually retire!

eastcorkram

noitsnotme said:

ent_moot said:

There is so much that doesn't make sense. My hobby is my career, but I have to stop everything now. The only objective seems to be the ability to tell everyone "I retired at 40". Your daughter would probably prefer you to do a bit of work for holidays and entertainment and securing her future rather than just sit at home with her eating porridge

What I really struggle to make sense of is people who don't know what they would do with their time if they didn't have to work. I can literally think of thousands of things to do, many of which take a lot of dedication and would be extremely hard to find the time, mental energy and discipline to fit in around full-time work.

I agree with you.  I hear it a lot from people that don’t appear to have any/many interests outside of work.  My father is nearly 80 and is still working.  He still enjoys it but has also admitted he hates the thought of having to give up work as he has literally no hobbies or interests to fill the time if he wasn’t working.

I still don’t think I’ll have enough time to do everything I want to do when I eventually retire!

You don't need to understand it though. Just accept we're all different. I'm one year into retirement, and am probably one of those people you're referring to.