Financially secure

Tayus

Hi all, i posted this question some time back but thought i would ask it again just to see if any1's view has changed on this matter so here is the question... What or how much does it take for us to be financially secure?

deemy2004

Financially secure ?

A house with no mortgage

Savings (including Pension) where the generated income is at least X2 expenditure, preferably the annual surplus being more than the rate of inflation.

and no, I am not there 'YET', on my calcs such a state on current trends is another 9 years away...

EdInvestor

deemy2004 wrote:

generated income is at least X2 expenditure

Gosh deemy,

Very ambitious

deemy2004

Well I am already there

Bar one factor - I don't own any property - hence the 9 years estimate - WITH property.

Also I included state pension in the calcs, though I am nowhere near state pension age....

But then again I am ALSO earning approx 2.5X what I spend monthly. Add on the growth & interest of approx X2.5 spending (though this includes a booming stock market), gives me approx X5 per month. A lot of surplus cash to plough back into savings / investments.

Now for how long will the good times continue ?

And when will I buy a house ?

I can't see this good run for the UK (and myself) continuing for more than another year or two ...

P.S. I'm 37.

Nick_C_4

I'm setting the bar a bit lower - I'd love to aim for never having to work again, but it's not very realistic for me. I'll consider myself reasonably secure when I've hit the following targets:

1. Paid off the mortgage.
2. Got 6 months' worth of savings, i.e. enough cash to last 6 months with no change of lifestyle.
3. Got enough in pensions (or alternatives) between the wife and myself to retire with the same lifestyle (initially aiming for 65). I'm also factoring state pension here.
4. Got enough saved / invested so that when kids get to university age they can choose whether / where to go without money being a factor, i.e. want to save enough to put them through uni without them getting in debt. Got one child so far, and working on the second (and hopefully last!)

We're on target to get there in ten years (I'm 34) (or at least to be on target with the pension). If we get there safely, we'll start working on bringing that retirement age down. Unlike deemy's plans, none of this will free me from the necessity of working, but with a (non-working) wife and child(ren) to support, that's not realistically within my grasp. Good luck to deemy, though.

Nick.

Joe_Bloggs

@Deemy2004
Have you considered squatting ? You get a house without the mortgage and get to keep it after ten years or so.
J_B (In Jest.)

Nick_C_4

And I should probably add, since the theme is security, and I have dependents:

5. Got a reasonable level of insurance, whether through insurance policies or self-insured. House, cars, life, disability etc. Already there on this (except for 2 above, which is self-insurance for losing my job and other survivable but costly mishaps, which I'm still working on).

oceanblue_3

Nick

Very impressive - good luck!

Just one or two suggestions for you to consider - don't forget about wills and enduring powers of attorney for you and your wife.

Also, when the value of everything comfortably exceeds your nil rate band, consider severing any joint tenancy you may have, re-registering as tenants in common, and setting up the provision for discretionary will trusts.

You mention life assurance; is it written in trust? If it has "embedded" critical illness cover, ask your provider if they have a "Split Trust" so that any critical illness claims are paid directly to you.

Have you completed a "nomination of beneficiaries" form for the trustees of your employer's pension/death benefits scheme?

lush_walrus

Personally, I dont think I would ever feel financially secure, well secure enough to completly stop working.

For my age, which is 29 Im doing ok Ive paid my mortgage completely (more luck than judgement to be honest), earn £37,000 from freelance work and have a buisness with a profit last year of £300,000.

But I worry day by day, that one false move and everything is gone, great as a motivator now, but if I keep those qualities then I will probably work till Im dead!

deemy2004

Yeh, I can't imagine stopping work either...

Maybe later on switch to less paid more enoyable work ... or somethign that barely resembles work but still pays.

Though as you say, you never feel financially secure, eventhough the numbers tell you, you are !

Five years ago , I said to myself when I have x amount then I am secure !, Now that I am at that level, its x amount more to cover a house in full.

So I guess, the amounts never enough....... maybe unless you really, really are retired.

lush_walrus

Deemy 2004, Im so pleased to read someone feels the same as me!!!! I keep wondering on this whether I am the abnormal one!

My parents made an attempt at retiring when they were both 40, which they managed to keep to for about 3 years. But gradually they started to put feelers around here and there. Both started to go back into exactly the same business they sold when they apparently retired. Now both in their 60s they are back in the throws of their new business (well 20 years old business!) and dont work as such but oversee the whole thing for about 20 plus hours a week each! So much for their early retirement!

But I guess the one thing they have is the ability to choose whether to keep on or not, they go on holiday when they feel like it without any guilt as in their mind they are retired, they buy everything they want without a blink and neither of them worry about money and spending it.

So maybe that is what financial security or the illusion of it will eventually do for people like us!