How to retire at 40

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  • Bravepants
    Bravepants Posts: 1,503 Forumite
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    I would have liked them to have said something more about index trackers, which were mentioned once by the Canadian couple at the beginning.

    Let's face it most reasonable people aren't going to sell potatoes with a felt tipped message for £3.99 a pop. And if you are the sort of person to spend £3.99 on one of those, you're not going to be retiring any time soon!

    My GF pointed out that we have some spuds in our fridge and a couple of Sharpies though, so I am tempted! I think we have some carrots somewhere too...I hope so because I'm not going to be spending anything for the next 4 days!
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • Stubod
    Stubod Posts: 2,169 Forumite
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    edited 10 July 2017 at 9:42PM
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    ..what a crap programme...nothing of any interest or use....

    ..and can somebody explain the maths behind saving "75%" of your income for 7 years and never having to work again?????

    Age 25 and living with parents for 7 years on a really "tight" budget earning £30k * .75 = 22,500 *7 = £157,500 to last from 32 until retirement!!...I am not sure how useful a piece of advise that is....
    .."It's everybody's fault but mine...."
  • Spreadsheetman
    Spreadsheetman Posts: 436 Forumite
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    Stubod wrote: »
    ..what a crap programme...nothing of any interest or use....

    ..and can somebody explain the maths behind saving "75%" of your income for 7 years and never having to work again?????

    Age 25 and living with parents for 7 years on a really "tight" budget earning £30k * .75 = 22,500 *7 = £157,500 to last from 32 until retirement!!...I am not sure how useful a piece of advise that is....

    http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
  • TomSurrey
    TomSurrey Posts: 23 Forumite
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    I think the point about the saving rate is your spending is then 75% lower, so your spending would then be 25% of £30k so £7.5k. The second key point is its not just about saving the money its about investing it, if you'd put that 157k in stocks and shares over 7 years at 6% growth rate it would be worth £200k, at a 4% draw down rate that would give you £8k, more than what you've been living on for the last 7 years....

    The maths don't work as well for those who are single, and work much better for those earning a bit more or with some existing assets.
  • Bravepants
    Bravepants Posts: 1,503 Forumite
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    Yes, the aim is to save 75% and spend 25%, but assumes you will continue to live on the portion that is 25% per annum during retirement, plus any gains from investment as part of your drawdown.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • Spreadsheetman
    Spreadsheetman Posts: 436 Forumite
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    TomSurrey wrote: »
    ....

    The maths don't work as well for those who are single, and work much better for those earning a bit more or with some existing assets.

    Yes, in the FI community there is a bit of a glossing over the fact that this works best for people with simple tastes, low expenses and very high incomes - at least for the "retire in 10 years" case.

    The 20-30 years range is a whole lot more achievable I think.
  • brewerdave
    brewerdave Posts: 8,507 Forumite
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    The Canadian couple from the start of the programme must have been earning shedloads of $$ in their 20s - even with modest lifestyles,renting etc investing for ~ 10 years in "index trackers" then living on the passive yield???
  • Spreadsheetman
    Spreadsheetman Posts: 436 Forumite
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    brewerdave wrote: »
    The Canadian couple from the start of the programme must have been earning shedloads of $$ in their 20s - even with modest lifestyles,renting etc investing for ~ 10 years in "index trackers" then living on the passive yield???

    They probably had software jobs like a lot of the people on the US FIRE forums - salaries in that field are huge compared to the UK.
  • Triumph13
    Triumph13 Posts: 1,730 Forumite
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    Spreadsheetman wrote: »
    Well, that was lightweight.

    For unintentional comedy there was a payday loan advert in the halftime ad break - er, won't be retiring if you go there then ;-)
    Even worse was the fact that the main sponsor, with an ad before and after every segment, was pushing a credit card with the message 'you can have whatever you want if you put it on a credit card'. The cynical part of me wonders if the total lack of any sensible advice was to avoid upsetting that sponsor.
    The only person who did have anything useful to say was the guy trying to explain the 25x spending rule and how that relates to your savings rate and that was basically greeted by the presenter with 'Argh! Maths! Scary!'.
    The only bright spot for me was the woman in the early vox pop saying if she was retired she could get on top of the ironing. Now THAT I can relate to.
  • michaels
    michaels Posts: 28,004 Forumite
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    We pension saved 100% of income for 2 years, as much as possible by salary sacrifice - very lucrative in terms of employer NI contributions, tax credits etc (so net household income including pension was way more than gross salary) but then ran out of carry forward allowance so are now capped at 40k pa. Still can't see us having a big enough pot to retire on in less than another 8 years though.
    I think....
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