Work hard now to pay off your mortgage by 30, and retire by 40

[Ieattoomuchsugar]

And to buy a house at 19/20 whatever age

Maybe exaggerating with the ages a bit but these are examples I've seen.

People who've gone without holidays, new clothes etc, lived with the bare minimum and worked endless overtime for years in order to achieve the above.

Has anybody actually done this or in the process of doing it?

I do see the appeal but I personally wouldn't want/wouldn't have wanted to spend my 20s and 30s living that way. I do think life is to be enjoyed, I of course want to save but I am not prepared to go without things I enjoy for such a long time. I think it's better to strike a balance, and I'd rather enjoy life now just as much as when I am 50/60.

I think it all very much depends on your circumstances. We don’t have a mortgage (we we’re lucky with the timing and equity from flat sales from mid 1990s and basically put all equity into reducing our mortgage and moved further out of London) but we still both have to work. All it means for us is we aren’t as skint every month as we would be if we had a mortgage, we certainly can’t afford foreign holidays.

No. I’m 45 and still paying a mortgage for a few more many years. If I had kept hold of the house I bought at 22 I would probably be mortgage free soon. But that was before big holidays marriage kids and divorce. I don’t think you can plan like that unless you are wealthy

@haribofiend

Only very high earners can contemplate this, so YABU.

Totally agree. Basically, unless you're consistently earning a 6 figure pa salary or you've won big on the lottery , it's a non starter.

Wafer biscuit it's not a joke at all.
I'm on the mw and been on the absolute bones of my arse many a time.

I'm too late for fire but there are many many tips and ideas that are enormously helpful!

It's try and apply some even though I'll never fire now.

There are brilliant investment tips as well.
However yes, many people I read about are on extremely fat salaries. Others just had the foresight to start much earlier in their twenties no matter what salary they were on.
It's definitely a mind set.

Many people earn fat salaries and carry tons of debt and have nothing to show for it.

I've spoken about it to my young dd but explained it can be quite consuming and people can get too extreme with it.
As ever, everything in life is about balance.
Your youth will be the most precious thing you ever have to and spend it soley sweating and worrying about every penny would be the biggest watse ever.

Balance.

I'll be opening a sipp for my two when I get around to it. And I'll start to get them into the habit once they start to work to save a teeny bit into their various accounts including sipp.

I had a friend who did this. Spent the whole of her 30s and 40s telling me she didn’t have any money. I then find out that in her early fifties she had paid off her mortgage and had purchased another house to rent out. For years I had bought her drinks as she didn’t have the money. However her and the h have a terrible separate relationship and their kids are not happy. It’s not always worth it.

No expert but iI=sn't the idea of this that you pay into your pension as the first priority to benefit from compound interest and paying off the mortgage comes second... or something like that?

What concerns me is that far, far too many people underestimate the amount of money that they will need to retire at 50/60, much less if they do so at 40. With today's life spans, that amount will have to support you and your spouse for about 40 years or so. And there may be children who have not yet left home or finsihed uni. I can't imagine being able to assure a good quality of living at 70, unless you have a professionally done financial plan, including investments.

@Mamanyt

What concerns me is that far, far too many people underestimate the amount of money that they will need to retire at 50/60, much less if they do so at 40. With today's life spans, that amount will have to support you and your spouse for about 40 years or so. And there may be children who have not yet left home or finsihed uni. I can't imagine being able to assure a good quality of living at 70, unless you have a professionally done financial plan, including investments.

I pointed this out above too .

"How much do I need in my pension pot for £1,000 per month income?

Using the same methodology, £1,000 per month is £12,000 of income each year. If you were again withdrawing from your pension pot at 4% each year, you would need a total pension pot of £300,000 to provide an income of £1,000 per month in retirement. But again, this money could run out."

How many people on here have pension pots of 300k, 600k etc ?

How many people on here have pension pots of 300k, 600k etc ?

If you look on other threads people have said what their pots are and they vary substantially from nothing to well over those figures.

But if you retire before 55 (some pensions 50) people have different investments to tide them over until they are old enough to access their pensions. Also DB benefits are very different where I presume you are talking about DC pensions.

Compound interest is great so starting a pension early and adding to it can make a big difference along with looking at what you are investing in depending on your risk factor.

Yes it can be unobtainable for a lot of people but it isn't impossible to retire early if you invest young.

£1k a month at age 50 is not enough. My council tax is over £100 month, gas and electric £100, other bills total £100, car £100, saving for a holiday £150, saving for Christmas/birthdays £100. Doesn’t leave much to enjoy yourself and travel, learn etc

£1k a month at age 50 is not enough.

I would agree. It would take a very frugal lifestyle to get to that then a very frugal lifestyle in retirement. Plus retiring at 50 means that the person wont be entitled to a full state pension at 67 (or whatever the age is by then).

Cheese paring your working life just so that you can then cheese pare in retirement seems dreary to me if you have an alternative.

I checked my NI contributions and it says I can get full state pensions (at 67...more likely 70 by my time) by working till 48. It doesn't have to be full time but my current role doesn't allow part time.

I agree, I would only retire at 40 if I had built up a substantial amount of investments that meant I had at least £3k per month to live off, with no mortgage payments and additional savings.

During this time you will need new cars, house repairs, house updates (new sofas, appliances, even a kitchen or bathroom). I would hate to be worried about money and not be able to have the lifestyle I have now.

With so much time, it would be more expensive to live - for me anyway. Mid week breaks, lunch out, gym membership, hobbies, decorating the house, a dog or even two. What’s the point of retiring at 40 if you are limited in what you can do

I agree you do need to factor in having sufficient income to enjoy life. Dh and I retired in early 50s and find that some activities can be very good value eg we pay £35 each per month for leisure centre and do lots of activities there: gym, swimming, spin classes, table tennis etc, but will certainly be glad when dd’s School fees end in two years.

@D4c3

I checked my NI contributions and it says I can get full state pensions (at 67...more likely 70 by my time) by working till 48. It doesn't have to be full time but my current role doesn't allow part time.

That's about 170 a week .

I agree on the small things or perhaps simple things in life. But perhaps your parents did you a lot of good by not buying you sugary snacks. Mine did the same but weren’t able to explain their reasons (sugar I.e. health) to me. It took me years to understand and now I’m grateful. The industrial food, overflowing wardrobe and shelves full of toys don’t make a child happy. It’s the quality time spent that is more important. Paying off the mortgage very quickly makes the mortgage much cheaper. I think it’s a balanced between paying off relatively quickly but with nice cheap holidays and not too long working hours.

I've been thinking about this thread still, how do people do this if they're also saving to put kids through university? I was looking today at the old Dave Ramsey and his 7 steps, which ranks saving for kids education before paying off your home. A quick Internet search suggests uni might cost £57k per child! Fees alone would be £10k per year x 3yrs, X2 kids for me so £60k. It's a shed tonne of money to save before prioritising mortgage overpayment.

I think many people are vastly underestimating how much you’ll need for the very basics in retirement. I guess our perspective might be skewed at bit by my parents generation (boomers) many of whom had final salary pensions and houses they paid next to nothing for compared to their salaries and have cashed in on downsizing.

Percentage wise I am paying quite a lot into my pension (38%) but it’s still only going to provide a very modest existence.

@Indecisivelurcher

I've been thinking about this thread still, how do people do this if they're also saving to put kids through university? I was looking today at the old Dave Ramsey and his 7 steps, which ranks saving for kids education before paying off your home. A quick Internet search suggests uni might cost £57k per child! Fees alone would be £10k per year x 3yrs, X2 kids for me so £60k. It's a shed tonne of money to save before prioritising mortgage overpayment.

The DC get student loans. If you are a high earner you have to pay to top up their living expenses but the loan still covers the fees plus some maintenance. My DC did this and have still been able to buy a property in their early 20s. Not in London.

@Feelingoktoday

£1k a month at age 50 is not enough. My council tax is over £100 month, gas and electric £100, other bills total £100, car £100, saving for a holiday £150, saving for Christmas/birthdays £100. Doesn’t leave much to enjoy yourself and travel, learn etc

wouldn't generally there be 2 of you?

£1k a month is enough for me right now, with mortgage paid off. £500 for bills/food (ie essentials) and £500 for going out/deliveroo/new items for house/me like books/clothes etc.

Admittedly i don't spend £1200 a year on presents, maybe £500 max for parents/partner and sibling. And have no car so its just a few trains 4-5 times a year and local busses as wfh.

My mortgage will be paid off by the time Im 30. The main sacrifice I made was buying a house that I could afford to by in that time frame. Rather than buying a house I could afford to pay the minimum amount on for the rest of my life. It's a decent house in a decent area, but I could afford more, I'd just rather spend that money on enjoying life.

Lol I actually had completely forgotten about student loans, despite having one! My fear is it's such a lot more these days.

We are both in our 70s and my husband has over a million pounds in his pension pot and I have about 200 thousand in my pension and savings. We are really comfortably off and can do what we want and travel where we want. Unfortunately Covid has put paid to a lot of that. We would normally have 4 holidays a year. My advice would be to pay off your mortgage as soon as you can, dont give up work but take a step back if your job is really demanding. Spend a portion of the cash you would have put into your mortgage on enjoying yourself now while you are still young and fit. Put a bit extra into your pension and then you can have a good retirement when you are older. This way you get the best of both worlds. To live well in retirement you need nearly as much cash as when you were working, your utilities will be the same maybe more becuse you are home most of the time your council tax is the same, you eat the same food and still need shoes and clothing.

@retirementsucks

We are both in our 70s and my husband has over a million pounds in his pension pot and I have about 200 thousand in my pension and savings. We are really comfortably off and can do what we want and travel where we want. Unfortunately Covid has put paid to a lot of that. We would normally have 4 holidays a year. My advice would be to pay off your mortgage as soon as you can, dont give up work but take a step back if your job is really demanding. Spend a portion of the cash you would have put into your mortgage on enjoying yourself now while you are still young and fit. Put a bit extra into your pension and then you can have a good retirement when you are older. This way you get the best of both worlds. To live well in retirement you need nearly as much cash as when you were working, your utilities will be the same maybe more becuse you are home most of the time your council tax is the same, you eat the same food and still need shoes and clothing.

Like the average person could build a pot of £1mill

We have just under 2 k a month. That is fine. Mortage paid off.
Council tax is expensive but otherwise we shop around.
If my dh dies I get half his pension. We are 58 and 62 so no state pension .