Retiring at 40 ,with 2 kids... is this possible without sacrificing too much?

[anxiousplanner]

Husband (31m) and I (28F) will be trying for our first baby soon. Plan is to have 2 kids, fairly close in age.

Recently I've become a little 'obsessed' with the idea of financial independence/retiring early. A huge part of me feels like there is more to life than working, having children and retiring at 67 (or even 55, which still feels depressing). Hanging on to this idea currently gives me hope, but I'm aware that I'm just looking for a way to escape.

Husband and I are in a good financial position with relatively well paid jobs for our age, and I feel like as we are still fairly young we have options, but struggling to know what the right thing to do (for us and future family) is.

Financial details:
Household gross income c£100k (Husband earns £55-60k, I earn £50k)
Salary net of tax/NI & pension & rail fair is £5400/month

£160k mortgage on a 3 bedroom semi in SE of England
Mortgage is 30 year term, £600/month payment
Other monthly bills (incl gym £120, council tax £150, tv £70, phone/internet £60 , mobiles £60, insurance/adhoc £40, gas&elect £90, credit card £400

So total monthly commitments is £1,590

Petrol & groceries about £400-600

So total outgoings including food is currently c£2200

Leaving £3,200 as disposable income/savings

Husband and I are agreed that we are not going to chase having a bigger house/car/keeping up with the Jones' if it means that we get to have some freedom when we're relatively young and have the energy to travel when we retire.

If I assume that having a child/children will cost about an additional £500- £700 per month, then that leaves £2500 to save every month.

If we decide not to send them to private school in the next 10 years, then a saving of £2500 per month would give me about £650k of cash by the time I'm 40 (7% stock market rate).

If we were to retire at 40, and withdraw 4% of this year on year then we would have about £26k of interest income = c£2200/month which is our current expenses and standard of living.

Basically.... what do you think of this life plan? Am I missing anything here? Will our kids be missing out a lot if they don't go to private school (as we could afford to send them there but then would not have savings). Planning on bringing them up with learning the value of money, so don't want to give them everything.

Right now I just feel like I'm at a crossroads, and whatever path I take now will determine my future, and it's a little scary but also exciting if I can pull off early retirement. I just want to know how I can balance everything to get the best of both worlds (realising that I am in this very fortunate position I don't want to waste it).

Any thoughts on what you would do if you were in my position would be great, and any advice or insights on things I may have missed would be appreciated.

Love how you are expecting your parents to provide free child care, maybe help towards your kids uni costs and then you are hoping for inheritance to add to your pensions!!

Obviously I have no idea of your parents financial situation but have you any idea of the cost of elderly care? Or perhaps you are planning on looking after your parents yourself with the extra time you will have during your long retirement.

Op your calculations seem fairly correct to me however as someone who has saved every spare penny I have the last couple of years so I can buy a new house it gets very draining and boring !!!

On your salaries both doing a full time slog I think you need to plan to just enjoy life a bit more !!! 400 quid sounds a lot for "fun" money but I'm not sure it is . Why wouldn't you want to go abroad with dc if you could ?? You only live once you honestly can't plan for everything

Well, good luck with that. It requires a lot of assumptions to turn out well - childcare, jobs, pay growth, national, local, regional and global economics, the financial markets, the performance of index funds.....

Personally I’d just scratch the itch by chucking all the money I could spare at the mortgage ASAP and renting it out and fucking off travelling/volunteering/searching for meaning in life in whatever other way I chose for a year, and then seeing where I end up. Rather than betting everything I’ve got on a series of optimistic assumptions which involve at best over a decade more of what is clearly not living your best life. Even if you’re right it seems like a long time to wait for personal fulfilment.

Good luck.

Rather than betting everything I’ve got on a series of optimistic assumptions which involve at best over a decade more of what is clearly not living your best life. Even if you’re right it seems like a long time to wait for personal fulfilment.

Yes. This is what I was trying to say

That's the thing- you don't get an uninterrupted hour. Ever. Especially not the both of you at once. And all the jobs multiply. The mess, the dishes, the laundry and wiping, the wear and tear so needing replacing, the devising storage solutions... NO I AM NOT FEELING WORN DOWN AT ALL RIGHT NOW WHY DO YOU ASK

look, the worse that can happen with your plan is that you are well set up with some savings, so you can make some decisions as you go which will be freer than if you didn't have the savings. It's win win- go flat out, give up work at forty, or not. Nothing you are setting up is binding, so you can take it as you please!

Anxious just looking at your budget for costs for your children - what about nappies, cot/pram etc, clothes (babies grow out of clothes every couple of months) toys, books, family days out and holidays as they grow older, music/ sports clubs , school uniform/ equipment, bikes, games consoles, mobile phone contracts , teenagers wanting brand clothing, the amount teenagers eat!!

@Messy
Lol, you paint such a pretty picture I can't wait!
Thanks, it's good to keep reminding to take a step back and realise that I just need to get on with it and chill out a bit - it's only a recent discovery with FIRE thing so I'm probably just over excited, and wanting to know if I can complete the game before I've even started!

@ clumsy - I can imagine yeah, saving every penny and no fun gets boring! Husband and I don't go out a lot we're pretty simple people - walks, puzzles, wine and cheese - that's our perfect weekend!
Do young kids really long to go abroad? I was thinking more holidays with board games, making pizzas together and getting muddy outside!

I don't find UK holidays very cheap, and penny pinching (camping in the rain etc.) is miserable.

I've had 5 years out of the rat race, working for myself 15 hours a week. It was amazing but I'm back to work now...mainly due to a separation.

The reason my partner at the time and I both did this was we had our mortgage paid off and no other debts.

Retiring at 40 is admirable but it's too early to know if it would suit you. Divorce, illness, death of a spouse, additional children are all life events that could change the plan too. But it surely doesn't help to use your large incomes now to pay off your mortgage and give yourselves flexibility.

Do young kids really long to holiday abroad?

Yeah the board games and muddy puddles thing is a nice idea, but in reality the pull of guaranteed good weather, a resort with a kids club with activities, swimming pools and a sandy beach becomes a much more attractive prospect! I prioritise this these days as I actually want to be able to relax for a couple of hours a day and the kids love it!!

Well no I guess they probably won't be nagging you to go abroad if they have never been its just you mention travel in your op so assumed ( like me ) it's something you enjoy and so I feel like when you do have dc it's something you might want to share with them? or fancy a holiday yourself etc ! I know I bloody do haha but not far off for me as my extreme saving is short term .

Someone upthread basically said how your in a great position youl have massive savings and it's kind of win win if in a few years your like sod it we need more money day to day you can have that and still have loads of savings which is never a bad thing !

I wouldn’t rely on the stock market, just pay off your mortgage asap.
I think you’re over relying on your parents. They may have volunteered but all day childcare for small children is exhausting. I also think you underestimate the sadness of working full time while your children are very small.
Rather than making grand plans, set reasonable targets, with known values.

I warn about the stock market because we invested in 2000. Withdrew the last of the stocks and shares isa a couple of years ago and it had hardly made back its original 2000 value.

I was thinking more holidays with board games, making pizzas together and getting muddy outside!

Lol! The idealism of the childless!

I doubt it. Kids are unbelievably expensive and get more so the older they get. I have a 17yo who has a £40 a month allowance, £25 a month mobile phone, £60 a month skating lessons, driving lessons. When she passes her test her insurance will be £1800 a year plus I need to buy her a cheap car. Rail and bus passes are currently £1200 a year so she can get to her nearest school, no free transport once in sixth form. At least a car will save me the public transport costs. Highlights once every 6 weeks for her at £35 a time. Contact lenses are £25 a month. Then there’s clothes!

And when she goes to uni we will want to help her then with her living costs.

I still can't get my head around your priorities OP! The thought of choosing to work full-time and spend very, very minimally on your children from birth until secondary age (and beyond) seems so hairshirt. The idea of delaying gratification seems wrong when your children will lose out for no reason other than their parents have adopted an ideology that says to scrimp and save until the adults become an arbitary age (40-45) then stop working. There is nothing about what would be best for your children in terms of parents being around according to their age, or choosing to spend money on them to help to create happy times and memories.

I can fully get my head around you doing it if you don't have children - that is entirely your choice as adults. But to choose to do it for your children feels like an anathema to me. If it's even possible.

I think it's fair to say that when you have children most people then experience their greatest joy and fulfillment vicariously. Their child's safety, comfort and moments of joy or pleasure become the priority. The idea of not using your money to help to create that (I am not talking anything extravagant - just average spending on children rather than vvvv minimal spending) seems so completely pointless.

The thread sort of feels like some other ones on MN where the pregnant woman has the whole routine planned for baby before he/ she is born, is determined her life will not change and if she has the right routine her baby will be sleeping through after a fortnight, the house will take no more cleaning than it used to and both baby and mother will feel rested and fabulous. It pretty much goes to shit when the baby arrives.

I don't know if it will or not for you but I hope you have a 'wake up and smell the coffee' moment if you are lucky enough to have your children. To realise that being in an extremely fortunate position of having enough money and/ or time to spend on your children from birth upwards is a gift and to use it to make your children's lives better in a whole host of little ways which actually has a profound effect overall. I really do think that is what may end up giving you the greatest feeling of satisfaction and achievement - rather than being able to say I am FIRE at 40 or 45 or whatever.

Must admit I reckon the OPs priorities will change once she has kids. Once they’re actually part of your life you want to be able to do stuff with them, nice days out, holidays, activities.

Re clubs, hobbies etc - and I'm not a big spender:-
Three kids-
Per month -
Swimming £40
Music lessons £60 (2 kids flute)
Beavers brownies guides about £40 on average a month for all 3
Dance club £40 a month
Football £15 a month
So that's £200 straight away
On top of that I've paid about £100 this month for dance show costumes tickets and dvd and £100 for brownie summer camp- a more expensive month than usual but things that are non essential but important to the kids and I wouldn't want them to miss out on
Plus all the kit they're constantly growing out of
They don't have to do extra curricular stuff but as a parent it's hard to avoid and you want your kids to develop their interests

Talking about putting the cart before the horse...

Any how, I don’t think you are, by any stretch, in the position to retire that early. I know a couple that had an income of about £300,000 a year and no children, they retired at 41... and lasted a year before going back to work. They got bored with the quiet life and being surrounded by older people who had nothing to do. I suppose they started to feel very out of sync with friends their age who were obviously very active, busy and full of entertaining new stories, while they were just vegetating in their luxury house in Marbella surrounded by people who do little more than playing golf.

You have no idea what having kids is going to be like and your plans look extremely naive

Maybe try and relax a bit - great idea to save but maybe dont try and create a 10 year plan

The one thing that comes over here anxiousplanner is your youth. You have- frankly- no flipping idea. You are using your accounting skills in a tick box way which assumes life goes to plan.

You said your parents are from a culture where the family helps out- so assume that's Asian (Indian/ Chinese) and therefore you will be expected to look after them too in time.

You are planning on handing over childcare100% to your parents while you work, so you can 'retire' at 40. Missing out on the prime years of your children's development.

You are also set on imposing a lifestyle on your DCs (if they arrive.) Think how they might enjoy a subsistence type of life as teenagers.

And so many posters have mentioned the volatility of the markets- which any IFA would tell you. Investing outside the UK is no protection.

I think also there’s a difference between ‘oh kids don’t need to have holidays/do extra curricular activities/new clothes’ if you’re strapped for cash in low paid work,compared to bringing in £80k a year and prioritising your future over their present day. For example a day at Peppa Pig world at Paulton’s Park would massively eat into your ‘fun money’ but you would most likely make your (hypothetical) 3-year old over the moon. Would you really want to miss out on day trips, activities etc just to put an extra few ££ into savings? When they’re teenagers they won’t be as keen to ‘make memories’ with you!

I’m saying this as I sit by the pool on holiday with my 2DD’s as I would much rather be here than squirrelling all our spare cash away. Sometimes you just need a proper break (with kids club and cocktails)!

You are getting a lot of negativity here OP.

Of course retiring early is doable. Maybe not at 40 but it is doable. We aimed for 50 and managed it at 53.

And if you don't try then you won't succeed.

We did it!

We are 39 and 42.

We have mortgage free house (£550) and £350 in the bank. £200 pension. 3 kids.

Yes it’s not what we need forever... but it feels like we own our lives. I am retraining, my husband wants to do other projects. We will probably do full time bits again, but I feel free. When first baby was born I was 28 and we had no money and £10k debt.