How to plan an early retirement

[Cashewrut]

I'm only 37, exhausted, working in a 'young' high pressure industry. On the gov website it says i have another 10 years to go to the full state pension andi'd really like to aim to retire then or by 50 - my youngest will (hopefully) be off to uni by then.
I am tight and introverted by nature so i don't think i'd spend much aside from the essentials. DH is the same and we could downsize to a flat then (we don't care for large house or entertaining people), both have decent private pension pots and savings. Obviously things could change in next few years (we could lose jobs, need money for school fees) and it's scary throwing away the idea of the current "career" having invested so many years in it. I'd be happy volunteering and doing any local NMW job in retirement (i always worked part time as student and those were my favourite jobs... never been more miserable in corporate jobs)
How do you work out how much of a pension pot to aim for? Do people purchase an annuity from 55, invest in property or dividend/interest income generating assets? I want to start planning even if only dreaming.

You do realise for the state pension that even if you have paid enough in, you won't be able to access it til normal retirement age?

yes, state pension to kick in at 68 or maybe later or never... and access own pension from 55.

FIRE is the path

www.theguardian.com/money/2019/aug/18/meet-people-saving-retire-by-40-fire-movement

I think getting rid of debt is the first step. Paying off your mortgage is the way to go as that's your biggest debt.

@StaffAssociationRepresentative - I was just coming in to say FIRE as well! Web search Mr Moneymoustache DFID all you need to know!

Came back in just to say that if possible put some money into an isa. I have my own share isa and have been very fortunate to back the right companies over the past year. (More by luck than anything else).

Done a little better than leaving it in a bank account.

You can’t draw on pensions pots till you are 55. You do know this? I understand that is rising too in the next few years.
To retire at 50 you’ll need to fund for. Your non pension savings or other non pension income.
Just saying…

@Cashewrut

I'm only 37, exhausted, working in a 'young' high pressure industry. On the gov website it says i have another 10 years to go to the full state pension andi'd really like to aim to retire then or by 50 - my youngest will (hopefully) be off to uni by then. I am tight and introverted by nature so i don't think i'd spend much aside from the essentials. DH is the same and we could downsize to a flat then (we don't care for large house or entertaining people), both have decent private pension pots and savings. Obviously things could change in next few years (we could lose jobs, need money for school fees) and it's scary throwing away the idea of the current "career" having invested so many years in it. I'd be happy volunteering and doing any local NMW job in retirement (i always worked part time as student and those were my favourite jobs... never been more miserable in corporate jobs) How do you work out how much of a pension pot to aim for? Do people purchase an annuity from 55, invest in property or dividend/interest income generating assets? I want to start planning even if only dreaming.

I don’t get how you only have 10 years to go to full state pension. You can’t draw on that until you are around 67 now. Plus you need 35 qualifying years now. If you are 37, and say you’ll have enough years by time you get to 47, it implies you started work and paying NI at age of 12. Children don’t pay NI, earli3stmyou could have got credits is 16. See my other comment- even a private pension pit cannot be taken till 55

I don’t get how you only have 10 years to go to full state pension.

I think she means before she has earned enough NI to get it one day?

I think the 35 years thing is for those just starting their NI contributions. I know I will have enough contributed in retirement years at age 53. For me that is 31 years of working after uni and about 4 of those were none qualifying, So about 27 years of full contributions. I’m guessing that the OP has checked their forecast on the Gov website and it is what she says it is.

Retirement at 47 is very early and it sounds as if it's driven by wanting to get out of your current job rather than any plans for what you'd want to do with retirement. Have you considered retraining for another post that would suit you better? You've still got 30 years till state retirement age and could have a whole new career (or two!) in that time. NMW jobs are often tough with very little control over your hours and working life so I would think carefully before assuming that is the best solution.

I am hoping to retire at 50.

Pay mortgage off
Work out how much is needed to live on annually
Work out how total amount of funds needed ('the number')
Save towards that number

FIRE is good.

How do you work out how much of a pension pot to aim for? Do people purchase an annuity from 55, invest in property or dividend/interest income generating assets? I want to start planning even if only dreaming.

On this. Very few people buy an annuity now as the rates are very low. Most people either invest in income producing assets or build an investment portfolio and draw down a portion of it every year. If you want to feel more in control of the situation I would:

1. Make sure you thoroughly understand your current position. Double check the state pension forecast because as PP have said it does sound very early to have full contributions. Check your current pension schemes, where they are invested and what they are projected to give you. Do you have any defined benefit pension or is it all defined contribution?

1. Then get a good understanding of personal finance and especially how pensions, tax and ISAs work. Money Saving Expert and their forums are a very good starting point. A key point is that the normal minimium age for access to pensions is moving to 57 in 2028 and is expected to move to 58 when the state pension goes to 68. If you are planning to retire very early then you need to have enough outside of pensions (e.g. property or S&S Isas) to bridge the gap to that age.

1. As others have mentioned it sounds as if you are interested in FIRE. There's a long thread on it here, though it hasn't been active recently www.mumsnet.com/Talk/legal_money_matters/4165470-FIRE-starter?pg=24. As a rough rule you work out your planned annual expenditure (remembering to account for any tax) and aim to build an investment pot that is large enough to allow you to draw down that amount each year. If all goes well the growth in the pot should be above inflation and allow you to draw down an amount that increases with inflation over the whole period without running out. The classic 'rule' is that properly invested you should be fine if you draw down 4% of your pot each year so you need to build a pot that is 25 times your desired annual spending. E.g. if you want to draw down £25k a year then you need a pot of £625k before you retire. There is controversy over that, especially for long retirements, and lots of people think 2.5% or 3% is more realistic, in which case you would be looking at more like £825k-£1M.

Just curious, those of you wanting to retire in your 40s, what on earth do you plan to do with all your time and energy? I think that retirement in the traditional sense is a slightly outdated notion now. There are so many interesting abd rewarding work options, and flexibility of hours and location.

You need to invest on top of your pension to have any hope of being able to retire early. Whether it’s in stocks / funds / property doesn’t matter as much - but you def won’t see significant gains without it

You’re not retiring though if you plan to do a local NMW job in ‘retirement’.
Drawdown is what you want rather than an annuity. Do consider carefully your likely expenses if you do do actually stop working. You may find you need more money than you think to actually enjoy being retired.
For us the number one priority was to get the mortgage paid off so we knew there would be no mortgage payment. Then we had a few (many) years of funding our children at university.

Just noticed this a VERY OLD THREAD!!!!!!

Oh so it is, she's probably on off on a saga holiday right now!

How sad that people think retirement is the panacea for all ills in their life!

Sacrificing international travel, extended holidays, having amazing experiences with friends and family, living well, learning new things..

For what?! A life of day time tv with no perks and no structure until Ill health and old age claim you?!

Life is about living it to the full, enjoying what you do everyday, waking up and looking forward to starting the day, having fun, learning lots, having lovely family and friends and a social life and enjoying healthy, active living.

I am nearly 70 and the biggest bores on the planet are retired people and other people who have nothing interesting to say because they do nothing interesting and moan about everything.

Those who have the most fulfilling lives are those who have interesting worthwhile jobs, who enjoy helping others and who are fun to be around.

If you don’t enjoy your job or the people you mix with or where you live then work towards changing these things as your mental health is arguably more important than your physical health.

Give yourself an MOT and put health and fitness first and being kind and thoughtful to others. Prioritising purely selfish ends does not guarantee happiness and fulfilment.

Sacrificing international travel, extended holidays, having amazing experiences with friends and family, living well, learning new things..

TBF I think a lot of people planning to retire early are motivated by doing exactly this.

As in they want to do all of those things with all of their time NOT that they want to sacrifice them!

The biggest bores tend to be those who were middle management who thought they should have been top directors. I have come across a few of those on the allotment committee and local charity events. Jheez!

Nothing worst than listening to someone say ‘I did this way when I was xyz and so that is the way it needs to be done. ‘. They are the ones blocking new blood from so many things because they want to dominate everything. Their volunteer efforts are ‘far better’ than anyone else’s.

I do not want to be one of those. The most interesting ‘retired’ people I know at the moment are those who have learnt new skills and developed new interests.