I will be retiring about eight years early, or, as far as the Government’s expectations are concerned, 14 years ahead of time. Here are five tips on how to get there.
From age 25 I managed to do 1 and 2 of these, and as I came within five years of retirement I did the whole lot.
- spend less than you earn
- never pay interest to borrow money for consumables, only productive or cost-reducing assets
- save six month’s running costs as an emergency fund
- pay off your mortgage before you reach retirement age, preferable five years before so you can use pension tax breaks to the full
- minimize fixed recurring costs such as mobile subscriptions, Sky TV, gym and magazine subscriptions. Of those you keep, make sure you get utility from them.
I’ve had good luck in some areas, such as being employed 95% of my working life, and unemployed only 1.6% of it (the rest was when I did an MSc with a grant), and having a final salary pension in a company with a normal retirement age of 60. I’ve had rotten luck in other areas – buying my first house in the Lawson boom and writing off half of it to negative equity. I trashed over £10k chasing momentum in the dot-com bust. But these were mistakes I could afford to make. You can be too fearful of making mistakes – and then you will never take opportunities. Getting the balance right is the key…
I am not a City banker, my job probably classes as middle management if equated to the rest of The Firm. Earning a little bit more than the UK average isn’t the secret to early retirement. There are plenty of people who earn a lot more than I do but can’t make ends meet. The secret to early retirement is pretty much in these five tips on how to stay on top of your finances over a working life-time. These are strategic and high-level rather than immediately actionable. Indeed, if you want to use them it helps to start at half my age 🙂
They worked for me, and I’m toying with the idea of going along to the Write on Finance Blog Up in Leeds. I will have finished work by then, and DW has identified a Turkish Baths at Harrogate which is 12 miles away. She has a weakness for that sort of thing. And I’ll take the opportunity to say hello to these old friends, the Devil’s Arrows, as mediaeval Christians titled the three prehistoric standing stones by the side of the Great North Road.
I like that. There is something special about a construction that has been standing sentinel for four thousand years.