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Thread: The Number .... retirement.

  1. #1
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    The Number .... retirement.

    Reading the other thread I wondered what people consider the number to be?

    I assume it boils down to a function of your living expenses.

    Iím working on getting to a point where my living expenses are 3% of my investments, excluding my own home.

  2. #2
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    Bravo!

  3. #3
    Master ryanb741's Avatar
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    So I did the calculations for our personal curcumstances. Advice often given is that you need 2/3 of your salary but that would be far too much in our circumstances as we would retire either to Spain or Thailand and cost of living is much lower than London.

    I've worked out that living expenses would be around £35k per annum in Thailand with a property there paid for (no mortgage or rent to pay) and partly offset by around £15k p/a rental income (after letting fees and taxes plus amount held back for refurb etc) from our London Flat. So that means £20k per annum from the pension fund (retiring before state pension age so not factoring in state pension). Assuming a 4% Drawdown that means a pension fund of around £500k.

    I'm 42 now so around 20 years before retirement and I'd imagine the fund to be a long way north of that by then but it does give the option to retire earlier, particularly as I am likely to inherit half of a house in a nice area of Poole in Dorset plus my wife owns land and a house in a nice area in Thailand sandwiched nicely between 2 luxury hotels (tempted to tell her to pretend she is going to open a Pig Farm there to get the best price ;) )

    I suspect I'd never retire completely - probably do some consulting work a couple of times a week for watch money
    Last edited by ryanb741; 30th January 2020 at 10:49.

  4. #4
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    I think your expenditure adapts to your income - so retirement (for me anyway) was not a function of investment.

    58 was my lucky number - main factor was that I didn’t want to commute and work for a multinational

    in terms of income (from whatever source - i reckoned £35K should be about right in today’s money)
    Last edited by MartynJC (UK); 30th January 2020 at 10:44.

  5. #5
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    I was fortunate to retire at 48 after completing my required service. Paid off everything inc mortgage and get a yearly pension of just under £21k. Whilst it gave me enough to get by, it was not enough to have money for the what ifs!

    So I went and got a job which has allowed me to have that little bit more and I am able to add to my savings. Have to agree that had my pension been in the £30k bracket per year I could have stopped completely.

    Won't be working past 60 though!

    Richy

  6. #6
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    A million quid excluding house :-(

    About 2/3rds the way there but SWMBO is screaming for me to retire now.

    I've said she needs to decide if she wants to shop at Waitrose/M&S or Aldi/Lidl! :-)

  7. #7
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by solwisesteve View Post
    A million quid excluding house :-(

    About 2/3rds the way there but SWMBO is screaming for me to retire now.

    I've said she needs to decide if she wants to shop at Waitrose/M&S or Aldi/Lidl! :-)
    Shop at Aldi, you can't buy time...........
    It's just democracy.

  8. #8
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    I got out at sixty one,Best decision by far.

  9. #9
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    Im projected to have a pot of around 700k from my works scheme.

    However is see they have now moved the goal posts in terms access age of 55 and this is moving to 57.

    It likely for the younger chaps this will well into the 60s as ive read its linked to the increases in state pension.

  10. #10
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    Target: £1.2m

    That would be for both of us, and should provide a very comfortable retirement for us and a brilliant start for the kids

  11. #11
    Quote Originally Posted by demonloop View Post
    Target: £1.2m

    That would be for both of us, and should provide a very comfortable retirement for us and a brilliant start for the kids
    Isn't there a tax issue once the pot is over 1 million?

  12. #12
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    Quote Originally Posted by adrianw View Post
    Isn't there a tax issue once the pot is over 1 million?
    It doesn't have to be money in a pension, it could be in an ISA as well.

  13. #13
    Grand Master Seamaster73's Avatar
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    Applying the 25x rule Iím planning to be finished this year at 47.

  14. #14
    Journeyman ELD1970's Avatar
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    Turn 50 this year...planning to bail out at 57 and play rather a lot of golf to keep fit. Current DC pots near £800k so looking good thankfully.


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  15. #15
    Master amnesia's Avatar
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    With four kids who seem to be able to spend money more quickly than I can earn it, I will be retiring when I'm 372 !!

    My total pension fund is approaching 700k (I'm 45) but I'm hoping to have at least double that at state retirement age (67 at the moment).
    I quite like my job and there's no reason why I can't take on NED roles in 5 years time which will keep my salary topped up, should I wish to start taking things a bit easier.

  16. #16
    Master ryanb741's Avatar
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    Quote Originally Posted by amnesia View Post
    With four kids who seem to be able to spend money more quickly than I can earn it, I will be retiring when I'm 372 !!

    My total pension fund is approaching 700k (I'm 45) but I'm hoping to have at least double that at state retirement age (67 at the moment).
    I quite like my job and there's no reason why I can't take on NED roles in 5 years time which will keep my salary topped up, should I wish to start taking things a bit easier.
    £700k already at 45? Blimey well done. I only have a private pension I pay into and albeit 3 years younger have no idea how I would have been in a situation to have that much in 3 years so fair play

  17. #17
    Quote Originally Posted by Mr Pointy View Post
    It doesn't have to be money in a pension, it could be in an ISA as well.
    But that's not a pension,

  18. #18
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    All those with these massive pots! Well done!

    Out of interest, how are you amassing these pots? Is it just that you are very high earning, or have you been actively been making regularly above the minimum contributions to get you to your targets.

    What does worry me, one of the points above. None of this is in out control and by the time retirement is on the agenda, who knows hat the retrement age will be. Would be rather annoying to have a large pot and not be able to access it.

  19. #19
    Master ryanb741's Avatar
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    Quote Originally Posted by Boss13 View Post
    All those with these massive pots! Well done!

    Out of interest, how are you amassing these pots? Is it just that you are very high earning, or have you been actively been making regularly above the minimum contributions to get you to your targets.

    What does worry me, one of the points above. None of this is in out control and by the time retirement is on the agenda, who knows hat the retrement age will be. Would be rather annoying to have a large pot and not be able to access it.
    I reckon people would have either started at age 21 or so and benefitted from compound growth or are in a Defined Benefit scheme which are dying out. Either that or their attitude to risk in their portfolio was 'stick it all on red'! :)

  20. #20
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    Quote Originally Posted by adrianw View Post
    Isn't there a tax issue once the pot is over 1 million?
    Very little of it in a pension.

    OP didn't mention a pension, just 'investments'

    And it'll be slowly managed across to them over a period of time to avoid IHT etc


    Quote Originally Posted by Boss13 View Post

    What does worry me, one of the points above. None of this is in out control and by the time retirement is on the agenda, who knows hat the retrement age will be. Would be rather annoying to have a large pot and not be able to access it.
    I'm mostly in BTL, so not held by any government restriction on retirement age or anything else.

    A lot of my decision to go down the BTL road was for exactly the point you make though.

    Gov't are forever moving the goalposts
    Last edited by demonloop; 30th January 2020 at 15:07.

  21. #21
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    I escaped the rat-race when I was in my mid-50s. A heart attack a few years earlier made me realise that I needed to make a change. I started saving money when I started working (after the uni and after my time in the military). I must admit that it was plain sailing for me: interest on savings was high back in the 80s (8,5% iirc), then came the first housing boom here in the Netherland. I bought a house about 15 mins before the hausse started! 16 yrs later, I sold the house for 4x the original price. I went from savings to investment funds and then to real estate. A friend and I started a communications company which proved to be rather successful with customers from the government and unlimited sources. I sold my part in 2001. Together with the investments etc. it was enough to retire when I hit the mid-50s. A little earlier would have been possible. But a divorce derailed my original plans. Luckily I was able to get back in the saddle rather quickly (18 months or so).

    I didn't have much trouble saving the money. However, I think that my system would not have worked under all circumstances. Starting saving money in 2020 would not be successful.

    After selling my part of the company, I bought a classic car and then I bought the company just before it went bankrupt. We turned it into a health business with the help of the mechanics and a financial advisor/accountant. That provides a lot of my monthly income.

    Then I was asked to 'go back to school'. First, a year as a teacher at a special educational needs school (my original job before we started the company). I needed all my experience when I returned. A very difficult bunch of kids. But, in the end, it was the best year ever. Currently I work as a vice-principal at that school. 4 mornings every week. I'm now a teaching professional for 41 yrs. I love it. Having said that: only my youngest is still at home. My oldest has his own apartment. I've promised my wife to officially stop working when the youngest is away to the uni in two years time. Working as a teacher provides me with another part of my monthly income. In so many words: I don't have to 'eat' my savings.

  22. #22
    Master ryanb741's Avatar
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    Luckily I'm gonna become a Youtube and Instagram star. Either that or beans on toast until I shuffle off this mortal coil

  23. #23
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    Got out before 40, almost 10 years ago now, My wife and I made the most of the dinky period to work, save, invest. BTL and some commercial property rather than pensions though there's a smallish couple of pots in the background due to employers offerings being too good not to have a piece of. As someone else mentioned re Pensions, just couldn't tolerate Govt moving goal posts/ changing rules, the lack of control, though obviously there's some tax efficiencies and advantages depending on circumstances. Back in the day I trained for financial advisory and heard a saying, 'you should never let the tax tail wag the investment dog', don't know if it's right but it stayed with me.

  24. #24
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    I'm planning on getting out at 55 which is next year. I can't stand the rat race any more.
    The magic number is different for everyone but I will have enough to live off but won't be changing cars annually or flipping watches to the same extent.

  25. #25
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    I finished last Friday at 54. Loving it so far, Iíve seen too many people drop dead before retiring so decided Iíd rather have a better life outside of the rat race and Iím willing to cut back on a lot of luxuries. Iíve Been out on my bike 4 days this week but Iíll need to sell my TVR 😢.

  26. #26
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    Quote Originally Posted by Top Cat View Post
    I'm planning on getting out at 55 which is next year. I can't stand the rat race any more.
    The magic number is different for everyone but I will have enough to live off but won't be changing cars annually or flipping watches to the same extent.
    Sorry to sound a misery guts but as a retiree of nearly 10 years, I can say you will still need to buy cars and watches if that is what makes you happy.

    I spend more as a retiree than when I worked because I do the things I want rather than adopt the live frugally as well as make do and mend.

    This is the 30th of January, so only 8% into 2020. So far my unnecessary indulgences include a return rail trip to London with the wife, a nice bit of shopping in Selfridges, afternoon tea in the Ritz, 4 meals in local restaurants, an evening in a ten pin bowling alley and a couple of evenings in my club. That is what retirement is about. Bugger sitting in and watching the telly.

  27. #27
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    No Idea

    I retire at midnight tomorrow, 31/1/2020 .
    53yrs old, just completed 30 years in the Fire Service, paid into the Firefighters pension scheme 1992 (amended).
    I did consider staying on for a bit, I`m still physically & mentally able to do the job, I get satisfaction from helping others etc, and I worked with a cracking bunch of lads at a large & busy station, BUT, I would have to continue paying into the pension fund, but watch my lump sum decline the longer I stayed in. No brainer for me, couple months off to chill then find some part time work.

  28. #28
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    Quote Originally Posted by Boss13 View Post

    Out of interest, how are you amassing these pots? Is it just that you are very high earning, or have you been actively been making regularly above the minimum contributions to get you to your targets.
    Time is probably the significant factor for most. People that start at 18 have a huge advantage over people that start at 30 or 40. As silly as it sounds if you start at 18 and retire at 65 the very first premium you paid has 564 months to grow, the second premium has 563 and so on. So time is huge. Also growth. At 7% per annum (for illustrative purposes) a lump sum could double in 10 years. The more lots of 10 years the more doubling. Also tax relief. You put in £80 and itís worth £100 immediately. 25% growth before you even start - again people starting at 18 have been getting this for decades until they retire. That 25% also grows from day 1 as well. Higher rate even better - £60 to £100 effectively. And so on. All these things added together and it all starts compounding into real growth long term. Obviously the amount you can afford to pay is a huge factor, but time certainly does itís bid.

    Only tip Iíd give is diversify if possible - pensions, property, investments and cash.

  29. #29
    Grand Master learningtofly's Avatar
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    Quote Originally Posted by Maris View Post
    I finished last Friday at 54. Loving it so far...
    That raised a smile :)

  30. #30
    Just to balance things out a bit, Iíve just turned 55, been paying into a pension since being a youngun and are no where near retirement.

  31. #31
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    I'm 31, will be a student for another 2-3 years, and have about £800 in the company pension pot. Don't think I'll be retiring any time soon :)

  32. #32
    Master amnesia's Avatar
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    Quote Originally Posted by ryanb741 View Post
    £700k already at 45? Blimey well done. I only have a private pension I pay into and albeit 3 years younger have no idea how I would have been in a situation to have that much in 3 years so fair play
    DB scheme from age 23 for 12 years which I converted into DC a couple of years ago when HP were trying to dump the risk on their inherited funds from EDS. Current employer puts in DOUBLE what I put in as salary sacrifice. I put in 10% of salary so 30% in total. I also have a salary that puts me in the top 5% in the UK (just) so it all adds up quite quickly.

    Could all go to shit at 11pm tomorrow night

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  33. #33
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    I've recently stopped paying into my pension because, taking my NHS Superannuation and SIPP together, I'm within £50K of the lifetime allowance. I thought I'd better allow a buffer to take into account potential increases in the value of funds within my SIPP.

    I'm semi-retired, working 3 days a week, but I quite enjoy going to work. Then I have a 4 day weekend every week.

    Note to any accountants while I'm here. Would I be correct in thinking that my personal lifetime pension allowance would be calculated as my NHS lump sum, plus 20x my annual NHS pension, plus the value of my SIPP?

  34. #34
    Stopped at 56 with the pot just short of the LTA
    Db pension, now doing a little contracting 2 short days a week means I donít touch the pension income or lump sum at present. Iíll aim to keep doing this for 3-4 years more as long as I still enjoy it.

  35. #35
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    A pot of £1.25m per adult in the relationship, based on enhanced LTA protection. Converts to £42,500 pa pp (after tax) based on current lower rate tax band. £85k as a couple works very nicely, thank you. And sometimes you take nothing pa other than the personal allowance (£12.5k currently), so no income tax paid. Sorry, to add, age 55.
    Last edited by Skyman; 30th January 2020 at 20:25.

  36. #36
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    Quote Originally Posted by trident-7 View Post
    I've recently stopped paying into my pension because, taking my NHS Superannuation and SIPP together, I'm within £50K of the lifetime allowance. I thought I'd better allow a buffer to take into account potential increases in the value of funds within my SIPP.

    I'm semi-retired, working 3 days a week, but I quite enjoy going to work. Then I have a 4 day weekend every week.

    Note to any accountants while I'm here. Would I be correct in thinking that my personal lifetime pension allowance would be calculated as my NHS lump sum, plus 20x my annual NHS pension, plus the value of my SIPP?
    Your last paragraph is correct

    https://www.nhsbsa.nhs.uk/sites/defa...V2%29%20_0.pdf

    Iím retired now but didnít stop paying as with 40% tax relief and company contributing 14% it made sense to continue paying and who knows what the LTA is when Iím 75 in 17 years time?

  37. #37
    I think I could get by quite easily at somewhere between £20k-£25k per annum, provided all mortgages etc. are paid. Iím a fair way off retiring, but Iím thankfully back to working 2-2.5 days a week again after a crazy year - as the kids are just about to start Uni and get very expensive Iíll put off retiring a little while longer. Iím also hopeful that Iíll continue some work after my officially retirement age to boost income a little.
    It's just a matter of time...

  38. #38
    Quote Originally Posted by Omegamanic View Post
    I think I could get by quite easily at somewhere between £20k-£25k per annum, provided all mortgages etc. are paid. Iím a fair way off retiring, but Iím thankfully back to working 2-2.5 days a week again after a crazy year - as the kids are just about to start Uni and get very expensive Iíll put off retiring a little while longer. Iím also hopeful that Iíll continue some work after my officially retirement age to boost income a little.
    Sounds like a good balance

  39. #39
    Master ryanb741's Avatar
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    Quote Originally Posted by amnesia View Post
    DB scheme from age 23 for 12 years which I converted into DC a couple of years ago when HP were trying to dump the risk on their inherited funds from EDS. Current employer puts in DOUBLE what I put in as salary sacrifice. I put in 10% of salary so 30% in total. I also have a salary that puts me in the top 5% in the UK (just) so it all adds up quite quickly.

    Could all go to shit at 11pm tomorrow night

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    Very nice. Let me know if you have any vacancies :)

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  40. #40
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    Quote Originally Posted by demonloop View Post
    Very little of it in a pension.

    OP didn't mention a pension, just 'investments'
    Indeed, my plan is to have a mix of;

    - Personal Pension
    - BTL
    - Stock ISA protfolio

    In terms of mix Iím keeping pension as a minimum because most pensions funds (and the government) are going to be broke in the future and I see haircuts coming, ISAs and BTL are less likely to be raided.

    My number is something like 30x my living costs assuming my home is fully paid for.

    So if I need £35k to live I need to build up a pot of just over a million.

  41. #41
    Horses for courses but I think the magic numbers are age 57 and pension pot of 300K (each, for a couple).

    I’m 51 and my wife and I will hopefully retire at 57. A retiree can take an income of 16K without paying tax. 12K personal allowance and the other 4K as part of the 25% tax free amount.

    By 57 my wife and I should both have 300K in each of our pension pots. If we draw down 16K a year for 10 years we’ll have 140K left. By that time we’ll be able to top it up with state pension of 9K, so would only need to draw down 7K going forward.

    So a household income of 32K, no tax and mortgage paid. I’m hoping that is doable.
    Last edited by rasputin; 30th January 2020 at 21:08.

  42. #42
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    Quote Originally Posted by rasputin View Post
    12K personal allowance and the other 4K as part of the 25% tax free amount.
    Are you suggesting the tax free allowance isnít for buying a Porsche? :-)

    I like your calculations and it will provide for a very comfortable retirement indeed.

  43. #43
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    well I am 63 and desperately wanting to retire this year, I have nothing like the numbers being talked about here !, and I wish I had retired @60, a very poignant quote already said is " you cant buy time " even with a million + pot ! I have never been a top earner, and various redundancies mean I have numerous but small pots, but a saving grace of one DB pot, but I have no mortgage and while I wont be able to vacate for 6 months a year in sunnier climates ,I wont freeze from lack of heat , and at the end of the day I will just have to cut my cloth to suit my means, but I will be out of the daily rat race and that's got to be good ?

  44. #44
    Grand Master Andyg's Avatar
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    I went at 56 (3 years ago), my wife at 57 (a couple of months ago).

    She has a NHS pension, i on the other hand have a SIPP a smige under LTA (which I will start to crystallise in May).

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
    Friedrich Nietzsche


  45. #45
    Thank you demonloop - you seem you know your way around all things financial, so itís good to know Iím not way off.

    I winced writing my post, thinking there may be a tax issue I wasnít aware of.

  46. #46
    Quote Originally Posted by Richy View Post
    I was fortunate to retire at 48...
    I did that too. But I don't think of it as 'retirement', but rather the opportunity to do things that, whilst they can generate income, are also enjoyable.

    Financial independence: the point in time that your assets and capital means that you lifestyle is affordable and whatever you do after that is an option rather than a necessity.

    R
    Ignorance breeds Fear. Fear breeds Hatred. Hatred breeds Ignorance. Break the chain.

  47. #47
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    Quote Originally Posted by ralphy View Post
    I did that too. But I don't think of it as 'retirement', but rather the opportunity to do things that, whilst they can generate income, are also enjoyable.

    Financial independence: the point in time that your assets and capital means that you lifestyle is affordable and whatever you do after that is an option rather than a necessity.

    R
    I think that's why I enjoy work much more now...I go because I want to not because I need to. If it ceases to be enjoyable then I can afford to walk away.

  48. #48
    Master ryanb741's Avatar
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    Quote Originally Posted by rasputin View Post
    Horses for courses but I think the magic numbers are age 57 and pension pot of 300K (each, for a couple).

    I’m 51 and my wife and I will hopefully retire at 57. A retiree can take an income of 16K without paying tax. 12K personal allowance and the other 4K as part of the 25% tax free amount.

    By 57 my wife and I should both have 300K in each of our pension pots. If we draw down 16K a year for 10 years we’ll have 140K left. By that time we’ll be able to top it up with state pension of 9K, so would only need to draw down 7K going forward.

    So a household income of 32K, no tax and mortgage paid. I’m hoping that is doable.
    All things being equal you'd have more than that £140k left each as assuming your pots were left invested in a tracker you'd be getting the annual increase in value from that investment. Of course the opposite may apply too but long term a US tracker has increased 7% a year after inflation and fees

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  49. #49
    Master Grandiloquence's Avatar
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    Don't think I will be able to afford to retire!

  50. #50
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    Quote Originally Posted by Devonian View Post
    Time is probably the significant factor for most. People that start at 18 have a huge advantage over people that start at 30 or 40. As silly as it sounds if you start at 18 and retire at 65 the very first premium you paid has 564 months to grow, the second premium has 563 and so on. So time is huge. Also growth. At 7% per annum (for illustrative purposes) a lump sum could double in 10 years. The more lots of 10 years the more doubling. Also tax relief. You put in £80 and it’s worth £100 immediately. 25% growth before you even start - again people starting at 18 have been getting this for decades until they retire. That 25% also grows from day 1 as well. Higher rate even better - £60 to £100 effectively. And so on. All these things added together and it all starts compounding into real growth long term. Obviously the amount you can afford to pay is a huge factor, but time certainly does it’s bid.

    Only tip I’d give is diversify if possible - pensions, property, investments and cash.
    Would have been very useful to have heard this simple advice decades ago.
    The future seemed a long way off then...

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