So, I’ve now reached another stage in life where I decided to focus on a retirement plan
I made the mistakes when I was younger of not bothering with this and thinking I had time. Where now, I realised this was a mistake that I should have concentrated on.
I decided that when I reach my next birthday (ie now), I was going to focus on a 25 year retirement plan. As my retirement age (was) at the time 67 years old officially before I could claim the station pension. As a side note, it’s not 68 years old. Whilst I don’t plan on working all my life, I do want to concentrate on making and saving more money now to focus onto my pensions and retirement as I get older.
My retirement plan hasn’t changed, I’ve simply added another year onto this 25 year (actually 26) year retirement plan. So I’m officially considering this Year 0 of my retirement plan. As it’s a starting point for the project anyway and it would be nice to see how much I can grow from what I started with.
What is my end goal for retirement financially?
Whilst you can’t plan on how old you can live to, you can at least make a best guess and plan ahead this way.
According to the ONS Data calculator, the average life expectancy age for a man at my current age is 84 years. So I need to plan on my money lasting until that age when I retire. That gives me another 42 years of living, and another 15 years after retirement to enjoy life. I do however plan on retiring early (I’d like to retire early, or have neough money saved up to retire early) so that I have enough time, energy and money to live off and enjoy myself now.
Assuming an average spend of £30,000 per annum, and retiring at 55. I’d need to have £1.65M in a retirement pot. I also want to live somewhere else (like a farmhouse, or converted industrial building) as a dream home that’s fully offgrid so lets figure another £1.5M on top of this. So this would put my total retirement fund required around £3.15 Million in order to retire at age 55 and never work again.
I could live off a lot less if I followed the 4% rule, however I have no plan on creating generational wealth. I have family, but no direct children. So my plan is for my money to die with me. Not to mention I can claim the state pension at the age of 67 years old. So basically when I retire, I just need a source of money that can fund me until I reach the stage pension age. Which would realistically make this goal around £360,000 as a retirement fund. Whilst it’s not a lot, but by the time you become a state pensioner, you’ll also have any other investments and pension funds to live off.
This figures I post in this article are currently my entire net worth, whilst my main savings up to £360,000 would exclude the pensions I have already. So when I reach state pension age, I would actually earn money from other sources too.
I don’t want to continue working once my state pension is maximised if I’m honest. The government in the UK is a mockery, and has destroyed our futures. So my interest is retirement early, and live off funds I’ve saved up. Whilst I do support the causes that people in the UK are taxed. Personally if my money went to the government, I’d rather just donate it to the causes directly than let our government spend it.
£360,000 is a lot less than £3.15m
No shit sherlock, £50 is a lot less than £5000 too. It’s all about baby steps and reaching the goals you want. I could win a lottery 10 years from now and never work a day in my life, I could be dead 10 years from now and not care less. Live in the moment, plan for the future and enjoy life as best as you can.
So my first step will be to reach the £360k goal I think, and then work on how to increase my funds again by 10x their value again using the knowledge I acquire over time. Once the first goal is reached, I can then focus on the house fund goal
How do I plan on reaching my large retirement fund?
At this stage, truthfully, I’m not sure. How does anyone acquire large amounts of money? Luck, gambling, investments, saving, business. I have 25 years to work on this plan. For me personally, I don’t want to continue changing jobs. My current job pay is OK. I’m underpaid, but it pays the quite frankly, I don’t much for changing jobs. Although I do look at out for other opportunities. I’d much rather focus my energy and attention into developing new skills, saving the money I get currently, and generating wealth with the ideas I have for my own Business. I’m not scared of taking risk to make money, I just want to maximise the money I make in an effort to get there quicker.
3D printing will be one of them, I want to leverage existing things I have. As my website also generates revenue, it’s something for me to capitalise on in future as the more I write. The more traffic I get
What is my current “Net Worth”?
My current net worth, if I add up all my money into savings, bank accounts, investments a grand old total of (drum roll)…… dum dum dummmmmm £14495.54. It’s not a lot, but it’s a start. I’m creating a spreadsheet for tracking this. Whilst I can’t think of updating this website for the next 25 years with this information. I do at least plan in the mean time to write these posts at least once a year to track my progress. If I get to the point I retire early all the better.
If I included my pensions, £28085.10 would be the amount I’d be declaring. However, for the purposes of these figures and my net worth. I will exclude this. As the pensions I’m contributing from employment would be seperate from this anyway, they will add up over time on their own. This journey is about focussing on my own savings and investments
What am I currently saving?
As I really only focussed on investing money the last couple of years, the sources have taken time to start building. I’m relying on compound interest to build up over time.
At the moment I am currently saving up (or investing), approximately £450 per month £5400 per year out of my salary (around 19%) of my annual wage. At the start of this plan, I plan on upping this to approximately £700-750 per month (which would be about 29%) into my savings. The recommended amount is normally around 15-20%, so I’m doing OK currently. Although some agressive strategies call for investment of a lot more money. I need to balance this out with how much I can afford vs savings.
It’s not a big boost, but it’s another 13 years of money (even without a single further pay rise, bonus or overtime) included into this figure which could contribute to my funds. On investments alone this would add up to £109,200 extra into my funds. Which would take my early retirement fund to almost £120,000. Considering a value of £360,000 this is still 33% of my target achieved. Without any further money made. I don’t want to stop there though
I want to create a nest egg in my bank of at least 12 months wages for emergency / rainy day funds. I have job searched before, and for me it has taken almost 9 months before. I’d like enough money to weather any storms for job changes financially. Job hopping has proven to generate more money financially than staying loyal to a company. So this option will always be open to me over the years as part of my retirement plan.
What am I currently investing in?
Currently I’m investing in two main sources. I am investing into Premium Bonds (I currently hold £4400) and Stocks and Shares with Trading212 (about £4000). In the later future I do plan on creating my own SIPP, and either trading. Or making money via other sources. As my knowledge is limited however, I am currently relying on the power of compound interest to generate me further money on Trading212.
With regards to compound interest, the magic supposedly doesn’t happen until around £100,000 (when the money starts working for you). At this point, if you leave the money to build up, it approximately doubles in value every 8 years. So if I figure 13 years to reach £100,000. If I left the money in my Trading212 account, I’d reach £200,000 at 63 years old, and around £375k if I left it for another 5 years after that for reaching retirement age (working on a basis of doubling every 8 years, would amount to 12.5% portfolio value per year).
My math is £200,000 x 12.5% = £25,000 growth per year x 5 years (63 –> 68 year old) = £125,000 + £200,000
Just thought I’d type it out for some wondering where I’m coming up with these numbers. Compound interest really works a lot better if you invest when you’re 18, but I can’t go back in time and do this. So I’m learning and working with the knowledge I have to make me money now.
The benefit of using Premium Bonds, is that it’s completely tax free in the UK (well for now anyway), and the main reason I use it other than savings. Is for the free “lottery” tickets you get. I personally think it’s better than real lotteries, because you never trutly lose your money. The initial principle is still there. If I ever got lucky to win a higher tier prize. I could simply pump the money back into investments, so that it makes me more money for retirement.
Premium bonds you can store a maximum of £50,000 in them. I currently hold £4400, and the more you hold. The more chances you get of winning the prizes. As of this moment, the extra money I’ll be putting into Trading212 with a goal of maxing this out (chancing my luck).
After this, any extra money I think will be gained with my website and products sold or through further knowledge.I’d like to gain software knowledge to write apps, or coding on sites. I’m a bit of a nerd so I’d like to play to my strengths
What do I plan on selling on this website?
I have a few ideas I’ve been jotting down. You can’t really make money unless you’re willing to spend it. However tools for one things, I’d also like to build a small scale injection moulding machine. There’s a few parts for cars I think of that are small which I’d like to improve on. Once I get the machine build, it will be easier for the store, because I can create the products faster then.
Why live on a farm / industrial unit?
I hate people, period. Plus, I much prefer being alone. I’m my own person, and I’d love to have a lot of space for projects. Ideally a fully offgrid setup so I’m not reliant on anyone. Offgrid batteries, turbines, solar panels. I figure this is a nice little thing to go by. Plus it gives me more space for workshops, and machinery I’d like for projects or ideas. Working on cars. Home datacentre setups. So I need space, and power and plenty of it. Plus I could be a farmer, have some fields and beehives.
Most people who work on farms, have lived in them. So finding a farm suitable to me would be problematic, as they’re usually passed down through generations. The alternative for me is a large commercial building or warehouse that I could buy freehold and convert. I’d have no farm, but I could still produce food through hydroponics, and be off grid. So it would be a win win for me.
Do I actually think I’ll do it?
Yes. No question about it. I’m not sure what age yet, but I’ll get smarter as I go along, and monetise all the sources I have available to me in order to maximise the money I can make on it. However, I don’t want to work all my life. I know that much. I do want to experiment with AI and leverage programming knowledge. Some say gambling is a fools game, however numbers don’t lie. There’s still proven luck with predicting results of sports and various games using AI and programming skills, so this is an option. Plus it’s a learning experience for me.
I don’t want to believe in something as part of my retirement and not commit to it. I have the energy and time, but no money for my goals
What is the relation between time, energy and money?
Too soon I saw the triangle of doom. Also known as the “Time Energy Money” triangle. Where you can have 2 options, but not the 3rd.
- Time – You have lots of energy, and money. No time to accomplish goals
- Energy – You have lots of time, and money. No energy
- Money – You have lots of time and energy, but no money
All these play a vicious cycle. As I’m someone who is officially in the middle of my life span according to statistics, I’m within the peak age range to focus on all these values and reap all the benefits. The other goal I’ll have is focussing on my health. All the constant working, and poor eating choices take a toll on my body. So I’d like to feel good about myself too as I’m doing this. I’ve already lost weight,but got plenty more to lose and improve my health as I do this. So this long goal allows me to focus on all aspects of the triangle and work on the best methods of achieving my goals.
You’ll never achieve this
That’s what some people are thinking, or will say. My response. Who cares. I tried, and even if I didn’t achieve the numbers I wanted. I’ll still achieve a financial wallet that will support me and put me in a lot better position financially for retirement age.
So, that’s my little thought process out of the way for my 25 year retirement plan. I’m off to enjoy my birthday, have a beer and jot down some ideas. Over time this website will progress and like seeds, the ideas will grow
