Based on my last month’s expenditure, I need around £1400 a month to cover my basic needs and wants, which break down roughly as below:
- Mortgage = £600 a month, or £7200 a year
- Other fixed expenditures = £500 month, or £600 a year
- Disposable expenditure = £300 month, or £3600 a year
- Total expenditure = £1400 a month, or £16800 a year.
- Total expenditure post-mortgage (10 years to go) = £800 a month, or £7200 a year.
It follows that in order to retire I need the following:
- £16 800 a year until I’ve paid my mortgage off (assuming I don’t remortgage/ overpay).
- Then £7200 a year until death.
My current future retirement situation – Full retirement guaranteed at age 55, in just over 9 years
As I’ve outlined before, one of the deserved compensations for enduring the mental abuse of a career in teaching is a decent pension – and after 16 years in the front line I’ve managed to accumulate one that’s worth about £7200/ year or £800 a month that I can claim from age 60 onwards.
I don’t know whether I endured teaching long enough deliberately, but my teacher’s pension is exactly sufficient to meet by basic needs and wants post-mortgage, until death (it pays out until death, that’s the idea of a pension!)
In addition to this I currently have £47500 in secure savings (and a £3K reserve fund/ float I don’t count as savings), which is sufficient to meet my basic needs and wants for five years if I draw down at the rate of £800 a month or £7200 a year, assuming I’ve paid my mortgage off, which will be the case 4 months after I turn 55, so other than this 4 months of mortgage payments, I’m on target to retire at age 55!
The above figures work out very neatly and look good for my post-mortgage retirement. Note I’m not factoring in any accumulation gains. If these happen or not, I’ll just have to adjust accordingly.
Additional earnings and savings required to retire earlier
This is very easy to work out: given that I’ve saved sufficient to retire post-mortgage at 55, all I need to do to work out how much I need to retire how many months or years earlier is to multiply by current basic expenditures by £800 for months and £16800 for years. I end up with the following stats:
Additional savings required to retire at selected ages
- To retire at age 54, in 2027 I need an additional £16800, or total wealth of £64800
- To retire at age 52, in 2025, I need an additional £50400, or total wealth of £98400
- To retire at age 50, in 2023 I need an additional £84000, or total wealth of £132000
- To retire at age 48, in 2021 I need an additional £134400, or total wealth of £182400
Bringing my full-retirement date forwards…
Given my recent increase in income, being back in the black a few months earlier than expected, I’m feeling confident that I can earn and save an additional £50K by 2025 no problem.
I’m setting as a push goal the challenge of earning an additional £85K over the next four years – so I could retire fully at 49, one month before 50.
I mean, who doesn’t like a ‘beat the round number’ challenge?!?