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  1. #1

    Financial Independance Sanity Check

    Just looking for a sanity check for my financial independence / early retirement plan. Simplified numbers below, although I also have this plugged into a more detailed spread-sheet and firecalc looks good

    Current age = 48 (both myself and spouse).
    Retirement age target = 55
    Retirement income target 55-59 = 3000/month net (36k/year gross, assuming no tax for this period)
    Retirement income target 60 on = 2700/month net (approx. 35k/year gross, assuming all income taxable and use of both our tax free allowances)

    Value of current investments (ISA/DC Pension/P2P etc) = 262,000
    Assume 7 years @ 2.5% better than inflation grows this to 304,000 todays equivalent by 55.

    Other lump sums in the pipeline:
    DB lump sum @60 = 25,000
    A soon to mature endownment (not required for house) = 25,000

    So cash/investment total available from 55 = 354,000

  2. #2
    Value of DB pensions @ 60 = 14,800
    Value of DB pensions @ 67 = 17,200
    Value of state pension @ 67 = 16,600 (We will both have full SP by 55)
    Therefore 33,800 from DB and state from 67.

    To get 36K between 55 and 59 = 5*36k = 180k
    To get 35K between 60 and 66 = 7*(35k-14.8k) = 141.4k
    To get 35K from 67 = 20*(35k-33.8) = 24k

    Total required = 345.4k, total available = 354,000

    So on a simplified basis and assuming post retirement investment growth income growth keeps income in line with inflation until DBs kick in, it looks like we are on target to be financially independent at 55 without too much additional saving. Also have the option of downsizing at some point but trying to keep that as a Plan B. Any comments/views/advice welcome.

  3. #3
    Why is there no tax in late fifties?

    You're counting your db lump sum available, at 60 as being available at 55 apparently.

    No long term consideration of inflation effects.

    You appear to have assumed life expectancy of you both at 87, there's a high probability that one if not both of you will live longer.

  4. #4
    In your estimates you should include inflation and also an investment return. If you've put your numbers into FireCalc those will be included....what numbers have you used?

  5. #5
    You have DB pensions; have you been contracted out? if so you may not get full new-style pension. You'd better check. You may want to put money aside to make some contributions to put it right.

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