Hello, I'm new here and discovered MMM last month, and was happy to discover the forum and read all the inspiring stories.
I've been lucky in that we have two full incomes and basically no bad money habits (except for too much eating out and lattes in the morning and lots of computer games getting bought at full price, but... I've used the last three weeks to address that, so that's done now). We're putting around 44% each of our pre-tax income into tax-advantaged pension plans which we can access at age 55, which was the original retirement age (we're both 44).
Then I found MMM and did the numbers and worked out we can retire at 50 (ie 2025) if we keep our eyes on the ball. The goal is to hit a NW of at least £1.6m, split into tax-efficient pension (access at age 55), real estate (paid-off house), and investments we can access to tide us over from age 50 to age 55. The house provides some downside protection - we live in an expensive city, and there are larger houses that a lot cheaper and nicer, so we could free up 100-200,000 in equity at least just by moving outside of commuting distance.
The big goal for 2020/21 is now to pay off the mortgage (also convert the loft for more space, which will substantially increase the value of the house), and build the emergency fund to £10k each. I have a side hustle that earns £500-1,000 a month without too much effort. More effort would push up the numbers but the day job keeps me plenty busy.
Expenses are around £24,000 for both of us at the lower end, but I wouldn't mind retiring at our Fat FI level of £40,000/y to travel. My numbers assume no appreciation of the house, so I'm going with 2015 values (which is the last time the estate agent valued it); I'm also excluding other positive effects like windfalls, inheritances, winning the lottery, raises or bonuses (the average bonus goes straight into our pensions, though, and I'm assuming the pensions return 6% while invested - they're mostly stocks and shares as we have a "high-risk" strategy. Also worth noting that the pension contributions are pre-tax - that income would normally be taxed at 40%, so financially it doesn't make a lot of sense to pay tax on it to boost take-home pay. Same with bonuses, which would be taxed at 40% but go in at more than 100% into the pension. We walk out with circa £2,800 each in take-home pay, and "need" £1,000 each a month for costs (ex-mortgage), food, utilities, commute, etc, though the budget could be trimmed. Mortgage payment is circa £550, but we're overpaying, and house has doubled in value since we bought 8-9 years ago.
My roadmap at the moment looks like this:
end-2019 household NW: £736,000 (pensions 180k each, house: 450k, mortgage: -90k, cash/gilts: 16k)
end-2020 household NW: £871,360 (pensions 223,680 each, house: 450k, mortgage: -46,500, cash/gilts: 20k)
end-2021 household NW: £994,200 (pensions 272,100 each, house: 450k, mortgage: 0, cash/gilts: 20k)
end-2022 household NW: £1,146,852 (pensions 323,426 each, house: 450k, cash/gilts: 20k, investment portfolio: 50k)
end-2023 household NW: £1,325,662 (pensions 377,831 each, house: 450k, cash/gilts: 20k, investment portfolio: 100k)
end-2024 household NW: £1,491,000 (pensions 435,500 each, house: 450k, cash/gilts: 20k, investments: 150k)
end-2025 household NW: £1,663,300 (pensions 496,650 each, house: 450k, cash/gilts: 20k, investments: 200k)
The investments aren't as efficient as they could be, as we both work in regulated professions so we have to jump through all the hoops if we want to invest in anything, but I'll have a chat with the Powers That Be about what I can actually invest in - there are options, they're just a lot more limited. Looking at the numbers like this, I'm kinda shocked. We wouldn't need to be super lucky to even hit £2m - and if we were to work full-out until age 55 we'd hit £3m or so. Shocker.
