Just starting at 38 Years Old - maybe too late...

[Manchester2017]

Hi everyone,

I just discovered the site and have been reading it like crazy over the last month. I've really began to look hard at my finances and make some changes. I don't believe in regrets so there's no point whingeing, however if I'd known what I know when I was younger what a difference I would have made... I did have a lot of crazy fun though!

I've done some calculations/planning below and if anybody can offer any advice, I'd be very grateful.

I'm a UK elementary school teacher but I'll put my finances in dollars as I know most readers are in the US.

In March, I will have paid off my student loans and then earn $3245 per month after tax and pension contributions (I currently earn less as the student loan deductions come out of my pay automatically - I'm saving money to pay off the balance in February).

Starting March, I intend to save $1350 of my pay each month. I also earn about $7000 a year after tax with a side gig and through rental on a flat I own (I actually live with my boyfriend who I pay rent too - the flat is an investment).

My idea is to try and pay off the mortgage on my flat in 4 years with all the money I am saving (this should just about do it as the balance is $97,000 - I can overpay by 10% of the balance each year and then the full balance when the deal runs out in 4 years).

Once the flat is paid for, I will then be 44 years old (maybe 45 if I don't meet the ambitious saving target).

So 45 years old with a mortgage free flat I figure this would be when I start stashing for retirement. I have a teachers pension which I can claim at 55 years old but it will be reduced by about 59% of its final value - to get the full amount I'd have to work until I'm 68 which is NOT happening! I could stop working at 55 and not touch the pension as it's reduced by 5% each early year below 68.

I believe the pension would be $20,000 aged 55 if I earn the same salary I'm on now. If I start saving at 45 until 55 that's ten years and I could save between between $200,000 and $270,000.

In summary, a mortgage free flat to rent or live in at 55 with $20k pension and between $200,000 and $270,000 savings sounds good to me.

I live close to work (a 20 min drive), don't have fancy tastes and have very low expenses that allow a little room for holidays and emergencies. I could maybe go for a promotion and earn a bit more - maybe another $8000 a year. 

I'm not going to get any earlier than that, am I?

[Roe]

You could pay of the flat and then start saving, sure. But what is your ROI on that? Will the flat increase its value? What is the interest? Would you be able to sell it (now or later) and move to a cheaper area? You are focusing a lot on paying it off, without mentioning why it would be to your advantage.

Having a payed of place might be a cornerstone for saving in some parts of the world. In other parts, its just...meh. What part are your piece of UK in? Are you locking yourself into the tought of living in that place, instead of optimizing your savings now?

[Roe]

Also, you arn't to old. Im the same age as you, and sure, I can relate to the "what if" toughts. On the other hand, once you retire, i guarantee you 90% of your surroundings will say the same, and WISH they started at 40.

You are ahead of their race.

AND you seem to have a nice hedge in that pension, allowing you to draw a bit above 4%, since you can always start withdrawing from that if things go to pot.

[marty998]

Nothing stopping you from earning more in the future. Whilst it is hard to know if you'll get material pay rises, this will be the big factor in determining whether you can get to your goal faster. Why only $8k? You could make it up the chain as a Headmaster or administrator...

You could also grow your realestate portfolio as well. A lot can happen in 18 years between now and 55.

[Tyson]

Are you kidding, too old at 38??? Haha, you're still a young pup.  I found MMM 2 years ago when I was 43! 

Re: paying off the mortgage, I wouldn't.  I'd save/invest it instead.  My reasoning is 2 fold.  First, you'll very likely get better returns in the market so you'll accumulate wealth more quickly.  2nd is liquidity.  When you save/invest, if SHTF, you have a large cash cushion to fall back on.  Paying off the mortgage does not give you any wiggle room while you are paying things off.

So, my advice, save the $$ and then in 4 years decide whether or not you want to pay the whole thing off at once, or not.  And at least you'll have access to your money in the meantime. 

You're right to take the $20k pension ASAP. 

Also, congrats on getting a lot of things paid off, that's hard freaking work.  You're actually in a pretty good position right now.  Maybe not the best it could have possibly been, but then no one is.  You're still far better off than the large majority of people.

[AnnaGrowsAMustache]

It's never too late to make some great big positive changes. I found this site this year, and I'm 45. I'm already on a better financial track than I would have been without all the knowledge and advice here. I have to take some of the posts here with a grain of salt, but the vast majority of posts are very clever financial ideas and great inspiration.

[Mac_MacGyver]

Still be better off than your peers

[snowball]

I'm not going to get any earlier than that, am I?

Depends how much you’re willing to do to make that happen.

The more you focus on this, the more you’ll find savings and/or increase your earning power, and your projected FIRE date will gradually grow closer.  At least, that’s what happened for me.  You're only a month into it - you'll find ways to speed things up, if you're committed.

You can only save so much out of a given income, of course, before you reach the point of vastly diminishing returns.  At that point, you either accept your FIRE timeline, or you find a way to boost your income.  I moved halfway around the world to do that.  In the end, I’ve chopped 15 years off the 23-year FIRE timeline I first calculated when I started down this road.  Only 5 years to go now!

Also, everyone always wishes they’d started younger.  :)  Best time to plant a tree is twenty years ago, second best time to plant it is today, and all that.  Get planting!

[Hula Hoop]

I'm 45 and DH is 55 and I've just discovered MMM although we've always been mustachian without knowing it (ie frugal).  You can't go back in time and regrets are a waste of time - just do what seems best going forward.

[Slee_stack]

+3 on not paying flat off unless there's some truly compelling reason to do so.

That will only make you heavily invested in a single asset class - real estate.  To me, that's a bit risky.  I prefer some diversification within investments.


As to 'starting late', everything is relative.  You are later to the game than many, yet earlier than many others.  A still larger group will never figure it out....ever.

Welcome and congrats!  You will one day be much better off than you would have ever realized before.  That's got to be a good feeling.

[BTDretire]

Maybe too late?
 Today's choice, I can make no changes and retire with debt, or, retire with $500k of investments and no debt.
 No, not too late!

[accolay]

When you reach for the stars you may not quite get one, but you won't come up with a handful of mud either.

[merlin7676]

You're definitely not too late.   I'm 41 and only found MM about 2 1/2 years ago. I've always been pretty thrifty. But since then I've become much more financially knowledgeable, gotten completely out of debt other than mortgage, and am cramming every last dollar I can into savings and investing.
Like you I won't be retiring before 55 unfortunately. But even if we end up working a little longer than that, we're still ahead of the game. And even if you don't retire until the "normal" age, you'll have tons more money to live off of and use for experiences than 90% of your peers.

Just remember that you still have many more years ahead of you for savings and paying debt. No you won't be living the great RE that many people here have done and will do. I think back to when I was 20 or even 30s and wish school or parents had taught me this stuff then. But you can't turn back the clock. However even recognizing that you're here now and seem to have taken to heart what you've learned, you are already ahead.


Good luck!

[dreams_and_discoveries]

No, you are not too late...you can always make a change in your future but never change the past. So yes, you'll be able to reduce your working life and extend retirement if you choose to do so.

Why are you focused on paying off the mortgage? Rates are so low at the moment, even on  a buy to let mortgage that you'd probably get better returns from the stock market.

[Stingray]

I agree. It’s never too late. DW and I just FIRED. I’m 55. Every day is a day I have gained for myself to do what I want. We have three rental houses that aren’t paid off. The tenants are basically paying the mortgage for us. Everything else we have is in the stock market. We consider our real estate similar to bonds in that it is less volatile than the market. Some things to consider before paying off the flat: 1. What is your interest rate compared to your anticipated stock market returns, 2) Does having the mortgage give you a tax advantage? I’m in the States and don’t know how it works in the UK. Hope this helps.