January 6th 2025.
As I reflect on my life at 32 years old, I have a clear goal in mind: to retire by the age of 58 with a comfortable pension pot of at least £500,000. This may seem like a lofty ambition, but it is one that I have been diligently working towards since my mid-20s, thanks to a combination of my workplace and private pension plans.
From a young age, my philosophy has always been to only buy what I truly need and to invest the rest. This mindset has served me well, allowing me to accumulate over £100,000 in retirement savings over the years. I am determined to continue on this path, as I have seen reports of millions of pensioners living in poverty and the alarming statistic that most of us are not saving enough for retirement. The thought of struggling financially in my later years terrifies me, so I am taking proactive steps now to ensure a secure future.
My financial management skills were honed during my time at university, starting in October 2011. Receiving maintenance grants was a game-changer for me, as it was the first time I had significant sums of money in my bank account. It was then that I made a promise to never take money for granted and to be wise with my spending.
During my university years, I also took on casual shifts as a student brand ambassador on open days, which helped me earn some extra cash. This experience, coupled with my newfound appreciation for saving, set me on a path towards financial stability.
Now, as it stands, my monthly income is over £4,000. This includes my salary of around £3,000, £500 from my bank savings interest, and at least £500 from investing in undervalued stocks, which I started doing in 2015.
With this income, I am able to cover my monthly expenses of over £1,400, which includes housing, utilities, and food costs. In addition, I set aside £750 each month for my pension and allocate the remaining funds between tax-free cash-ISAs, instant access, and fixed-term bond accounts.
In terms of my pension, I follow the "half your age" rule, which means contributing half of your age into your pension each month for optimal returns. For example, at 30 years old, I would put in 15% of my income towards my pension.
My frugal approach to saving comes with sacrifices, but it is worth it to me. I have coined the term "Emotional Depreciable Assets" to describe purchases driven by feelings and/or items that decrease in value over time. I choose not to spend money on these types of purchases, which includes things like owning a car or going on foreign holidays.
While some may view this as extreme, I am content with my decision and have found that many people understand and even admire my dedication to saving. I am fortunate to have understanding friends and family who support my lifestyle choices, and I am always happy to explain my reasoning to others.
At the end of the day, I am happy to trade nights out and unnecessary expenses for the peace of mind that comes with seeing six-figures in my pension pot. It is not just about the number on paper, but also the economic necessity of having a secure retirement in a world where we are living longer.
Of course, I recognize that not everyone has the same opportunities or earning potential to build a substantial pension fund. This is why I believe the state should increase tax relief for the lowest earners to help boost their retirement savings.
To those who may be young and think retirement is a distant concern, I urge you to consider investing in your pension now. Your future self will thank you for it. And to those who may have a similar mindset, I invite you to share your stories and perspectives in the comments below. Let's continue the conversation and support each other in our financial journeys.
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