How to retire in your FORTIES without earning a fortune! US movement inspires Britons to escape rat race and live mortgage free on £25,000-a-year
- FIRE formula promises a mortgage free world and £25,000-a-year to live on
- Key is building net worth of 25x annual spending in savings and investments
- Hundreds of thousands said to be following rules to stop work in 30s or 40s
- Barney Whiter saved half salary and invested it for 19 years to retire aged 43
- He said saving hard means: ‘You go from broke to never needing to work again’
- Many try 5:2 cash diet – meaning you don’t spend a penny for five days a week
Barney Whiter, a married father-of-three from Farnham, Surrey, walked away from work at 43 by saving half his annual salary after tax.
A US-inspired money movement helping thousands retire in their forties is sweeping the UK.
The financial independence retire early [FIRE] formula promises a mortgage free world and £25,000-a-year to live on if their strict fiscal rules are followed to the letter.
London accountant Barney Whiter, a married father-of-three from Farnham, Surrey, walked away from work at 43 by saving half his annual salary after tax.
He then invested all of it in low-risk stock market funds and shares, bringing in up to 12 per cent return every year for 19 years while also paying down his mortgage.
A big house, eating out, expensive holidays, new cars, cable TV and non-essential shopping were all banned so the Whiter family could stick to their £24,000-a-year budget for all spending.
Frugal Mr Whiter made sure he built up a net worth of 25 times his annual spend – £625,000 – in savings and investments.
And the result was retirement around 20 years before his colleagues, which he said ‘is the best thing since slice bread’.
-
Millionaire sues for defamation after his wealthy tycoon…
Hammond warns that no-deal Brexit would be ‘extremely…
M&S Bank is only savings provider to raise the rate on its…
Mortgage rates remain largely static in the aftermath of the…
Share this article
He told The Times: ‘If you can save 50 per cent of your take-home pay, it will take 19 years to go from broke to never needing to work again. If you can save 75 per cent, it will take seven to eight years.
‘You need to have the mentality of a marathon runner or triathlete and be able to delay gratification. For most people money is leaking out of their life like a bucket shot full of holes’.
If you need £25,000-a-year to live you need to work towards a nest egg of £625,000 before giving up work (file picture)
There is an army of super-savers in the UK, many gaining inspiration from U.S. and British websites that advise on how to become mortgage-free early.
SEVEN STEPS TOWARDS AN EARLY RETIREMENT
- Try to save between 50 and 75 per cent of your earnings every month
- Invest all savings in low-risk stock market funds or property
- Stop buying needless gadgets — if there’s anything you really need (such as a drill for odd jobs around the house) you can often hire it from a special tool ‘library’ for a small fee. Ask your local council or visit libraryofthings.co.uk.
- Give up on needless fripperies. Do you really need to spend more than £6 on a bottle of wine? Would a run round the park be as good as a gym membership? Will your partner really appreciate gifts worth hundreds of pounds — or is something small and thoughtful enough?
- Try to 5:2 your finances — spend only at the weekend and as little as possible during the week.
- Stop online shopping. Delete any apps and block tempting emails sending you offers.
- Save here and there: pop change into a jar and don’t fritter it. Take your jar to the bank once a month and put it straight into savings.
More than 100,000 people are said to be using blogs produced by FIRE proponents including Mr Whiter, who calls himself ‘The Escape Artist’.
Earlier this year more than 900 people tried to get into a London pub to hear a talk about the formula, spearheaded by Canadian Peter Adeney, who retired at 30.
Mr Adeney’s blog Mr Money Moustache gives people a step-by-step guide to retiring in a decade or less.
Mr Whiter threw all his energy behind his plan to retire in his forties.
He drove a battered second hand Skoda for years and cut spending to the bone while his children, now teenagers, grew up.
But he insists it was all worth it.
He said: ‘Tasting freedom is the most intoxicating thing and I wouldn’t ever go back to full-time work. I’d rather cut my lifestyle back. My highest value is freedom and self-determination and being able to do what I want to do’.
The Holy Grail for anyone who wants to retire early is saving because if you want a scatter-cash lifestyle then you will pay for it in many more years at work.
Experts say you need a nest egg equivalent to 25 times your annual salary to retire early.
This means that if you need £25,000-a-year to live you need to work towards a nest egg of £625,000 made up savings and returns from investments or buy-to-let properties.
If it is £50,000 then that amount grows to £1.25million.
The other battle is to eliminate a mortgage using the half of the salary people don’t save.
Many take their inspiration from the 5:2 diet, meaning for full five days of the week, they do not spend a penny only allowing themselves to have any outlays on the other two days.
Source: Read Full Article