RETIRING early is a dream for many and the good news is that it’s totally possible on an average UK salary.
Of course it will take some careful financial planning but following one simple method could ensure that you are able to save £5,000 a year on a salary of £31,000. And investing that savings pot wisely could help people to achieve financial freedom and retire early.
As with anything that’s worth working for, it will mean a few sacrifices.
People will need to live off 50 percent of their income to achieve this savings goal.
Thirty percent of their wages could then be allocated for ‘nice to haves’ and 20 percent will need to be put towards savings or investments.
That’s £417 a month that will accumulate to £5,011 over the course of a year.
To have any chance of retiring early, what someone does with the money next could make all the difference.
They’re unlikely to be able to retire early just by saving this amount, but if they invest it and take into account their work pension and State Pension, then it begins to look a lot more likely.
People who like a challenge could follow the FIRE (Financial Independence, Retire Early) movement.
This movement is gaining momentum after becoming particularly popular among millennials over the last ten or so years.
It works by encouraging people to keep their expenses as low as possible when they’re young and reap the benefits by retiring much earlier than most.
Many supporters of the movement suggest the four percent rule meaning someone would need to put away at least 25 times estimated annual living expenses.
That’s quite a feat – but not everyone needs a fortune to retire.
People will find that their expenses naturally decrease as they grow older.
Goldman Sachs recommends that Britons build a flexible portfolio of investments.
The bank has provided a money guide for people looking to retire earlier. Tips include:
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