£250k to pay off my mortgage and then £100k a year for the next 50 years would see me through until death-ish. Although tbh I wouldn’t need anything like that. I’m on 52k which is about £41k after tax.
The UK seems too expensive. I just wondered why people would want to live in such a expensive country. I understand that the UK provides good opportunity for works and career, but cost of living eliminates the benefit of salaries. Have you thought about moving to a cheaper european country? If not, what is the reason?
Because I’m british and i like living in the UK. Also our cost of living might be higher than places like Portugal and Greece but its a lot lower than places like Norway and Sweden and on a level with France and Germany.
I love visiting Europe but I’ve no intention of leaving the UK
So you save about $14k a year? Don’t save that, invest it. After you have an emergency fund built up (most recommendations say 3 months worth of expenses), then contribute 15% of your paycheck to youryour 401k including your employer match if you get one.
If you have more left over after doing that, then open and contribute to a Roth IRA for tax-free growth and tax-free withdrawals in retirement. Federal annual max this year is 7,500. Many people don’t understand how powerful the tax-free compounding is… This is one of my primary financial regrets of my twenties, is not understanding Roth value. I am 39 now and working hard to make up.
If you have more left over after doing that, then open and contribute to an HSA for pre-tax contributions, tax-free growth and tax-free withdrawals. It’s the only triple tax advantaged account type. Use Fidelity vanguard or Schwab. Select growth ETFs as your investments, and let the money sit there instead of using it for healthcare expenses. (But of course use it if you actually have medical emergencies, that’s what it’s for)
If you have more left over after doing that, then open a taxable brokerage account, also through Fidelity vanguard or Schwab. Plenty of others too though like IB, SoFi, etc. Contribute however much to this you’re comfortable with after doing your emergency fund, 401k, Roth IRA, and HSA. Personal recommendation is to pick large broad growth ETFs (SPY, VOO, VTI, VXUS, QQQ, maybe a growth industry like SMH)
Man I WISH I understood all this when I was in my early twenties. I would be in a very different financial picture now in my late 30s. I’m doing well for myself, but also the opportunity cost is MASSIVE. But I tell myself “the second best time is now!”
Sorry if that was too much! Love thinking and talking about this kind of thing.
Edit: I see now you’re in the UK (£ not $). I think all the same principles apply but maybe there are differences in how 401ks are structured, or Roth IRAs don’t exist in the UK, etc. But overall the main point applies to any currency or country, which is take advantage of as much tax deferred and tax-free growth and compounding as you can!
I wouldn’t need it, but the question was how much would you need to feel comfortable about never working again.
£5m was my figure. I could live on less, but if I’m going to have all this free time with my wife and dog I’m going to want to spend more on travel and stuff.
I already have a house and a car, I’m not interested in replacing either.
£5.25 million.
£250k to pay off my mortgage and then £100k a year for the next 50 years would see me through until death-ish. Although tbh I wouldn’t need anything like that. I’m on 52k which is about £41k after tax.
I save a third of that already.
The UK seems too expensive. I just wondered why people would want to live in such a expensive country. I understand that the UK provides good opportunity for works and career, but cost of living eliminates the benefit of salaries. Have you thought about moving to a cheaper european country? If not, what is the reason?
Because I’m british and i like living in the UK. Also our cost of living might be higher than places like Portugal and Greece but its a lot lower than places like Norway and Sweden and on a level with France and Germany.
I love visiting Europe but I’ve no intention of leaving the UK
I understand. Thank you for the explanation.
So you save about $14k a year? Don’t save that, invest it. After you have an emergency fund built up (most recommendations say 3 months worth of expenses), then contribute 15% of your paycheck to youryour 401k including your employer match if you get one.
If you have more left over after doing that, then open and contribute to a Roth IRA for tax-free growth and tax-free withdrawals in retirement. Federal annual max this year is 7,500. Many people don’t understand how powerful the tax-free compounding is… This is one of my primary financial regrets of my twenties, is not understanding Roth value. I am 39 now and working hard to make up.
If you have more left over after doing that, then open and contribute to an HSA for pre-tax contributions, tax-free growth and tax-free withdrawals. It’s the only triple tax advantaged account type. Use Fidelity vanguard or Schwab. Select growth ETFs as your investments, and let the money sit there instead of using it for healthcare expenses. (But of course use it if you actually have medical emergencies, that’s what it’s for)
If you have more left over after doing that, then open a taxable brokerage account, also through Fidelity vanguard or Schwab. Plenty of others too though like IB, SoFi, etc. Contribute however much to this you’re comfortable with after doing your emergency fund, 401k, Roth IRA, and HSA. Personal recommendation is to pick large broad growth ETFs (SPY, VOO, VTI, VXUS, QQQ, maybe a growth industry like SMH)
Man I WISH I understood all this when I was in my early twenties. I would be in a very different financial picture now in my late 30s. I’m doing well for myself, but also the opportunity cost is MASSIVE. But I tell myself “the second best time is now!”
Sorry if that was too much! Love thinking and talking about this kind of thing.
Edit: I see now you’re in the UK (£ not $). I think all the same principles apply but maybe there are differences in how 401ks are structured, or Roth IRAs don’t exist in the UK, etc. But overall the main point applies to any currency or country, which is take advantage of as much tax deferred and tax-free growth and compounding as you can!
I also have a pension.
My take home pay is 41k or thereabouts. My pension is deducted as a salary sacrifice which means I don’t pay tax on it.
Its a government pension so when i retire I’ll be guaranteed a lump sum as well as an annual salary for life. Plus my state pension.
The money I save is in addition to that
After purchasing a house and car, why would you need 100k a year? That’s so much.
I wouldn’t need it, but the question was how much would you need to feel comfortable about never working again.
£5m was my figure. I could live on less, but if I’m going to have all this free time with my wife and dog I’m going to want to spend more on travel and stuff.
I already have a house and a car, I’m not interested in replacing either.