How to retire in 15 years (my plan). How to go from full time employed to self employed and still save enough to retire in 15 years.
Is it possible to retire in 15 years? Well it’s certainly not impossible.
Of course it does require a plan.
It also depends upon various factors including how much money you already have saved towards your retirement savings. Also when you decide that you’ve had enough of work and when it’s time to think about getting out.
I’m currently working towards building up the right amount of money to add towards my already saved retirement accounts in order to have enough to purchase an annuity at age 60.
As I write this very long article I am approaching the age of 50.
I live in the U.K.
I’m now self employed and control every financial element of my life as I can.
I already live an amazing life of adventure and travel, a lot of which is documented on this blog!
Before I go and show you how to retire in 15 tears. Or at least tell you how I’m going through my plan to retire in 15 years I do need to give you a bit of my back story.
This is so you can copy that or at least gain the inspiration from my story for you to do the same!
You can of course skip forward to parts of this article that may interest you specifically. And I’ve linked those for you below.
However if you read where I’ve come from first then you might not be so disillusioned with the situation that you may be in yourself.
After all I’m nothing special and have had to work hard.
Just like you.
By the age of 42 I was already pretty fed up with the whole world of work.
Since the age of 16 I’d pretty much worked more or less full time hours at various jobs.
This included even working about 30 hours a week as a dishwasher at a local hotel for the duration of my 4 years studying at University from age 18 to age 22.
After finishing University I didn’t even take a job that was anything to do with my degree (Retail and Distribution Management).
I needed a job fast to pay off various debts I’d racked up from various failed relationships.
I had rent to pay having also moved out of the flat I’d bought together with my then girlfriend. One of the failed relationships.
So I joined a U.S. owned bank (now defunct) selling loans and insurance products.
Yep! I’m sorry to say that I was one of those PPI sales people.
In later years banks would be shelling out millions of pounds of compensation to those customers I had been forced to sell those duff products to.
Basically if i wanted to keep my job I had to sell those products.
There was a huge reason to have do so. The job was largely commission based and there were daily threats of being fired for not hitting the aggressive sales targets.
Anyway I lasted 8 years in that job. I did make it up to assistant branch manager and even had a rather nice company car at one stage. But I was stressed out of my mind 24/7. Desperate to reach the sales targets.
I’d tried applying for other jobs throughout my time at the bank but to no avail.
I even did Open University and studied IT and some computer programming but it just wasn’t for me.
One thing I’d proved I could do was to sell.
So when I was given the opportunity to join a recruitment agency as their Branch Manager I lept at that chance.
I was lucky that the lady who did the recruitment in the bank for my staff was also moving to that recruitment agency as their area manager. So she knew me and my abilities. That’s how my chance came.
So anyway I ended up working about 9 years in various recruitment agencies.
Working my way up the ladder to a position I loved as Branch Manager of one of the largest branches of one of the main UK Recruitment agencies in the U.K.
Then BOOM! 2008 and the financial crisis hit.
I was made redundant by a recorded telephone call from the American Directors.
So having thought I’d worked myself into a nice position in a prestige company to settle down in. And maybe even with enough financial stability for me to start to think about having a family.
Those thoughts were quickly quashed.
Luckily for me, my then girlfriend (now happily my wife) also worked in recruitment.
She worked in an agency that was not quite so affected by the crisis. She had contacts and I managed to quickly get a new position.
My new postiion was working for one of the worlds largest and leading suppliers of personal computers as a sort of account manager / project manager promoting their new global online store to their blue chip customers.
Again I worked my way up in that role for about 5 years.
It was hard work. I worked tirelessly. Often late into the night.
There was also early morning and weekend work required so that I could speak to potential customers all over the world.
I even worked whilst on some holidays (more fool me!).
Redundancy again called in 2014.
The company were looking to cut costs and they offshored our work to India.
I was gutted to say the least. Although some of my colleagues had unfortunately been made redundant in the years leading up to my redundancy, I thought I had enough of a good reputation to avoid that fate myself. Wrong!
So again, feeling a bit lost and disillusioned by the whole world, I took a temporary job in an administrative role in a call centre of a large bank.
I hated that role. But like everyone I had bills to pay.
Then out of the blue I was contacted by a large firm of solicitors who were looking for a Project Manager to install various IT related systems.
It was an excellent company to work with.
But I was already seriously considering how I could get out of the world of work and start putting a retirement plan into action as quickly as possible.
The thought of being made redundant for the 3rd time in my life was too much to take. I had to get out of having to work for other people first.
How I Replaced My Monthly Salary Income
Neil’s Healthy Meals
I’d begun writing my food blog, neilshealthymeals in 2014. I’d always been creative in the kitchen as well as health conscious when it came to what I ate.
I had no idea that hobby would end up being one of my major sources of monthly income. Or that I would become a business owner.
I didn’t even know at the time you could make money off blogging.
So, there was a source of growing income I could work on. Something that I actually loved doing with no chance of redundancy!
Real Estate – Renting Out Property
I’d bought a beautiful flat at the height of the property boom (2008).
It of course crashed in value and when I got married and we wanted to buy a house together I had to get special permission from the bank to rent it out.
Even then the monthly rental payments didn’t cover the huge monthly mortgage payments.
I had to use that rental income and a large portion of my own monthly salary to pay that mortgage down.
I paid that outstanding amount of mortgage on that flat down by so much.
Eventually the rent paid the mortgage and gave me a small amount after the agency too it’s deductions left over. So I saved that too.
Then I began to realise that you could earn monthly income from renting out properties.
This could replace a monthly salary. And be another source of income.
So I saved and saved and by the time I had had enough of working in the solicitors after 3 years, I had three properties and income from the blog.
Between both the food blog income and the rental properties I had just enough coming in from these income sources. Enough to cover my monthly bills and leave a very small amount left over to live off.
It was then, at age 45 I formulated my plan to completely retire by the time I was 60.
What follows is my plan of how to retire in 15 years. Or at least how I intend to retire in 15 years!
I suppose you could say I took early retirement in 2018 when I was 46 because I retired from the world of having to work for someone else.
I now worked for myself and had financial independence.
Even if you don’t want to work for yourself and are happy working for yourself, what follows should help you to create a retirement fund and your own retirement plans too.
Remember though these are my plans and if you are in any doubt or require more information you should speak to financial experts, a financial adviser or certified financial planner. I am no financial expert!
Employer Pension Scheme
Make sure you always contribute the maximum into any pension scheme you are offered by an employer.
This is so that you can gain the maximum retirement benefits into your retirement portfolio whilst you are working.
My first employer (the U.S owner bank) that I wrote about above did not have any pension scheme on offer to me.
At that time it was not U.K. law for an employer to offer a pension scheme to employees of all ages as it is now.
However I did have the common sense when I was 22 years old to visit a financial advisor and set up a personal pension scheme.
The recruitment agencies, the computer manufacturer and the firm of solicitors all had company pension schemes.
One of the first things I did on joining those companies was to start contributing the maximum monthly amount from my salary to those schemes.
In fact at each interview I asked what I could contribute and what the company would contribute. I also remember being told at one interview I was the first person to ever ask this!
SIPP – Self Invested Personal Pension
At age 36 in 1999 I opened a SIPP with Hargreaves Lansdown.
I wanted to be able to combine my previous company pensions from the recruitment agencies into one pension savings account that I could see online and make additional contributions to when I had the funds.
The term ‘SIPP’ stands for Self Invested Personal Pension. A SIPP is a type of personal pension scheme that is registered with HM Revenue & Customs in the UK.
With a SIPP account, you are in control of the decision making for your pension, rather than being controlled by an old employer or insurance company.
Like with a personal pension scheme or company pension scheme every time you contribute money into the SIPP you usually get at least 20% tax relief.
Meaning that for every £100 you pay in the pension company claims back £20 from the UK government and adds that into your pension scheme.
I write this, that’s much better than any current savings rate available.
Also if you are a higher rate tax payer you can claim back even more tax relief through your UK tax return!
In the SIPP the tax advantages are that your money can grow free of UK income tax and capital gains tax.
You choose your own stock market investments. There’s plenty to choose from but of course the investment returns of your SIPP do depend on the ups and downs of the stock market.
You have to be prepared to see the value of your portfolio go up and down.
But as it’s part of a retirement nest egg, you should be in it for as much time as you can.
Currently with a SIPP you can normally start taking your pension money from age 55 (57 from 2028).
How To Retire In 15 Years (My Plan)
So I calculated at age 45 using an online retirement income calculator that I would need to have saved about £400,000.
Investing that should mean I would receive roughly £1000 per month at age 60, my chosen target retirement age.
The £400,000 would buy me an annuity. An annuity is a guaranteed income for life, paid for the rest of your life no matter how long you live.
When you purchase an annuity you have the option to take out 25% tax-free cash if you want.
I plan to just use all of the money I’ve saved to purchase an annuity in order to get a maximum annual income and monthly payment into my bank account.
I’ve calculated that £1000 per month should be enough for me to live on.
Between my wife and I, our mortgage will be paid off by then and I will only have to live off the £1000 per month until the final stage of my retirement at 67.
At 67 I am able to take my state benefits.
In other works I will be eligible for my state pension. By then my wife also plans to be retired. She will be 57 and we will sell all our rental properties and house we currently live in and use the proceeds to buy a property abroad.
How Will I Save £400,000?
Even though I’m an “early retiree” I and still earning money from the rental income and from the money I make from my blog. I am also still paying income taxes.
Every month I’m contributing as much as I can into my SIPP, which invests in relatively safe Index Funds.
It’s also my intention to sell my food blog before I reach my chosen retirement goal of 60. I’ll put those proceeds into my SIPP as well.
Our plans are to live abroad. Somewhere cheaper than the UK. Somewhere warmer and sunnier.
We’ll have no mortgage and will own buy property outright.
We’ve calculated that our combined retirement income will be more than enough money for a comfortable retirement.
Enough to pay all our living expenses but still enjoy ourselves in our golden years!
Social Security Benefits
As part of my retirement plan I mentioned that I’ll be able to get my state pension at age 67.
You need to make sure you have paid the maximum National Insurance contributions before you retire in order to get the maximum UK state pension.
At the time of writting this is you need 35 qualifying years to get the full new state pension.
You’ll get a proportion of the new State Pension if you have between 10 and 35 qualifying
You can check your National Insurance record to see how much you have paid and how much you need to pay to qualify for full state pension at the check your national insurance record site.
I already have contributed enough to qualify for full state pension. I’ve been paying National Insurance since I was 16 years old to qualify.
I was also contracted out through the personal pension scheme I took out that I mentioned earlier meaning I paid more National Insurance contributions than I need to.
Disclaimer – All of the above is applicable to my financial position and may not be suitable for your own financial situation. If you are looking to devise a plan for how to retire in 15 years then I strongly recommend you seek financial planning advise. What I have written above is meant to show you that I strongly believe you can retire in 15 years and it’s my own individual plan of how I indend to do that!