My Early Retirement Plan

retirement plan

MY early retirement plan has evolved over the years but the goal remains the same – freedom from work.

I think it’s important everyone sits down and works out just how much money they need in their Freedom Fund.

Everyone will have different annual costs so, if using my plan as a guide, you’ll need to tailor it to suit your needs.

In my case I need 20k per year to live a comfortable life.

Like me, if you want to retire early in the UK, there are three income streams that kick in at different ages.

  1. ISAs (can be accessed at all ages)
  2. Personal Pension (accessed at 57)
  3. State Pension  (accessed at 67)

The above ages are specific to myself (currently in my late 30s).

So as you’ll see, I need enough in my ISA to live off until I reach 57 and can draw down my personal pension. This money will have to last me until I die.

I’m not relying on getting a state pension at 67 because the government could increase the starting age or scrap it altogether. If I do end up with one, it’ll be a bonus.

So just how much do I need in my Freedom Fund to say goodbye to work forever?

It’s a huge question so here are two answers.

The first is the absolutely safe scenario.

The second is the more realistic scenario (which I’ll be using for myself).

The Absolutely Safe Scenario


If my standard retirement age is 57, for every year I retire early, I need 20k.

So to quit work at 40, I need 340k in my ISA. (17 years x 20k)

To quit work at 47, I need 200k. (10 years x 20k)

Personal Pension

At 57, I’ve probably got 30 years of life left, so I need 600k (30 years x 20k) in a pension to see me to the grave.

Total Freedom Fund Needed…

600k to retire at 57 (600k in personal pension)

800k to retire at 47 (200k in ISA + 600k in personal pension)

940k to retire at 40! (340k in ISA + 600k in personal pension)

Crazy isn’t it? The figures are eye-watering. They make you want to give up on your early retirement dream and go and cry in a corner. Even if I worked until 67, I’d still need 400k.

But wait. This scenario is for those people who keep all their money in saving accounts and bonds, just barely keeping up with inflation. You know, the people who don’t understand about investing and who fear the stockmarket.

But we’re not like them, are we?

So let’s look at what you and I are going to do.

My More Realistic Scenario

Since I invest my spare money every month in low cost, index-linked global stockmarket trackers I have been able to boost my Freedom Fund because the returns are better over the long term than just holding cash.

In retirement I’ll stay invested (probably 60% stocks 40% bonds) and this will turbo-charge my returns even more as the years go by.

The basic idea is that stockmarket returns will average out at 4% per year over the long term after inflation. Of course, sometimes it will be a lot better, sometimes a lot worse.

Now let’s see how the figures stack up…


I can’t access my personal pension until 57 and for every year I retire early I need 20k.

My investment returns are 4% each year.

So to quit work at 40, I need 270k in my ISA which will last 17 years until I hit 57 and can get my hands on my personal pension.

To quit work at 47, I need 180k which will last 10 years.

Personal Pension

At 57, I’ve probably got 30 years of life left, and my investment returns are 4% each year. So I need 360k in a pension to see me to the grave.

Total Freedom Fund Needed…

360k to retire at 57 (360k in personal pension)

540k to retire at 47 (180k in ISA + 360k in personal pension)

630k to retire at 40 (270k in ISA + 360k in personal pension)

Now that’s more like it!

I’m also going to build up an additional cash buffer of 3x annual expenses (60k) which I will dip into when the stockmarket has bad years and allow me to withdraw less from my Freedom Fund.

I want to retire at 47. Now I’ve got a realistic number to shoot for. I need 600k.

It’s not going to be easy, that’s still a lot of money, but I KNOW I can get there.

PS. For an easier route to early retirement, check out The Optimistic Early Retirement Plan.


Have you worked out your early retirement plan? Do you think I’m being too cautious or optimistic with the amount of money I need? I’d love to hear from you in the comments below. If you found this article helpful, please share it using the Twitter icon. PS. Try out your withdrawal rates with this handy calculator.

Simon Saves

I'm a national newspaper journalist for hire who has a passion for personal finance. Currently saving and investing towards my first million. All comments welcome. Follow me on Twitter: @MyRichFuturecom

You may also like...

3 Responses

  1. weenie says:

    This is pretty much how I worked out my ‘number’, although the amount that I have calculated as being what I need to live comfortably is £19k. I’ve done a scenario for £18k – less travelling in that plan! I’m actually living on a lot less so could probably scale it down even more but I guess better to have more than less, just in case. As I started saving/investing late, my goal is just to retire before 60. If I can save in an ‘extreme’ fashion or my investments do well, then 56 might be doable. I do have the state pension in my plans – if they move the goalposts, then I reckon I should still be ok – will just have to cut back on the bingo visits, haha!

    • Simon, Editor in Chief says:

      Hiya Weenie. We all need to cut our cloth accordingly and be flexible with our goals and targets. I know I can cut back and live off less than 20k if I really need to.
      If the state pension is still available for me at 67, then it’ll be a lovely bonus. In fact, the numbers with the state pension included look pretty good. I’ve mapped it out in The Optimistic Early Retirement Plan.
      All the best, Simon.

  2. Fatbritabroad says:

    It’s a difficult balancing act for sure. As a higher rate tax payer we’ll Into the hrt tax bracket I put a decent amount into a pension about 15k a year plus the odd retention bonus I get . . That will give me 35 to 40k to live on retiring at 57. I’m also now trying to build up my non pension saving and currently have about 50k. I’m putting money where I cant access it in Saye schemes at 400 a month and drip feeding my a and s isa at 300 a month while trying to maintain my emergency fund at a reasonable level. I can open one other Saye scheme at 250 a month and am seriously considering this.maybe just for 3 years instead of 5 though . There’s an opportunity cost there of not investing it straight away but then I definitely can’t touch it for a few years and it’s guaranteed. I expect our share price to gain slowly

Leave a Reply

Your email address will not be published. Required fields are marked *