I am so excited that I can finally start to post about our Ultimate Dream Fund, as this means that it has finally got off the mark and is no longer at zero!
I’m going to post updates on our fund for two reasons; one, so that I can show that living a frugal lifestyle means that we can retire earlier than we should do and still live a good life on the journey, and two; to keep me motivated for the long haul. This journey is going to take us a long time, but it’ll be worth it in the end.
To recap on our plan briefly, as we have changed it slightly, I want us to retire early at the age of 50, 17 years before our other pension options start to kick in. So, we need enough savings/investments/income to last us for those 17 years in between. I have been looking at three different scenarios for budgets, in terms of what to aim for. They are:
- Retire early with a budget of £18,000 a year, which means needing a £306,000 pot
- Retire early with a budget of £20,000 a year, needing a £340,000 pot
- Retire early with a budget of £22,000 a year, needing a £374.000 pot.
Now, in an ideal world, we’ll manage to do this with a budget of £22,000 a year, as that will be worth less than it is today, due to inflation. However, if we manage to get to £306,000 in the time frame, we also know that we could manage, though it may be a slightly less indulgent early retirement (remember that this plan also includes a paid off mortgage).
Related post: The Ultimate Dream
Related post: The Ultimate Dream Part Two: Early Retirement
Related post: Why We’re (sort of) Paying Off Our Mortgage Early
Now, when reading through other personal finance blogs, these numbers seem rather small and not particularly ambitious. However, our combined income is not particularly high, so this will be a stretch goal for us, I think. I’m hoping that one day I’ll have some side hustles going on which will bring in additional income which will predominately go towards our early retirement dreams, but. until that happens, it’ll be a bit of a challenge. But hey, that’s part of the fun, right? 😉
Anyway, our Ultimate Dream Fund now stands at £955.84 which is a great start! To keep on track for the small post aim (£306,000) we’ll need to save an average of £1,182 a month from now on, to meet that aim. This is much bigger savings that we currently manage, so when I said this was going to be a challenge, it definitely will be!
Our journey to early retirement has finally begun and it is seriously motivating. Here’s to adding more to the fund in June!
It’s great that you have finally started this journey towards FI. I’m sure you’ll have many ups and downs in terms of saving for this goal of yours but as long and you can measure your progress I think you’ll only be more motivated as time goes on and will hit your eventual FI goal. Thanks for sharing.
Thank you; I’m so glad we’ve finally started too!
I have never thought about measuring my retirement fund in this manner. Scary but a great idea. I’m gonna do it too and see what I can come up with. Good luck with fund and I look forward to see how this works all out for you.
It is definitely scary, but very motivating at the same time 🙂 Have you looked at your number?
Congrats on finally starting your journey! You’ve got yourself a nice goal there but just remember, any little bit helps. Even if you don’t hit your goal every month, putting as much in as you can is still better than nothing.
I look forward to watching your journey progress.
ADD
Thank you 🙂 and yes, if we fall short for whatever reason, we’ll still be doing okay 🙂
Hey Nicola!
Congrats on getting your foot into the door on your dream fund! I’m excited to follow along your journey. I’m certain you’ll overcome any obstacles in your path.
Best of luck
DB
Thank you! We’re looking forward to the journey 🙂
Nicola,
It looks like you simply took the annual budget and multiplied it by 17 to come up with your number. So is that assuming no return and you just taking the cash out of cash, slowly reducing the number to zero? If that’s your plan, I think you’d probably need a lot less by investing it intelligently and just keeping a super high withdrawal rate (since you’ll have the pensions later on). But I’m sure you’ll figure out what works. 🙂
Best of luck to you guys. This is a very exciting time. The snowball starts picking up speed before you know it.
I’ll be following along!
Cheers.
That’s true; I haven’t factored in any sort of return, mainly because I couldn’t get the spreadsheet formula to work! And yes, generally taking out the cash each month/year until it runs out, or having some surplus when our other pensions kick in. I am going to invest in a fund I think; it’s definitely on my list of things to do. And looking forward to the snowball picking up; yours certainly is very motivating to watch, so to speak!