Almost 20 years before the state’s retirement age, David Cox gave up his graft to spend his leisure time when he was just 47.
“I stopped loving my job and had a particularly bad day thinking, ‘Do I really have to put up with this?'” he told The Sun.
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But unlike many of us who get bored with the job and want to quit, David manages to make it happen despite having no pension.
“That’s when I decided, within almost 24 hours, that I could have another life, and the possibility of early retirement came up.
“It took me several months before I was convinced by the idea and had the courage to file a notice with my employer.”
“I was really scared to give up my job. What should I do? How much will it cost? Am I going to run out of money?”
David, now 54, has been enjoying his retirement since 2016 with his wife Sally, 49, a former elementary school teacher.
Increased income
After starting a minimum wage job at just 18, in my 30s my focus was on maximizing my income and minimizing my expenses to achieve financial independence.
After his two grown-up children left home, he took the plunge and quit his job altogether.
“I didn’t even go to college, I started working as an accountant at 18 and making minimum wage,” he says.
‘I finished my career with a good salary, but that’s not where I started.
“But I realized that being focused on my job, being diligent and being trusted led to promotions and raises, so I worked my way up to finance director,” he says.
“I managed to get through it by getting my accountancy qualification (I studied part-time while working), taking on a few risky jobs, and swimming hard in roles that could easily be given up and sunk.”
“There are many ways to increase your income, such as negotiating a raise, getting a promotion, changing employers, learning additional skills, changing jobs, working shifts or overtime, working second jobs, starting a business, etc.”
This retiree has worked abroad like Dubai where the pay is good and the taxes are low, but the downside is that he doesn’t have a good pension and managed to retire without it.
“One of the downsides of working abroad is that you are not eligible for a pension scheme,” explains David.
“I would 100% pay more if I had the chance, because pensions are tax efficient and employers often contribute.
“Not paying your pension plan can be like saying ‘no thank you’ to an employer who gives you money.”
“But I have very little pension, so I had to earn my own income through savings and investments.”
unearned income
David invested instead in rental properties and low-cost exchange-traded funds (ETFs) that provide passive income for him and Sally.
Unearned income is money that you earn without doing anything, such as interest earned from savings or income from investments.
ETFs are stock exchange traded funds that track a variety of investments. This could be a specific market or government bond, or a specific sector such as technology or health.
He said: “I came across ETFs after I retired. My investments can be in literally thousands of different companies.
“I like it because even if one or two companies go bankrupt or do poorly, thousands of others are still okay, so it doesn’t have a big impact.
“I keep my eggs in different baskets, and there are ETFs with very low fees.”
However, it’s worth remembering that returns from investments, including rental properties and ETFs, are never guaranteed and may go up or down.
Anyone who wants to retire early, even if they have a pension, is likely to need a similar form of unearned income when they first leave work.
In the UK, money saved in a workplace pension is kept until at least the age of 55.
However, it will increase to 57 in 2028 and may increase again in the future.
The age to receive the National Pension is now 66 and is £203.85 a week. This will increase to 67 by 2028 and 68 by the end of 2046.
Both spouses are eligible to receive the national pension when they reach the age of 67.
And there are savings. David suggests that anyone planning an early retirement should start saving as soon as possible.
“Automatically set the amount you want to save each month, move it into a savings or investment account as soon as you get your paycheck, and pay yourself first,” he advises.
“Start saving as early as possible and get into the habit, and then as your income grows, so will your savings.
“I was in my late 30s and early 40s when I saved the most.
“Also, if you get a little extra money, like a bonus at work, save it, or at least save most of it.
Stick to your budget and avoid lifestyle disruptions
One of David’s biggest tips for saving for early retirement was to factor in his monthly cost of living and stick to a strict budget.
“Know what you’re spending by tracking your costs (you’ll probably spend less just by doing this),” he says.
“I always log my money a few times a month. I have a spreadsheet and I compare it to the previous month to see where it’s been.
“Budgeting can also help. Focusing on this can help you manage your money and naturally put a brake on your spending, which means you’ll be able to put more money into saving and investing.”
David also reviews his spending on a regular basis. “Without much effort I was able to save money by changing my TV and cell phone package, switch to a cheaper supermarket, start using my shopping list, find a better car insurance deal and change my utility provider.”
Resisting lifestyle disruptions is also important, he says. When your income starts to grow, it’s time to increase your discretionary spending.
“Over the years, our friends tended to have bigger homes and better cars than we did,” says David.
“It was always tempting to keep, but then you would save less.
“We had a bigger house when the kids were home, but when they left, we downsized the house, kept our housing costs down, and kept it reasonable for the number of people in the house.”
The couple owns the house, so there are no rent or mortgage payments.
David estimates that they spend about £55,000 a year on living expenses, but they can cut this down to £35,000 if needed and still enjoy vacations and eating out.
Currently, this comes from rental income, and money from ETFs is reinvested.
The two have £50,000 each in premium bonds.
no regrets
David filed a notice to his employer in January 2016, working part-time for his former employer for six months after leaving the company, calmly relieving himself. He believes this was a beneficial transition.
He also told himself not to panic about money, that he could go back to work and earn again if needed.
He now spends his days biking, running, planning trips, learning French, and drinking coffee with friends, as well as doing jobs like supermarket shopping and ironing so he doesn’t have to do it on weekends.
With the nation’s retirement age set to rise from 66 to 67 between 2026 and 2028, retiring in your 40s may be a pipe dream for many, but quitting a few years early is not an unrealistic goal.
“Perhaps it is reasonable to imagine being active and healthy until the age of 75, which translates to eight years of retirement.
“Retiring one year early gives you nine years of aggressive retirement (12.5% increase), and two years early gives you ten years of aggressive early retirement (25% increase),” David believes.
“It seems far more feasible to retire a year, two years, three years, or four years earlier.
“If I had to choose between retiring for another year at 60 or another year at 90, it would be a no-brainer.
“I chose to retire earlier because I want to retire while I am young and strong enough to do more.
“I’m not lazy, I plan, set goals, stick to routines… most of the time.
“I’m sure these things have made a huge difference in my early retirement success so far,” he says.
“For me, it’s a life with far less stress and more options. Zero regrets. I never miss work, the pressure and stress that comes with it, and I love the new things I do.”
