Friday, 19 February 2016

How I plan to become Financially Independent in 10 years

In my last post, where I shared my 2016 goals, I set myself a task to create a "FI before 50 Roadmap" containing the steps I need to take to become financially independent before reaching the age of 50 (giving myself just over 9 years to achieve FIRE). This is because my ultimate goal is to:
"Gain the freedom to choose what I use my time for, removing the necessity of doing work that does not inspire me simply because it pays the bills"

In today's post I lay out the roadmap I have created. As with all good plans, I'm sure that changes may be necessary along the way, so I'll revisit the roadmap to make adjustments if I feel that something is not working to get me to my ultimate goal.


I would like to begin with defining what I mean by Financial Independence. Here's a quote from wikipedia which describes it more eloquently than I would be able to:
"Financial independence  is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses."

In order that I can stop working at age 49 (just over 9 years from my starting point in Feb 2016), my strategy will be to save and invest money over the next 9 years 3 months into a mix of:
  • My Freedom Kitty - comprising personal saving and investment accounts (Stocks & Shares ISAs, high interest savings accounts etc)
  • My Personal Pension

Just before my 50th birthday I will be able to consider myself Financially Independent. This is because I will be able to use my Freedom Kitty to support me for the 7 years until I reach age 57 when I'm permitted to start drawing my Personal Pension. In doing this I will effectively be depleting the Freedom Kitty (it won't be large enough to support an income from the return on investments), but this approach will satisfy my ultimate goal of early retirement and is more achievable than trying to build the Freedom Kitty up sufficiently to generate enough income to allow it not to be diminished when I start withdrawing.

By age 57 my Personal Pension will be large enough that it can cover my annual expenses from the return on investments, so I can enter into Income Drawdown without depleting the underlying funds.

FI Before 50 Roadmap
In order to achieve my goal of retiring before 50 I need the following financial targets to be met:

Freedom Kitty must reach £209,590 by Jun 2025 (age 49)

  • I anticipate achieving this by saving £1,554 per month

Personal Pension must reach 
£364,965 by Jul 2032 (age 57)

  • I anticipate achieving this by saving £1,180 per month

This results in a total monthly saving goal of £2,734

This plan assumes that any mortgage commitments are paid off by my age of retirement (57). 

The most difficult part of this plan will be achieving the saving rate of £1,554 per month into the Freedom Kitty. I am only just starting on my journey to FIRE in some respects, I have not yet learned how to achieve a high savings percentage so this will be my biggest challenge.

The pension savings target is definitely achievable for me, I am saving more than this per month at present (£3,000 per month). This is possible because I have been freelancing with my own business for 4 years and have built up a pot of funds in my company account which I am using to max out my pension contributions. However the ability to pay this much into my pension depends on the frequency of contract assignments I work on and the rate I am able to charge for this work.

Do you have a strategy and roadmap to get you to a FIRE goal? Do you have a similar situation to mine, where you already have significant funds in a pension pot which you'd like to factor into your FIRE calculation? I'd love to hear of your FIRE plan!


  1. Hi there! It sounds like you have a good plan. I'm assuming you don't have any debt? Our plan is to achieve financial semi-independence because we still have a lot of debt to pay back. We will still work, but on a part-time basis, doing things that we enjoy.

    1. Hi Harmony,

      I should probably have mentioned my current financial start-point in this post - I didn't think to do that. I am very fortunate to have no debt or loans to repay other than my mortgage. I have a mortgage on my house (which I'm currently trying to sell in order to buy a new one with my boyfriend), which has about £124,000 left on it to be repaid. My calculations assume that I will be paying a mortgage off until age 57, which means when we buy a new house we ideally need to get a 16 year mortgage (I think that's achievable).

      I have had debt in the past though, an overdraft of £1,500 and credit cards built up to about £3,000. I managed to pay them off by a process of shifting the debt to interest free credit cards, not spending any more on the credit cards, and slowly but surely paying as much as I could each month to clear the debt. It takes time, but I know that it is possible because I have done it.

      I wouldn't be adverse to doing some amount of part time work once I reach FI, as long as it's a type of work that I choose to do because I love it, rather than feeling like it's work I need to do because of the income it generates.

      I've just popped over to take a look at your blog and will definitely be adding it to my reading list! Thanks for stopping by to take a look at mine.

  2. Hey there!

    Thanks for commenting on my blog. I see you also have a big goal you are trying to reach! My husband and I are hoping to retire early, too. I have a defined benefit pension, which always makes our calculations a little more challenging. We'll probably retire between ages 45 and 55, depending on whether or not we have kids, and how frugally we can raise them if we have them.

    1. Hi Ms. 2016!

      It was great to find your blog today, I think it's a great idea for writing about. I need to think about letting go of a few things myself, especially with a house move coming up sometime this year!

      Although it may make your calculations for becoming FI a little trickier, my understanding is that having a defined benefit pension is a good thing. I think they're quite rare these days, so good for you that you have one!

      Mixing kids into the equation is always going to make calculating a possible FI date difficult. It's also something which may be a consideration for myself and my BF, but since this is by no means a given I'm working out a plan as things currently stand. I can always reassess it if circumstances change. Being able to retire between 45-55 is a great goal to have, and ahead of the norm for a vast number of people out there.

      I wish you luck with your 2016 mission and your early retirement goal. Thanks for stopping by and saying hello!

  3. Hi! Nice to meet you at the FIRE Escape, although sad we did not get to soak to you properly. Next time! Nice to get round to reading your blog. It's ace to have a plan for early retirement! Ours is a slower plan, as we have two kids, but should still hope to be FI in about 15.5 years!


    1. Hi M,

      It was lovely to meet you too, sorry it was so short. Having a plan to be FI in 15.5 years sounds like a great plan if you have kids - it must be more difficult with kids to pay for. It's been great coming up with and consolidating a plan through writing about it on my blog - it's nice to feel that there's a roadmap which if I follow it I'll definitely achieve my goals!

      Best of luck with your FI goal and I'll keep an eye on There's Value for when you do another post...