My Revised Roadmap To Freedom for 2017

Last February I formulated my strategy for how to achieve retirement by the time I'm age 50. In my Roadmap to Freedom I set out the savings goals I would need to achieve on a monthly basis.

I think it's important to revisit this Roadmap frequently to make sure that I'm still on target with my savings each month. This post is the result of my 2017 review.

I have revisited all my calculations from last year, including:

• My expense projections considering:
• Ages 50-57 (the ages between which I'll be retired but won't yet be able to draw my Personal Pension)
• Ages 50-62 (the ages between which I'll be retired and still have mortgage repayments to make)
• Age 62+ (when I'll be mortgage free)
• The current value of my Freedom Kitty and my Personal Pension

So without further ado, here is my revised Roadmap for 2017 onward...

FI Before 50 Roadmap

Freedom Kitty  must reach £190,000 by Jun 2025 (age 49) 

•    To be achieved by saving on average £1,268 per month from February 2017 - May 2025 (assumes 4% interest)

Personal Pension must reach £446,300 by Jul 2032 (age 57) 

•   To be achieved by saving on average £1,090 per month from March 2017 - May 2025 (issues 5% interest)

This results in a total average monthly saving goal of £2,358

My FI Before 50 Roadmap suggests that I need to save a total of £2,358 each month until June 2025. This splits out across my Personal Pension as £1,090 and my Freedom Kitty as £1,268 per month. The amounts I actually want to set as my saving targets for 2017 have been slightly adjusted from those suggested in the Roadmap:

SAVINGS TARGET

Freedom Kitty - £1,666 per month

Personal Pension - £1,000 per month

Equals TOTAL Savings Target: £2,666 per month 

(£308 more per month than the Roadmap states is needed, but split differently across the 2 savings pots)

Although my 2017 pension target is £90 per month lower than the Roadmap suggests, it is hoped that the fund will grow by at least 5% per year. Furthermore, savings into my Freedom Kitty are planned to be approx. £480 per month higher than the Roadmap requires, any excess in my Freedom Kitty can be used to supplement my Personal Pension if it has not met the required amount by age 57. The reason for paying more into the Freedom Kitty is to maximise the new £20,000 ISA allowance in 2017/2018.

I feel very confident in being able to achieve the Personal Pension target. The Freedom Kitty target will be more of a challenge, but I'm going to give it my absolute best shot.


Have you set any financial targets for 2017? I'd love to hear of them, let me know in the comments...

Portfolio Value and Net Worth - March 2016

Each month I publish the following regular progress updates toward achieving my second goal for 2016 which includes the pursuit of Financial Independence:
1. Portfolio Value and Net Worth as it stood at the end of the previous month
2. Income, Expenses and Savings achieved for the previous month
3. My Investing Choice for the previous month's savings

This post covers point 1 above: Portfolio Value and Net Worth at the end of March 2016.

Portfolio Value - end Mar 2016

My portfolio includes the savings and investments in my Freedom Kitty as well as my Personal Pension, the combination of which make up my "FI Before 50 Roadmap".

FREEDOM KITTY
Here is the end of month value of my Freedom Kitty:

As you can see the total amount I'd invested into my Freedom Kitty by the end of Feb was £1,200. In March with the ISA year end looming I managed to contribute a whopping £14,810.53 in order to max out my ISA allowance for the year.

The reason I was able to do this was because I sold my flat (which I had owned since 1999) earlier this year and I made some profit (after putting aside money to cover what I anticipate will be the capital gains tax liability). I have had the money from the flat sale sat in my current account while I decided whether I would likely need it for my upcoming house purchase with TheBF. As we progressed through March it became evident to me that I should be able to use some of the money to pump into my ISA without causing us any problems with the house purchase (mostly because we're using our mortgage to cover up-front costs).

I'd also not yet invested the money I'd saved for the Freedom Kitty in January and February so these contributed to the figure. So the money I was able to put into my ISA in March broke down as follows:

• Flat sale profit - £12,135.00
• Savings from January - £678.78
• Savings from February - £1,048.22
• Savings from March - £948.53
• TOTAL - £14,810.53

Within the 2015/2016 tax year I have paid a total of £16,010.53 into my St. James Place ISA. The ISA allowance for the year is £15,240, which means that the up-front fees for my ISA came to £770.53, which looks to be an initial fee of 5%. I don't yet have a benchmark to compare this up-front fee against, but I will certainly be paying a lot more attention to both up-front fees and ongoing fund fees from now on.

Due to the up-front fee, the current value of my ISA is less than the total amount I have invested by -£706.53, I'm hoping to see this deficit disappear over the course of the coming year, but who knows what may happen!

I have decided to consider an alternative ISA provider for the 2016/2017 tax year, so I've got some research to do in order to pick a good one!

Here's how the Freedom Kitty is tracking for the year - I've set myself a target of £23,000 for this calendar year (Jan-Dec 2016):

At 66.54%, I'm now about two thirds of the way to achieving my Freedom Kitty goal for 2016 with 9 months still to go. Though of course I have been helped along the way to this target by the money from my flat sale.

Here's how the Freedom Kitty is tracking against the overall target of £209,590:

It's particularly satisfying to see the percentage for my overall Freedom Kitty target shoot up from 0.54% to 7.3%. With 9 years 3 months to go until my desired FIRE date, I think this is a healthy percentage to be at. If I can manage 10% of the way to the £209,590 target by the end of the year I'll be very happy.


PERSONAL PENSION
Here is the end of month value of my Personal Pension:

In March the monthly pension contribution from my business account was £3,000 again. This is great because my monthly target is £2,000. As I mentioned last month, I'm not currently working on a contract so there's no income into my business account due in March. I've decided to postpone starting a new contract until after we've moved house, which means it's likely that my business account will not have any sales income until August. For this reason I have asked my financial advisor to reduce my company's pension contributions to £1,000 per month with this change taking effect in May. However, for now at least, I'm ahead of schedule for achieving my pension contributions target this year.

Here's how the Personal Pension is tracking for the year - I've set myself a target of £110,000 for this year:

I've got about 65% of the way still to go to hit my pension target for this year. My ability to achieve this target looks like it will really hinge on how soon I secure a work contract after our house move.

Here's how the Personal Pension is tracking against the overall target of £364,965:

I've achieved 24.59% of my overall target for my Personal Pension goal, next month I should hit a nice milestone of 25%, and that will feel good!

Net Worth - end Mar 2016

I don't include assets such as car, valuables or house sundries in this calculation - it's really only the big or purely savings items I choose to include. The credit card debt listed is my monthly spend which I always pay off in full each month by direct debit. This month sees an increase in my Net Worth of £4,007.66 since last month, a nice increase largely fuelled by my pension contribution I suspect.

Overall March was a very positive month for me in terms of my increasing Portfolio Value and Net Worth. The challenge now is to keep up the good work, which could be tricky with the big house move fast approaching and the uncertainty over when and what my next paying contract will be.


How's your net worth looking at the end of quarter 1? How are your portfolios fairing with the recent turbulent times in the markets? As always I'd love to hear from you and appreciate your comments...

Portfolio Value and Net Worth - February 2016

Each month I will be publishing the following regular progress updates toward achieving my second goal for 2016 which includes the pursuit of Financial Independence:
1. Portfolio Value and Net Worth as it stood at the end of the previous month
2. Income, Expenses and Savings achieved for the previous month
3. My Investing Choice for the previous month's savings

This post covers point 1 above: Portfolio Value and Net Worth.

Portfolio Value - end Feb 2016

My portfolio includes the savings and investments in my Freedom Kitty as well as my Personal Pension, the combination of which make up my "FI Before 50 Roadmap".

FREEDOM KITTY
Here is the end of month value of my Freedom Kitty:

This includes my regular £150 contribution to the ISA for February, but does not include any additional money I've managed to save during February - that will be invested in March and so will show up on the March Portfolio post.

As you can see, the current value of my ISA is less than the total amount I have invested so far (by £67). I think that the reason for this is due to the current state of the markets, though I also think that the fees involved with investing through St. James Place are playing a part. I'm a complete newbie to investing and so last year when opting to start saving into a Stocks and Shares ISA I chose St. James Place because I have no idea how to invest (and they already manage my pension). I am planning on reviewing my options for the 2016/2017 ISA year.

Here's how the Freedom Kitty is tracking for the year - I've set myself a target of £23,000 for this year:

Here's how the Freedom Kitty is tracking against the overall target of £209,590:

So I'm just under 5% of the way to achieving my Freedom Kitty target for 2016, and 0.5% of the way to achieving the overall target! Still a long way to go, but it feels great to have made a start, and even better to be tracking my progress on here.


PERSONAL PENSION
Here is the end of month value of my Personal Pension:

At the moment the monthly pension contribution from my business account is £3,000. I have been out of a work contract since the beginning of February 2016 so there is a chance that the monthly pension contributions will be reduced from April if I do not take another contract until later in the year. This will really depend on my work circumstances. For now I'm making great progress with my goal to save £2,000 per month this year.

Here's how the Personal Pension is tracking for the year - I've set myself a target of £110,000 for this year:

So I've got just over 82% of the way still to go to hit my pension target for this year.

Here's how the Personal Pension is tracking against the overall target of £364,965:

At 23% of overall target I'm edging toward being a quarter of the way to my Personal Pension ultimate goal, that feels pretty fantastic. The money in my pension pot has been accumulating over time (to varying degrees) since I was about 25 which means it's had 15 years to reach its current value. Despite nearly being at a quarter milestone I need to continue to push for a high savings rate if I'm to achieve my goal of reaching Financial Independence in 10 years time.

Net Worth - end Feb 2016

I've included the outstanding balances on my credit cards in this calculation. I choose to use credit cards for my every day spending because I earn cashback on them and there is no annual fee (American Express and Barclaycard). I have direct debits set-up to pay these amounts in full each month, and once a year I get a nice little payback from them. I also have a Halifax Credit Card but this is only used when I travel abroad as it offers a decent exchange rate and no fees.

I've found it a really interesting exercise working out my Net Worth, it's something I've never done before so it's nice to know the current total. I've purposely not included any assets such as car, valuables or house sundries, it's really only the big or purely savings items I wanted to include. I'm happy with a current net worth of £225,225 and it will be interesting to see how this figure changes in what promises to be a year of change for me - selling my current house and buying a new one with TheBF.

Well, it feels like this has been quite a long post! I'm hoping that it's been interesting for you to read - I've certainly found it useful compiling it and I'm looking forward to seeing how the figures change each month.


Do you think this post has just about the right level of detail in it, or too much/too little? Is there any information I've not included concerning portfolio values which you'd like to see? Do you track your net worth? As always I'd love to hear from you and appreciate your comments...

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.

Strategy

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!