We're going to retire when we're 40 and our kids will NEVER have to work a day in their life – here’s how | The Sun

A COUPLE plan to save so much money they can retire at 40 – and their kids never have to work a day in their lives.

Toby Evans, 34, and his partner Leah, 32, have set themselves up to rake in some serious cash to cement intergenerational financial freedom.

Firstly, they have chosen to send their daughters Arabella and Aurora to state school rather than forking out for private education.

This will save them about £28,000 a year – the average annual fees for two children – totalling almost £400,000 over 14 years.

They have also purchased four buy-to-let properties, but won't touch the rental income from any of them until they're ready to buy more.

Once they've saved up, Toby and Leah hope to buy two new homes a year with the cash, and by releasing equity from existing properties, so by the time their children grow up, it will provide a steady income for them.


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Financial adviser Toby, from Poole, Dorset, told The Telegraph: "The idea is our retirement plans won't involve the properties.

"That income can be diverted straight to our daughters to afford them, at say 25, to have financial independence as well.

"So we can have them with us in our early retirement."

On top of their property portfolio, the couple put up to £4,000 a month – about half of their combined salaries – into pensions and ISAs.

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They plan to up this to around £6,000 in five years in line with inflation and salary increases.

While they won't be able to touch their pension pots until later, they can withdraw the money from their ISAs at any time.

Toby and Leah maintain two investment pots – a rainy day fund of £40,000 held with two conservatively managed listed investment trusts, and a mix of actively-managed funds and cheaper index funds that track the performance of a stock market.

And while Toby says this is a low-risk strategy, he knows they can fall back on their private pensions.

Teacher Leah is a member of a defined benefit (DB) scheme which pays out a set amount each year depending on length of service and salary, and increases roughly in line with inflation.

Leah, who will be able to draw from the pot in her 50s, should be able to get 25 per cent tax free and the rest in regular payments.

Her husband has a different setup with his workplace pension.

For long-term wealth there's no other way.

As well as matching the four per cent his employer contributes under auto-enrolment, he uses the company's "salary sacrifice" scheme which involves workers agreeing for a chunk of their earnings to be put into a tax-free benefit.

Often this is childcare vouchers, gym, membership or a cycle to work scheme, but some employers, like Toby's, allow you to put it towards your pension.

One of the main advantages of this is that you pay less in National Insurance, and the full amount you've sacrificed will be put into your pension.

This is because as you are earning a lower salary, so both you and your company will pay less in National Insurance Contributions (NIC) – and it means that your take home pay will actually be higher.

How much National Insurance you pay depends on how much you earn per week or month.

Toby also pays in an additional £2,000 a month, and he and his wife have agreed to contribute all future pay rises and bonuses into their pensions, adapting for the rising cost of living.

They will do this until they hit the annual pension contribution allowance limit, before turning to their ISA allowances.

What are the different types of pension?

WE round-up the main types of pension and how they differ:

  • Personal pension or self-invested personal pension (Sipp) – This is probably the most flexible type of pension as you can choose your own provider and how much you invest.
  • Workplace pension – The Government has made it so it's compulsory for employers to automatically enrol you in your workplace pension, unless you choose to opt out.
    These so-called defined contribution (DC) pensions are usually chosen by your employer and you won't be able to change it. Minimum contributions rose to 8% in April 2019, with employees now paying in 5% (1% in tax relief) and employers contributing 3%.
  • Final salary pension – This is a also a workplace pension but here, what you get in retirement is decided based on your salary, and you'll be paid a set amount each year on retiring. It's often referred to as a gold-plated pension or a defined benefit (DB) pension. But they're not typically offered by employers anymore.
  • New state pension – This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £179.60 a week and you'll need 35 years of national insurance contributions to get this. You also need at least ten years' worth of national insurance contributions to qualify.
  • Basic state pension – If you reached the state pension age on or before April 2016, you'll get the basic state pension. The full amount is £137.65 per week and you'll need 30 years of national insurance contributions to get this. If you have the basic state pension you may also get a top-up from what's known as the additional or second state pension. Those who have built up national insurance contributions under both the basic and new state pensions will get a combination of both schemes.

The pension allowance is the maximum amount you can save into all your pensions combined without incurring a potentially hefty tax charge.

This includes personal, workplace and defined benefit schemes, but excludes your state pension, and is capped at £40,000 a year.

The total amount you can save in in a fixed-rate ISA in a tax year is £20,000.

Once Toby and Leah hit the £1million mark in savings, they will formally retire.

And they hope by working hard now to save for their own future, they will secure their children's as well.

They see their approach as relatively simple and pretty low-risk, steering clear of more unpredictable investments like cryptocurrency.

But it is really only attainable if on higher salaries like them.

Many families are currently grappling with a cost of living crisis, which is forcing them to cut back on essentials – and saving any money each month is a luxury.

The couple do, however, want to emphasise that however people approach their future, they need to be flexible.

"We're investing less during Leah’s maternity leave because we still want four nice holidays in foreign countries and the girls to go to quality childcare," Toby said.

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"We won't live like kings but won't need to buy the £3 wine when we want a £15 bottle.

"For long-term wealth there's no other way."

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