There’s no one-size-fits-all approach when it comes to planning for retirement. We caught up with three Moneybox customers to find how they’re using Moneybox to save for retirement in a way that suits them. Meet Ben – who started saving a little later – and Sophie and Jemima – who are following the FIRE (Financial Independence, Retire Early) movement.
Ben: “I was a late bloomer when it comes to my pension – now I’m making up for lost time.”
After years of searching for his calling, Ben Pyle finally found his groove as an Electronics Design Engineer. Now he’s able to focus on planning for the future using a LISA.
“I’ve never been great with money and didn’t ever really think about it – I used to think everything would just take care of itself. I hadn’t given my pension a thought until relatively recently.”
“For the past 10-12 years I bounced between a lot of different jobs and didn’t know what I wanted to do, career wise. But I’m glad to have found a job I really like in an industry I want to grow in. That coupled with my recent 40th birthday pushed me to make a lot of changes around money. I’m in the process of buying a house and am paying off debt.”
“When I was teaching, I was asked to hold a class on saving into a pension and planning for retirement. It made me realise how little I knew about it! It was a bit of a wake up call for me.”
“I read the Moneybox blog about the ‘half your age’ rule of thumb [which says that when you first start to save for retirement, you should save a percentage of your pre-tax salary equal to half your age]. For me that’s 20% which I would never be able to save on my own, but found that my employer will increase its contributions to my workplace pension if I do too. So, if I contribute 10% of my pre-tax salary, they’ll contribute 8% – taking me up to 18%.”
“I opened a Moneybox Lifetime ISA before I turned 40 just in case. Since I’m now in the process of buying a home, I’ll use my LISA specifically to save for retirement in addition to my workplace pension. I saw the Moneybox LISA was high up on a few comparison tables, plus the great interest rate and 25% bonus were a big draw for me.”
“I think I’ve left it a little too late to have any major aspirations for my retirement. But as long as I have a roof over my head and enough to lead a modest lifestyle, I’ll be very happy. I’m lucky in that I have lots of options available to me in terms of my job past retirement age. I could work reduced hours, go into teaching, or even do contract work.”
“My advice to anyone thinking – or not thinking – about retirement is to start saving as soon as you can. Even if it’s not much! Also, consider upping your pension savings when you get a pay rise.”
“I love the ease and convenience of Moneybox. It’s really customisable and I can tweak my settings as often as I need. A lot of banks don’t let you do that.”
Learn more about the pros and cons of saving for retirement with a LISA vs SIPP. 👇
Sophie & Jemima: “We’re saving and investing so we don’t have to work past 55.”
Sophie and Jemima are using the Moneybox LISA to work towards their dreams of retiring early.
Why did you start following the FIRE movement?
Sophie: “We became quite interested in the FIRE movement because we’ve seen first hand how being unprepared for retirement ruins peoples lives. My mum was a teacher for years but stepped back to be a Teaching Assistant which meant quite a big pay cut. She doesn’t have any pension savings, she won’t benefit from a teacher’s pension, and the State pension isn’t enough.”
“Jemima’s the more finance-y person, it was her idea to get the LISA and is hot on pensions and everything. We basically don’t want to work any extra time or any longer than we need to, so we’re investing and saving so we don’t have to work past 55.”
Jemima: “When we heard about the whole FIRE movement, we bought and converted a van for £30k and lived on a farm in Warwickshire, then later on a campsite in Cornwall with our pets, so we could save more into our Moneybox LISA. We wanted to pay a significant amount towards the deposit so that our mortgage would be lower and we could pay it off quicker. It’s all part of our plans to retire early.”
Why did you choose to save with the LISA?
Jemima: “The reason we chose the LISA is because of the bonus and the interest rate was really good. You absolutely have to – it’s a free grand! Even your best investments wouldn’t give you a 25% return.”
Sophie: “We’re selling the van because we’ve found our dream home which we’re in the process of buying. It’s so much better than we could have imagined. If it wasn’t for Moneybox we never could have afforded it.”
Jemima: “We used the LISA to save for our deposit and now we’ll use it to save for retirement. The plan is to max out our LISA every year to get the bonus and contribute to a Stocks & Shares ISA every month. Hopefully we’ll retire at 55, or maybe even 50 depending on how our savings go, and live off our investments from then until we can withdraw from our LISA and our workplace pensions. We both work for the NHS, so the employer contributions to our workplace pensions are great.”
Tell us about your retirement goals
Sophie: “Obviously we want to retire early but also don’t want to get our hopes up. The dream is really to be able to live off our investments.”
“Because we work crazy shifts, we don’t get much time to enjoy Cornwall. After a 12 hour shift I come home, cook, eat, then it’s time to go to bed to do it all over again. Hopefully once we retire there will be more time to go on walks and kayak.”
“We’re really into sustainability too so we’d like to get to a place where we’re producing the energy we need with solar panels and to not have to pay for energy. We’d also like to get a little veg patch to grow our own food and maybe even harvest rainwater that we can use to water the plants.”
Do you find the FIRE approach too restrictive?
Jemima: “This is where we disagree a bit. Sophie wants to have more of a life and do more fun things, whereas I just want to know that I only have 20 odd years left of working. I’ll cut back on things like subscriptions and holidays now so that I can enjoy life later.”
Sophie: “Later is a long way away. I like to have a balance of some nice things now as long as we budget for them.”
Important to know
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA
Remember: if you opt for the S&S LISA, all investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.
When investing, your capital is at risk. Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to 57 in 2028).
If you plan to use a Lifetime ISA in place of a pension, you will not benefit from contributions from your employer into your Lifetime ISA.
As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to 57 in 2028).
