
At Lexington Wealth, we believe that a great life doesn’t happen by accident, it’s created by design. That’s the philosophy behind The Money Plan, and it underpins everything we do. One of the most powerful decisions you can make is to give your future self-options, especially when it comes to retirement.
With the cost of big-ticket items like university fees, childcare, and housing continuing to rise, not to mention saving for shorter-term goals along the way, it’s easy to feel like retiring in your 60s is an achievement. Retiring earlier than that? It might seem out of reach.
There’s a mindset I often encourage; don’t assume you’ll want to work forever. Life has a way of changing and relying on being able or willing to work into your late 60s or 70s can be risky. Instead, aim to give yourself the option to retire earlier, even if you never choose to take it.
One of the most compelling illustrations of this comes from American financial author David Bach, who popularised the 50–20–10 formula: save £50 a day, invest it for 20 years, and earn a 10% annual return, and you’ll accumulate over £1 million.
Now, let’s be clear, £50 a day is roughly £1,500 a month, which is a serious commitment. But if early retirement is on your wish list, you’ll need to be just as serious about saving and investing. Many early retirees manage it not because they earned millions, but because they consistently saved a significant portion, often over 50%, of what they earned.
And it’s not all about the 10% return. Yes, that’s a long-term historical average for equity markets, but returns vary year to year. What matters most is that you start early, stay consistent, and keep your money invested for growth.
This is where I see many people trip up: they save, but they park their money in cash ISAs or NS&I accounts earning 2-3%. While that might feel ‘safe,’ it won’t deliver the growth you need to build lasting wealth. As I write in The Money Plan, wealth-building requires your money to be working, in a pension, investment portfolio, or other growth-focused vehicle.
So, how much is enough? That depends on you. What does your retirement look like? Will you travel? Stay local? Support children or grandchildren? As a rule of thumb, you need 300 times your desired monthly income – so, if you wanted £2500pm then you need £750,000. Your vision shapes the target. But with a clear plan, the right habits, and a focus on long-term investing, early retirement becomes a choice, not a fantasy.
At Lexington, we’re here to help you plan for that life, on your terms, and on your timeline. If you would like to discuss this further, please contact us.