Matt is age 37, earns about £48,000 a year after tax and has a self-invested personal pension (Sipp) worth £125,400. His home is worth about £430,000, but he jointly owns it with a friend, so his share is worth £215,000. He and his friend have a joint mortgage of £340,000, so he owes £170,000. Matt and his wife have a joint account into which they contribute equally every month for paying bills, the mortgage and other joint expenses, but otherwise keep their finances separate.
Sipp and Isa invested in shares, cash, residential property.
Retire at 57, income from investments in retirement of £20,000 per year, total return of 15 per cent a year, use up pensions lifetime allowance.
“I appreciate that it’s ambitious, but I’m aiming for an annual average total return of 15 per cent a year until I'm age 57, to take the value of my Sipp up to the pensions lifetime allowance limit," says Matt. “I will put any money I have to invest beyond this into my individual savings account (Isa), which is currently worth about £14,000. When I reach age 57, I plan to move a portion of the portfolio into higher-yielding shares and/or an equity income index fund to provide an income in today’s money of around £20,000 a year.