Early 30s couple, UK – £110k salary, ~£200k pension, young family. How would you optimise this for FIRE?
Looking for a sense-check on our finances and what people here would prioritise over the next few years.
About us
- Both early 30s
- Me: Started a new role on £110k base + bonus
- Partner: works in healthcare, currently earns around £70k–£80k, and earnings excepted to increase materially over next few years
- One young child, and likely to have another in the next few years
- Based in the North of England
- We'd like the option of retiring or working significantly less somewhere around our mid-50s rather than necessarily pursuing very early FIRE
- Retirement spending target: roughly £50k-£60k in today's money for the household. Once mortgage paid off and children no longer financially dependent.
Current position
- House worth roughly £475k
- Mortgage: around £345k, fixed at just under 4%
- Mortgage payment around £1,500/month
- My pension: roughly £200k, employer matches 10%
- Partner has an NHS DB pension
- S&S ISAs: roughly £66k between us
- Cash reserves currently fairly low at around £3k, although I also have roughly £17k in Premium Bonds from a recent bonus
- Small personal loan: roughly £1,700 at 6%
- No other significant debt
The £100k childcare issue
A big part of my planning at the moment is the UK £100k threshold for Tax-Free Childcare / funded childcare.
I'm making fairly large pension contributions/salary sacrifice to stay below £100k while we're eligible.
My intention is also to put most/all of my bonus into pension where possible.
As a result, my pension could grow quite quickly over the next few years, but I'm conscious that this potentially creates an imbalance between pension wealth and accessible ISA/cash wealth.
House
At some point in the next few years we may move to a more expensive house, potentially somewhere in the £650k–£750k range.
This is one reason I'm questioning how much cash to retain versus investing or overpaying the mortgage.
What I'm currently thinking
My rough priority order is:
- Build a proper cash emergency fund – probably £15k–£20k
- Use pension contributions aggressively while they give me the additional childcare/tax benefit
- Continue building ISAs so we have meaningful accessible assets before pension age
- Avoid aggressive mortgage overpayments for now, particularly while the mortgage rate is below 4%
- Once childcare stops being relevant, reassess the pension/ISA/mortgage split
Questions for the FIRE crowd
Does this overall approach make sense?
In particular:
- Would you prioritise building the cash reserve before adding anything further to the S&S ISA?
- Am I right to prioritise pension heavily while the £100k childcare cliff exists, even though I already have ~£200k in my pension in my early 30s?
- Would you bother with mortgage overpayments at a sub-4% rate, given our age and likely future house move?
- How much emphasis would you put on ISA assets to create a bridge between stopping work and pension access?
- How should I think about my partner's NHS pension alongside my DC pension when planning for FIRE?
- Are there any obvious holes in our FIRE planning?
- Given our current numbers, does retiring or significantly reducing work in our mid-50s look reasonably achievable without living particularly frugally?
I'm not trying to maximise net worth at the expense of enjoying our 30s/40s – we still want holidays, a nice house, etc. I'm more interested in building enough financial independence that work becomes increasingly optional later on.
Interested in what people would do differently.