‘I saved my salary, my mortgage was paid by 32 and then I retired at 43’
By investing his earnings, Barney Whiter works to fill time. He tells Rachel Cocker how he does it
You might imagine it would take a lottery win, City-style casino bonuses or inheriting squillions before anyone like us could retire properly young. It’s the stuff dreams are made of, isn’t it? Well, meet Barney Whiter, 47, who leapt off the corporate ladder four years ago, living out the fantasy of a thousand commuting drones; all while raising three children and without financial windfalls or a one-per-cent salary.
“Saving has always come naturally to me,” says Whiter, who lives with his wife Claire, also 47, and their children aged 11, 14, and 16 in a six-bedroom home in leafy Farnham, Surrey. “I always got the idea of digging a well before you got thirsty.”
Whiter is part of a growing movement called Financial Independence, whose adherents will do what it takes to achieve freedom from worrying about money. These supersavers are the subject of a new Channel 4 programme How to Retire at 40, offering tips from families who are on their way to financial freedom, or like Whiter, already there.
While some of the show’s tips – watch every penny, stop buying Christmas presents – are not in themselves enough to become rich, Whiter’s approach is more focused: “How can you find a way to lead a good, middle-class lifestyle without the pain of a long career?
“I’ve certainly drunk my fair share of champagne,” he adds, “and had the hangovers to prove it. I haven’t lived like a monk. But once I had children, my perspective changed, and anyone with accountancy training who’s financially literate can see that if your lifestyle constantly inflates with your salary, you can never achieve independence.”
Whiter, who now writes a money saving blog, theescapeartist.me, “couldn’t help but think about what one would gain if you stashed away your salary and compounded it. Compound interest is the most powerful force in the universe.” Whiter recalls his parents being affected by the high interest rates of the Eighties. “They had a big mortgage and were leveraged to the hilt. I remember them cancelling holidays and newspapers. I had an awareness that running out of money is an issue, and borrowing it is dangerous.”
After studying economics at the University of Nottingham, he trained as an accountant with Coopers & Lybrand, and later found work in London at a management consultancy. But rather than adopt the City slicker approach to life – the odd bottle of bubbly aside – Whiter kept to his frugal instincts, renting in Bethnal Green, which was then “properly rough and edgy” and cycling to work.
“I was never a trader or a master of the universe; I never earned hundreds of thousands in bonuses. But I was amazed at how many people were earning half a million a year and had nothing to show for it.”
His determination to “squirrel away” was supported by his wife. Together they moved up the property ladder, from a tiny flat in Battersea in 1996 to their current home, each move planned around proximity to excellent state schools. Their mortgage was paid off at 32. But there have been moments of marital tension: “My wife is more ‘normal’ than me, saying: ‘Why be the richest man in the graveyard? Everyone else is having their kitchen done, why can’t we?’ But I have always stuck to my belief – there is a payback in deferring gratification. It is the mindset of a marathon runner. You endure discomfort so you can win.”
He won’t disclose his salary (“unexceptional to a middle class professional in London”) but saved about 55 per cent of his post-tax income a year in cheap funds that track the stock market offered by Vanguard, an American investment company. The portfolio has delivered about 12 per cent a year for the last 19 years, with compound interest doubling it every six years. “This can seem quite boring for the first few years. After that, as the snowball gathers speed and size, it becomes pretty interesting.”
So focused was Whiter that when he reached 43, “I kind of realised I had saved enough up over the years not to need to work again, so I stopped.”
And it is this, he says, that is the really hard bit, citing One More Year Syndrome, “when people say they can’t leave a job they don’t like because now is the wrong time, given their share options, bonus, whatever.”
He now finds fulfilment in spending more time with his children, cycling holidays, and advising others on matching his achievement. They live on the dividends from his savings, although Claire (formerly a full-time mum) recently took a part-time book-keeping role for a local company.
“Like anyone else, we still need things to do with our time. But work is now optional not compulsory. This has freed us to do things that are fun or meaningful, but low-paid.”
So what advice does he have for us? “The key metric is what percentage of your post-tax income are you able to save and invest,” he says. “If you can save 50 per cent, it will take 19 years to go from broke to never needing to work again. At 75 per cent, only seven to eight years.
“Obviously it is easier to save half a salary if you are on £100,000 than on £20,000. But plenty of people in the City were earning much more than I was – and they are still there, because they spend what they earn.”
First, there are some pretty tough lifestyle decisions to consider: “Ask yourself, do I want a job I love, rather than a well-paid one? How do I feel about cars? Do I want children?”
You can still have a good life; you just need to get smart. “If I wanted to take my family to Europe in August, even Ryanair flights would cost £500 a head. Instead, we drove to Croatia (in their second-hand Skoda) on £100 of petrol, staying in a Travelodge-type place in Germany en route.
“You need to take this attitude with everything – how can I chip away at the cost? Replicate this across your life and the savings rack up.”
How to Retire at 40 is on Channel 4, Monday July 10, 8.30pm