How does this financial situation look long term…
Discussion
The last few years has created a big problem for many. If it's all about 'disposable' income in retirement then the recent above trend inflation, higher interest rates, higher asset prices, higher goods/services prices, etc, has created a much bigger divide between those who can absorb it, and those that have to downgrade their lifestyle / expectations or have to work for much longer. One thing is for sure and that it's grim reading for many more today than it was 5 years ago.
IJWS15 said:
Should have asked the question 10 years ago……
You should get state pension at 66 if that helps.
This, I am 50, it is over the last few years that I have realised that if I don't want to he working forever I need to start planning my exit strategy from the world of work. If I am honest I feel like even this is too late and I am nowhere near where I should be.You should get state pension at 66 if that helps.
I should really be at the point where I no longer have a mortgage and am putting 50% of my salary into my pension.
A divorce and life got in the way so I am doing the best I can with the working years I have left.
For me the cornerstone for everything is to have a house fully paid for and a decent amount in a private pension.
I am trying to catch up, I am overpaying my mortgage by 10% a year and putting 25% of my salary into my pension. Once the mortgage is paid off I will be putting the 50% in.
No nice cars for me anymore, every spare penny either goes on the mortgage or into my pension.
If I were you I would move somewhere I could buy a little house outright rather than effectively spend it all on rent and hoping it lasts long enough.
ThingsBehindTheSun said:
I am trying to catch up, I am overpaying my mortgage by 10% a year and putting 25% of my salary into my pension. Once the mortgage is paid off I will be putting the 50% in.
okgo said:
Highlights the impending crisis nicely then. OP despite not being in a good position still miles ahead of most.
I think the issue for the OP is the pending dramatic downgrade in lifestyle from £130k to £20k per annum. Many are worse off but will already be living a frugal life. Stop the ISA. Pile £60k per annum into pension for five years. Have a more balanced investment strateg within the pension. Buy a place to live with the 25% tax free from the pension plus the existing ISA.
mike9009 said:
I think the issue for the OP is the pending dramatic downgrade in lifestyle from £130k to £20k per annum. Many are worse off but will already be living a frugal life.
Stop the ISA. Pile £60k per annum into pension for five years. Have a more balanced investment strateg within the pension. Buy a place to live with the 25% tax free from the pension plus the existing ISA.
Yep. As we saw on that ‘how much you need thread’ many will be used to earning well but have the pension pot of someone on minimum wage Stop the ISA. Pile £60k per annum into pension for five years. Have a more balanced investment strateg within the pension. Buy a place to live with the 25% tax free from the pension plus the existing ISA.
Deep Thought said:
I'd be looking at using that lump sum to buy a house somewhere.
Doesnt even have to be somewhere foreign theres many places outside of London where £150K would buy you something quite palatable.
Grimsby or somewhere in Spain? HmmmmDoesnt even have to be somewhere foreign theres many places outside of London where £150K would buy you something quite palatable.
In seriousness though, the other big plus is around council tax/utilities and more day to day costs of living.
Shnozz said:
Grimsby or somewhere in Spain? Hmmmm
In seriousness though, the other big plus is around council tax/utilities and more day to day costs of living.
I know that was tongue in cheek but there are many very nice areas that would have houses and apartments in that price range.In seriousness though, the other big plus is around council tax/utilities and more day to day costs of living.
That still keeps someone on the same land mass as family and friends which may or may not be important.
Yes, personally we may look to sell up and move to Spain. That said there's any amount of properties here in NI along the North Coast, Bushmills, Giants causeway area we could move to and pocket and still pocket a lump sum from the downsizing.
Moving to Spain had it's merits for us but there are downsides too.
Deep Thought said:
I know that was tongue in cheek but there are many very nice areas that would have houses and apartments in that price range.
That still keeps someone on the same land mass as family and friends which may or may not be important.
Yes, personally we may look to sell up and move to Spain. That said there's any amount of properties here in NI along the North Coast, Bushmills, Giants causeway area we could move to and pocket and still pocket a lump sum from the downsizing.
Moving to Spain had it's merits for us but there are downsides too.
I completely take on board your points but would also suggest it’s very easy, and with some flexibility in retirement of when you travel, very cheap to travel from Europe to a mass of U.K. areas. That still keeps someone on the same land mass as family and friends which may or may not be important.
Yes, personally we may look to sell up and move to Spain. That said there's any amount of properties here in NI along the North Coast, Bushmills, Giants causeway area we could move to and pocket and still pocket a lump sum from the downsizing.
Moving to Spain had it's merits for us but there are downsides too.
Quite often it’s cheaper for me to fly on a budget airline from my place in Spain to, say, London or Leeds or Manchester etc for less than it would cost me to take a train from one place to another in the U.K.
Inter-European travel is plentiful and cheap. Trains and our roads are expensive and crap
I appreciate foreign lands aren’t for everyone, however. Many also seem to have concerns on healthcare abroad when they get into later years.
okgo said:
trickywoo said:
It sounds a ridiculous amount of money but it’s the reality in this country. Depending where you live in the country it could easily be over £1m and you are not living that well even then.
Obvious solution as others have said is to move to another country where you get more for your money.
Highlights the impending crisis nicely then. OP despite not being in a good position still miles ahead of most. Obvious solution as others have said is to move to another country where you get more for your money.
Collapsing home-ownership rates amongst the young means there’s going a whole pile of middle-income people reaching retirement age without owning a home outright. They’ll have a pension (thanks to auto-enrolment), but it won’t be nearly enough to pay the rent.
brickwall said:
It also highlights the other ticking time-bomb of low home ownership (/high house prices). The OPs situation is going to start becoming a lot more common.
Collapsing home-ownership rates amongst the young means there’s going a whole pile of middle-income people reaching retirement age without owning a home outright. They’ll have a pension (thanks to auto-enrolment), but it won’t be nearly enough to pay the rent.
Presumably means tested benefits will help here at the cost of yet higher government spending/taxation. Yet another downside of insanely inflated house prices :-(.Collapsing home-ownership rates amongst the young means there’s going a whole pile of middle-income people reaching retirement age without owning a home outright. They’ll have a pension (thanks to auto-enrolment), but it won’t be nearly enough to pay the rent.
OP, to put your situation into perspective I am 64, we have SIPPs worth around 400k which the providers say would convert into around 20k a year non-indexed pension. But that is not our only income, we have DB pensions and own our home (mortgage free). I have never earned 100k a year.
You need to look seriously at what you will need to live on after retirement, what income your current savings will generate, and how you can cover the shortfall.
Don’t assume you won’t see your 90s as you don’t want to run short although we tend to need/spend less in our eighties.
You need to look seriously at what you will need to live on after retirement, what income your current savings will generate, and how you can cover the shortfall.
Don’t assume you won’t see your 90s as you don’t want to run short although we tend to need/spend less in our eighties.
Shnozz said:
I completely take on board your points but would also suggest it’s very easy, and with some flexibility in retirement of when you travel, very cheap to travel from Europe to a mass of U.K. areas.
Quite often it’s cheaper for me to fly on a budget airline from my place in Spain to, say, London or Leeds or Manchester etc for less than it would cost me to take a train from one place to another in the U.K.
Inter-European travel is plentiful and cheap. Trains and our roads are expensive and crap
I appreciate foreign lands aren’t for everyone, however. Many also seem to have concerns on healthcare abroad when they get into later years.
The problem with Europe for retirement is the need to show income levels & private health insurance. Having a place in Spain I’ve been looking at the options around the 90/180 rule & frankly unless I commit totally to Spain none of them are attractive post Brexit. The income requirements are actually high for Mr Average Brit. Quite often it’s cheaper for me to fly on a budget airline from my place in Spain to, say, London or Leeds or Manchester etc for less than it would cost me to take a train from one place to another in the U.K.
Inter-European travel is plentiful and cheap. Trains and our roads are expensive and crap
I appreciate foreign lands aren’t for everyone, however. Many also seem to have concerns on healthcare abroad when they get into later years.
Its probably not so different in much of Europe
GT03ROB said:
The problem with Europe for retirement is the need to show income levels & private health insurance. Having a place in Spain I’ve been looking at the options around the 90/180 rule & frankly unless I commit totally to Spain none of them are attractive post Brexit. The income requirements are actually high for Mr Average Brit.
Its probably not so different in much of Europe
True enough for many that are destitute but in the OP’s case it makes a more compelling argument only because he will be relatively cash rich but asset poor at retirement age. As he pays rent and bills in the U.K., as well as the higher costs of living, he will become cash poor and asset poor. Its probably not so different in much of Europe
Healthcare insurance can be had for less than £100 pcm and what do you need in the bank for a NLV now? As a couple I think it’s about £35k year one and then double that for years 2-3 and 4-5.
Eminently doable for the OP but, again, appreciate its not for all. If I was in a similar position, however, I would be very tempted rather than rent a property in a country expensive to do so. Makes sense when employed given U.K. wages and opportunity, but beyond retirement I can’t see why you’d diminish a no longer filling finite pot of money in renting there.
I’ll probably do 50/50 in the future as a lifestyle choice, but don’t have to worry about paying rent. Spanish tax is what largely puts me off ever taking residency but then my income might drop sufficiently in retirement that it’s less painful.
Moneyquery said:
Delurking for this query
I’m 63 and we rent our home. Not worried about tenancy length. I want to retire at 67 latest but maybe 65.
Salary - approx 96k
Partner salary. 33k
Savings: 50k in each of our ISAs and we add 1200 per month between us
200k in sipp currently cash at 4% interest adding 1400 per month in contributions gross I take the extra 20% as take home pay via my tax code as increased personal allowance All stakeholders pension gets transferred to sipp as it leaks money.
30k in easy access savings for cars/kids/emergencies.
I know I’m not skint and I’m certainly not complaining but I worry about the future and if I’ll have enough money to live comfortably. I’d love to buy a house but I think that ship’s sailed. When I look at RIO or interest only I’m not eligible. If I’m lucky and healthy I could have c 350k at retirement. Or am I f@cked?
I’m not interested in providing for my nineties, past lifestyle will no doubt catch up with me at some point.
Household income in the region of £8k/month net. I’m 63 and we rent our home. Not worried about tenancy length. I want to retire at 67 latest but maybe 65.
Salary - approx 96k
Partner salary. 33k
Savings: 50k in each of our ISAs and we add 1200 per month between us
200k in sipp currently cash at 4% interest adding 1400 per month in contributions gross I take the extra 20% as take home pay via my tax code as increased personal allowance All stakeholders pension gets transferred to sipp as it leaks money.
30k in easy access savings for cars/kids/emergencies.
I know I’m not skint and I’m certainly not complaining but I worry about the future and if I’ll have enough money to live comfortably. I’d love to buy a house but I think that ship’s sailed. When I look at RIO or interest only I’m not eligible. If I’m lucky and healthy I could have c 350k at retirement. Or am I f@cked?
I’m not interested in providing for my nineties, past lifestyle will no doubt catch up with me at some point.
The big question is just what are you spending it all on to be only putting aside a couple of grand a month to replicate your future income post employment?
Putting aside the use of cash in the pension which seems an excessive loss of earnings, I think the big question is how much rent you are paying a month because if that is a large chunk of your net monthly income then there isn't much you can do while maintaining that cost burden which will have to change anyway the day your retire.
You arguably need to be considering cutting monthly spend to the bone now and ploughing everything into the most tax effective pot for later use. Stretch out the working years a little more and just focus on pot building. In short, get things set up while you're still earning the high income and avoid hitting a horrible wall if ignored.
Shnozz said:
I completely take on board your points but would also suggest it’s very easy, and with some flexibility in retirement of when you travel, very cheap to travel from Europe to a mass of U.K. areas.
Quite often it’s cheaper for me to fly on a budget airline from my place in Spain to, say, London or Leeds or Manchester etc for less than it would cost me to take a train from one place to another in the U.K.
Inter-European travel is plentiful and cheap. Trains and our roads are expensive and crap
I appreciate foreign lands aren’t for everyone, however. Many also seem to have concerns on healthcare abroad when they get into later years.
It is yes. Its easy got back to, but its a big difference between friends or family jumping on a train or driving up the road for a couple of hours and having to get a flight to see you.Quite often it’s cheaper for me to fly on a budget airline from my place in Spain to, say, London or Leeds or Manchester etc for less than it would cost me to take a train from one place to another in the U.K.
Inter-European travel is plentiful and cheap. Trains and our roads are expensive and crap
I appreciate foreign lands aren’t for everyone, however. Many also seem to have concerns on healthcare abroad when they get into later years.
As i said, thats not a consideration for everyone, but its an important point.
We are very seriously considering Spain for our retirement. What we live in currently is far too big for our retirement years, so we'll likely sell up then rent for a couple of years - maybe six months at a time - to see where we might want to buy and settle. Mainland Spain would definitely be on the cards for that. As i said the North Coast here in NI is another option. We saw a lovely apartment with a view over a harbour, great beaches for long walks and within walking distance of the Giants Causeway, Bushmills, various bars and restaurants etc. That one definitely piqued my wifes interest.
We both have UK and Irish passports so moving to mainland Europe wouldnt be an issue.
We'll see how it pans out
Dont want to derail this thread so will leave it at that
Edited by Deep Thought on Sunday 24th March 13:10
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