Retire early (living off savings)
Discussion
I think that's why you have to budget and track spending very carefully and also account for one off spending like boilers, new car, dentist etc.
I have £200 in the monthly budget just for "who knows" on top of everything else I can think of. I put £50 a month down for house repairs for example. It probably wont need anything like that but you never know when a big bill will land on the door mat!
After the first couple of years if we have a lot of overhead in the budget I will probably either reduce the WR or increase the travel. I doubt it though.
I have £200 in the monthly budget just for "who knows" on top of everything else I can think of. I put £50 a month down for house repairs for example. It probably wont need anything like that but you never know when a big bill will land on the door mat!
After the first couple of years if we have a lot of overhead in the budget I will probably either reduce the WR or increase the travel. I doubt it though.
GT03ROB said:
There's 2 things that can make a huge difference in all this.
Divorce - I would say I was merrily waltzing along on this path in my 30s, then along came a divorce, makes a heck of a hole in the best laid plans. When you could be ramping down expenditure you suddenly find a huge bill & having to buy your house for the 2nd time.
Inheritance - I am fortunate in that anybody I would have an inheritance from are alive & well. Other receive inheritance's much earlier which can have a significant influence,
Yes I had to start again at 30. Had that not happened, I would have been able to pay off the mortgage years ago. It was due to be paid at 50 but I bought it before the housing boom and the mortgage payments were next to nothing. Divorce - I would say I was merrily waltzing along on this path in my 30s, then along came a divorce, makes a heck of a hole in the best laid plans. When you could be ramping down expenditure you suddenly find a huge bill & having to buy your house for the 2nd time.
Inheritance - I am fortunate in that anybody I would have an inheritance from are alive & well. Other receive inheritance's much earlier which can have a significant influence,
As for inheritance, unfortunately I may get to see that sooner rather than later. My father is in his 80's and my mother is not far behind. They've got multiple health issues and my mother had a heart attack recently. They've had a good life and my father retired early on a public sector final salary pension. The house isn't worth much and there's not a lot of in the way of assets or investments but yes, an inheritance of some kind can help. I'd not like to rely on one though. Scary to think that a previous poster suggested he knew lots of people with interest only mortgages :-0
I’m also surprised at the number of people with interest only mortgage
A small portion of mine was (now paid off? & years after it was set up i was getting the third degree on what I had in place to settle it.Guess the rules changed.
Ignoring their requests & flippant answers were not accepted !
A small portion of mine was (now paid off? & years after it was set up i was getting the third degree on what I had in place to settle it.Guess the rules changed.
Ignoring their requests & flippant answers were not accepted !
My interest only mortgages have been superb. Yes, for those who have no repayment engine paired to them they can be dangerous, but there are many advantages.
I had no idea how long I would be in some properties. Had I been there only a few years and then sold the majority of my repayment mortgage would have been the frontloaded interest anyway and naff all capital repayment. Paying solely interest and investing the repayment element into various sources meant those investments are continuing to accrue a return, whether the property was sold or not.
Similarly, I can diversify repayment engines as per market conditions (admittedly I haven't always called them correctly). It's also allowed liquidity to funds as times other opportunities have arisen or I have needed access to the money for other things.
Yes, a straight-line repayment model is a steady eddie predicable and safe method to buy a house. If you stay put for the duration of the mortgage its even more straight-line. However, so long as you approach an IO mortgage in the same way it was always designed (to have a repayment method alongside), I don't see it as the evil many make it out to be.
I do think IO was tainted for 2 reasons:
1. The repayment engine accompanying the mortgage suddenly became optional and not obligatory in the eyes of the lender. People seemed to forget about it to over-leverage themselves on property.
2. The 'problem' years of the endowments sold alongside an IO mortgage which left a shortfall. Grossly optimistic returns that unsurprisingly did not materialise. There was uproar but the reality of it was, the investment was underfunded to achieve the final sum needed. The shortfall often wasn't too severe and might extend a mortgage by a few years at most but people were up in arms. The reality of it was that returns were simply not as great as forecast and a homeowner "benefited" from multiple years of paying less in that repayment investment than they needed to achieve the outcome they required. The fact that at the end of it they were short was evidence of that.
It is interesting (boom boom) that if I mention to anyone I have an IO mortgage they just shake their head and tell me how stupid I am. I never feel the same for anyone in a repayment mortgage, yet I am cast as being an utter fool instantaneously for my IO decision it seems.
I had no idea how long I would be in some properties. Had I been there only a few years and then sold the majority of my repayment mortgage would have been the frontloaded interest anyway and naff all capital repayment. Paying solely interest and investing the repayment element into various sources meant those investments are continuing to accrue a return, whether the property was sold or not.
Similarly, I can diversify repayment engines as per market conditions (admittedly I haven't always called them correctly). It's also allowed liquidity to funds as times other opportunities have arisen or I have needed access to the money for other things.
Yes, a straight-line repayment model is a steady eddie predicable and safe method to buy a house. If you stay put for the duration of the mortgage its even more straight-line. However, so long as you approach an IO mortgage in the same way it was always designed (to have a repayment method alongside), I don't see it as the evil many make it out to be.
I do think IO was tainted for 2 reasons:
1. The repayment engine accompanying the mortgage suddenly became optional and not obligatory in the eyes of the lender. People seemed to forget about it to over-leverage themselves on property.
2. The 'problem' years of the endowments sold alongside an IO mortgage which left a shortfall. Grossly optimistic returns that unsurprisingly did not materialise. There was uproar but the reality of it was, the investment was underfunded to achieve the final sum needed. The shortfall often wasn't too severe and might extend a mortgage by a few years at most but people were up in arms. The reality of it was that returns were simply not as great as forecast and a homeowner "benefited" from multiple years of paying less in that repayment investment than they needed to achieve the outcome they required. The fact that at the end of it they were short was evidence of that.
It is interesting (boom boom) that if I mention to anyone I have an IO mortgage they just shake their head and tell me how stupid I am. I never feel the same for anyone in a repayment mortgage, yet I am cast as being an utter fool instantaneously for my IO decision it seems.
Interest only mortgages should be the next miss selling scandal, one was given to a relative of my, aged 64, 25 year term on an apartment whose value has gone down. She has no prospect of repaying the capital and the claim on the estate when she dies will be well in excess of the value of the apartment.
Robbo 27 said:
Interest only mortgages should be the next miss selling scandal, one was given to a relative of my, aged 64, 25 year term on an apartment whose value has gone down. She has no prospect of repaying the capital and the claim on the estate when she dies will be well in excess of the value of the apartment.
Who advised her to take an IO? Mortgage brokers won't advise on which one to take, they will only give you a list of what you ask for. I have both BLT IO and a residential IO. Both are what I wanted.
After some decades of IO mortgages I've just sold up and paid off the last one. Never saw the point in cap-and-int for the residential. Like taking money from one pocket and putting it in another.
Currently living in rental (and loving it). Next house will be bought entirely with equity gifted by Mr House Price Inflation over the years. To my mind, that's a free house.
OTOH never saw the point in buying a btl on IO. Rent should pay the cap so eventually that's another 'free' house (apart from the initial 'hurt' money).
Currently living in rental (and loving it). Next house will be bought entirely with equity gifted by Mr House Price Inflation over the years. To my mind, that's a free house.
OTOH never saw the point in buying a btl on IO. Rent should pay the cap so eventually that's another 'free' house (apart from the initial 'hurt' money).
Edited by drainbrain on Monday 15th January 13:02
It's difficult to find a balance between the live-for-today / get off the treadmill early and enjoy retirement.
I've also been made aware that you can never tell what tomorrow brings. My dad died very young indeed - I'd always thought 18, but I think he was probably actually 19. My mum made it to the grand old age of 62 - and went from (appearing) perfectly healthy, to diagnoses with liver cancer and dead 5 months later.
I felt my attitude shift when my mum died, and to some degree I do have a "enjoy it now - you might not see tomorrow" attitude to life - it's definitely the reason I own the cars I have.
On the other hand - I do not enjoy working, and I would dearly love to retire (too young at the moment - 48, and there is no way my savings would last that long). Especially since, you don't know what tomorrow will bring and hence I'd rather enjoy today by not having to work for incompetent numpties......
It really is a shame you can't know your end date! I'm sure a lot of people would never want to know it - but I'd find it fairly handy to know that I have <x> years left, and that if I retire now I could have a damn fine <x> years! (I have no kids which probably makes a difference to my view!)
I've also been made aware that you can never tell what tomorrow brings. My dad died very young indeed - I'd always thought 18, but I think he was probably actually 19. My mum made it to the grand old age of 62 - and went from (appearing) perfectly healthy, to diagnoses with liver cancer and dead 5 months later.
I felt my attitude shift when my mum died, and to some degree I do have a "enjoy it now - you might not see tomorrow" attitude to life - it's definitely the reason I own the cars I have.
On the other hand - I do not enjoy working, and I would dearly love to retire (too young at the moment - 48, and there is no way my savings would last that long). Especially since, you don't know what tomorrow will bring and hence I'd rather enjoy today by not having to work for incompetent numpties......
It really is a shame you can't know your end date! I'm sure a lot of people would never want to know it - but I'd find it fairly handy to know that I have <x> years left, and that if I retire now I could have a damn fine <x> years! (I have no kids which probably makes a difference to my view!)
Robbo 27 said:
Interest only mortgages should be the next miss selling scandal, one was given to a relative of my, aged 64, 25 year term on an apartment whose value has gone down. She has no prospect of repaying the capital and the claim on the estate when she dies will be well in excess of the value of the apartment.
Something doesn't sound right about that. Could one bit be not as clear cut as you suggest?davek_964 said:
It really is a shame you can't know your end date! I'm sure a lot of people would never want to know it - but I'd find it fairly handy to know that I have <x> years left, and that if I retire now I could have a damn fine <x> years! (I have no kids which probably makes a difference to my view!)
Knowing your end date could be handy. MInd you we might have these in the future
Cotty said:
davek_964 said:
It really is a shame you can't know your end date! I'm sure a lot of people would never want to know it - but I'd find it fairly handy to know that I have <x> years left, and that if I retire now I could have a damn fine <x> years! (I have no kids which probably makes a difference to my view!)
Knowing your end date could be handy. MInd you we might have these in the futureETA: in fact, it probably would.
We're all going to die at some point anyway. Let's say I do well and live to 100. That will include working several more years in a job I don't like, hoping a pension supports me and gradually declining in some kind of home.
On the other hand : sell the house, travel the world living it up, blow the savings, cash in the pension in a few years - and then call it a day when the cash runs out.
I'm not convinced the 50 odd years of 'normal life' work out better than the short term living it up life!
Edited by davek_964 on Monday 15th January 14:13
davek_964 said:
It does sometimes occur to me that maybe early retirement and a future appointment with Digitas (or whatever they're called) might work!
As someone non-religious and not wishing to stir up a hornet's nest but this would make for an interesting scenario. Rather than an actuary having to do complex calculations to get to an annuity price point on life expectancy, you could purchase one based on a known end date with only investment returns being the fluctuation to base annuity rates on. Or outside of an annuity just base straight draw down knowing how long your pot needs to last. You'd be making a sizable bet that you could euthanasia much easier in the future than you can now.
Dignitas make you go through a number of interviews over a sizable time period before they will accept you as they want to weed out those who just want to die rather than those who want to die because of a physical condition. Also the guy who runs Dignitas is getting on now and the Swiss government is waiting for him to die as they are hoping Dignitas will wind up when he dies.
Assuming you could just take the easy way out at the end on a fixed date, what would stop you from taking out a large life insurance policy just before you died?
Dignitas make you go through a number of interviews over a sizable time period before they will accept you as they want to weed out those who just want to die rather than those who want to die because of a physical condition. Also the guy who runs Dignitas is getting on now and the Swiss government is waiting for him to die as they are hoping Dignitas will wind up when he dies.
Assuming you could just take the easy way out at the end on a fixed date, what would stop you from taking out a large life insurance policy just before you died?
tankplanker said:
You'd be making a sizable bet that you could euthanasia much easier in the future than you can now.
Dignitas make you go through a number of interviews over a sizable time period before they will accept you as they want to weed out those who just want to die rather than those who want to die because of a physical condition. Also the guy who runs Dignitas is getting on now and the Swiss government is waiting for him to die as they are hoping Dignitas will wind up when he dies.
Assuming you could just take the easy way out at the end on a fixed date, what would stop you from taking out a large life insurance policy just before you died?
Damn. So 'I've run out of cash' wouldn't be a good enough reason!Dignitas make you go through a number of interviews over a sizable time period before they will accept you as they want to weed out those who just want to die rather than those who want to die because of a physical condition. Also the guy who runs Dignitas is getting on now and the Swiss government is waiting for him to die as they are hoping Dignitas will wind up when he dies.
Assuming you could just take the easy way out at the end on a fixed date, what would stop you from taking out a large life insurance policy just before you died?
I understand your point, but personally I have no dependents so a large life insurance policy would be a tad pointless.
davek_964 said:
Damn. So 'I've run out of cash' wouldn't be a good enough reason!
I understand your point, but personally I have no dependents so a large life insurance policy would be a tad pointless.
If you could top yourself some how, you might find somebody to lend you the money (or a big chunk of it) in return for you naming them as beneficiary for your life insurance policy? Obviously I realise this is insurance fraud.I understand your point, but personally I have no dependents so a large life insurance policy would be a tad pointless.
tankplanker said:
f you could top yourself some how, you might find somebody to lend you the money (or a big chunk of it) in return for you naming them as beneficiary for your life insurance policy? Obviously I realise this is insurance fraud.
Just make them a beneficiary on the will I presume there is no fraud element in that case.Robertj21a said:
Something doesn't sound right about that. Could one bit be not as clear cut as you suggest?
Dunno, not a legal expert but perhaps I will need to be.The person in question bought an apartment in a converted textile mill in Elland, West Yorkshire. She was 64 at the time and went to a well known building society and asked for a mortgage. At the time she had a business and told the building society that the capital on the flat would be repaid when she sold the business. The business went bust. She continued with the Interest only mortgage and has no prospect of being able to pay the amount owed at the end of the term.
She paid £220000, the flats are selling for around £130000 (not hers but very similar.)
http://www.rightmove.co.uk/property-for-sale/prope...
I dont know the rules on this but I would have thought that the buuilding society could come to the executors for any shortfall.
Robbo 27 said:
Robertj21a said:
Something doesn't sound right about that. Could one bit be not as clear cut as you suggest?
Dunno, not a legal expert but perhaps I will need to be.The person in question bought an apartment in a converted textile mill in Elland, West Yorkshire. She was 64 at the time and went to a well known building society and asked for a mortgage. At the time she had a business and told the building society that the capital on the flat would be repaid when she sold the business. The business went bust. She continued with the Interest only mortgage and has no prospect of being able to pay the amount owed at the end of the term.
She paid £220000, the flats are selling for around £130000 (not hers but very similar.)
http://www.rightmove.co.uk/property-for-sale/prope...
I dont know the rules on this but I would have thought that the buuilding society could come to the executors for any shortfall.
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