Income when you retire
Discussion
I need to invest for my retirement, my personal pension is not going to give me enough to retire on (this is 20 years away), what options are there to have another income.
1. purchase another house and let it out, hopefully pay the mortgage off over the next 10 years or so, split the income from this between myself and wife, thus reducing tax liability
2. pay more money into a private pension, is it worth it, current prediction is it will be worth about £4000 when I retire
What other options are available for income when you retire?
1. purchase another house and let it out, hopefully pay the mortgage off over the next 10 years or so, split the income from this between myself and wife, thus reducing tax liability
2. pay more money into a private pension, is it worth it, current prediction is it will be worth about £4000 when I retire
What other options are available for income when you retire?
snowy said:
1. purchase another house and let it out, hopefully pay the mortgage off over the next 10 years or so, split the income from this between myself and wife, thus reducing tax liability
You're confident that the rent will cover the mortgage (assume "normal" base rates of 7%), maintenance, and also pay off the capital?I dont understand how you figure that if you invest what you would have in a pension instead of a house you would only have £4,000
There is no way a house is £4,000 so really you are not comparing apples to apples. If you are going to put £100k+ into a house etc then...
Fund your pension properly is the answer IMO. Hell you can even choose reits or other property stuff if you want that exposure.
There is no way a house is £4,000 so really you are not comparing apples to apples. If you are going to put £100k+ into a house etc then...
Fund your pension properly is the answer IMO. Hell you can even choose reits or other property stuff if you want that exposure.
ringram said:
I dont understand how you figure that if you invest what you would have in a pension instead of a house you would only have £4,000
There is no way a house is £4,000 so really you are not comparing apples to apples. If you are going to put £100k+ into a house etc then...
Fund your pension properly is the answer IMO. Hell you can even choose reits or other property stuff if you want that exposure.
I think you have mis understood, i was after more options on what to do over the next 20 years to try and provide a retirement fund, the pension pot is extremely small as I do not pay much into this, so I need to either pay a lot more into this private pension (fund your pension properly) or come up with an alternate plan, this could be as stated purchase another house and let it, this would be funded by a second mortgage, therefore try and pay it off ASAPThere is no way a house is £4,000 so really you are not comparing apples to apples. If you are going to put £100k+ into a house etc then...
Fund your pension properly is the answer IMO. Hell you can even choose reits or other property stuff if you want that exposure.
The assumption would be that the rent would cover the mortgage on the second property, i would also repay lump sums each year of £10k,
Are there more options than these two???
snowy said:
ringram said:
I dont understand how you figure that if you invest what you would have in a pension instead of a house you would only have £4,000
There is no way a house is £4,000 so really you are not comparing apples to apples. If you are going to put £100k+ into a house etc then...
Fund your pension properly is the answer IMO. Hell you can even choose reits or other property stuff if you want that exposure.
I think you have mis understood, i was after more options on what to do over the next 20 years to try and provide a retirement fund, the pension pot is extremely small as I do not pay much into this, so I need to either pay a lot more into this private pension (fund your pension properly) or come up with an alternate plan, this could be as stated purchase another house and let it, this would be funded by a second mortgage, therefore try and pay it off ASAPThere is no way a house is £4,000 so really you are not comparing apples to apples. If you are going to put £100k+ into a house etc then...
Fund your pension properly is the answer IMO. Hell you can even choose reits or other property stuff if you want that exposure.
The assumption would be that the rent would cover the mortgage on the second property, i would also repay lump sums each year of £10k,
Are there more options than these two???
Does your pension pay you £4k per year plus a lump sum? If so then you will have this lump sum to invest as well its not just £4k.
How about building a share portfolio even £1000 per year invested in some big organisations with dividends reinvested over 20 years will give you a sizable cunk.
How about building a share portfolio even £1000 per year invested in some big organisations with dividends reinvested over 20 years will give you a sizable cunk.
I am in a similar position - I am 43 and have no pension at all.
On a positive note, £4000pa is probably not that bad as someone on the radio a few days was saying that the average private pension is £3500pa.
I am considering at the moment buying a house for say £100,000 and this paying itself off over the next 20 years. If you can get say £500 per month for rent and your mortgage is £700, consider the extra £200 per month as a contribution to a pension. In a few years time, this £200 will be the same whereas a percentage of your salary in a normal pension will be going up every year. Also, the property value is pretty certain to go up over a 20 year period so you will be quide in twice over (ie rental income plus capital value increase). Tax on income will have to be considered but may not be the case if rental income is less than mortgage interest, and capital gains can be partially offset (ie you get a certain allowance for increase in value every year, per person).
Also, with a rental proporty, you have more control over the investment and it can be quite good fun (and it feels good telling your mates you have another property!!)
On a positive note, £4000pa is probably not that bad as someone on the radio a few days was saying that the average private pension is £3500pa.
I am considering at the moment buying a house for say £100,000 and this paying itself off over the next 20 years. If you can get say £500 per month for rent and your mortgage is £700, consider the extra £200 per month as a contribution to a pension. In a few years time, this £200 will be the same whereas a percentage of your salary in a normal pension will be going up every year. Also, the property value is pretty certain to go up over a 20 year period so you will be quide in twice over (ie rental income plus capital value increase). Tax on income will have to be considered but may not be the case if rental income is less than mortgage interest, and capital gains can be partially offset (ie you get a certain allowance for increase in value every year, per person).
Also, with a rental proporty, you have more control over the investment and it can be quite good fun (and it feels good telling your mates you have another property!!)
cpas said:
and capital gains can be partially offset (ie you get a certain allowance for increase in value every year, per person).
Sorry, but that is not right.You get an 'annual allowance' per person where any gains made in the year below that figure did not attract CGT. However this does not roll forward each year and is not linked to any increases in value - it is set in the Finance Act.
cpas said:
NoelWatson said:
cpas said:
If you can get say £500 per month for rent and your mortgage is £700, consider the extra £200 per month as a contribution to a pension.
This seems irrational.Mortgage Overpayment Calculator
S6PNJ said:
cpas said:
NoelWatson said:
cpas said:
If you can get say £500 per month for rent and your mortgage is £700, consider the extra £200 per month as a contribution to a pension.
This seems irrational.Mortgage Overpayment Calculator
If the rent doesn't cover the BTL mortgage, you won't be offered the mortgage. The rent needs to cover 125% of the mortgage. If you already own the house (ie live there) you'll still need to get permission from the mortgage company and they may still need the rent to cover 125%. Your best bet is to email scotal on here as he deals with this kind of thing.
cpas said:
What I mean is if you but a property and the rental income doesn't quite cover the mortgage and it costs you an extra £200 per month, this is still probably a better bet than if you were to be paying £200 into a pension without having a rental property.
Better than putting the £200/month into a property fund in a pension? Effectively the same kind of investment, but with risk spread across properties, and most importantly massive tax benefits?Problem is pension contributions are currently tax free, might change in the future though. This is especially important if you are a higher rate taxpayer £200 net then gets you £280 in your pension, then on the growth you don't fall foul of cgt either.
I'm not an IFA but I'd be wary of having all my pension pot at the mercy of the property market, I'd be wanting at least 2 different plans.
Personally I have 12 years in a final salary scheme, and am currently in a money purchase scheme through work. I also have an old fund that I've gone high risk on and am making a small monthly contribution to. But I am still concerned that it's not enough, I have wondered about btl as well.
I'm not an IFA but I'd be wary of having all my pension pot at the mercy of the property market, I'd be wanting at least 2 different plans.
Personally I have 12 years in a final salary scheme, and am currently in a money purchase scheme through work. I also have an old fund that I've gone high risk on and am making a small monthly contribution to. But I am still concerned that it's not enough, I have wondered about btl as well.
fid said:
cpas said:
What I mean is if you but a property and the rental income doesn't quite cover the mortgage and it costs you an extra £200 per month, this is still probably a better bet than if you were to be paying £200 into a pension without having a rental property.
Better than putting the £200/month into a property fund in a pension? Effectively the same kind of investment, but with risk spread across properties, and most importantly massive tax benefits?cpas said:
The trouble is that the pension will be controlled by some spotty teenager somewhere who will ensure that the priority is for their company to make oodles of money at all costs, even if it means filtering all your money off!! At least with property, you have some control.
have a look at a SIPPcpas said:
NoelWatson said:
cpas said:
If you can get say £500 per month for rent and your mortgage is £700, consider the extra £200 per month as a contribution to a pension.
This seems irrational.Gassing Station | Finance | Top of Page | What's New | My Stuff