Aged 49 and need financial advice - pension/savings/house
Discussion
I am looking for some combined wisdom, and will probably get some condemnation as well....
History - as per title am currently aged 49, wife is 53. Three years ago, got out of a failed business venture owing approx. 40k unsecured. Rather than go bankrupt, decided to pay everyone off - debt now down to 13k, and decreasing fast. After 10 years before that of poverty, we decided to mix paying off the debt with living a little better - we could have paid it off a bit quicker, but its a conscious decision we made, so we are where we are.
We have no assets, no savings, and have never owned a house. Am fortunate now to have a good household income of approx. 64k gross per annum, with minimal housing costs of approx. £500 per month all in.
We pay the remaining debt off at between 500 and 1000 per month, depending on what else we are doing eg holidays etc.
I have only just started paying into a pension at a rate of £333 per month (total of mine and employers contributions) and my wife has been paying into a private pension for the last 2 years at a rate of £150 per month.
We will never inherit anything as both our (now very elderly) sets of parents are effectively penniless.
Whilst general advice about the best way forward is welcome (and I don't even mind high risk suggestions) some specific questions :
1. Am I better off paying the remaining debt as quickly as possible and THEN start saving, or should I pay the debt slower and start saving cash now - because.....
2. Realistically by the time I have paid off the remaining debt and saved a deposit I would be a first time buyer of a house at aged 53 to 55 - could I get a mortgage at that age? We live in Scotland so could get a decent house for about 150k, which I could rent out, but I read somewhere that as a FTB I would never get a BTL mortgage? Should I just forget ever being able to buy a house?
3. Pension - is there any point in carrying on with it as we both started so late? Am I better off putting that money into cash savings instead?
The only real saving grace is that I have a good credit score (because of 100% record of debt repayment) and I am very well insured (about 500k) so if anything happens to me before 67 the wife will have plenty of cash to buy a house and live on without too much worry.
I appreciate all this is well off the mark of the multiple BTL owning PHers and their massive pension pots, but I am a real world example of a place that I assume a lot of people find themselves in outside the rareified atmosphere of PH. And yes, I know Ishould have bought a house 30 years ago, but my life just hasn't panned out that way. I do have some good stories though....
All suggestions as to any/best way forward appreciated.
History - as per title am currently aged 49, wife is 53. Three years ago, got out of a failed business venture owing approx. 40k unsecured. Rather than go bankrupt, decided to pay everyone off - debt now down to 13k, and decreasing fast. After 10 years before that of poverty, we decided to mix paying off the debt with living a little better - we could have paid it off a bit quicker, but its a conscious decision we made, so we are where we are.
We have no assets, no savings, and have never owned a house. Am fortunate now to have a good household income of approx. 64k gross per annum, with minimal housing costs of approx. £500 per month all in.
We pay the remaining debt off at between 500 and 1000 per month, depending on what else we are doing eg holidays etc.
I have only just started paying into a pension at a rate of £333 per month (total of mine and employers contributions) and my wife has been paying into a private pension for the last 2 years at a rate of £150 per month.
We will never inherit anything as both our (now very elderly) sets of parents are effectively penniless.
Whilst general advice about the best way forward is welcome (and I don't even mind high risk suggestions) some specific questions :
1. Am I better off paying the remaining debt as quickly as possible and THEN start saving, or should I pay the debt slower and start saving cash now - because.....
2. Realistically by the time I have paid off the remaining debt and saved a deposit I would be a first time buyer of a house at aged 53 to 55 - could I get a mortgage at that age? We live in Scotland so could get a decent house for about 150k, which I could rent out, but I read somewhere that as a FTB I would never get a BTL mortgage? Should I just forget ever being able to buy a house?
3. Pension - is there any point in carrying on with it as we both started so late? Am I better off putting that money into cash savings instead?
The only real saving grace is that I have a good credit score (because of 100% record of debt repayment) and I am very well insured (about 500k) so if anything happens to me before 67 the wife will have plenty of cash to buy a house and live on without too much worry.
I appreciate all this is well off the mark of the multiple BTL owning PHers and their massive pension pots, but I am a real world example of a place that I assume a lot of people find themselves in outside the rareified atmosphere of PH. And yes, I know Ishould have bought a house 30 years ago, but my life just hasn't panned out that way. I do have some good stories though....
All suggestions as to any/best way forward appreciated.
All seems logical to be honest. If the debtors are happy to be paid back at what seems a very equitable time scale given that their alternative is zero then that side all seems OK.
Pension seems logical as on £64k you are a higher rate payer and also close to the age at which you can draw your pension so you might as well view it as a cash savings account that claws back a big chunk of tax.
Might be screwed buying your own house on the mortgage front. If your desire is to physically own property as opposed to escaping rented accommodation then the solution might be a BTL.
Re, whether to invest your money as cash or less liquid investments, at 49 its got to be a bit borderline and ultimately how healthy your lifestyles has been might be the decider as to what future time horizon you're looking at etc.
Generally, being 50 with no assets and nothing to inherit I'd err on the side of caution and save as much as possible for as long as possible in the most tax efficient way.
Pension seems logical as on £64k you are a higher rate payer and also close to the age at which you can draw your pension so you might as well view it as a cash savings account that claws back a big chunk of tax.
Might be screwed buying your own house on the mortgage front. If your desire is to physically own property as opposed to escaping rented accommodation then the solution might be a BTL.
Re, whether to invest your money as cash or less liquid investments, at 49 its got to be a bit borderline and ultimately how healthy your lifestyles has been might be the decider as to what future time horizon you're looking at etc.
Generally, being 50 with no assets and nothing to inherit I'd err on the side of caution and save as much as possible for as long as possible in the most tax efficient way.
Take it we're talking about a strategy for the future here.
I did a Rightmove search on Glasgow + 10 miles at 100-125k. Mostly flats and semis but loads that me n' the missus could happily live in. Probably be a good few at a lower price point too. So I'd get property hunting if I was you. Because you're not destitute enough to be able to get Housing Benefit. And you don't want to be paying (probably increasing) rent if you lose income later on when you stop doing what you do just now for work. So buy a place to live in. And it's unlikely you won't get a mortgage if you want one. Ask your bank.And failing that, a good mortgage adviser. In fact some lenders will give you a 25 year profile if that's what you want. In your case, certainly to at least your projected 'retirement' age.
Are you both going to have state pensions? If so, you'll have £16kpa between you. And it sounds as if you'll have some other pension income too because you're both paying into pension plans. But you need to have some idea via projections of what that income will be. That can be done, so do it, using pretty modest guesses at growth rate. Try 3%. So now you'll know what you'll have on top of the state pension. Let's just completely hypothetically say that whatever figures you use result in a projection that will lead to joint income of...£8kpa? So that plus the state pension gives you £24k. In Scotland that's probably pretty close to the real average wage. Maybe even above it. So assuming debt gone by then, and modest mortgage payment (probably much less than rent) you should certainly be able to get by ok, and that's that.
BUT. Could you consider that whilst your mainstream normal working life was over, you might just be able to do SOMEthing albeit neither stressful nor full time that added a little more 'pocket money' to your life? What, you might ask. And there are so many potential answers that they could fill 50 pages of a school jotter one on each line. Many people already do this. Some are very humble and simple jobs like working 20 hours a week in a cafe like the old dodger aged 93 who was in the papers the other week. Some are probably very sophisticated and complex, like whatever Warren Buffet does.
Because IF you can handle the idea of supplementing the state + private pension incomes with even the most humble of part-time activities then- I'd suggest - there isn't going to be much to fret about in YOUR old age money wise.
Apart from your great forum name, you also said something else that many people would be well advised to think about. In the midst of a financial drama scenario youse decided to 'live a little better'. So many people live as though the present is a rehearsal. And they gear everything to catering for some time point in the future almost as if there's some certainty of how that future'll unfold. And - as a "retired" person myself I would strenuously advise you against living a life of austerity which involves the sacrifice of enjoying the present on the altar of tomorrow. But I get the feeling you're aware of that and why.
I did a Rightmove search on Glasgow + 10 miles at 100-125k. Mostly flats and semis but loads that me n' the missus could happily live in. Probably be a good few at a lower price point too. So I'd get property hunting if I was you. Because you're not destitute enough to be able to get Housing Benefit. And you don't want to be paying (probably increasing) rent if you lose income later on when you stop doing what you do just now for work. So buy a place to live in. And it's unlikely you won't get a mortgage if you want one. Ask your bank.And failing that, a good mortgage adviser. In fact some lenders will give you a 25 year profile if that's what you want. In your case, certainly to at least your projected 'retirement' age.
Are you both going to have state pensions? If so, you'll have £16kpa between you. And it sounds as if you'll have some other pension income too because you're both paying into pension plans. But you need to have some idea via projections of what that income will be. That can be done, so do it, using pretty modest guesses at growth rate. Try 3%. So now you'll know what you'll have on top of the state pension. Let's just completely hypothetically say that whatever figures you use result in a projection that will lead to joint income of...£8kpa? So that plus the state pension gives you £24k. In Scotland that's probably pretty close to the real average wage. Maybe even above it. So assuming debt gone by then, and modest mortgage payment (probably much less than rent) you should certainly be able to get by ok, and that's that.
BUT. Could you consider that whilst your mainstream normal working life was over, you might just be able to do SOMEthing albeit neither stressful nor full time that added a little more 'pocket money' to your life? What, you might ask. And there are so many potential answers that they could fill 50 pages of a school jotter one on each line. Many people already do this. Some are very humble and simple jobs like working 20 hours a week in a cafe like the old dodger aged 93 who was in the papers the other week. Some are probably very sophisticated and complex, like whatever Warren Buffet does.
Because IF you can handle the idea of supplementing the state + private pension incomes with even the most humble of part-time activities then- I'd suggest - there isn't going to be much to fret about in YOUR old age money wise.
Apart from your great forum name, you also said something else that many people would be well advised to think about. In the midst of a financial drama scenario youse decided to 'live a little better'. So many people live as though the present is a rehearsal. And they gear everything to catering for some time point in the future almost as if there's some certainty of how that future'll unfold. And - as a "retired" person myself I would strenuously advise you against living a life of austerity which involves the sacrifice of enjoying the present on the altar of tomorrow. But I get the feeling you're aware of that and why.
drainbrain said:
So many people live as though the present is a rehearsal. And they gear everything to catering for some time point in the future almost as if there's some certainty of how that future'll unfold. And - as a "retired" person myself I would strenuously advise you against living a life of austerity which involves the sacrifice of enjoying the present on the altar of tomorrow. But I get the feeling you're aware of that and why.
Yep. Reminds me of this:https://www.reddit.com/r/tifu/comments/2livoo/tifu...
trowelhead said:
Thanks for that, puts life in perspective...h8tax said:
We have no assets, no savings, and have never owned a house. Am fortunate now to have a good household income of approx. 64k gross per annum, with minimal housing costs of approx. £500 per month all in.
We pay the remaining debt off at between 500 and 1000 per month, depending on what else we are doing eg holidays etc.
I have only just started paying into a pension at a rate of £333 per month (total of mine and employers contributions) and my wife has been paying into a private pension for the last 2 years at a rate of £150 per month.
So that's a household income of just over £5k/mo before tax, just over £4k after tax, assuming you're both standard-rate tax payers. More than twice the national average household income.We pay the remaining debt off at between 500 and 1000 per month, depending on what else we are doing eg holidays etc.
I have only just started paying into a pension at a rate of £333 per month (total of mine and employers contributions) and my wife has been paying into a private pension for the last 2 years at a rate of £150 per month.
But... you've mentioned spending less than half of that income at most, including the debt repayment. What's happening with the other £2k+/mo? Just general spending...? It comes down to prioritising when you want to spend the money - now, or in your retirement.
h8tax said:
Realistically by the time I have paid off the remaining debt and saved a deposit I would be a first time buyer of a house at aged 53 to 55
You owe £13k now, and are repaying it at up to a grand a month. You'll have repaid it by next March. If you keep that up, you've got a £13k deposit for a house by April 2018. Or £13k in savings.h8tax said:
could I get a mortgage at that age?
You'd be in your 80s by the time it was repaid at a full 25-30yr period. But you can afford to pay £1k/mo, right? You only need a 15 year mortgage.h8tax said:
We live in Scotland so could get a decent house for about 150k, which I could rent out
Surely the first priority would be to buy your home...?BTL is just another way of investing. You invest some money now and you borrow more. You get some (not necessarily predictable or high) income back after you've repaid the money you borrowed plus the interest on it. There are various legal obligations you need to abide by, you may get periods of no income, you may get large unplanned expenditure. You can palm a lot of the work off - but at a cost. All in all, if you ignore the potential for capital growth, it can be a fairly lousy investment.
But you may eventually also get some capital growth - with CGT payable on it, of course... Historically, that's been good, but that means that the buy-in is now relatively high, so the chances of further growth are reduced. - but everybody likes to look at that historical growth and cross their fingers it'll continue.
h8tax said:
but I read somewhere that as a FTB I would never get a BTL mortgage?
Some BTL lenders will lend to you without owning your home, but many won't.h8tax said:
Should I just forget ever being able to buy a house?
Let's go back a step. What advantage will "buying a house" give you? By the time it's fully repaid - saving you from paying rent - you'll be elderly (at best). You'd be eligible for state help with your accommodation. You haven't mentioned any kids, so why not focus on your own lifespan?h8tax said:
Pension - is there any point in carrying on with it as we both started so late?
Definitely! A pension is just saving, with a specific target date, and with big tax efficiencies. You have £333 going into that pot - what does it actually cost you per month? The employer's matching your contrib? So that £333 going into your pension pot is actually £160-odd. Before tax, so actually £130ish?Sure, it's not going to give you your full current salary after you retire... But it's still going to be better to have spent 15yrs investing £480/mo in your retirement than less than £280/mo, right?
Edited by TooMany2cvs on Monday 6th February 10:33
TooMany2cvs said:
drainbrain said:
TooMany2cvs said:
You'd be eligible for state help with your accommodation.
Really? Could you be a bit more specific about that 'state help'?Private pension would exclude him. ( though if it was next-to-nothing he might get reduced HB. Possibly what's called a 'Discretionary Payment'. Probably £1 reduction for every £1 the pension provided. And that's just a 'maybe'.)
In your 'plan' he tries to fund a decent pension. He wouldn't be getting a dime in HB.
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