Retirement

[hifinutt]

Has anyone gone down the 'lifetime mortgage' or equity release routes? We have two houses, both with mortgages, both interest only, so to pay off the mortgage on the one house would take all of our savings and more, and the other would take all of our pension pot. We rent one house to a family member, so we can't really sell it, and we don't want to sell our main house, even though we know its going to cost us a lot in maintenance (500yr old thatched cottage!). Our IFA has recommended that we look at these options, and also reckons our pensions are ok, but when we ask for specific figures, he's unable to be very specific, for reasons I understand. I'm embarking on a nine year slowing down phase with my employers, who are supportive. I will have plenty to do, when I retire, as I'm a (unpaid) director of another company, have my photography, and would like to travel more, but I'm unsure I'll be able to afford any of this...

interesting situation . of course if its a buy to let mortgage on the one rented to family , that is now against regulations and you will see it any any T&C on new mortgages . if they find out they can convert to repayment mortgage which can come as a bit of a shock

 

[hifinutt]

I agree with NeilR.

When people talk about BTL yields it’s all meaningless unless they clarify gross or nett.

My yields looked impressive until I factored in agent costs, non payment of rent insurance costs (a no brainer after your first experience of twatty tenants), annual checks, refurbishment, redecoration, empty periods with no income, accountants fees.

In the end I got out as it barely bettered returns from stocks and shares.

very true , its not easy to make it work now with all these costs let alone the increased tax costs

 

[Mike Reed]

where are your properties?

One 2 bed flat, one 3 bed maisonette, Norwich. used to part own 3 in Lowestoft/Oulton Broad but sold a decade ago. just worked out gross yield, which surprised me. 13+% and just below 13%. Thought it was less, but as rents rise.....

 

[ks.234]

I did the sums before I went back into education in my mid 30's and they didn't add up. And didn't add up by some way. Essentially I couldn't afford to live. I went anyway and had to make it work. Glad I did as it took me in a very different and better direction.

I have the same approach to retirement. The sums still don't add up, but I'm doing it anyway and I'll just have to make it work.

However, the sums are not what this thread is about, The OP asked what people are going to do in retirement.

What I'm going to do is is the thing I'm most looking forward to most about retirement.

Personally, I'm going to be doing a mixture of old and new. Arty stuff I've always done alongside things well outside my comfort zone to provide new challenges.

Old stuff includes an illustrated children's book. I've worked as an illustrator in the past and have an idea based on Einstein's Theory of Relativity that now needs finishing.

New stuff is to challenge my arty persons difficulty in understanding a world defined by numbers. I have written my own website all in HTML, but it's pretty awful. Immensely satisfying to do though.

Recently, and with a huge amount of help from others, I've set up Raspberry Pi's to play music around the home, and come retirement, I intend to continue playing with the rPi to develop my understanding of things computerish.

Hopefully a new and improved understanding of basic computing will somehow feed into the older book idea with Quentin the Quantum Mechanic as the central character

What are other people planning to do in retirement?

 

[blossomchris]

That is indeed what retirement is all about ks.234. enjoy.


Bloss

 

[Mick P]

What are other people planning to do in retirement?

I am already doing it. I am lucky in that Mrs Mick and I both enjoy travel and since our retirement in 2010 we average 24 weeks abroad and have done every continent except Australia and the only reason for that is the journey, it's just too long. We spend about 18 weeks in Spain and the other 6 somewhere else. This year we are doing a river cruise up the Danube and another tour of Italy is on the cards. We did it last year and it was our all time favourite. The thought of spending over 90% of our retirement in the UK would do my head in.

We shall keep this up until age catches up with us and then it's multiple tours of the UK.

 

[ks.234]

I am already doing it. I am lucky in that Mrs Mick and I both enjoy travel and since our retirement in 2010 we average 24 weeks abroad and have done every continent except Australia and the only reason for that is the journey, it's just too long. We spend about 18 weeks in Spain and the other 6 somewhere else. This year we are doing a river cruise up the Danube and another tour of Italy is on the cards. We did it last year and it was our all time favourite. The thought of spending over 90% of our retirement in the UK would do my head in.

We shall keep this up until age catches up with us and then it's multiple tours of the UK.

That sounds wonderful. When Mrs S retires (mortages paid off and state pension kicks in) we'll be better off and plan to travel. More immediately we plan to use some of my lump sum and do the Northern Lights (for me) and some Whales Watching (Mrs S). Not sure I like the idea of a cruise, but so far it seems best way to do both.

 

[tones]

Has anyone gone down the 'lifetime mortgage' or equity release routes?

The former is standard in Switzerland, where you NEVER pay off your mortgage, because then the property becomes taxable! So, everyone keeps a small mortgage going and passes it on to their kids, who can keep it going or sell the property.

 

[clivem2]

What can be afforded in retirement greatly depends on how much of a pension you have. I keep reading that a £1m pension pot isn't very much but I'm sure many people would love such a problem to have.

As a defined benefit pot £1m should equate a £50k per year pension plus you have the state pension of a little over £8k so £58k in total. For a defined contribution £1m pot I keep seeing people quoting an annuity of about £30k indexed (plus £250k tax free cash) but not many will take out an annuity vs drawdown with a mix of income generating investments and capitial growth. Of course drawdown has its market risks but it seems like £1m in drawdown vs £1m in defined benefit should end up approximately equivalent. DB even has risk in that will the company guaranteeing the pension be around in 20 years (most funds are in deficit).

Are the doomsayers doing down pension pots of £1m unnecessarily? Is £1m what we should be aiming at or is it nowhere near enough for a plush retirement?

 

[Bob McC]

What people fail to take into consideration is they plan for cruises, road trips, that red coupe they always promised themselves and look at the financing without thinking that for the last 5 years of their lives they are likely to be sitting in a wing chair, with heating on far too high, drooling in to their mug of Horlick wondering who the hell all these visitors are with nothing to spend their money on, apart from care home fees.

 

[clivem2]

It's hard to plan for care fees the way I see it is that up to say mid to late 70s more money is needed for holidays etc than in our 80s when life should be cheaper. Better to spend the money on holidays early on.

 

[MikeMA]

When I retired I signed up for classes in Chinese history, culture and Mandarin. It has become all consuming and, if I'm honest, slightly scary. It is quite clear to me that China is fast becoming the dominant 21st century world power. I'm hoping to be able to read their proclamations in the original Mandarin. Later this year we are off for a month's tour of China with the study group.

Our normal holidays are quite unambitious. We spend about three months of the year at our family hovel on the island of Lemnos, plus a couple of short breaks elsewhere in Europe, usually Italy or Spain. We travelled quite a bit when working and can't really be arsed with it now. We paid off our Mortgages years ago and now just live modestly off our pensions and savings and hope they last until we die.

 

[ks.234]

What people fail to take into consideration is they plan for cruises, road trips, that red coupe they always promised themselves and look at the financing without thinking that for the last 5 years of their lives they are likely to be sitting in a wing chair, with heating on far too high, drooling in to their mug of Horlick wondering who the hell all these visitors are with nothing to spend their money on, apart from care home fees.

My retirement plans include one last trip to Dignitas

 

[Darth Vader]

What can be afforded in retirement greatly depends on how much of a pension you have. I keep reading that a £1m pension pot isn't very much but I'm sure many people would love such a problem to have.

As a defined benefit pot £1m should equate a £50k per year pension plus you have the state pension of a little over £8k so £58k in total. For a defined contribution £1m pot I keep seeing people quoting an annuity of about £30k indexed (plus £250k tax free cash) but not many will take out an annuity vs drawdown with a mix of income generating investments and capitial growth. Of course drawdown has its market risks but it seems like £1m in drawdown vs £1m in defined benefit should end up approximately equivalent. DB even has risk in that will the company guaranteeing the pension be around in 20 years (most funds are in deficit).

Are the doomsayers doing down pension pots of £1m unnecessarily? Is £1m what we should be aiming at or is it nowhere near enough for a plush retirement?

I would say ignore these 'people' as they have no idea what they are talking about.

When retired with savings and investments you do not need nor even want an 'income'. Any income is taxable at standard rates. Instead you just draw down what and when you need any cash in the most tax efficient way. Someone who is earning say £50K is possibly living on no more than £25K anyway after income tax and NI plus paying into a pension and saving for nice things and a rainy day. So when you retire even £25K would be living at a better standard as by now you would have paid off the mortgage.

I was earning a 5 figure salary before I stuck two fingers up and retired at 66. I did leave school at 15 and apart from Uni and another post grad piece of paper had worked until then. I haven't dropped my standard of living at all in fact I am spending more and not only on holidays. However I am not taking any income except those I am forced like my state pension and teachers pension both taxable.

As has been raised above when getting older you never know what is around the corner so live well and enjoy life. Unlike Mick P I love the UK and its people and culture. I spent much of my working life travelling and even 4 years in Germany at ESOC but missed our UK culture and couldn't wait to come back home. I remember the relief I had on seeing a BA plane arrive in Fiji after cyclone Kina had wrecked the islands. The aircraft represented 'home' even though I had thousands of miles yet to travel I felt at home.

Oh and don't fergit that if you have a £mill for every £1000 you spend you deny the tax grabbing IR £400 as thats what they'll take in IHT. Spend it and enjoy.

Cheers,

DV

 

[Mike Reed]

I have written my own website all in HTML, but it's pretty awful. Immensely satisfying to do though.

For some obscure reason, my wife has decided to immerse herself in coding, creating a new website for her (Taiwanese) brother. I gather she's experimenting in PHP and SQL, whatever that is. It seems to fascinate her but leave me cold ('cos I'm digitally thick). Nice to have someone who knows what to do when a new pop-up appears, though !

 

[blossomchris]

Nice to have someone who knows what to do when a new pop-up appears, though !

Crikey, am I on PFM, and I thought you were a gentleman Mike.

Bloss

 

[Bob McC]

It's hard to plan for care fees the way I see it is that up to say mid to late 70s more money is needed for holidays etc than in our 80s when life should be cheaper. Better to spend the money on holidays early on.

I agree.
At 66 I am planning on 10 more years of reasonable quality of life, anything after is a bonus.

 

[blossomchris]

Phoned up a mucker this morning and his wife answered. Half-term I asked her, no said she retired on Friday and after 2 days of rowing with retired partner she was off to the job centre. Oh well.

Bloss

 

[ian123running]

Phoned up a mucker this morning and his wife answered. Half-term I asked her, no said she retired on Friday and after 2 days of rowing with retired partner she was off to the job centre. Oh well.

Bloss

Never tried rowing with my wife ...we have canoed, and ride a tandem

 

[Dozey]

If you have a million in your pension pot it can be passed on without any Inheritance tax. If it goes to offspring they may have to pay income tax on it of course.