pension options

[OwlHoot]

question is, firstly the fundamentals

1, sit down and write down what your operating costs would be per year when you retire, that means, house - heating - lighting - insurance (assuming mortgage paid), car payments/depteciation + running costs, food, holidays, clothes, children etc, plus extra-ordinary costs

this is a very interesting exercise, I did it 18 months ago, once you've got the yearly costs on paper, then you can play with the numbers and see which item is the highest percentage of the total etc and where if needed you could shave extra costs

for my exercise I did a very conservative estimate ie with higher costs, eg new (decent) car every 5 years, decent family holidays 2 x a year etc, budgeted a lot for diesel etc

so immediately, I could see cost reduction potentials with the car etc

so as a result of item #1 you know your best prediction of annual running costs

then,

2, calculate the total £££ needed for retirement fund


dependency,


you need to know when you want to retire

so if we say you want to retire at 55, and you expect to live until 90 then you will need....

90 - 55 * (the answer from item #1) = Something To Chew On

good luck

I've done mine

Milan.

As a favour I've done your calculation for you, Milan, assuming you'll live to be 90.

By my reckoning, to get all that lot you'll need to work until you're 88

[milanbenes]

thanks mate

Milan.

[SimonMac]

do you mean your pension fund will be to sell your house and live in rented accomodation and spend / live off the difference ?

Milan.

No my pension will be to sell the house in the UK and live in our Spanish property on the return, my mortgage will be paid off long before I retire (even retiring at a contractor friendly age) so the excess from the rental income will be invested at that time, but for now its all about paying down the existing mortgage.

[Doggy Styles]

1) Trade the stock market up to your capital gains allowance.
2) Set up a few little Plan B's - Web Business/Sell Online/Mail Orders/IT Services
3) Put cash in high paying bonds and use up your ISA allowance each year
4) Buy a BTL property
5) Carry on contracting.

Piece of pish.

That looks reasonable to me. Only two comments:

Probably best to pay down the mortgage first (MF, you've probably never needed one so can't blame you for missing that )

And as most of us don't know what we're doing with number 1, what about simple tracker ISAs?

[MarillionFan]

That looks reasonable to me. Only two comments:

Probably best to pay down the mortgage first (MF, you've probably never needed one so can't blame you for missing that )

And as most of us don't know what we're doing with number 1, what about simple tracker ISAs?

This would be true if interest rates were high, but as mine is a 0.98% offset I've drawn it all out and stuck it into ISAs, Bonds, RPI Linked Bonds at an average 5%(& tax free) and bought a BTL & a building plot which will return 7% p/a when complete. So I'm paying £4200 per year in interest payments but making £21,000 on the invested equity.

Who said low interests was bad?

[mrdonuts]

This would be true if interest rates were high, but as mine is a 0.98% offset I've drawn it all out

what do you mean you have drawn it all out?

i though the idea of an offset was that you parked your cash with the mortgage benefit being you dont pay interest on mortgage

[mrdonuts]

BTW, a pension of £25k a year would need a "pot" of roughly half a million pounds with current annuity rates (and even then we are talking rates for a 60-65 year old, not a 50 year old.)

see that is what annoys me there are loads in the public sector who are getting this and retiring at ~55 its just not right and the fckers have the audacity to complain theyre getting half a million pound paydays and often a lot more

[mrdonuts]

aaaaaaaaaaaaaarrrrrrrrrrrrrrrrrrrrrrrrrrrrrghhhhhh hhhhhhhhhhhhhh

Civil servants take 15 extra days off every year whilst four ministry staff miss 37 working days | Mail Online

[milanbenes]

BTW, a pension of £25k a year would need a "pot" of roughly half a million pounds with current annuity rates (and even then we are talking rates for a 60-65 year old, not a 50 year old.)

who said anything about 'buying' an annuity ?


Milan.

[MarillionFan]

what do you mean you have drawn it all out?

i though the idea of an offset was that you parked your cash with the mortgage benefit being you dont pay interest on mortgage

Lets say you want to buy a property for £250k and have £150k in the bank.

In theory you need to borrow £100k from the bank. So you could put down £150k and take out a mortgage for £100k, giving you a LTV of 60%.

Or you could put down £25k and borrow £225k(LTV 10%), placing £125k into your current account. In terms of the offset, the interest payments are the same in both cases. But, you could then invest the £125k elsewhere at a higher interest rate then you are paying for the £225k and effectively make money out of the whole deal.

Piece of mathematical pish.