Brock Posted February 25, 2010 Share Posted February 25, 2010 How do you fund the purchase of your motorhome on retirement and thereafter? I have no more than four and a bit years to go before I retire. I've always purchased my motorhomes for cash because I have benefited from a generous employer and the stock market - oh and a frugal wife. I've already decided not to change my van this year as planned - wary of dealers and manufacturers going bust and long delivery times. My current van is a Hymer so should last me for many years if need be. When I retire, I would like to treat myself to another van. Should we use our savings? Should we convert part of my pension into a lump sum? Should we borrow the money to keep our liquidity? My pension is more than enough for us to live on. The answer will depend on our position at the time and will be our decision. I am interested, though in how others went about buying a van on retirement. And is the purchase a 'van for life'? Link to comment Share on other sites More sharing options...
Colin Leake Posted February 25, 2010 Share Posted February 25, 2010 Brock - 2010-02-25 6:53 PM How do you fund the purchase of your motorhome on retirement and thereafter? I have no more than four and a bit years to go before I retire. I've always purchased my motorhomes for cash because I have benefited from a generous employer and the stock market - oh and a frugal wife. I've already decided not to change my van this year as planned - wary of dealers and manufacturers going bust and long delivery times. My current van is a Hymer so should last me for many years if need be. When I retire, I would like to treat myself to another van. Should we use our savings? Should we convert part of my pension into a lump sum? Should we borrow the money to keep our liquidity? My pension is more than enough for us to live on. The answer will depend on our position at the time and will be our decision. I am interested, though in how others went about buying a van on retirement. And is the purchase a 'van for life'? No matter how you decide to fund you new motorhome you should always take the 25% of you pension fund as a lump sum. The simple fact is that this is tax free and it is the only time you are going get your hands on the money tax free no matter how you decide to spend it. If you have the cash use it. If you borrow the money it will simply cost more in the long run and only provide a profit for someone else. Naturally it will be a van for life just like the Rapido we bought was until we decided a new Frankia would be rather fine. The same holds true for the new car we bought just before my retirement which may also be replaced before to long. Enjoy your retirment. Its the only one you are going to get! Our Rapido has the words "What inheritance?" worked it the logos so that it looks like part of the original logo. I retired late to build up funds only to discover that we would have more than enough because every thing was paid for and even spending 1/3 of the year on tour our outgings were no where near what I imagined they would be. Link to comment Share on other sites More sharing options...
Guest Tracker Posted February 25, 2010 Share Posted February 25, 2010 Colin Leake - 2010-02-25 7:12 PM No matter how you decide to fund you new motorhome you should always take the 25% of you pension fund as a lump sum. The simple fact is that this is tax free and it is the only time you are going get your hands on the money tax free no matter how you decide to spend it. I retired late to build up funds only to discover that we would have more than enough because every thing was paid for and even spending 1/3 of the year on tour our outgoings were no where near what I imagined they would be. My own view is that a pension fund's primary role is to ensure sufficient income for the remainder of both of your lives. Whether you take a tax free lump sum or not depends on your circumstances at the time and your perceived need for future income and cash is not always a good idea if you might need income rather more than cash. With annuity rates, at a guess, around 7% you would need to invest your lump sum risk free at better than 5.5% to get a similar return to use as income and that won't be easy so if income is your priority don't take a cash lump sum. If on the other hand you are happy that you and your wife/partner will have enough income both while you are both alive and after either one of you dies then take the cash, or part of it, and use it and enjoy as you wish. I have only ever funded a motorhome, or any other non essential toy, out of savings and when retired unless you have a very good income you will need to take into account the effect that the repayments will have on your budget and therefore your lifestyle. Nice as a new van might seem on paper - will it really do so much more for you than the old one - except depreciate? No van is ever for life as we all get tempted by satan to demolish our kids inheritance and meander off happily into the sunset! We all suffer from the often mistaken belief that a new van is the answer to all our prayers - and this comes from a guy who has had more than his share of vans in recent years! If in doubt talk to an independent financial adviser before doing anything irreversible - like buying a new Fiat! Link to comment Share on other sites More sharing options...
Lord Raindrop Posted February 25, 2010 Share Posted February 25, 2010 As Colin says use the lump sum as a lump, it is the only chance you will have, not much else to add except I plan our M/H use over 5- 10 years with the same one. Then re-assess the situation each 10 years. Tracker suggests an independant financial advisor. I'm not sure he's serious but thats the last person I need to talk to. Link to comment Share on other sites More sharing options...
Guest Tracker Posted February 25, 2010 Share Posted February 25, 2010 Let's just agree to differ then Mike shall we! Link to comment Share on other sites More sharing options...
Bob Elswood Posted February 25, 2010 Share Posted February 25, 2010 Last time I listened to a 'financial adviser' He told me Endowment Mortgages were a much better deal ( for him !! ) And tried to tell me a 'money purchase' pension scheme was the way forwards !!! Thank goodness I never listened to him. Why should anyone listen to any financial adviser ever again!! According to a certain Mrs 'T' we all would have so much money and time on our hands that we would not know what to do with it!! Strange that when more and more people are having to work longer to make ends meet !! As others have stated, do what is right for you, but remember the tax free lump sum is the only bit of your pension that you can get at right away and it would probably take 10 - 16 years or so to break even if you just took it in annual income instead. Link to comment Share on other sites More sharing options...
Mike B. Posted February 25, 2010 Share Posted February 25, 2010 I had similar experience with a Financial Adviser in 1985. He told me my 'pot' would be worth £167,000 in 2009. Now I discover it will be worth £38,000 in 2014 because of market activity over the years. My FA took holidays in the Caribbean, drove a large car, lived in a big house and sold up his business in 1996 to enjoy retirement at 50. I on the other hand have to work another 4 years, live in a 2 bed bungalow and have a miserly pension to look forward to. Bitter? You bet I am-I hope he rots in hell!! Link to comment Share on other sites More sharing options...
Lord Raindrop Posted February 25, 2010 Share Posted February 25, 2010 Perhaps its Tracker's FA who keeps suggesting he buys s/hand M/H's and duff batteries. I avoided a local FA who offered many goodies but ended up in court. I don't need anyone to tell me what to do with my cash thankyou. Link to comment Share on other sites More sharing options...
silverback Posted February 25, 2010 Share Posted February 25, 2010 IM no FA, but i would keep hold of the hymer, then sell it in 3yrs time,then look for a van for life! take the lump sum buy a van and take off, thats our plan and ive got a 2001 rollerteam!!!! but thats my opinion! and im in the same position as you! for colin im intrigued, the grahics "what inheritence" in rapido graphics can you post a picture? that would be well good :D BUT AT THE END OF THE DAY!! you dont know what lies around the corner, so maybe you should do it NOW :D Link to comment Share on other sites More sharing options...
BGD Posted February 25, 2010 Share Posted February 25, 2010 OK, you asked for views: Why this burning desire to throw lots of money away? Keep the MH you've got. No reason why, if well maintained, it shouldn't give you good service for another 20 years. Spend your money using it, travelling Europe, having adventures........ Link to comment Share on other sites More sharing options...
silverback Posted February 25, 2010 Share Posted February 25, 2010 nice one BGD :D Link to comment Share on other sites More sharing options...
Freewheeler Posted February 26, 2010 Share Posted February 26, 2010 We've always paid cash for our motorhomes, because we couldn't afford to pay the interest charges on loans. Having said that, we have only had three motorhomes during the last thirty years. Unless you are really unlucky, they can last for over twenty years, if maintained regularly and correctly. Be aware though, that dealers/salesmen will loose some of their interest when they know that they will be loosing commision from not selling you a credit agreement. One of the benefits of hire purchase is that the hire purchase company can and will exert pressure on dealers to correct defects, if they are involved. Friends of ours were able to use this facility to good effect. Link to comment Share on other sites More sharing options...
RogP Posted February 26, 2010 Share Posted February 26, 2010 not sure I can offer you anything but here's my take. I'm 44 this year , when I turned 40 everything was in place for me to be able to retire at 50 (based on time served with my employer). when I was 41 my wife (then 36) was diagnosed with MS , in the last 3 years she has gone from a full time Senior Staff Nurse to now being retired due to ill health and unable to work. During that period my works pension fund has been in negative equity to the tune of £250m and to get 'a decent' pension now when I retire I have to pay in double the amount and will have to work till I'm 60 or 65. So in 3 years my rosey looking future has been turned totally around. I'm seriously concearned that in 20 years time there wont be a pension pot to pay me anything near what I believe to be reasonable. My thoughts are plan for the worst case scenario now based on the pension being totally inadequate or worse still failed. As others have said look to change your van nearer the retirement date so that its going to last well into that era. At the time of retirement you will know what your needs will then be and you can decide what options best for you. Taking a lump some sounds good on paper , but you can spend that very quickly and before long its gone and (if you buy a van) the value will depreciate. However taking the full pension gives you higher monthly pension which in turn then gets you greater increaments each year. If your monthly pension is more than you need , bonus , treat yourselves or the family more. As mentioned my wife got retired off 3 months ago , we took a lump sump and thats all but spent now , part we've had to pay for a new bathroom to cope with her disability and part to buy our current van. Neither of these items will ever recoup their initial payout (the bathroom may enhance disireability for any future buyers of the house) but to make money on it , no it won't. Think long and hard , luckily you have a few years to consider your options. Good luck and most of all enjoy the free time when it comes and make the most of it. Link to comment Share on other sites More sharing options...
suenmike Posted February 26, 2010 Share Posted February 26, 2010 I can't be much help on the finatial bit But don't forget the wieght limits at 70 or mediacal ;-) Link to comment Share on other sites More sharing options...
747 Posted February 26, 2010 Share Posted February 26, 2010 If you have over 4 years to go before retirement, I think that it would not be possible to glean any useful advice at the moment. The recovery has not really started yet and the picture in 4 years time could be completely different. The value of pensions could be much better on the back of a recovery. I have worked on contract for over half of my working life and looked after my cash myself. On the odd occasion I used the Bank`s "experts", I lost out to some degree. My knowledge of a pension is very limited as I do not have one. What I have are cash and investments, the value of which is comparable with what I would have got going the pension route. My advantage is that I have it all now and can be flexible about making more from it, rather than having it doled out monthly to live on. It means I get the interest rather than the Pension provider. As for buying a newer motorhome, I went the opposite way and bought a larger but older one. I would not purchase a new model as they will not be as reliable.in my opinion. Juddering and Dual Mass Flywheels spring to mind and then there is the long term reliability of complex electronic systems. All of these can be extremely expensive to repair. We all have different opinions and I have never wanted to be first to buy the latest toy. I place reliability and proven good engineering first. I hope your present position improves and I am sure it will. Link to comment Share on other sites More sharing options...
Guest Tracker Posted February 26, 2010 Share Posted February 26, 2010 Lord Raindrop - 2010-02-25 10:40 PM I don't need anyone to tell me what to do with my cash thankyou. Neither do I but then as my own financial adviser I found myself retiring 10 years ago at 55 with no mortgage and enough capital and income to be quite comfortable - so maybe my way was not so wrong after all? Choose your own path and good luck to all. Link to comment Share on other sites More sharing options...
lennyhb Posted February 26, 2010 Share Posted February 26, 2010 Like others say I would take the Pension lump sum, we both reach the big 60 this year wife has a couple of small pensions as well as her state one mine has plummeted but I've left it in high risk hoping the market will recover. We carefully worked out the pros & cons of taking the lump sum and worked out if you don't take it, the increased pension it will take 16½ years to recover it so for us it was a no brainier take the money. We were hoping to retire this year but wife has decided to do a couple more years so we can spend a bit on the house & take more holiday I think she has arranged 7/8 weeks off this year & I work mainly from home mostly part time we don't have big needs & are very frugal with our cash the Motorhome is our only luxury. Worrying times at the moment my wife spent most of her working life for Lloyd's and we are very over exposed on Lloyd's shares. We original were going to buy a van this year but saw just what we wanted at Düsseldorf a couple of years ago and took the plunge, it was a special edition offering very good value at the time at the time, the pound dropped between ordering & delivery and cost us an extra 6k still good value. In your position I think I would buy the van soon after or just before retirement then you have the lump sum to help pay for it & young enough to enjoy it. If you delay you never know what the future brings. As for financing a Motorhome we try to only borrow money if rates are favourable & we have investments to cover it. Link to comment Share on other sites More sharing options...
Clive Posted February 26, 2010 Share Posted February 26, 2010 Taking the 25% lump sum when retiring is not always the right thing to do. I did not. Also I could have taken my AVC's as well but did not prefering to use them to inflate my occupational final sallary index linked pension. It all depends on your circumstances and expected life expectancy. Its all a gamble. For me if I last past 74 then I have won. If not then I have lost. But having been a tight hard working sod over the years I did not need to capitalise on my pension prematurely when I retired at age 60. Many good firms have the pensions index linked and this does not happen to a lump sum if you take it. Also since I retired from full time work interest rates have fallen through the floor. Had i taken the lump sum and invested it myself it could not have done as well as it has done for me unless i gambled personally on the stock market. Did this previously and lost!. So, the crunch question is how much of your assets to convert into something you will enjoy but will without doubt depreciate with time. How do you justify purchasing a motorhome? Dunno, never been able to do that. But if you can afford to loose the cash without worrying about the consequences and know you will enjoy your purchase then go for it! Have you tried living within the income that your pension will provide well before you actually retire and saving the extra income? We did this for 5 years so saved enough extra for a new van and had become accustomed a lifestyle we could continue. Each to their own! C. Link to comment Share on other sites More sharing options...
Bob Elswood Posted February 26, 2010 Share Posted February 26, 2010 lennyhb - 2010-02-26 1:49 PM We carefully worked out the pros & cons of taking the lump sum and worked out if you don't take it, the increased pension it will take 16½ years to recover it so for us it was a no brainier take the money. Yes, that's how long I worked out it would take me to break even also! Like you lennyhb, for me it was a 'no brainer' too. Remember of course you would have to pay tax on that money as 'income' if you did not take the tax free lump sum option. I think I have paid enough in taxes over the years so I would go for the tax free option every time. As others have pointed out, you don't know what the future may bring so 'a bird in the hand is worth two in the bush' so to speak !! Enjoy !!! B-) I forgot to add that I am fortunate enough to have been in receipt of a 'final salary' (indexed linked ) occupational pension from my previous employer at age 50 also. The annuity is rubbish compared to this one but I did not have a choice! The two added together however add up to a reasonable income. Link to comment Share on other sites More sharing options...
Brian Kirby Posted February 26, 2010 Share Posted February 26, 2010 It so much depends, as everyone else has said, on personal circumstances. If the van you presently have is reliable, solid, and works for you, why not keep it and continue using it. There are advantages to older (pardon!) vans. Less eye candy, so less temptation for the light fingered, for one. If you need to tap the lump sum to fund the van, I would, in all honesty, say don't: or at least don't before you do the sums. Vans cost a lot to run and maintain, and that has to be met from post retirement income. If you've needed to pillage the lump sum to buy it, with all respect due to those who have done this, I'd be very wary about being able to afford to run, maintain, and use it. Careful checking highly desirable!IMO, if you still have one, paying off the mortgage early would be a better bet. Then bank as much as possible of what you earn, including the saving on the mortgage, between now and retirement, and use that pot to buy a van if necessary.We met a retired banker (yes, I know!!) in France last spring. He had enjoyed a varied career, and seemed to have acquired some seniority before retiring, so I guess had a good pension. He was swanning around in a middle aged, and slightly travel worn, Auto Trail. Wasn't worth that much, he said, so he never had to worry too much about it. He kept it well maintained, and used it regularly, to keep it reliable. Between his savings and the insurance, if it was wrecked, D.V. he'd buy another, if it was nicked, he'd buy another, if it was damaged it could be repaired, or if not, he'd buy another. His point was that having sufficient income, adequate savings, and not having a worryingly expensive depreciating asset, he could just relax and come and go across Europe as he chose. Comfort, sufficient income, freedom from debt, no ties, and no worries. That is where you want to be. Not travelling around with doubts and worries about security, costs, scrapes, time, and a fear of theft or break-in, because you are, basically, financially over extended.How or if you can navigate to that idealised place, only you can decide, but I suspect the reason you have asked is because that big, shiny, new toy appeals to the boy inside you, but its financial consequences worry the man that succours the boy. Unless you are absolutely dedicated to having the latest, or unless the Hymer is truly (or will be) on its last legs, therefore, I'd say keep both the van and the money, and follow the banker's lead. He was profoundly contended: even more so after we'd finished the second bottle of rosé. :-D Link to comment Share on other sites More sharing options...
Colin Leake Posted February 26, 2010 Share Posted February 26, 2010 There is another trick you can pull if you can afford it. For the last year you work let all your salary go into your pension pot and live off your savings or as happened in my case my state pension. That way your final years income will be tax free and this will more than offset any loss of interest on your savings. This works best if you have adequate savings and are paying the top rate of income tax. You may also be better off than you expect when you retire. If you have worked all your life on a good salary your state pension could be much higher than you expected. Also yours and your wife's tax free allowance will be much higher and transferable not to mention bus passes, various discounts and cheap haircuts on Wednesdays. Speaking from experience I never worked it out properly and as a result decided to retire late when I could have easily retired early. Link to comment Share on other sites More sharing options...
Bob Elswood Posted February 26, 2010 Share Posted February 26, 2010 Good advice there Brian. We have a 2004 reg van, but we intend to keep it although it is tempting to get a newer model. We are happy with our van and we enjoy ( or suffer) the same weather as others who have far more luxurious vans. As we spend most of our time outside when we are on holiday we find that we just use the van for cooking and sleeping in, so why spend a lot of money just to have the 'latest'. Of course this is our choice, and I can appreciate that others will have a different opinion ! Link to comment Share on other sites More sharing options...
Porky Posted February 26, 2010 Share Posted February 26, 2010 Tracker - 2010-02-26 1:35 PM Neither do I but then as my own financial adviser I found myself retiring 10 years ago at 55 with no mortgage and enough capital and income to be quite comfortable - so maybe my way was not so wrong after all? Who's a clever bunny then? Making choices is a personal thing and specific to the individual. Practical advice on things like financial matters which the person may not be aware of is of great value. In my lifetime two very significant health issues seriously damaged any plans I may have had, and I always thought I was a clever bunny too>:-) Still we are now persuing the dream even though that has been interupted with having to leave the van in Spain and for me to have major spinal surgery in the UK. Enjoy the planning(lol) Link to comment Share on other sites More sharing options...
Guest Tracker Posted February 26, 2010 Share Posted February 26, 2010 Porky - 2010-02-26 5:08 PM Who's a clever bunny then? Not really - timing played a very big part both in the contribution element and certainly in the payout elemnet! Fate intervened on our best laid plans in 2004 but as ever I bounced back! Good luck Roy and may the force be with you! Link to comment Share on other sites More sharing options...
Vernon B Posted February 26, 2010 Share Posted February 26, 2010 Interesting comments even if Mrs T came in for a bit of stick for some reason. Good to see that many of us are enjoying retirement with reasonably secure financial means - but do be careful. I've heard it said that we post war baby boomers have had it too good and should be putting their hands in our pockets to pay off the national debt V Link to comment Share on other sites More sharing options...
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