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Saving for Retirement


Bulletguy

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Taking early retirement myself at the end of the year I watched a Newsnight special during the week on this subject.

 

It's forever being banded around that people are living longer and the country is fed up of giving old farts like me little tit bits like a bus pass or winter fuel allowance, neither of which I qualify for incidentally as I was born just four months 'too late'.....I now have to wait until i'm 65.

 

Not only are a variety of little tit bits like the above mentioned being gradually eroded away, presumably until there is nothing left at all, but older people are being encouraged back into work with the likes of B&Q leading the way by being the first employer to staff an entire store with employees over the age of 60. Quite whether that is an achievement to be proud of is a matter of opinion and subject for another discussion.

 

We are told that because we are 'living longer' we are costing the country too much and people must make their own provisions by way of savings. As for the 'living longer' bit I personally find it all rather odd. We are encouraged to lead a healthier lifestyle, smokers have seen the price of tobacco go stratospheric not to mention the draconian BOSIPP with drinkers about to experience the same treatment. Both alcohol and tobacco bring in billions of revenue to the Exchequer, yet both are known to DECREASE life expectancy. Tax from tobacco and alcohol benefits everyone whether you are a non smoking teetotaller or not.

 

As to saving money this is one part which particularly interests me. Income levels, not to mention personal circumstances, go to make this an extremely difficult subject. Just how much 'savings' do people consider to be adequate? How much does anyone manage to 'put aside' on a regular basis?

 

For example, who has managed to save £50k plus or even £100k? Because if you retire at 60 or before, these are the sort of MINIMAL figures you will need to live on until you draw your State Pension.

 

Due to numerous personal 'circs' in my life I managed to aquire very little in the way of savings and had a long battle to pay off my mortgage. But whilst I now have a good sum of equity in bricks 'n mortar, zero debt, plus a forthcoming redundancy package, i'm still basically 'penny poor'.

 

So my question is........who has managed to save in hard cash;

 

£50k+

 

£100k+

 

........or more?

 

 

 

 

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Mel B - 2010-09-11 3:16 PM

 

Why not? Assuming it's all 'legal and above board' what difference does it make? :-S

100% agree with you.

 

I can be perfectly open as everything I have is owned entirely by myself and is all totally legit. I did think this might be a tad touchy for some which is why I left the figures as a very broad example.

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Bulletguy - 2010-09-11 3:30 PM

 

Mel B - 2010-09-11 3:16 PM

 

Why not? Assuming it's all 'legal and above board' what difference does it make? :-S

100% agree with you.

 

I can be perfectly open as everything I have is owned entirely by myself and is all totally legit. I did think this might be a tad touchy for some which is why I left the figures as a very broad example.

LOL you dont even advirtise what M/H you have and you want peeps to tell you if they have saved money ;-) :D :D :D

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Guest pelmetman

Being self employed I can work as long as I want (lol) Which I am quite happy to do, but I prefer to work part time, so I semi retired 6+ years ago at the ripe old age of 46.

I used to work 7 days a week and was a higher rate tax payer >:-( But fortunatly I came to my senses (lol)

Got fed up giving it to Blair and Brown to waste >:-(

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pelmetman - 2010-09-11 5:17 PM

 

Being self employed I can work as long as I want (lol) Which I am quite happy to do, but I prefer to work part time, so I semi retired 6+ years ago at the ripe old age of 46.

But has that enabled you to put aside sufficient savings for when you throw the towel in altogether......voluntary or involuntary? The figures I quote are based on one person alone not working at all.

 

Both Governments have banged on about saving and yes of course I understand the importance of it, but you need to be earning at a sufficient enough level first in order to have a surplus amount to put by each month (note I do not use the term 'disposable income' which is something quite different).

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Guest pelmetman
Bulletguy - 2010-09-11 6:15 PM

 

pelmetman - 2010-09-11 5:17 PM

 

Being self employed I can work as long as I want (lol) Which I am quite happy to do, but I prefer to work part time, so I semi retired 6+ years ago at the ripe old age of 46.

But has that enabled you to put aside sufficient savings for when you throw the towel in altogether......voluntary or involuntary? The figures I quote are based on one person alone not working at all.

 

Both Governments have banged on about saving and yes of course I understand the importance of it, but you need to be earning at a sufficient enough level first in order to have a surplus amount to put by each month (note I do not use the term 'disposable income' which is something quite different).

 

Nope (lol)................ my approach is different to most, we practice thrift and can get by on less than a lot of people, I expect when I give up completely we will manage quite well on the state pension and I will have a small navy pension and er in doors will have a similar civil servant pension. Plus we will do equity release when I retire proper as we have no kids, so we intend to spend every penny we can!

I think alot of people struggle when they retire because they have not got out of the habit of spending money, I know my old man has found it hard to adjust *-)

Being a natural skinflint will be very useful (lol)

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pelmetman - 2010-09-11 5:17 PM

 

Nope (lol)................ my approach is different to most, we practice thrift and can get by on less than a lot of people..... plus we will do equity release when I retire proper.

 

I've only just begun looking at equity release as an option and surprised to find it's not quite as simple as what I thought. Not only do some Banks/BS not offer it at all, but where it is there are many varied types.

 

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I stopped worrying about how much I was worth when a small number of of friends past away before they reached 65. All I can say is try to have no debt and make sure the roof over your head is paid for, then you can decide how you want or need to get on with your life. One thing I made a mistake on was by not doing a draw-down on the equity, we took the full amount which was silly really but you only live once and on the whole I don't think we have regretted anything.

Bulletman you could be dead tomorrow!! but I wish you a long life.  

Dave 

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So true Dave.

 

I have a very close friend (known each other 32 years now) who took early retirement at 53, pursued his hobby of military aircraft photography and tour around in his camper only to suffer a stroke four years later.

(link to his website here;)http://valleyaviationsociety.net/Coppermine/thumbnails.php?album=143

 

You are spot on with the debt. A mortgage was my only 'debt' that I carried for years.....far too many for my liking but changing 'circs' dictated. But I resisted the temptation to go out maxing the credit card or taking loans out for daft things like new cars or plasma tv's. Everything I have I own.....it's never belonged to a Bank or finance company.

 

You say you have regrets about taking the full amount of equity, but with the slump in property prices that must surely depend upon whether you took it before, or after the slump?

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We sold our house in Northant's and moved to Linc's last year and invested the difference in price, which is not inconsiderable. I packed up work at nearly 64 to do up the new house for our retirement and even if we don't stay here we should be able to sell it at a good profit. My wife carried on working at her old job, travelling 160 miles a day. She has now jacked it in and is going to work 15 hrs a week from home for the same company, whenever she likes.

Which means we can now both get off the treadmill and do what WE want when WE want. We don't have any kids, so everthing we own is fully paid for. We don't have a big pile of money, but we have someting that all the money in the world can't buy and that's our good health and plenty of things that we still want to do and see.

Too many people put too much store in working for it's own sake and when they retire, they don't know what the hell to do with the rest of their life, having been too busy working to have any hobbies and outside interests. I know of loads that have pegged out shortly after retiring. You've got to keep yourself and especially, your brain, active or they will both sieze up before they should.

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No, whatever you agree, if say the equity release is £35000  at 6% then you decide whether to take the full amount or take it in smaller amounts over time then you are only being charged  6% on whatever you take out and not on the £35000. But you only pay that back + an early repayment fee if you decide to repay whatever you have borrowed  earlier than the agreed time. Make sure if you go down that road that they are members of ships.

We took it before the slump, had a long holiday, treated ourselves then topped our ISAs up and got a few more shares in BG and N/Grid with the remainder

Don't forget, the older you are the more they will allow you.

Dave

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Before even considering equity release look very hard at a few aspects.

 

What happens if or when interest rates go up?

 

What impact will it have on the survivor after the death of one of you?

 

Consult with children about the impact on their inheritance?

 

Think about whose interest the schemes are really designed to serve - it is a financial product and it's primary function is to make money for the company that sells it?

 

That said there are circumstances that it can fit into well but you really need to talk to a good independent financial adviser first.

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Mel B - 2010-09-11 3:16 PM Why not? Assuming it's all 'legal and above board' what difference does it make? :-S

OK Mel, why don't you make a start and tell everyone on here what the total is of your savings.

Me? I'll just continue to take the view that it's none of their business.

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Tracker - 2010-09-12 7:33 AM Before even considering equity release look very hard at a few aspects. What happens if or when interest rates go up? What impact will it have on the survivor after the death of one of you? Consult with children about the impact on their inheritance? Think about whose interest the schemes are really designed to serve - it is a financial product and it's primary function is to make money for the company that sells it? That said there are circumstances that it can fit into well but you really need to talk to a good independent financial adviser first.

Sound advice Rich. Our interest is fixed but it is compound interest. Payback time is when the last partner dies or if they have to go into full time care, House has to be sold at market value at that time and not sold at a price just to cover what is owed, and if anything is left it goes to into the estate.

'Consult the children'

Speaking on a personal note, We have brought them up in a happy household where they have wanted for nothing within reason and affordability. They have their own homes (with mortgages) and are in work, they also have their own savings and thankfully always help each other out if need be. My initial reaction when asked to consult with them was 'what the hell as it got to do with them, we are doing what we want to do now' but we did and they were all for it. There is a bit of a cushion though for them as we own another property, so they share that but as for cash there will be very little of that to share. :-D

Dave

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nowtelse2do - 2010-09-11 11:50 PM

 

Don't forget, the older you are the more they will allow you.

Dave

Tracker - 2010-09-12 7:33 AM

 

Before even considering equity release look very hard at a few aspects.

 

That said there are circumstances that it can fit into well but you really need to talk to a good independent financial adviser first.

Its something which is still relatively new to me and since found there are many varieties to choose, so it can be quite confusing. So far it's no more than an option and i'd never commit unless convinced 100% that it suits me.

 

But as a single person with privately owned property, should I ever end up having to go into care for whatever reason, that property (as long as I own it) would be used to finance care. That's one downside of owning private property.

 

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Bulletguy - 2010-09-12 11:07 AM
nowtelse2do - 2010-09-11 11:50 PM Don't forget, the older you are the more they will allow you. Dave
  So far it's no more than an option and I'd never commit unless convinced 100% that it suits me. But as a single person with privately owned property, should I ever end up having to go into care for whatever reason, that property (as long as I own it) would be used to finance care. That's one downside of owning private property.

So you would be paying for care because you own the property or you would be leaving it to the Government or a charity if you have no family. There are two roads to go down as I see it, that is either down size if possible (cash left over) or equity release (living mortgage) Both options gets you money back to do what ever you want to do. At lease you are getting some thing and they would be getting less. The longer you try to leave it the more you will get.

Dave

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nowtelse2do - 2010-09-12 4:49 PM

So you would be paying for care because you own the property or you would be leaving it to the Government or a charity if you have no family. 

The longer you try to leave it the more you will get. Dave

Absolutely the point I made in my post.

 

Serious savings or bricks 'n mortar means you will be shelling out to go in a home. Have neither and you will go into government funded care.

 

As for 'leaving it longer the more you get' is a bit like being on a winning streak in a Casino and deciding to chance one more chuck of the dice! I've never been a gambler so would make a damn rotten loser!!

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Hi Bulletguy

 

I am an IFA and I dislike equity release. More accurately I suppose I hate the way they are sold on the TV as a way of getting a new car having a holiday.

 

That said, if as I understand it, you are single (no dependents? or are they financially "well set up" themselves?) so who will get the estate/money when you die?

 

There is an interesting programme I caught on the TV after BBC breakfast time called Heir Hunters that shows the number of people that die intestate (no will) and whose estate would otherwise go to the government.

 

So I do think that you could be one of those people that to, be frank, could benefit from Equity Release because you are single, asset rich but cash poor. This to me, from the "best advice" viewpoint, means that at first glance, you would be silly living in a nice house but cannot afford to do much else!

 

BUT! - As I say - I really do not like Equity release. However, if you go for one DO use the expertise of the charities like Age Concern and Help the Aged who employ experts to assess the schemes and from all of them select a panel of the best.

 

However, I would look at other ways of getting income out of your home.

 

I have always said to my family that if ever I was left alone if SWMBO sadly died, then I would buy a Canal Barge and live on that whilst renting the family home out.

 

Nice bit of income and I would still own the property which is important to me as I want my kids to benefit from our estate.

 

Similarly, there are couples who rent out their homes and live 10 months of the year in fantastic two bedroom mobile homes on the site where we have our caravan on a seasonal pitch. They have to live of site once a month for a couple of days but they either visit family or use their caravan/motorhome.

 

In Jan/Feb when the site is closed they jump on a plane after Christmas and rent an apartment in Spain. Another drive their MH down to Portugal where they meet up with several other and have a long break, usually coming back just before Easter.

 

Now I had never considered doing such as this until I got into caravanning. Their lifestyle is fantastic. They own property so are on the "property ladder". They never have a problem renting the house out and when interest rates plummeted; their rental income stayed the same.

 

The rental market is good and as long as mortgages are relatively difficult to get, the rental market will remain so.

 

As a couple we are very envious and will probably do much the same all being well.

 

So in summary, despite having professional reservations about Equity Release, I suspect it could work for you. However, there are many other options and I would urge you to "think outside the box" before committing because once you sign up for one of those ruddy things they have you by the short and curlies.

 

I have very good professional reasons for urging extreme caution with Equity Release.

 

Please be careful. Take good Independent Advice from an IFA and a Solicitor - those charities usually have a list of both for your area that specialise.

 

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Ohhh I love these kind of threads, totally out of my league in all depts, we are thousands of pounds in debt , have no savings whatsoever . We both run our company together and just about scrape by to live week by week.

 

I am not near retirement age and he is 14 years behind me, how we will cope over the next 20 years we have no idea. Do we worry and fret? Yes on a daily basis, but we have a life , lovely little girl and our health and reading on here and other forums we are very lucky indeed.

 

Keep writing I love to hear of others who do so well and can retire early and have a great life in their motorhomes, its what keeps me going each day.

 

Well done to all of you, I genuinely admire and envy you.

 

Mandy

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