Shall we stay or shall we go now

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Spanish_Escape
Spanish_Escape Posts: 22 Forumite
in Savings & investments
My husband and I are in a very fortunate position as we met later in life and have no major money worries. We have saved hard since we meet and are lucky to have 3 houses 2 in the UK 1 we live in and the other we rent out. We have holiday home in Southern Italy which is paid for. All of our children are grown up and left home and are independent to a degree. Always room for mum and dad to help out. We both have good jobs but the rat race is really getting us down and we are seriously thinking of leaving our jobs and selling our main home and go travelling and spend more time at our holiday home. After paying off our mortgage and cashing in a few things we should have about £200k. Is this enough money to do this and see us through? Would we be able to live a nice life on the interest? we are 15 years away from receiving our company pensions so our savings need to last longer than 15 years so we always have a comfort blanket

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  • Archi_Bald
    Archi_Bald Posts: 9,681 Forumite
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    Spanish_Escape wrote: »
    After paying off our mortgage and cashing in a few things we should have about £200k. Is this enough money to do this and see us through? Would we be able to live a nice life on the interest?
    .

    Enough money to see you through what? How much money do you need a month? What is your definition of a nice life?

    Interest rates are pitiful everywhere throughout the EU. You'd be very lucky if you could earn 2% after tax anywhere, more likely just 1%. If you are living off your capital, your income from interest obviously reduces all the time.

    Put all your numbers into a spreadsheet and you'll be able to work out what you can afford going forward.
  • Spanish_Escape
    Spanish_Escape Posts: 22 Forumite
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    Hi Archi Bald
    Thank you for your quick response . We have worked out that we think we need £15k a year to live comfortably (enjoy meals out, pay for hobbies etc) on paper that seems enough but in reality we don't know. I appreciate our capital will reduce as interest rates are very poor but we are hoping the interest and the captial will last until we start to recieve our private pensions which will be over £15k at today's estimate. Our view Could be just a pipe dream but trying to make it come true
  • TCA
    TCA Posts: 1,530 Forumite
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    It might be an idea not to go "all in" as you're not tied in to a decision for 15 years. Instead of liquidating and selling everything, why not try a halfway house, give up the jobs and try it for a year and see how it goes?

    Daft as it may sound right now, you might miss some sort of employment or the comfort of your main home.
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    TCA wrote: »
    why not try a halfway house
    Another house, they've got three already! ;)

    To OP - are you planning on retaining your rented property when you sell your current main home? Making £200K last 15 years sounds tight but an ongoing revenue stream from property might make a significant difference, although as Archi says you really need to work it all out with your actual figures....
  • Motormad
    Motormad Posts: 134 Forumite
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    Not enough info to give my opinion,Spanish Escape.Do you mean to sell your own home and the one you rent,is that where you count the £200k.
    If you intend to travel,how does a Motorhome sound ,it might be worth thinking about as you can live quite cheaply and see a lot of places.
    I retired about age 54 because I suddenly became aware of IHT and the thought of grafting another 10 to 12 years and leaving 40 percent to the government was shocking.
    Give a bit more info about your situation and I'm sure you'll get some good responses.
  • Spanish_Escape
    Spanish_Escape Posts: 22 Forumite
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    Yes we are planning to keep the rental property going however we do have a small buy to let mortgage on it so we need to keep that in a fund to pay it off.

    We have done many many spreadsheets and looked at different scenarios and it looks ok on paper but like anything reality is some what different.
  • Onawingandaprayer
    Onawingandaprayer Posts: 642 Forumite
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    My gut reaction is go for it, but don't burn your bridges in the UK. Keep a property (or two!) here, as, to be morbid, one really doesn't know what's round the corner. (As some close friends of ours recently found out.)

    If your sums appear to work out, go for it!
  • gallygirl
    gallygirl Posts: 17,228 Forumite
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    I reckon that with a withdrawal rate of 15k a year, inflation of 2% and net interest of 1.5% you will last around 13 years. That would leave you broke.

    Do you have any savings or is the 200k wholly your house purchase? How much is the outstanding mortgage and how much rent do you receive? It may be possible to pay the mortgage off and have rental income? Bear in mind though that Mr Osborne is scrapping tax relief for overseas landlords - !!!!!!! :mad::rotfl:. And you'd need a contingency fund for repairs etc.

    Personally it's looking too tight for me. And I'm of the 'go for it' mentality normally. If you lived really frugally for a year (no sky, eating out, new clothes etc) how much could you save? Another 20k would be a great help (and a year less to fund!). But you are looking at a lifetime on very low income - might be harder to do when you're older and need some help?

    Hope you find a way.
    A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort
    :) Mortgage Balance = £0 :)
    "Do what others won't early in life so you can do what others can't later in life"
  • James_B.
    James_B. Posts: 404 Forumite
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    It sounds like too little, to me. As above, interest rates are too low to draw what you want from interest, and that's ignoring the question of indexing, which tends to mean that you'll need far more per year in twenty years than you do now.

    Remember, though, that you can still work, even while "retired". You don't need much as a top-up to change you from struggling to comfortable.
  • itch_for_a_glitch
    itch_for_a_glitch Posts: 10,705 Forumite
    edited 20 November 2014 at 4:14PM
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    Spanish_Escape wrote: »
    My husband and I are in a very fortunate position as we met later in life and have no major money worries. We have saved hard since we meet and are lucky to have 3 houses 2 in the UK 1 we live in and the other we rent out. We have holiday home in Southern Italy which is paid for. All of our children are grown up and left home and are independent to a degree. Always room for mum and dad to help out. We both have good jobs but the rat race is really getting us down and we are seriously thinking of leaving our jobs and selling our main home and go travelling and spend more time at our holiday home. After paying off our mortgage and cashing in a few things we should have about £200k. Is this enough money to do this and see us through? Would we be able to live a nice life on the interest? we are 15 years away from receiving our company pensions so our savings need to last longer than 15 years so we always have a comfort blanket

    .
    So you would have a holiday place, a BTL that doesnt give an income, and deferred pension income of £15k pa in fifteen years.
    With £200k(forget any income from that, it "might" keep pace with inflation) you are going to run out of money, worryingly you will be in your sixties when the money runs out, do you think you can get a job with a decade missing from your CV ?
    If you "go for it" I see you burning your £200k in ten years, then living in either of the two properties and selling the other because you are skint. Sorry.

    £15k doesnt sound much of a pension, have you included SRP (two?)? We expect two basic state pensions, so around £11k.
    £15k doesnt sound like much for comfort either, we spend £18k and dont travel much.

    *edit*
    Just re-read and notice £15k is private pensions, so you are going to be appreciably richer in retirement. Assuming you are early fifties, you might squeak it by taking your private pensions early. Too close for me.
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