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    • fatbeetle
    • By fatbeetle 12th Sep 17, 6:24 AM
    • 290Posts
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    fatbeetle
    Living on savings
    • #1
    • 12th Sep 17, 6:24 AM
    Living on savings 12th Sep 17 at 6:24 AM
    In order to retire early, me and SWMBO will be living on a lump sum I am due.

    From Jan 2018 until sometime in 2024, we will live on a pot which currently stands at roughly £274,000

    Has anyone else lived on a savings pot for a period?

    Any tips or advice?


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    Last edited by MSE Andrea; 20-09-2017 at 9:20 AM.
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
Page 3
    • fatbeetle
    • By fatbeetle 13th Sep 17, 4:24 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle
    I believe the OP, but think they would be making an error spending the lump sum down to zero and just relying on the DB pensions. Their plan might work, but as stated it is not optimal.
    Originally posted by bostonerimus
    DB pensions? Soz what are they?

    Just to clarify

    Come 2014 we will have my wife's super, which, at our (lower than current,) predicted exchange rate, will give us some £45,000 pa.

    I will then be entitled to a full UK state pension, and have a small NHS pension which should pay out somewhere in the region of £70 pw.

    On top of that my M-I-L who is now 83, (fortunately in good health,) has willed her Aussie house to her only daughter, that is currently valued at £350,000.

    ETA: Forgot, SWMBO will still be paid, at half pay, until July 2019.
    Last edited by fatbeetle; 13-09-2017 at 8:56 AM.
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • xylophone
    • By xylophone 13th Sep 17, 9:42 AM
    • 22,881 Posts
    • 13,241 Thanks
    xylophone
    DB pensions? Soz what are they?
    Your NHS pension is one example.

    https://en.wikipedia.org/wiki/Defined_benefit_pension_plan
    • fatbeetle
    • By fatbeetle 13th Sep 17, 10:01 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle
    Many thanks, I hadn't thought of that.
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • coyrls
    • By coyrls 13th Sep 17, 11:36 AM
    • 851 Posts
    • 864 Thanks
    coyrls
    Interest rates out here, (Australia,) where the money will be kept and drawn down from, are quite good at the moment. I'll have to look at spreading my savings appropriately.

    Thanks for this advice.
    Originally posted by fatbeetle
    You can ignore the £85,000 and income tax points, as they are specific to the UK, I've no idea what the position will be in Australia.
    • uk1
    • By uk1 13th Sep 17, 12:58 PM
    • 994 Posts
    • 642 Thanks
    uk1
    fatbeetle,

    You have asked for any thoughts and advice with respect to your situation. I was in pretty much the same situation although I "retired" at around 50'ish although I can't be precise because I drifted into it rather than it being on a particular day.

    The key thing I would keep in mind is not just where to invest your cash to maximise return, but firstly decide whether in your situation risks are are requirement at all. Very few people are fortunate enough in life to have enough cash in retirement to keep a reasonably good lifestyle. For that understandable reason much of the advice given for genuine reasons is how to exceed the dire rates given by banks by taking more speculative and riskier investments because the advice is from people in a different situation to your own. There are a very few fortunate people who have enough cash and very few of these people realise that they need not risk their cash at all simply because they have enough of it already. Many will say "you can never have enough" but actually you can and if you do, then risking it all and fretting about investments and whether they are safe is something you may have the luxury of not needing to do. I only offer this advice because I see people risking all their lifestyle because it didn't occur to them that actually they need not worry about increasing their assets and spend their time worrying about it and managing it. To repeat, very few are in this position but it sounds like you may be, and therefore your main concern should simply be to keep your cash safe and ensure you understand what you are spending.

    We have kept a simple spreadsheet with all our "cashable" assets, and every so often I take the current balance and compare that balance over many years ie five or six, simply to judge whether my depletion of my sinking fund is concerning or not. If it isn't then that is that concern over.

    Good like and best wishes in your retirement.
    • Triumph13
    • By Triumph13 13th Sep 17, 1:10 PM
    • 1,036 Posts
    • 1,232 Thanks
    Triumph13
    Are you taking a deliberate FX position because you believe the AUS$ is more likely to strengthen against GBP than vice versa? If not then I would seriously question the wisdom of holding AUD cash to meet GBP spending just because you can get 1 or 2% more interest.
    • bostonerimus
    • By bostonerimus 13th Sep 17, 1:39 PM
    • 868 Posts
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    bostonerimus
    Do not make plans that rely on anticipated inheritances and of course your UK state pension will not be index linked if you live in Australia......so you might want to have some investments that will grow to replace the index linking.

    Even if you have enough income it is risky to have zero capital just from a cash flow perspective. Also you say you will have more than enough income from your pensions and super so do you have a plan to invest the excess?

    You should also file of one these with HMRC to make sure you receive the NHS and UK state pension free of UK tax.
    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/452963/aust-indiv2003.pdf
    Misanthrope in search of similar for mutual loathing
    • atush
    • By atush 13th Sep 17, 2:40 PM
    • 16,243 Posts
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    atush
    The op and his Aus wife are retiring in the UK, so thst would not apply
    • bostonerimus
    • By bostonerimus 13th Sep 17, 5:50 PM
    • 868 Posts
    • 437 Thanks
    bostonerimus
    The op and his Aus wife are retiring in the UK, so thst would not apply
    Originally posted by atush
    OK, then they should look into the UK taxation of Aus superannuation. The points about retiring with capital as well as income and having a plan for investing excess pension income are still worth thinking about.
    Misanthrope in search of similar for mutual loathing
    • ukdw
    • By ukdw 13th Sep 17, 11:47 PM
    • 42 Posts
    • 34 Thanks
    ukdw
    To repeat, very few are in this position but it sounds like you may be, and therefore your main concern should simply be to keep your cash safe and ensure you understand what you are spending.
    .
    Originally posted by uk1
    Slight variation on uk1's suggestion is you could keep your basic living costs for all the years prior to pensions in safe cash, ideally in sterling if you are certain of being uk based - which I suspect could be 70% or less of your lump sum, and then invest or spend the rest as you see fit without having to worry about investment or exchange rate ups and downs.

    Also I like the Op's camper van idea - we did the same a few years ago, and whilst they may be a big initial capital outlay, they tend to keep their value remarkably well and massively reduce holiday costs when compared to hotel stays.
    • fatbeetle
    • By fatbeetle 14th Sep 17, 3:42 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle
    Are you taking a deliberate FX position because you believe the AUS$ is more likely to strengthen against GBP than vice versa?
    Originally posted by Triumph13
    We are basing our assumptions/planning on $1 = 50p, we've estimated on the side of caution.

    The exchange rate over the past 10 years can be seen here.
    http://www.xe.com/currencycharts/?from=AUD&to=GBP&view=10Y
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • fatbeetle
    • By fatbeetle 14th Sep 17, 3:45 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle
    Do not make plans that rely on anticipated inheritances and of course your UK state pension will not be index linked if you live in Australia......so you might want to have some investments that will grow to replace the index linking.
    Originally posted by bostonerimus
    The house/inheritance is not part of our planning, and is a "bonus" if anything. We will be living in Cornwall.

    Also you say you will have more than enough income from your pensions and super so do you have a plan to invest the excess?
    We've not planned on doing that, but it may be a good idea, my thanks.
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • fatbeetle
    • By fatbeetle 14th Sep 17, 3:48 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle
    OK, then they should look into the UK taxation of Aus superannuation.
    Originally posted by bostonerimus
    If you are aged 60 in Aus, then superannuation income will usually be tax-free.

    https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/tax-and-super
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • fatbeetle
    • By fatbeetle 14th Sep 17, 3:50 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle
    Also I like the Op's camper van idea - we did the same a few years ago, and whilst they may be a big initial capital outlay, they tend to keep their value remarkably well and massively reduce holiday costs when compared to hotel stays.
    Originally posted by ukdw
    That's very good to hear. We're lucky as one of my best mates used to be employed by a major campervan company. He now buys and does up vans as a hobby/income source.
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • xylophone
    • By xylophone 14th Sep 17, 9:40 AM
    • 22,881 Posts
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    xylophone
    If you are aged 60 in Aus, then superannuation income will usually be tax-free.
    https://www.gov.uk/tax-foreign-income/foreign-income-thats-taxed-differently

    https://www.taxation.co.uk/Articles/2014/02/05/319941/australian-pension

    Above may be worth a look.
    • MallyGirl
    • By MallyGirl 14th Sep 17, 9:58 AM
    • 1,901 Posts
    • 6,353 Thanks
    MallyGirl
    That's very good to hear. We're lucky as one of my best mates used to be employed by a major campervan company. He now buys and does up vans as a hobby/income source.
    Originally posted by fatbeetle
    We are also working towards a camper van although we won't be retiring till 60 (current plan) and we are now 50. The advantage we have is that we already own a suitable VW Transporter as I use it for sled dog activities. Once the dogs are too old for this - probably got a couple more years in them - then we will rip out the crates and hand it over to someone to convert. DD will be off at uni by then so the world will be our oyster - well the British Isles will be!
  • jamesd
    We will be living in Cornwall.
    Originally posted by fatbeetle
    The Pound is quite low compared to most currencies at the moment and raw rates of 12% or so are available from peer to peer lending from UK places, perhaps 10% after allowing for possible bad debt.

    While the Pound could fall more, or the Australian dollar rise more during say a resource boom repeat due to another Chinese building boom, you seem to have pretty good conditions for making a move now or starting on a fairly rapid moving process. If you did want to keep exposure to the currency pair there are spread betting or options available that could deliver that. Tying your retirement income to a country whose currency moves are primarily driven by commodity prices doesn't look like a good move given it currently being decently high rather than so low that the only way to go is up.
    • fatbeetle
    • By fatbeetle 15th Sep 17, 12:55 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle

    Many thanks, we will be taking advice.
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • fatbeetle
    • By fatbeetle 16th Sep 17, 5:43 AM
    • 290 Posts
    • 406 Thanks
    fatbeetle
    Assuming the money is in low interest accounts, that would be roughly £40k per year to spend it all. If they need to spend that much to live off for the next 7 years I would assume their pension income after tax would be over £40k, as he says it will be well above what they need.

    Best way to do it would be to set up a monthly standing order (or orders if from various accounts) amounting to £2,500 as a monthly salary to themselves. Just a thought which could be a consideration.
    Originally posted by Audaxer
    Thanks, we're actually doing that, and have budgeted to live on £25,000 pa, mortgage free.

    Living that way means we will still be able to enjoy the standard of living we would want, plus "cash in the bank" for expenses, a safety net, and treats.

    Out of the forecast pot there will be some initial set up expenses, such as house renovations and a conservatory (estimated at £30,000), buying a car ( £4,500 second hand) various insurances, etc. However all our moving costs are now paid, and we have a "proper" savings pot of some £25,000 at hand for any expenses which crop up over the coming months.

    Many thanks again to all for their thoughts
    “If you trust in yourself, and believe in your dreams, and follow your star. . . you'll still get beaten by people who spent their time working hard and learning things and who weren't so lazy.”
    • AnotherJoe
    • By AnotherJoe 17th Sep 17, 6:43 AM
    • 7,237 Posts
    • 7,750 Thanks
    AnotherJoe
    Can you lease cars using non guaranteed income?
    Originally posted by westv
    I'll be finding out shortly
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