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  • FIRST POST
    • Marine_life
    • By Marine_life 5th Nov 10, 10:46 AM
    • 815Posts
    • 1,459Thanks
    Marine_life
    Early-retirement wannabe
    • #1
    • 5th Nov 10, 10:46 AM
    Early-retirement wannabe 5th Nov 10 at 10:46 AM
    I would like to create a topic (don't see it at the moment - other than the NUMBER thread).

    Who is aiming for early retirement (or who has retired early already)?
    When did you begin planning and what drove the decision?
    What is the strategy for getting there?
    How much of a relative decline in income are you prepared to take / did you take?
    What are your main concerns?
    For those already in early retirement - how is it progressing? What have been the good and bad surprises (financial and otherwise)?

    I will post my strategy but wanted to get some thoughts
Page 177
    • Temrael
    • By Temrael 12th Oct 17, 2:59 PM
    • 330 Posts
    • 70 Thanks
    Temrael
    I would have thought you had plenty of time to make sure that all your non-pension savings were in ISAs so tax on interest should not be a problem. (Low returns on cash is not so easily solved)
    Originally posted by michaels
    I've been using my ISA allowance on Stocks and Shares but have also preserved a couple of years cash allowance in a flexible Cash ISA (I transfer money in at the end of the tax year and then back out again at the beginning of the next). I'm loathe to actually leave cash in there at the moment though because otherwise, whilst I can protect the interest from tax... there isn't any interest (or rather there is, but it's way below inflation).

    Maybe in a few years they will be useful again though (as rates rise and Funding for Lending stops).
    Temrael

    Don't use a long word when a diminutive one will suffice.
    • Marine_life
    • By Marine_life 7th Nov 17, 9:58 PM
    • 815 Posts
    • 1,459 Thanks
    Marine_life
    So...for various reasons we are thinking about moving back to the UK but ...

    ... can we get a mortgage?

    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets

    Where's the risk? Looking at the Debt free wannabe board it seems credit card companies are more than happy to keep upping limits ...

    The financial services industry spends too much time box ticking and not enough time applying common sense.
    Something witty goes here
    • Thrugelmir
    • By Thrugelmir 7th Nov 17, 10:03 PM
    • 56,181 Posts
    • 49,562 Thanks
    Thrugelmir

    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets

    Where's the risk? Looking at the Debt free wannabe board it seems credit card companies are more than happy to keep upping limits ...
    Originally posted by Marine_life
    Assets are here today and gone tomorrow. The lender might ask why you don't use your assets to purchase the property.

    Credit card lending is highly profitable in terms of interest and transactional processing income. A different market to mortgages where profit is very low margin after all operational costs are taken into account. .
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • Daniel54
    • By Daniel54 7th Nov 17, 10:09 PM
    • 575 Posts
    • 687 Thanks
    Daniel54
    So...for various reasons we are thinking about moving back to the UK but ...

    ... can we get a mortgage?

    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets

    Where's the risk? Looking at the Debt free wannabe board it seems credit card companies are more than happy to keep upping limits ...

    The financial services industry spends too much time box ticking and not enough time applying common sense.
    Originally posted by Marine_life
    You might want to ask on the Mortgage board where the mortgage brokers could have a view if there are lenders out there who would lend against your pension/unearned income. Bear in mind they cannot themselves suggest possible lenders on MSE.
    • k6chris
    • By k6chris 7th Nov 17, 10:11 PM
    • 147 Posts
    • 230 Thanks
    k6chris
    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets
    Originally posted by Marine_life
    Out of the box thinking I know, but could you use some of those assets to buy a house without a mortgage.....??!
    EatingSoup
    • ermine
    • By ermine 7th Nov 17, 10:55 PM
    • 623 Posts
    • 924 Thanks
    ermine

    ... can we get a mortgage?

    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets

    Where's the risk?
    Originally posted by Marine_life
    Brexit? Can't pay won't pay for the masses w/o that sort of wedge and the knock on effects?

    Der liebe Gott sorgt dafuer, dass die Baume nicht ins Himmel wachsen and all that.

    You may not be able to get a mortgage but you can afford a house, wherever it is
    • SuperSecretSquirrel
    • By SuperSecretSquirrel 8th Nov 17, 7:45 AM
    • 599 Posts
    • 2,628 Thanks
    SuperSecretSquirrel
    So...for various reasons we are thinking about moving back to the UK but ...

    ... can we get a mortgage?

    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets.
    Originally posted by Marine_life
    If you want to move back to the UK, don't let the fact that you can't get an unnecessary mortgage stop you!

    I'm guessing you wouldn't feel the need to take out a loan to buy a car? Why would buying a house be any different?
    Mtg [2013 £64k|2014 £51k|2015 £38k|2016 £26k] £14,904.43
    MN [2013-£25k|2014-£2k|2015+£16k|2016+£34k] +£50,239.70
    (MFiT4:+60k)
    NW [2013 £126k|2014 £156k|2015 £190k|2016 £228k] £266,147.26 (2020:300k)
    FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%] 17.5%
    • Marine_life
    • By Marine_life 8th Nov 17, 8:09 AM
    • 815 Posts
    • 1,459 Thanks
    Marine_life
    Thanks for all the responses and of course if we can't get a mortgage we will use the assets to buy a house.

    The reason for taking the mortgage is simply the fact that mortgage rates at that LTV are somewhere around 1 to 1.5% whereas we can earn a lot more by keeping the money invested.

    The ridiculous thing is that once we have a UK address we will be able to remortgage after a 3-6 month waiting period - all other circumstances will be exactly the same!
    Something witty goes here
    • gfplux
    • By gfplux 8th Nov 17, 10:02 AM
    • 3,506 Posts
    • 3,259 Thanks
    gfplux
    So...for various reasons we are thinking about moving back to the UK but ...

    ... can we get a mortgage?

    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets

    Where's the risk? Looking at the Debt free wannabe board it seems credit card companies are more than happy to keep upping limits ...

    The financial services industry spends too much time box ticking and not enough time applying common sense.
    Originally posted by Marine_life
    So sorry to hear of your change of plans. Good luck.
    "Brexit Blight of Uncertainty" sums it all up. Although "Brexit Crisis", "The Curse of Brexit" or "Brexit Disaster" come close. I am a Remainder. Brexit will make Britain poor (again)
    • enthusiasticsaver
    • By enthusiasticsaver 8th Nov 17, 12:19 PM
    • 4,827 Posts
    • 9,104 Thanks
    enthusiasticsaver
    So...for various reasons we are thinking about moving back to the UK but ...

    ... can we get a mortgage?

    So far the answer is clearly no ... but consider this ... 60% LTV ... over €2 million in assets

    Where's the risk? Looking at the Debt free wannabe board it seems credit card companies are more than happy to keep upping limits ...

    The financial services industry spends too much time box ticking and not enough time applying common sense.
    Originally posted by Marine_life
    I guess because assets are not looked at in the same way as income. If the market crashes big time tomorrow then your assets may decrease massively and they are not going to take the trouble to find out what assets you are invested in. I understand from a financial point of view cheap borrowing to buy a house with no regular income makes sense to you but there is very little incentive to the mortgage company to lend you cheap money with no guarantee you will be able to pay it off. What about an offset mortgage?

    I think you will just have to look on it as transferring from equities to property. I would buy outright for the security. Are you not selling a property abroad?
    2 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enthusiasticsaver
    • By enthusiasticsaver 8th Nov 17, 12:28 PM
    • 4,827 Posts
    • 9,104 Thanks
    enthusiasticsaver
    So my works retirement do is booked for the 20th December and I am getting my ducks in a row for the start of 2018 when I will be retired woohoo!!

    Our income bond portfolio is now set up and that together with my LGPS will cover 60% of my current part time salary. OH pension comfortably covers our essential outgoings leaving us £1000 per month disposable income from him and my investments and pension gives us a further £750 per month. We have our capital arranged so 25% is in cash assets - Santander 123, Tesco current accounts and internet saver and regular savers. The other 75% is invested in Vanguard Lifestrategy 60, Premier Asset monthly income, Artemis monthly distribution and is mainly in ISAs and SIPPs in mine and OHs name.

    Just picked up latest list of exercise classes from the leisure club we belong to (at last we will get our moneys worth) and making plans to see lots of friends in January for lazy lunches. Might see if we can pick up a nice holiday abroad in February before our second grandchild arrives in April/May. Exciting things to come.
    2 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • DancingBadger
    • By DancingBadger 8th Nov 17, 12:34 PM
    • 143 Posts
    • 115 Thanks
    DancingBadger
    The ridiculous thing is that once we have a UK address we will be able to remortgage after a 3-6 month waiting period - all other circumstances will be exactly the same!
    Originally posted by Marine_life
    Rent for six months or so?
    • OldMusicGuy
    • By OldMusicGuy 8th Nov 17, 1:50 PM
    • 192 Posts
    • 355 Thanks
    OldMusicGuy
    So my works retirement do is booked for the 20th December and I am getting my ducks in a row for the start of 2018 when I will be retired woohoo!!
    Originally posted by enthusiasticsaver
    Good luck, it looks like you are well set up. I still have 16 weeks to go.......
    • Marine_life
    • By Marine_life 8th Nov 17, 6:39 PM
    • 815 Posts
    • 1,459 Thanks
    Marine_life
    Rent for six months or so?
    Originally posted by DancingBadger
    Already found a house we like a lot!
    Something witty goes here
    • Marine_life
    • By Marine_life 8th Nov 17, 6:41 PM
    • 815 Posts
    • 1,459 Thanks
    Marine_life
    I think you will just have to look on it as transferring from equities to property. I would buy outright for the security. Are you not selling a property abroad?
    Originally posted by enthusiasticsaver
    Indeed.

    Yes we are selling but its unlikely to coincide with the purchase.

    We are resigned to paying cash which is not such a bad thing as the majority of money is in EURO so given the current exchange rate its actually not a bad time to be buying sterling and as another poster said, there is value in the security of no debt.
    Something witty goes here
    • Mathes00n
    • By Mathes00n 20th Nov 17, 8:23 PM
    • 7 Posts
    • 12 Thanks
    Mathes00n
    Hi All. Sorry I’ve spent too long lurking and watching this thread but always feel I have more to learn off others than anyone can learn from me. This thread has been an inspiration to my own plans to retire at the end of 2018.

    Qu: When did you begin planning and what drove the decision?
    - I am 46 now and have been thinking about quitting at 50 for many years but in recent years after many, many, hours spent on a forecasting spreadsheet and many more on the internet researching the kind of lifestyle we want going forward, I have become convinced that I can quit earlier. Work can be great but the 5% to 10% of the time that I spend on negative and troublesome issues can outweigh all the good times and load more and more stress into just too many sleepless nights. I’ve survived this for many years but can only take so much more. Frankly, I served my time and earned (in more ways than one) a change of lifestyle.

    Qu: What is the strategy for getting there? Well, I will tell you clever folks our position and leave you to judge the sanity or not of my plans.
    - We are married, no kids. I am late 46 (so aiming for retirement at 48); My wife is 45
    - House owners (small for just the two of us). No mortgage or other debt.
    - Expected cash in savings at Dec 2018: £200,000
    - Expected DC pensions at Dec 2018 assuming moderate growth: £340,000
    - State pension entitlement: We will need to make further contributions in order to both get full state pension entitlement (as the rules currently stand at least). I reckon £20,000 of the above cash savings will be needed and seems worthwhile (My wife in particular has many years missing)

    Qu: How much of a relative decline in income are you prepared to take?
    - £20,000 a year is very doable for us. We live fairly modestly and have been focusing on living on this level of income (outside of work expenses) for the last year. Owning our own small house and not having kids really helps keep the expenses down.

    Qu: Main concerns?
    - I feel we need the cash savings (low risk but I know low returns) in order to fund the period between early retirement and the DC pensions becoming available. Don’t feel we can take risks with this. Arguably should have £50k left at age 55 to play with.
    - From age 55 to state pensions age that would leave us dependent on the DC pensions – in a downturn we would have a couple of years cash reserves in the background but not too much
    - State pensions in the future. Who can tell! I do feel that our budget has a good chunk of leisure & luxuries built in so that if state pensions reduce or our DC pensions are taking a dive we can afford to be frugal for a good few years to cope.
    - And finally the figures seem so sensitive to the smallest change in the percentages I use in my forecast. I’m interested in what others are using for their growth figures:
    - Inflation
    - Pensions growth
    - State pension growth

    But my forecast assume very modest pensions growth and it seems we should be able to make it 90 before heading off to Switzerland.

    Any comments gratefully received (though please do not depress me too much )
    • AlanP
    • By AlanP 20th Nov 17, 8:36 PM
    • 986 Posts
    • 700 Thanks
    AlanP


    - And finally the figures seem so sensitive to the smallest change in the percentages I use in my forecast. I’m interested in what others are using for their growth figures:
    - Inflation
    - Pensions growth
    - State pension growth
    Originally posted by Mathes00n

    In my calculations I use 3% for inflation, with investments making 2% over that (after fees), and 1% for SP.

    I can't see the Triple Lock lasting (i'm 58) so gone pessimistic there in some ways.

    Fortunately our core income will be from index-linked DB pensions so whether inflation is 1% or 5% has a reduced impact for us, but even so, given "time" investments shoudld return Inflation+.

    With ~9 years to live on your cash that is where inflation could hurt you. Do you really need to keep 9 years worth in cash?
    • IanSt
    • By IanSt 21st Nov 17, 10:46 AM
    • 149 Posts
    • 104 Thanks
    IanSt
    Retirement savings can come in handy for things other than full-time retirement
    - We are married, no kids. I am late 46 (so aiming for retirement at 48); My wife is 45
    - House owners (small for just the two of us). No mortgage or other debt.
    - Expected cash in savings at Dec 2018: £200,000
    - Expected DC pensions at Dec 2018 assuming moderate growth: £340,000
    - State pension entitlement: We will need to make further contributions in order to both get full state pension entitlement (as the rules currently stand at least). I reckon £20,000 of the above cash savings will be needed and seems worthwhile (My wife in particular has many years missing)
    Originally posted by Mathes00n
    If it were me I'd want a bit more in savings/investments then what you've mentioned above. There may just be enough if all goes well, but it could get tight if things go a bit astray.

    My main concern is if there is a prolonged period of time when there is only one of you and there is only one state pension coming in (and being blunt here that is likely to be your wife's). Will there be enough other money available so she can live comfortably for possibly another 10 to 20 years.

    You've not mentioned whether your wife currently works, but if she doesn't then have you thought about both of you taking on some part-time work, or even just you finding some more relaxed part-time or even full-time work. It doesn't have to be the same company, or the same line of work, just something that you might enjoy or at least something that doesn't have the negatives of your present role.
    • ggmf
    • By ggmf 21st Nov 17, 11:17 AM
    • 37 Posts
    • 10 Thanks
    ggmf
    In my calculations I use 3% for inflation, with investments making 2% over that (after fees), and 1% for SP.
    Originally posted by AlanP
    Interesting, in my calculations I have also used 3% for inflation, with investments making 2% (but before IFA and Platform fees, though I'd like to see more than that), and 1% annual increases for SP, due @66 and 2 very small DB pensions due @65.

    In my spreadsheets I have used (1) 3.5% drawdown until RIP, and (2) a higher initial drawdown rate for 3 years until my DB and SP kick in to help supplement income, and then cut back on drawdown rate.
    • AlanP
    • By AlanP 21st Nov 17, 12:05 PM
    • 986 Posts
    • 700 Thanks
    AlanP
    Interesting, in my calculations I have also used 3% for inflation, with investments making 2% (but before IFA and Platform fees, though I'd like to see more than that), and 1% annual increases for SP, due @66 and 2 very small DB pensions due @65.

    In my spreadsheets I have used (1) 3.5% drawdown until RIP, and (2) a higher initial drawdown rate for 3 years until my DB and SP kick in to help supplement income, and then cut back on drawdown rate.
    Originally posted by ggmf
    It's all a bit of a guessing game unfortunately, luckily we have a high level of "inflation" protection with the DB schemes.

    Our various DC pots will be used to fund the period after leaving work, and defering DBs until nearer Scheme Age & SP, so sometime in next 7 years. Limited time for inflation too hurt us too much there.

    After that they will be the "icing on the cake" for more extravagent uses and/or a buffer if care required, and/or passing onto children.

    We are very fortunate to be in this position and appraciate the "comfort blanket" we will have.
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