Leave the Rat Race!

andyjwill

Hello,

I am 44 and my wife is 40. I have around 200K in savings. I am planning on taking a break from work and then taking a much lower paid job after 6 months. Looking at our costs and my wife's part time salary and me earning a net £800 a month I need about £850 from my capital each month. I reckon monthly interest on the sum will be about £400 (reducing as capital erodes). So I think I should be Ok for about 15 years and still have a fair amount left when I can draw my pension. My outgoings will include savings 300 per month for holidays and 200 per month to a pension. i currently have a pension pot of £135K.

Is this flawed?

Thanks

sabretoothtigger

Sounds a fairly modest plan. However the capital will erode over time just from taking the interest only, because of inflation

bunny999

In the present climate your main problem could be getting a low paid job. At the moment each job has about 50 applicants

CLAPTON

realistically, if you want to preserve the purchasing power of the capital then you should only take about 1% i.e. 2,000 per annum or 166 per month

your pension pot of 135k would buy an index linked pension asssumigny your are 65 of about 3.5% so 4,725pa

Broadback

Even normal inflation eats away at capital. In 1953 when I started work £1,000 salary was an unimaginable sum. When I purchased my first house in 1967 £30,010 purchased me a good semi in a good area. 10 years later I spent £3,400 having double glazing installed. At that point I could pay my 6 months council tax out of my months salary, a struggle, but I could. I remember when a football win of £75,000 set you up for life. to be honest now I do not think a £!,000,000 would set a young to middle aged person for life, though as a man in his 70s it would do me!

AllTheKs

I did the same about 18 months ago. Mortgage paid off, a bit of savings and wondering why I was busting a gut to feather someone elses nest. My plan was to get back to work after 6 months too but so far savings have held up and, since GB is about to bankrupt the lot of us soon, I can't see the point of going back. Only down side is that the golf handicap has not reduced!

andyjwill

Thanks for the advice so far.

Re:Pension Pot. My plan is to add £200 per month into it.
Re:Capital erosion. Understand but if my maths are correct and applying inflation to costs; I reckon capital will be about 120K in 15 years. (obviously buying power of this is much lower but I will be able to draw pension and will have had 15 years stress free.
Re:Savings mix..currently 160K cash and 40K investments. I guess I was hoping that capital erosion of cash should be protected by appreciation of stock investments..but that can't be certain.
Re:Golf handicap..I look at the amount of tax I pay each month and nearly cry!
Re: Gettin a job..yes biggest problem but hope to have skills to be able to freelance.

Berty

Andy you sound like me.
I have a good savings account, a little less than you but I own a property around £300000 and have several shares in a fishery.
My pension is nothing after it was eaten into by the directors of my last company due to the way it was set up so I will not be funding another but have my assets to fall back onto.
I work bank for a company which can't find enough people to do the work so I get to pick my hours which is great and I spend time doing what I want which tends to be fishing just to relax and watch life float pass:D

andyjwill

Sounds perfect Berty

downshifter98

Hi Andyjwill

crikey, you sound a lot like me too; I actually had to check the username to make sure I hadn't made a 'drunken' post and forgotten...

Wife and I both 44 - property (now down to £250t ish) paid for, kids almost grown up (youngest now 16, 1 working & paying keep, 1 almost through uni), savings of a similar amount (slightly more but then 16 year old might also go to uni!) - both wife and I now work part-time which finances about £800 or £900 per month (with little tax to pay) and the other required £800 being drawn from our savings. Pension wise we both have 28 of the 30 years required for state pension plus I have 2 'deferred' final salary pensions from previous employment (these start at age 60 and are about £20t per annum in todays money - downside is they are bank pensions.....I'm already assuming they might pay a bit less..:eek:) - I'm aware that our savings will inevitably drop but just feel this is more than balanced by a less stressed life (generally!).

If all of this sounds a bit smug I should add that we used to have a bit more but I'm afraid it was in the form of bank shares and the less said about that the better...

downshifter

sabretoothtigger

You would need to have the entire amount in an ISA to avoid income tax on the savings so I can see how NI might be reduced but otherwise its the same tax for the same income I'd think