How to use £160K to support me for the next 30 years?

Ally1205

I own a house worth about £165K. I have no mortgage. I'm 57 and I'm kind of tired of working. If I sell my house, is there any way I can use the £165K to support myself for the rest of my life? I don't mind emmigrating if necessary (to take advantage of cheap living in other countries). What kind of investment would be my best option?

Thanks,

Al

GillM

Will you be getting an occupational pension at all at 60/65, also state pension? Sorry, not sure if you are male or female so don't know what ages these would kick in for you. Once you do get them, would you be able to live on them - i.e. how long does your money actually have to last you?

dunstonh

If I sell my house, is there any way I can use the £165K to support myself for the rest of my life?

£165k without a house isnt a lot of money. If you take investments with a view of 5% income and 2.5% growth for inflation (assuming medium risk), that that is only just over £8k a year. if you cant accept medium risk and prefer lower then you are looking around £3k a year. If you are looking cash deposits only then you are looking at virtually no income a year.

Loughton_Monkey

A Purchased Annuity would accept the £165K, and in return, give you an income for the rest of your life. If, for example, you wanted 3% escalation on the income each year, you would find the annuity rate is in the region of 3.7%, and so your starting payment would be £6,100 a year. [Unlike a pension, this would not be 100% taxable, but only taxed on the proportioned deemed as 'excess over return on capital]

Now I am in no way suggesting that you should buy such an annuity, but I raise it simply to give you a 'benchmark' of the miserable (in my opinion) income you are likely to get. The annuity company is obviously making a profit, and they are carrying your mortality risk (i.e. the risk that you might live a long time).

It is certainly possible to 'manage' the investment of £165K yourself, by investing it and drawing a regular income from it. But what would you assume as to your life span? You could really only assume average life expectancy for your age. In my wildest dreams, I could not envisage anyone doing that and earning much more than, say, £7,000 - escalating by 3%. If you think you can, then you shouldn't be retiring, you should make a mint running an Annuity Company!

If you go abroad, then you will become subject to a significant currency risk - which of course could fall in your favour. You can eliminate this by converting the money to local currency and investing it there. Don't forget that emigrating to some countries (e.g. Australia) means that your State Pension will never be escalated.

Unless you have significant company pensions that switch in when you're 60 or 65, then I think you would struggle to live even in places like Thailand. You'd have to eat the local food, live in quite a small apartment, and your wallet would probably not be big enough to buy too many 'drinks for the girls'!

bristol_pilot

In practice you would not buy such an annuity as the rate you would receive is so poor. Instead you would spend the £165k and the interest thereon like a mortgage in reverse i.e. mostly interest and a little bit of capital the first year, slightly less interest and a little more capital the second year etc....spending a constant amount each year. The money would run out after 12-15 years I would guess, depending on how frugally you could live and what you would have to pay out in rent. If you die in your early seventies you might get away with it.

I don't recommend you do this however. I suggest you look at other options. How about ploughing on for a few more years followed by semi-retirement? A bit of part-time work to supplement investment income would make it go a lot further. And I guess you will have at least the basic state pension at 65.

Loughton_Monkey

bristol_pilot wrote: »

How about ploughing on for a few more years followed by semi-retirement? A bit of part-time work to supplement investment income would make it go a lot further. And I guess you will have at least the basic state pension at 65.

This makes perfect sense. Especially because of the 'leverage' involved at the OP's current age.

Each year you work, you have (a) another year of living expenses paid for, (b) hopefully a bit more savings put away, and (c) One less year over which you have to spread your savings.

OP should really work backwards. i.e. what is minimum amount needed to sustain living. Then calculate what cash is required to support this (including state pensions etc.). This will inform him of the optimum time to pack it all in.

bendix

Ally1205 wrote: »

I own a house worth about £165K. I have no mortgage. I'm 57 and I'm kind of tired of working. If I sell my house, is there any way I can use the £165K to support myself for the rest of my life? I don't mind emmigrating if necessary (to take advantage of cheap living in other countries). What kind of investment would be my best option?

Thanks,

Al

You're 57 and your only asset is a house? Didn't it occur to you to save a bit at the same time, or put some money into a pension?

By the way, if you think cheap living in other countries is the answer to all your issues, forget it. Most of the Brits i see who head overseas to live cheaply spend all the time in English pubs paying inflated prices, buying English newspapers and eating English breakfasts in English cafes.

They usually spend their money quickly - thinking wrongly that they are !!!!-of-the-hoop over the locals - and come home penniless after a few years living like a King.

Dave101t

if you have contacts in another country, that would help. family would be best. if they could sort out your accomodation, you could then easily work out your rent/bills and living expenses.
in china for example, without taking the purchase of a property into accoint, you can eat and be entertained, pay bills etc for 100 pounds a month on a non-english basis.
compare this to the uk at roughly 1000/ month.

Dick_here

bendix wrote: »

Most of the Brits i see who head overseas to live cheaply spend all the time in English pubs paying inflated prices, buying English newspapers and eating English breakfasts in English cafes.

Takes one to know one eh

Ally1205

GillM wrote: »

Will you be getting an occupational pension at all at 60/65, also state pension? Sorry, not sure if you are male or female so don't know what ages these would kick in for you. Once you do get them, would you be able to live on them - i.e. how long does your money actually have to last you?

I'll only get state pension. I don't have any private or company pension. I'm male. I'm not sure how much the state pension will be by the time I reach 65. I'm fairly used to living at subsistence level.

Thanks also to the other respondees.

A

Ally1205

bristol_pilot wrote: »

In practice you would not buy such an annuity as the rate you would receive is so poor. Instead you would spend the £165k and the interest thereon like a mortgage in reverse i.e. mostly interest and a little bit of capital the first year, slightly less interest and a little more capital the second year etc....spending a constant amount each year. The money would run out after 12-15 years I would guess, depending on how frugally you could live and what you would have to pay out in rent. If you die in your early seventies you might get away with it.

I don't recommend you do this however. I suggest you look at other options. How about ploughing on for a few more years followed by semi-retirement? A bit of part-time work to supplement investment income would make it go a lot further. And I guess you will have at least the basic state pension at 65.

Good point about working part-time. Yes, that's an option I'll consider. I can easily make enough to cover food, working just one day a week. If I sell the house, I'll have to pay rent though, and that would be between £70 and £100 a week if I stay in my current vicinity.

The only overseas relatives I have are in Canada. I have friends in the US. N.America isn't as cheap as China, of course, but perhaps cheaper than the UK. I don't think I'd want to live in China. India would appeal more. But realistically, I'd rather be in an English-speaking country, where the climate is tolerable all year round.

Thanks,
A