Do I have enough to live off investment income?

amcluesent

Am seriously thinking of becoming 'economically inactive'. Can I do it?!?

Age 47, single, no kiddies, mortgage free (just a basic 2-bed terrace valued at £100K, lowest band CTax), ISA/premium bond/cash savings about £200K, share investments maybe £25K.

Three deferred final salary schemes would kick in at 60, 62, 65.

Sorry if this is distasteful, but I could reasonably expect inheritance of about £500K as parents are 93 & 88 and I'm the only child.

I don't have expensive tastes, am happiest pottering in the garden.

Currently out the house 12 hours/day in a job/industry sector I have come to loath.

Is there enough capital to make early retirement feasible? I'd previously set an financial target of £500K by 50, but TBH everything's doing my head in at the mo.

CLAPTON

what will your pension income be when you are 60, 62 and 65
what is your income requirement to enjoy your life

DavidHayton

Becoming economically inactive doesn't have to be permanent. If you loathe your job, it sounds like you could resign tomorrow and then take a year, two years, or three years pottering, travelling and thinking, and then maybe start out in a different line of work.

If it is permanent, then your £200k plus an inheritance of £500k should yield enough to support you, depending on your lifestyle. You will need to do the maths.

David

ed123_2

...why not get another job you enjoy doing?

sleepless_saver

If your parents are currently 93 and 88 then you come from quite a long lived family. In that case you need to think about the next few years financial planning on the assumption that your savings, pension and inherited income will need to keep you going for as much as 50 years.

Managing on your savings until 60 (assume for a moment that your parents become centenarians) would probably run them down to a very small amount/nothing after inflation is taken into account.

But a lot will depend on how much your pensions are, and whether those in combination with any inheritance, will be enough to keep you from 60 onwards. A spreadsheet would be useful to help you work this out, there are a few ideas on the pensions board.

Finally, could you find more congenial part time work which would preserve more of your savings, and still give you plenty time in the garden?

darkpool

500k is a good inheritance, but what happens if both your parents spend 10 years in a care home? that 500k could be whittled away to nothing.

like someone else said if i was you i'd get a job you enjoy - get work in a garden centre?

i think your still a little far from having enough savings to retire.

mike88

£200k should last until your pension kicks in providing you are cautious with your spending. The chances are that you will also inherit within the next 13 years; and bear in mind that when you don't work you spend less. No travelling to work costs, fewer work clothes and lunches out. With no mortgage you easily have enough to get by.

At 47 have you considered travelling and renting your house out while away as that would fund your travels.

Whatever the other's think for me its a no brainer. Why be unhappy in your work when you can afford to retire?

Lokolo

If you like pottering around the garden, why not get a job doing something around this?

Garden design, or gardening or something like this?

Masomnia

What do you do with the second bedroom? Could you perhaps take a lodger if things got tough?

ctdctd

Ignoring any possible inheritance,

£225K would give you £11K PA to live on until you are 66 and leave a small contigency fund.

This assumes:-
a) This is enough for you to live as you want
b) Savings keep pace with inflation (OK - not at the moment, but historically they have)
c) You are happy to use up your capital
d) State + work pensions are enough when you reach 66

So, do the sums work for you?

HTH

mike88

ctdctd wrote: »

Ignoring any possible inheritance,

£225K would give you £11K PA to live on until you are 66 and leave a small contigency fund.

This assumes:-
a) This is enough for you to live as you want
b) Savings keep pace with inflation (OK - not at the moment, but historically they have)
c) You are happy to use up your capital
d) State + work pensions are enough when you reach 66

So, do the sums work for you?

HTH

The Maths is incorrect as it ignores interest on the £225000 and the fact that his first pension kicks in at 60 and the second at 62. Then you have to factor in the £500k inheritance against which you must assume that some of this at least may be required for the parents' possible residential/nursing home fees or to pay for carers.

There is also the prospect of Job Seekers Allowance depending exactly on whether the original poster's will want to actively seek alternative employment. One alternative would be to get a more enjoyable job with fewer hours even though it might be low paid.

Given that many people are being made redundant is there any possibility of seeking voluntary redundancy?