Is £200k enough to live on?

xtac

If someone had 200k in the following circumstances, could they live off it?

Assumptions:

1. the person is in their early 40s

2. the person is currently renting and does not own any property (but would like to)

3. the person is accustomed to living a modest lifestyle and living as cheaply as possible

4. the person does not have any debts or financial dependants

5. the person is currently living in london (expensive) but is prepared to relocate to any part of the uk (i.e. a cheaper part)

6. at the age of 60 the person should start to receive pension income (perhaps as much as 10k per year)

7. if possible, the person would like to continue to pay into a pension fund (currently £200 per month, though could pay less if required)

8. the person would like their capital to work for them, rather than have it tied up in a savings account and living off the interest (except in a short term situation where house prices were falling)


What would be the best way for that person to go about living off 200k under those circumstances?


(if this is not the right board for this post please move post to the correct board, thanks)

beanys

can you afford to live on 10k a year with bills and food etc till your 60 , i doubt it :rotfl:

Patrick20

beanys wrote: »

can you afford to live on 10k a year with bills and food etc till your 60 , i doubt it :rotfl:

your oversimplifying the math a bit there bud its not just the case of dividing 200k by 20 years. I don't know much about this since i've not got that sort of money sitting around but if this person just sat it in a 4% account then thats 8000 of the 10000 a year already covered. Also, I'm sure there are more rewarding ways to invest that lump of cash so I'd say it MAY be possible.

redpin_2

in other words retire at 40?in which case personally i think investing in property and renting as your income might be a better option; you would be able to rent a cheap home from the council and if needed meet the shortfall with benefits

sleepless_saver

As well as using up the capital, you need to think about the effects of inflation. No way of knowing what this will be in future, but if you had started off with £200k twenty years ago, it would now be worth only £120k thanks to inflation.

xtac

Yeah I guessed inflation would be a problem in that situation, probably best to avoid a savings account for that reason.

I thought it might be better for the person to buy a 'cheap-ish' place to live somewhere, rather than rent. I don't think it would be possible to claim benefits due to the person having so much capital.

might need to simplify the original post a bit!

jackieglasgow

Could the person not buy a nice 2 or three bedroomed house and rent out a room as a single person b & b? Someone else on Old Style recently posted how she had done this, and now has a nice simple life with a little income from renting out her "spare" room when it suited her. I will try and find it.

vitriol

id feel like a millionaire if i had 200k to live of, you could buy a small castle in Scotland for that

MrandMrsB

vitriol wrote: »

id feel like a millionaire if i had 200k to live of, you could buy a small castle in Scotland for that

Maybe, but how would the person maintain it? That is not relevant to the question.

rictus123

I doubt they could....

Le_Chuck

Patrick20 wrote: »

your oversimplifying the math a bit there bud its not just the case of dividing 200k by 20 years. I don't know much about this since i've not got that sort of money sitting around but if this person just sat it in a 4% account then thats 8000 of the 10000 a year already covered. Also, I'm sure there are more rewarding ways to invest that lump of cash so I'd say it MAY be possible.

you can get 5 yr bonds paying 5% which should earn you around £9,750 (£10k less small amount of tax)