Living off savings

GeoH_2

What is the position and how do you live of your savings once you have your nest egg. Lets say early retired couple late 50’s in 7-8 years time?
What I mean is let’s say that you have a married couple with the following savings.
Male
Small Private Pension £35k
ISA’s £30k
Shares £7k
Investments £200k
Female
Small Private Pension £30k
ISA’s £60k
Shares £7k
Investments £90k

No mortgage in UK and staying part of the time overseas Spain with no mortgage.
How would you be able to live off the interest or growth of your investments without paying the likes of capital gains tax, tax etc or could you? Let say that you wanted £20k a year between you both for living on.
Also could you acheive the £20k without using par tof your nest egg?

EdInvestor

Hi GeoH

It seems the man has 272k in total and the lady has 187k.Using 5% as an achievable income return from such money appropriately invested at low- medium risk, the man would have 13,600 and the lady 9,350 before tax. If the investments were sensibly arranged you would not need to pay any tax and would not need to dip into capital to get this amount.

What are the "investments" exactly, BTW?

Are you due to get state pensions at 65? Important to check out what then happens on the tax front at that point.When you say ISAs, do you mean the cash ISA?If so I would change the strategy and start putting your investments into your stocks and shares ISAs @7k a year each from now on.This will help enormously with tax later and may even save you money now, depending on the status of your investments at present.

GeoH_2

The ISA’s at present are maxi ISA’s invested in stocks.
Both would not get state pension until aged 65.
Both sets of investment and the female private pension totals are projected and would be invested over the next 7-8 years on stocks or what we are advised on.
Also the Female ISA’s are projected providing that they keep ISA’s going for this duration.
The female is a non tax payer therefore limited to the amount that can be paid towards a pension.
I cannot have any further private pension or ISA allocation due to being non resident UK for tax purposes at present

EdInvestor

Geo

Only just realised you have been posting on the other thread. Could you clarify a bit?I gather you are looking to have around 20k sustainable income in 7-8 years time prefereably without accessing capital.You will be eligible for state pensions (but how much, there are 2?) Forecast here

You already have mortgage free homes in the UK and overseas.Are you aware that you can access 25% of the value of your pension scheme in tax free cash from age 50? You can then leave the rest to grow further or take 120% of the annuity rate in (taxable) income from it, while it remains invested.

This may be quite unnecessary, but if there is a gap scenario,every little helps

Cook_County

There is a BIG problem here.

The husband in this scenario is non-UK resident.

Consequently we know the tax position in the country where he is resident so as to define what will happen with these various investments.

Which country is this?

EdInvestor

The theory seems to be that they will be UK resident in 7-8 years time, but spending X months in Spain ( which I gather allows visits of six months a year without becoming tax resident?)

BTW it would be better IMHO if Geo posted actual figures of savings now rather than projections to work out what he should do to reach the target amount of 10k each net income.

GeoH_2

I am presently working in Azerbaijan.
My company pays local taxes.
I would I think be classed as UK resident when I retire?
I have not decided whether to sell up in the UK or not?

Savings to date
Male
Shares
Bradford & Bingley 1,162.65
BT Group 660.43
IQ 599.42
Scottish Power 1927.82

Regular Payments (presently 2k per month)
Fidelity Multi Manager Growth Portfolio 10,917.67
Fidelity Multi Manager Income Portfolio 3,574.45

ISA’s
Fidelity American 3,628.83
Fidelity International 2,874.42
Jupiter Financial Opportunities 16,453.83

Pension
Fidelity Multi Manager Income Portfolio 15,872.60
Fidelity Multi Manager Special Situations 5,484.27
New Star Active Portfolio Share Class A 5,444.93
Standard Life Select Property R 3,550.04

Female
Bradford & Bingley 1,162.65
British Energy 284.89
British Energy 468.41
BT Group 660.43
Innovation 1443.96
Scottish Power 1,927.82

ISA’s
Aberdeen Emerging Markets Class A 2577.43
Artemis Capital 3,848.37
Artemis Income Fund 5,598.42
HL Multi-Manager Special Situations Trust 2,582.54
Investec Cautious Managed Class A 2,651.76
Jupiter Merlin Balanced Portfolio 10,716.71
New Star European Growth Class R 2,157.65
Norwich Property Trust 5,227.04

Pension
Invesco Perpetual Income 3,835.29

Expected available investments over the next 7 years £45-50k per year spread over both partners

Cook_County

Azerbaijan charges tax on Azerbaijan residents on worldwide income. Is this income being declared on your Azerbaijan tax return (I recogise that Azerbaijan did exempt investment income from tax, but tax there needs to be considered if applicable).

If there is no local tax (and this is a very bif "if") then the logical place for investments while non-UK resident is offshore as against onshore.

EdInvestor

You should have no problem meeting the target Geo if you can keep up the regular 2k monthly payments.At 7% growth net of charges after 8 years compounded your fund should be worth 398,181, so it will generate a 20k income on its own.

Your wife's fund ( currently @48,135), assuming nothing else goes into it,would grow to 82,705 over the 8 years. If it too was getting 2k paid in regularly every month it would end up at 338,180 in 8 years.

So not too many problems there.

GeoH_2

Cook County
I don’t complete any Azeri tax return.
As with almost all expats we only work / take money and run.
Company pays any local taxes liable.
I really don’t exist as far as anything else is concerned at least at the moment.

With regards offshore my present advisor indicated that I would be better with UK investments at this time.???????

I have also been burnt with offshore advisors lately

EdInvest Ta for comments.
This must be the Scottish side in you

Many more questions to come