Retire,own house,no capital,ideas

whitejohn

Self-employed, retire in 11 months, have house £180K, no capital, estimated pensions £7K total. Looking to sell house outright and rent as I want money to travel while I can. No family. Equity release plans not worthwhile. Any ideas welcomed.

1: Where do I invest the money?
2: How does this affect future benefits, going in to care at some point etc? Presume if you have nothing you get cared for and if you have capital they take it all?

Dunroamin

whitejohn wrote: »

Self-employed, retire in 11 months, have house £180K, no capital, estimated pensions £7K total. Looking to sell house outright and rent as I want money to travel while I can. No family. Equity release plans not worthwhile. Any ideas welcomed.

1: Where do I invest the money?
2: How does this affect future benefits, going in to care at some point etc? Presume if you have nothing you get cared for and if you have capital they take it all?

Couldn't you sell the house, buy a small flat and enjoy spending the rest? You'll have difficulty in paying an average rent out of an income of only £7K and you'll be ineligible for any benefits if you've deprived yourself of your capital.

McKneff

When you say £7k, I presume that is private pension income per annum

So you should also have state pension and any SP2 and Serps.

Have you rung DWP for a pension forecast.

And yes, if you spend your capital, it will impact on any means tested benefits/care home fees.

Dunroamin

McKneff wrote: »

When you say £7k, I presume that is private pension income.

So you should also have state pension and any SP2 and Serps.

Have you rung DWP for a pension forecast.

And yes, if you spend your capital, it will impact on any means tested benefits/care home fees.

I assumed s/he meant £7K in total - perhaps s/he'll clarify.

whitejohn

Dunroamin wrote: »

Couldn't you sell the house, buy a small flat and enjoy spending the rest? You'll have difficulty in paying an average rent out of an income of only £7K and you'll be ineligible for any benefits if you've deprived yourself of your capital.

Thanks,
I was thinking that the interest on the capital would pay the rent. Cost will reduce as I get older and stop travelling but take out of the £180K maybe £5k PA (20 years makes me 85 if I make it).
I then have £12K PA pension and pay no tax? (keep books going with little turnover)?

whitejohn

McKneff wrote: »

When you say £7k, I presume that is private pension income per annum

So you should also have state pension and any SP2 and Serps.

Have you rung DWP for a pension forecast.

And yes, if you spend your capital, it will impact on any means tested benefits/care home fees.

Thanks, thats total pensions, state £5k and private £2k (got a forecast)

whitejohn

Dunroamin wrote: »

Couldn't you sell the house, buy a small flat and enjoy spending the rest? You'll have difficulty in paying an average rent out of an income of only £7K and you'll be ineligible for any benefits if you've deprived yourself of your capital.

I thought you would be entitled to benefits for a care home at say 75 if you had no capital left? But if you still had £180K you would have to pay the full amount?

agrinnall

You probably can just about make £5K interest on £180K capital, although you may need to move your money around every year (and you should make sure you keep on eye on the £85K limit with a single financial institution).

With a total income of £12K you will be liable for tax, but it'll only be on about £1400, so it would only be £280, unless the 10% rate applies (I don't think it does but I find the rules a bit hard to understand).

I think you'll have to live pretty frugally to manage rent, council tax, utilities, food, travel and anything else you spend money on with that level of income. And because you won't be compounding your interest the value of your £5K per year will decrease as time goes by, although as you say this may be offset by spending less as you get older.

When you are travelling will it be for long enough that you won't need to keep your rental property while you're away? If so that'll help, although you'll then need to consider what to do with your posessions.

I'll be interested to see how you get on, as I might want to think about doing something like this myself in a few years.

Ken68

Hi John..you could rent out home, then travel on a shoestring for 6months or a year.
Pal of mine goes anywhere if the flight is cheap enough and stays wherever.He a great walker so often stays at hostels, usually in the hills.

katsclaws

If you do go into a care home your pensions will be taken and you will be left with approx £23 per week (unless you are receiving Continuing HealthCare from the NHS when you can keep your pensions)

whitejohn

agrinnall wrote: »

You probably can just about make £5K interest on £180K capital, although you may need to move your money around every year (and you should make sure you keep on eye on the £85K limit with a single financial institution).

With a total income of £12K you will be liable for tax, but it'll only be on about £1400, so it would only be £280, unless the 10% rate applies (I don't think it does but I find the rules a bit hard to understand).

I think you'll have to live pretty frugally to manage rent, council tax, utilities, food, travel and anything else you spend money on with that level of income. And because you won't be compounding your interest the value of your £5K per year will decrease as time goes by, although as you say this may be offset by spending less as you get older.

When you are travelling will it be for long enough that you won't need to keep your rental property while you're away? If so that'll help, although you'll then need to consider what to do with your posessions.

I'll be interested to see how you get on, as I might want to think about doing something like this myself in a few years.

Thanks for the comprehensive reply. I think I may just do it, hoping to get more for the house but that's a bonus. Will have a £15K lump sum from pension that will buy new vehicle. I was unable to work out the compounding or lack of it.

When travelling, will probably have to keep renting, hopefully may find a new partner at some point and maybe live together and share costs, a bonus if it happens. Have looked at going full time in a motorhome and it's still an option. Worked out all variations on a spreadsheet (as best I can) and renting is cheapest. No outlay or depreciation and if motorhoming 365, sounds cheap but 365 days x £15 per night average? Includes electric but then laundry etc. on top. No fixed address etc. For possessions, don't have many as a single guy but friend is building me a 16 foot trailer on old caravan chassis so I can move and store easily. Find property with garage or parking etc. or worst case I have somewhere to park it £300pa.
Interesting!