retirement plan, starting with property

want2bmortgage3

I have been thinking lately, starting with the basics of life and what will happen when I retire.

I think owning your own property is a good start, because then you have chosen the house/area you want to live.

From this I then wonder whether to get a mortgage early on or just rent and save a property fund and buy outright down the line (a life without debt... just rent/save then buy outright 20 years on...).

so with this basic idea, I would end up retiring with no mortgage and living somewhere I am happy to live (not living 'where they put me').

What comes next? Would a state pension be enough to pay my bills and shopping? How much would I receive to live on?

Do I need to add more steps to this plan? Would the fact I own a property count against me in any way? Would I receive less, or would I be forced to sell at any point?

Thanks for any information!

JoeCrystal

Actually, the mortgage would be cheaper on the whole than save/rent since you would only be focusing on paying the mortgage off.

Cheers,
Joe

dunstonh

Would a state pension be enough to pay my bills and shopping?

Just over £5000 a year currently with benefits but moving to £8000 a year with most benefits removed. Can you live on £8000 a year?

Do I need to add more steps to this plan?

Make your own provision so you are not reliant on the state.

Would I receive less, or would I be forced to sell at any point?

Some benefits can make a charge against your property (long term care for example). They wont force you to sell but who really knows what the country can afford when you get to retirement. Hence you should aim not to be reliant on the state.

want2bmortgage3

Joe,
If I compare buying to renting, I can see a few factors:
-less flexibility with buying in terms of moving, for work etc
-is comparing rent with the mortgage interest part relevant? if the mortgage interest is lower then buying makes sense?
-the time it takes to save deposit before buying
Can you live on £8000 a year?
probably, with no mortgage left to pay, that's 667 a month.
Make your own provision so you are not reliant on the state.
I think this is good idea, as long as I still get the state pension as a basic income then that sounds fair.
What I don't like is when I hear people who have worked their life and come retirement their assets get stripped away, whereas someone who hasn't worked/gained any assets still gets the same benefits. I am a bit unclear on this though, and not sure whether it just applies to long term care?

GhIFA

want2bmortgage3 wrote: »

Can you live on £8000 a year?
probably, with no mortgage left to pay, that's 667 a month.

Can you live on £667 per month at the moment?
What are your career prospects? How would that equate with your potential earnings (and the standard of living that will give you) later in life.
How old are you? That state pension may not kick in until you are 68 (potentially later than that), depending on your age now- do you want to work that long? There's no guarantee that the approx £8,000pa that is mentioned will be the amount that is paid when you finally reach State Pension Age. The upcoming changes to the State Pension in 2016 are, when all is said and done, an attempt to reduce the cost of the State Pension to the government, therefore, it would be unwise to think that the provision won't change again in years to come.

Basing your retirement plans on property and nothing else is a high risk strategy (granted the way you are suggesting it is slightly different, but effectively this is what you are doing).

Does your employer offer a pension scheme, and do they contribute - ignoring this as a possibility is passing up free money, and tax relief on any contributions you make.

What happens if you lose your job? How does the mortgage get paid? Have you built up a cash fund for emergencies? Are you making use of your ISA allowances? If not then the only prospect you have available to you if you fall on "hard times" is selling your house, or worse still, losing it.

Just some things to consider - I would say that ignoring the alternatives to concentrate solely on property and whatever state pension provision is in place at the time is unwise to say the least.

R_P_W

I'm 30 and I'm working on the assumption that the state pension either won't exist or will be different than what it is today when I finally retire.

Been paying into a employer pension since 19, but ideally want to add S&S ISA and maybe a property as well.

Hopefully will live a long life after I retire and don't want to just exist.

Yorkie1

I'd caution against renting in order to save up to buy outright, unless you will definitely be able to save loads and loads.

If and when house price rises take off again, you risk them outstripping your savings - so you can never afford to buy.

atush

Renting is making profits for your landlord, and doesn't really save you much if any at todays interest rates. So buy with a mtg that will be paid off before you retire.

then, pension. Yes you need one, and yes your employer will have to offer you one soon if not today. so join it. Take the Free Money.

No one can live comfortably on the State pension, even w/o a mtg.

Then savings. You need 3-6 months in cash savings for emergencies( and would renting anyway) use your cash ISA allowances. Then use your S&S isa allowances to save into equities.

These 4 prongs (home, pension, cash, equities) will see your way into a comfortable retirement

SG27

With regards to renting versus buying you need to work our how much it would cost in rent over the time to it would take to save to buy outright compared to the cost of mortgage interest if yoy bought now.

For example the house I bought I borrowed 105000 the total I will pay back is £180,600 so £76,600 in interest. add to this the costs with owning maintenance etc £1500 per year maybe? Is this more than the total cost of renting while you save? The best option would be stay at your parents for as long as possible probably paying a nice low rent. Obviously that's not always an option.

want2bmortgage3

I'm 31. Why does life have to be like this? Once we start working and buy a property, living by fear. Fear of losing our property, fear of retiring with nothing. Why do we have to retire? Who looks forward to this? To me, it's too far away. It's depressing to think about. I can't bring myself to think about or pay into a pension! I can't work solidly for the next 20 years. I think after a few more years I want a break, just travel on the cheap, with a tent. I am not afraid to do this. Probably a reason I'll not have kids, I can't face responsibility! Am I alone?

mania112

want2bmortgage3 wrote: »

I'm 31. Why does life have to be like this? Once we start working and buy a property, living by fear. Fear of losing our property, fear of retiring with nothing. Why do we have to retire? Who looks forward to this? To me, it's too far away. It's depressing to think about. I can't bring myself to think about or pay into a pension! I can't work solidly for the next 20 years. I think after a few more years I want a break, just travel on the cheap, with a tent. I am not afraid to do this. Probably a reason I'll not have kids, I can't face responsibility! Am I alone?

If everyone felt like that our benefit system would be ruined... oh wait... it is!