Using savings to generate income.

The_Janitor

I'd love to retire early - 55/56? (work till I'm 70 or so - no way). Of course, I'd need money so I'm looking at consolidating some savings and using these to generate an income.

Has anyone experience of doing this? What sort of income could realistically be generated from say £60k? (I also have an occupational pension of £13k after tax)

dunstonh

You should work an 5% pa before tax as a guideline. At times you may get more, other times, you get less.

That works out to be £3000 before tax and £2400 after (assuming deposit based). There are ways to reduce the tax liability down depending on how you invest.

You should also check with the occupational pension trustees would let you have the pension at age 55 and how much it would be.

Milarky

DD,

'Purchased life annuities'? By which I mean annuities that notionally return the capital 'tax free' over the lifetime of the annuitant .. Unlike 'compulsory purchase' annuities, where all the payment is treated as income and taxed accordingly...

Does this option has any merits for someone in The_Janitor's position? [rates are quite low, so not much 'premium' over other interest rates and capital has to be used or saved again in part]

FangKat

I have done just what you want to do, decided to give up working last December (age 54) so I shut down my business and since have had four holidays in Greece... Whats more I am ceasing now to pay the Government huge amounts of tax at last.

We reckoned to need 20k a year for normal living, so we have around 350k earning us interest from bonds and Cahootie type accounts and just top up from our capital as and when and if needed. We have pensions etc. too but consider that dead money only of use if it actually gives us something in proper money in the future which on current track record looks iffy.


Work til 70 - bloody ridiculous and only dreamt up by pollies who have a nice fat pension already lined up.

But with the ever increasing hidden taxes like rates etc. you do need a good chunk put away to be ok for say 5 and 10 and so on years down the line. The thought of having to go back to work in 5 or so years time is not a nice one.