Do i have enough for early retirement?

londoninvestor

ams25 wrote: »

Good luck. You do have options most don't have — that is an impressive achievement at 35.

Completely. To have the "FU" money that gives you a great deal of choice - over who you work for, what you do and when you do it - is a huge asset, and the opposite of wasting your potential!

Terry_Towelling

DairyQueen wrote: »

(I recently spent £20k on dental work despite having 'perfect' teeth until age 50).

OH and I have three decades on you, and have a much bigger net worth, but we are still concerned that we may outlive our funds.

Plus you will need to make voluntary NI contributions to qualify for a reasonable state pension.

You are too young to waste what could be a very productive life.

Dairy Queen, I think it's time to change your dentist - or your teeth.:D:)

I think you may have a completely different lifestyle to most of the people posting here. To have a higher net worth at 65 than the OP and still be worried about it not lasting must mean that you are haemorrhaging cash. Whatever do you find to spend it on - apart from dental work? And you say 'we' which presumably means you have two sources of income?

I agree about selling up and moving somewhere cheaper and mortgage free, but even that is quite a big move if you are suffering with anxiety.

Frankly, apart from the depression/anxiety (which seem to be under control now) the OP has reached a point where they actually have the wherewithal to pick and choose to some extent what they do. Personally, I also think they should keep doing paid work and keep the NI contributions up for at least a few more years but, if it were me, I'd think I was in clover with such worth behind me at that age.

So, if you're still reading, OP, don't worry, chin up, keep smiling, you're well on the way.

Alexland

londoninvestor wrote: »

Completely. To have the "FU" money that gives you a great deal of choice - over who you work for, what you do and when you do it - is a huge asset, and the opposite of wasting your potential!

It's completely possible to both have money and waste your remaining human potential.

Arthurian

Some might say the human potential is wasted by spending life imprisoned in an office chasing impossible targets, and that it's better to spend your days visiting family and friends, growing your own veg and flowers, and getting more sunshine. The trouble will be, at such a young age, that there's nobody to play with - everyone else your own age has to work.

itwasntme001

Thanks again for the replies. Many comments on how i should sell my property and move somewhere cheap. This is something i should have mentioned earlier - sorry. I wont be moving away from London simply because my parents and sibling are all in London as well as friends too. I much rather work full time to be in London then to move out of London just to retire.


Another thing that i should mention after speaking to my parents today is that they have a fair amount of future potential inheritance themselves (roughly £400k total they should receive) and they were saying how they will pass on some of their savings to me and my sibling soon (around £200k each). They also have a SIPP which is worth £200k which they plan not to touch and pass it down to me and my sibling as i understand SIPPs fall outside the estate?


So all in all i will certainly receive £300k in gifts and inheritances. Also given my parents financial position, they should have enough income to cover all expenses including care home as they will be receiving quite a lot of income from state pension, dividends, rent and annuities. This means that they wont need to sell their home and that too will be passed onto me and my sibling.


But as i said before i dont like to think about receiving inheritances etc. I know for my well being and financial security i should look for work i enjoy even if its just part time.

Alexland

itwasntme001 wrote: »

Another thing that i should mention after speaking to my parents today is that they have a fair amount of future potential inheritance themselves (roughly £400k total they should receive) and they were saying how they will pass on some of their savings to me and my sibling soon (around £200k each).

If they have not yet inherrited then it may be more tax efficient to ask the source to change their will to skip a generation or use a deed of variation later.

https://www.gov.uk/alter-a-will-after-a-death

itwasntme001 wrote: »

They also have a SIPP which is worth £200k which they plan not to touch and pass it down to me and my sibling as i understand SIPPs fall outside the estate?

Yes here's a good guide from AJ Bell:
https://www.youinvest.co.uk/pensions-and-retirement/accessing-your-pension/sipps-and-death

Alex.

atush

I'm simply amazed at the number of responses you've had saying that someone with enough money to buy a home and still have three quarters of a million Pounds left over can't afford to retire, but I assume that those expected you to stay in London.

I am simply amazed that ANYONE would suggest to someone with depression to move away from home to a place where they dont know anyone or have any support networks. And where it may well be darker and colder than you are used to.

Mind boggling.

jamesd

atush wrote: »

I am simply amazed that ANYONE would suggest to someone with depression to move away from home to a place where they dont know anyone or have any support networks. And where it may well be darker and colder than you are used to.

Mind boggling.

The details of family and friends are from a post after the one you quoted. At the time of my post leaving London could have been returning to family and friends, not leaving them. It's very common to leave home to work in London for a while.

jamesd

itwasntme001 wrote: »

I wont be moving away from London simply because my parents and sibling are all in London as well as friends too. I much rather work full time to be in London then to move out of London just to retire.

Are you open to moving to a cheaper part of London, say to a 300k or so flat? Can be done without but with you moving to SVR in two years when the deal ends, if you're retired, it'd help a lot with the ongoing costs.

Is a lodger an option? A potentially very useful bit f extra income. If not a lodger, perhaps occasional AirBNB?

Ignoring those for the moment, lets consider how the no change numbers work. The mortgage interest rate is low, so nothing useful to do there for a while.

On to investable capital, £565,000 of it. If you were to use the Guyton-Klinger drawdown rules you could start at 5% withdrawing rate. At 5% that's £28,250 initially, sufficient for your purposes.

There are a couple of future things which help with the sustainability of this: the mortgage and 10k of spending ends in 30 years at age 65 and three years later your state pension starts, paying 8.5k a year of income. 5% is for a 40 year plan but you only need 30 and 33 years before drawing can drop from 28.25k to 15.25k then 7.25k. So a 40 year plan seems to fit pretty well. Also, this income will usually increase with inflation while the mortgage capital payment doesn't, so you get steadily increasing excess income above your mandatory commitments.

The current requirement is 24k, so 4.25%. Something that can be increased if the expected money arrives.

So yes, even staying in London at the current mortgage interest rate looks doable for retirement. The main issue is limited flexibility to reduce income, as the drawdown rules might require, particularly in the early years.

Given that you might well move to SVR, what does that do? It probably makes paying off the mortgage with capital a good move, depends on interest rates. Interest seems to be about 4k of 10k payments so in two years you'd have 248k to pay off, cutting capital to 317k. At 5% that's 15.85k, above your 14k requirement. So you look OK in this situation as well, same caveat about limited flexibility to reduce income so better to start lower to reduce the potential need for a cut below requirements.

So either way, early retirement in London looks OK but there would be a very welcome increase in safety margins with the anticipated money from your parents.

itwasntme001 wrote: »

Another thing that i should mention after speaking to my parents today is that they have a fair amount of future potential inheritance themselves (roughly £400k total they should receive) and they were saying how they will pass on some of their savings to me and my sibling soon (around £200k each). They also have a SIPP which is worth £200k which they plan not to touch and pass it down to me and my sibling as i understand SIPPs fall outside the estate?

Good that they are considering this, giving while alive so you can enjoy the benefit to the recipient is what I'd typically suggest to someone in their position. SIPPs are outside the estate as long as the SIPP was opened more than two years before death. The beneficiaries get a beneficiary pension that they can draw on at any age. If death was before age 75 the withdrawals are tax free, else they are taxable income. For their inheritance the neatest solution can be them using a deed of variation to pass the money to children directly so it never even potentially becomes part of their estate.

DairyQueen

Terry_Towelling wrote: »

I think you may have a completely different lifestyle to most of the people posting here.

... and I think that everyone posting on here has a completely different lifestyle from everyone else (quick flash of those very expensive teeth)

Terry_Towelling wrote: »

To have a higher net worth at 65 than the OP and still be worried about it not lasting must mean that you are haemorrhaging cash.

A few years short of 65 and, yes indeed, the sandwich generation tends to haemorrhage cash

Terry_Towelling wrote: »

Whatever do you find to spend it on - apart from dental work?

Let's see now....
1) Two small homes so that OH can commute to work in London during the week whilst I am in the sticks caring for elderly parents.
2) Deposit for younger stepd's London flat.
3) Legal fees to challenge planning application which, if passed, will destroy home in the sticks.
4) Elder Stepd's post graduate education.
5) Younger stepd's forthcoming marriage.
6) Bailing out family member in time of difficulty.
7) OH redundancy.

Plus, of course, that extortionate dental bill.

Terry_Towelling wrote: »

And you say 'we' which presumably means you have two sources of income?

Unfortunately, not any more (see needs of the elderly above).

We have had 1 holiday in the last 5 years, and OH's car is just short of it's 10th birthday. Not exactly a luxury lifestyle.

The reason for my cautious response is that, at OP's age, who knows what the future will hold? I have lived through 15% interest rates, inflation at 20%, negative equity, 3 recessions (or is it 4?), around a dozen governments, enough financial scandals to sink the Titanic, tax grabs, blah de blah. I can say with some confidence that the last decade has been the most expensive of my life and, thank God, that OH and I are well pensioned-up as the calls on our cash have been extortionate over the last few years.

I would no way rely on any inheritance. My parents were sitting pretty until my mother was diagnosed with MS in her early 50s. From that point onward the income dried-up and the expenses increased. They have been subsidising expenses from capital ever since and the well is pretty near dry. The house will almost certainly go on care fees.

The OP is young and has zero responsibilities. Dependents are expensive. Bad times are expensive.

Productive lives are about what you give to others and society, not what you take. So far I've heard a lot about what the OP will receive from parents/grandparents but nothing about how society/family/friends will benefit from his/her (hopefully) long life.

Trust me, as you age and reflect on the past, what you have taken means diddly squat. It's what you have given that counts.