Equity Release or Re-Mortgage to fund retirement?

ashpan

Please move if not in the right place

i am mortgage-free (house value £500k) and would like to retire at 60 (next month) but thanks to pension changes :mad: im unable to do so (unless i go for one of the options below) for another 6 years:mad:
i have £500 pcm coming in from my nhs pension, £50k in savings and £120k in private pension/ISAs
A possible but by no means guaranteed investment return of £7k pa from December 2019
I need around £1000 pcm to live on and have zero debt
the house prices in the area that i live in are steadily increasing and i have no reason to expect this to change
Im in a quandry as to whether to a) do equity release until my govt pension kicks in, and pay off what i can when i can to reduce the debt - using a drawdown facility so i only take what i need each year to live on
b) remortgage with an early repayment option

any expert/experienced responders welcome!

Bravepants

Is the pension you can draw from 66 your state pension? I suspect it is, but it's not clear.

What is the split of the £120k between ISA and private pension?

When can you access the private pension?

Is the ISA a stocks and shares ISA?

What is the £50k held in? Cash?

Have you thought about downsizing your house? Moving to a cheaper part of the country?

Why is the £7k pa income not guaranteed?

DairyQueen

- Married? partner? children (dependent?)
- Is the (non-guaranteed) £7k p.a. in addition to the £120k plus £50k cash? Or is the latter the portfolio that you intend to support £7k drawdown?

First thought (agree with Bravepants) would be downsize. Any reason this isn't an option?

AnotherJoe

You might "like" to retire early but so would many, whats so special about you? I'd have "liked" to retire 6 years earlier than i did but the finances didn't work for that, so I didn't.

I'm sorry that men arent being forced to work 5 years longer than you to enable you to retire 5 years earlier than them, even though they die earlier .... errrm upon very short reflection, I'm not sorry.

You didn't save enough, you didn't plan enough. Chickens coming home to roost.
Do one or more of;


C) Get another job, or stay in current one, or go part time in current one.
D) Downsize.
E) Move to a cheaper area.
F) Save more into pension.

Bravepants

Further thoughts...


If your £120k is in an ISA say invested in a globally diversified fund with a 60:40 equity/bond split, growth of this fund should support an annual drawdown of 4% (statistically speaking). So that's £4800. Keep the £50k in cash incase there is an equity crash (crashes tend to recover over a couple of years), and draw your annual £4800 from the £50k while equities recover.



So you have £500 per month from your NHS pension = £6000 a year, and £4800 drawdown....there's £10800 of your £12000 requirements. You could probably afford to top up with £1200 cash per year from your £50k (£7200 in total until your pension kicks in).



You then don't have to get into debt with your house!

Bravepants

AnotherJoe wrote: »

You might "like" to retire early but so would many, whats so special about you? I'd have "liked" to retire 6 years earlier than i did but the finances didn't work for that, so I didn't.

I'm sorry that men arent being forced to work 5 years longer than you to enable you to retire 5 years earlier than them, even though they die earlier .... errrm upon very short reflection, I'm not sorry.

You didn't save enough, you didn't plan enough. Chickens coming home to roost.
Do one or more of;


C) Get another job, or stay in current one, or go part time in current one.
D) Downsize.
E) Move to a cheaper area.
F) Save more into pension.

Seriously? The poor woman came here completely innocently to ask for some advice mate! I don't think she deserved to be typed at like that. !!!!!!!

For what it's worth I'm retiring in 5 years' time whether you say its OK for me to do so or not!

JoeEngland

ashpan wrote: »

Please move if not in the right place

i am mortgage-free (house value £500k) and would like to retire at 60 (next month) but thanks to pension changes :mad: im unable to do so (unless i go for one of the options below) for another 6 years:mad:
i have £500 pcm coming in from my nhs pension, £50k in savings and £120k in private pension/ISAs
A possible but by no means guaranteed investment return of £7k pa from December 2019
I need around £1000 pcm to live on and have zero debt
the house prices in the area that i live in are steadily increasing and i have no reason to expect this to change
Im in a quandry as to whether to a) do equity release until my govt pension kicks in, and pay off what i can when i can to reduce the debt - using a drawdown facility so i only take what i need each year to live on
b) remortgage with an early repayment option

any expert/experienced responders welcome!

What kind of house do you want to live in, and are there any commitments which stop you relocating? There are parts of the UK where you could get a good house for half the price of your existing one. That would be a better way to release cash from the house than an equity release scheme.

AnotherJoe

Bravepants wrote: »

Seriously? The poor woman came here completely innocently to ask for some advice mate! I don't think she deserved to be typed at like that. !!!!!!!

For what it's worth I'm retiring in 5 years' time whether you say its OK for me to do so or not!

She didnt come here "innocently" she came with an agenda that women are being hard done by and its all someone else's fault that she cant retire at the age she wants to.

Bravepants

AnotherJoe wrote: »

She didnt come here "innocently" she came with an agenda that women are being hard done by and its all someone else's fault that she cant retire at the age she wants to.

It seems to me that YOU are the one with the agenda!

If she wants to retire early then good luck to her. Of course she could also go on Job Seeker's Allowance, would that better suit your point of view for looking down on her?

At least she is intending to live off her own money in the meantime before SP.

bostonerimus

If your budgeting is correct you have more than enough to span the gap until your state pension starts.
I'd leave the 120k in ISA/private pension invested in a portfolio that is at least 60% equities so you have the chance of some growth. Then put 36k of your savings into a savings bond ladder to fund the 6 years of spending until you are 66 and keep 14k in an easy access saving account for emergencies.

You should end up with something left in savings, hopefully more than 120k in ISA/pension and your income needs covered by NHS and state pensions and you still have the downsizing or equity release card to play if there are issues. This is a conservative approach, but you have enough savings to allow you to avoid risk almost entirely.

I'd also suggest that you think about part time work as that can ease you into early retirement both psychologically and financially. Also if there are any state benefits that you can get don't be concerned about claiming them. I retired early and because my income was low before my pension started I qualified for some benefits and I had no guilt in taking them.

kidmugsy

ashpan wrote: »

i have £500 pcm coming in from my nhs pension, £50k in savings and £120k in private pension/ISAs

I need around £1000 pcm to live on and have zero debt

I don't see what your problem is. You need £12k p.a. You already get £6k p.a. from an NHS pension, so you need around another £6k (is that the £7k you mention?). You have £120k in private pension and ISA - so draw £6k or £7k p.a. from those for six years. Be sure to do it in a way that exploits your Personal Allowance against income tax. Problem not so much solved as shown to be non-existent.