Equity Release or Re-Mortgage to fund retirement?

ashpan

!!!8220;
- 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?
the £7k pa is in a high risk investment and separate to the £120 k plus £50k cash

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

also im single - two adult children both financially independent but would like to maybe give them £10k each in the near future to help on the housing ladder and more once my (potential) risky investment starts to give returns!

ashpan

Bravepants wrote: »

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!

Everyone keeps telling me not to touch my pension /ISA if i can, i think i need to change my IFA as he knows my circumstances but when i asked what i could do to retire now, he didnt really come up with much- it was me who suggested Equity release. Hes been my IFA only for a couple of years so i suspect i would have to pay £££ to move my investments to another IFA - am i right?

Also im thinking if my income is below £12k i dont pay tax so my £500 NHS pension would be more?

ashpan

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!

Thank you!

bostonerimus

ashpan wrote: »

Its invested in a high risk development - if it comes good it will be a nice extra for me, its not guaranteed income (£7k pa for 10 years from december 2019) so im not including it in my future income

What is "high risk development"? I'm worried that you might have something silly here. More info would help.

There have been lots of good tax efficient suggestion about how to use 25% tax free lump sum to fund an ISA and personal allowances, but I think all the advice so far as assumed that you have some money in cash and the rest in a sensible equity and bond portfolio.

ashpan

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.

I cant imagine whatever prompted you to be so nasty - maybe its because i have a choice and you dont?
For your information - I have spent much of my working life either nursing in neonatal/paediatric ITU and latterly as a therapist for children with autism, it is not well paid but i believe ive made a difference to the families ive supported
I wonder what you have contributed to society ?

ashpan

JoeEngland wrote: »

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.

My house is way to big and pretty impractical but for now i want to try to stay until im more settled in myself - i realise its not the sensible thing to do but hey id really like to try !

ashpan

bostonerimus wrote: »

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.

can you tell me more about a savings bond ladder please
im actually only working 3 days a week now for various reasons mainly as my work is so very stressful
ive never claimed any benefits and wouldnt know where to start, i guess my savings may exclude me from this but i will look into it for sure, thankyou for the suggestion!

ashpan

marlot wrote: »

You say you're looking for £1000pm. You already have £500pm, so is it simply a case of drawing down from the private pension or ISAs?


£500 x 12 months x 6 years = £36k, so you seem to have enough.

i think ill look into this again, ive always been averse to drawing down from the private pension/ISA
Would i need to have an income less thank £12k pa to avoid paying tax? I pay around £120 pcm tax on my NHS pension

ashpan

kidmugsy wrote: »

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.

Is my personal allowance £12k pa - by exploiting this do you mean to keep it under the £12k limit

ashpan

xylophone wrote: »

Why would you consider equity release when you have a personal pension and savings to tide you over until SPA?

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

i got one last year so i doubt it will be much different, i think its around £180 per week for me at age 66 years

thanks