Equity Release or Re-Mortgage to fund retirement?

atush

ashpan wrote: »

theres lots i could do i guess but im feeling a bit 'stuck' at the moment, i think i need to consolidate my financial plans and undergo the transition from work to non-work before i make any big plans - being single makes me probably over-anxious about money and having enough but im hopefull that will settle and ill be able to enjoy my (young-ish) retirement
:T

I havent read the whole thread, but personally for me- I would not retire if I had to rely on equity release (unless I had no spouse, children or other close relatives) or a re-mtg.

I'd just work a bit longer,, and cut costs down to save more.

bostonerimus

ashpan wrote: »

my pension & ISA are with metlife and parmenion, i think theyre pretty safe
the 50k is in a deposit account until i stop dithering about where to put it!

OK, so from your answers I gather that the 7k pa income you mentioned in your first post is from the 51k you invested into MBI property and then into hotel rooms and that you still have 50k in savings and 120k in pensions and ISA. That's "lucky" as I think the 7k pa income will never materialize and you've basically lost the 51k you invested. But you still have enough to bridge the gap until state pension starts as long as you are sensible.

So

1) Find out and understand exactly how your ISA and pensions are invested. If you are going to do some drawdown from the pension then you need to understand how it is invested. This should be an easy question for your IFA, but from what you've already said I think your adviser is either incompetent or completely asleep at the wheel.

2) Don't do anything with the 50k in savings until you have a good plan that you understand.

Malthusian

ashpan wrote: »

my pension & ISA are with metlife and parmenion, i think theyre pretty safe
the 50k is in a deposit account until i stop dithering about where to put it!

Phew. Don't take it personally, but other people in your situation might have said "Don't worry, the other £50k is in secured bonds with London Capital & Finance" ;-) Hence the importance of us asking.

The fact that the hotel exists is only tangentially relevant. Plenty of people have invested into similar physical properties like solar panels, self storage pods etc. The physical property exists but the money is nonetheless gone.

These investments are the equivalent of a magician's trick. A magician makes you look at the wand in his right hand while his left hand removes your card from the deck. Similarly, with these investments, while you are looking at the hotel, your money disappears. Successful investment is about never taking your eyes of the money.

kidmugsy

Malthusian wrote: »

. Successful investment is about never taking your eyes off the money.

Very good.

And also it's about diversifying. A large part of a portfolio in a single hotel? Not for me, not even if the business concerned were not a scam.

I'm considering investing in three publicly quoted companies (in contrast to my usual interest in collective investments). The three together will be less than 5% of our portfolio.

Triumph13

ashpan wrote: »

thankyou, can you clarify some of the points you have made please, so im not sure how you are suggesting i plug the 6 year gap between now and when my state pension is payable, apart from the NHS pension, are you saying i should withdraw £26k from my private pension to cover the deficit over the 6 years gap

thanks

Spot on. You take cash from your pension and from your ISAs if there isn't enough in the pension. During the years 60 to 66 you will have about £7.5k a year coming in from the NHS leaving about £4.5k of PA unused. You should be withdrawing at least this as tax-free taxable income from your private pension each year as otherwise you will just have to pay tax on it when you take it out later. That won't be enough in itself to get you to £1,300 spending per month so the rest would have to come from savings, ISAs or taxed drawdown from your private pension.

ashpan

Malthusian wrote: »

Phew. Don't take it personally, but other people in your situation might have said "Don't worry, the other £50k is in secured bonds with London Capital & Finance" ;-) Hence the importance of us asking.

The fact that the hotel exists is only tangentially relevant. Plenty of people have invested into similar physical properties like solar panels, self storage pods etc. The physical property exists but the money is nonetheless gone.

These investments are the equivalent of a magician's trick. A magician makes you look at the wand in his right hand while his left hand removes your card from the deck. Similarly, with these investments, while you are looking at the hotel, your money disappears. Successful investment is about never taking your eyes of the money.

i realise this may be the case hence my not including it in my future plans-if it fails to return is there anything i can do? Also where can i find out more about how to invest in secured Bonds and what sort of return should i be looking for? Thankyou

ashpan

Triumph13 wrote: »

Spot on. You take cash from your pension and from your ISAs if there isn't enough in the pension. During the years 60 to 66 you will have about £7.5k a year coming in from the NHS leaving about £4.5k of PA unused. You should be withdrawing at least this as tax-free taxable income from your private pension each year as otherwise you will just have to pay tax on it when you take it out later. That won't be enough in itself to get you to £1,300 spending per month so the rest would have to come from savings, ISAs or taxed drawdown from your private pension.

Great thanks for the clarification, i feel much more reassured now!

jamesd

We've done much of the big planning discussion, on to useful tweaks to make you some more money.

1. When working you can make gross pension contributions equal to your gross pay, up to £40,000 a tax year, and above that with more checking. Since you're 55 or older you can take 25% as a tax free lump sum a few weeks later if it's a personal pension. You can take the rest when you stop working because as soon as you take the taxable bit your annual allowance for pension contributions is reduced to £4,000 a year. In effect this lets you save the income tax on 25% of your taxed pay and also make a gain on the amount of your personal allowance, since you get tax relief on that as well. This would be an excellent use of some of your savings money.

2. In tax years when not working you can still pay 2880 net into a pension and get tax relief added to increase it to £3,600. That makes you 720 if the £2,700 taxable portion is all within your personal allowance, £180 if none is, else something in between.

It would be useful for us to know more about your current workplace pension as well as roughly how much you have in pensions now.

ashpan

jamesd wrote: »

We've done much of the big planning discussion, on to useful tweaks to make you some more money.

1. When working you can make gross pension contributions equal to your gross pay, up to £40,000 a tax year, and above that with more checking. Since you're 55 or older you can take 25% as a tax free lump sum a few weeks later if it's a personal pension. You can take the rest when you stop working because as soon as you take the taxable bit your annual allowance for pension contributions is reduced to £4,000 a year. In effect this lets you save the income tax on 25% of your taxed pay and also make a gain on the amount of your personal allowance, since you get tax relief on that as well. This would be an excellent use of some of your savings money.

2. In tax years when not working you can still pay 2880 net into a pension and get tax relief added to increase it to £3,600. That makes you 720 if the £2,700 taxable portion is all within your personal allowance, £180 if none is, else something in between.

It would be useful for us to know more about your current workplace pension as well as roughly how much you have in pensions now.

Your ongoing guidance is much appreciated
My mother puts £2880 into my private pension for me each year, can i do this as well or is that the limit of what i can put in pa?
My private pension with parmenion is currently valued at £85,606, projected value at age 66 is £309,000
My school pension will give me £3128 pa, with a retirement grant of £3,800. My crystalised benefits are £66,366

jamesd

Hmm, I don't actually know how your mother counts vs the pay limit, hopefully someone else already does. Employer contributions don't count for that one.

Contributions by anyone to any UK pension in your name count towards the £40,000, including mother and employer.

When no longer working that £2880 from your mother probably is all you're allowed, just hoping someone can confirm that she counts as you, which is what I expect.

Nice move by your mother! Gifting while alive and in an efficient way.