Dream Retirement Property - but can we afford it?

k6chris

DON'T. DO. IT.    Buy a National Trust membership instead.......   

DairyQueen

Deleted_User said:

“ Low/zero withdrawal rate means we can afford to take more risk and my nephews will inherit the balance of my SIPP. ”

Are they handicapped? In my book, if they are healthy and you are not “independently wealthy” (worth over 10M) then you should invest and withdraw to address your own risks and needs. 

Appreciate the point. 

We have positioned the SIPPs to allow for up to £90k drawdown over the next 5 years but little after that as we will have around £50k in guaranteed gross income when SPs kick-in. A net income of around £45k against planned expenses of around £35k was a comfy position for us. Sufficient for a generous holiday fund and no reliance on drawdown. But that expenses number doesn't allow for (possibly) £5kp.a. in house insurance and house maintenance of (possibly) 10kp.a. 

The longer Mr DQ works the less we need the up-front cash. He enjoys working but also enjoys knowing that we will be fine if the income dries-up or if he chooses to fully retire tomorrow.

Elder nephew is on the autism spectrum. The boys are still minors and neither of their (divorced) parents is in a great place financially. They will likely be in their 20s when I pop my clogs and may not receive their inheritance from my share of our property until their 40s+ as Mr DQ is healthy as a horse and comes from a long-lived family. Mr DQ will have £40k guaranteed income - mostly inflation-linked, plus his own SIPP and 75% of any other non-property assets on my death. He will also have a lifelong beneficial interest in my share of the property. 

His share of property should more than cover his care home needs if required.

Our much-reviewed retirement plan will need an overhaul if our housing costs increase by maybe £10k/£12k p.a. 

I'm not sure if our assets will sustain the extra expense over the medium/long-term. Mr DQ could be tax-hammered if he increases drawdown beyond BRT threshold.

I could aim to exhaust my SIPP over the next 15 years but if I live longer than anticipated we/he may be squeezed income-wise at some point.

DairyQueen

shinytop said:

DairyQueen said:

Thrugelmir said:

-      Market crashes by 50%. We are around 80% equities so that would reduce our SIPPs by around £240k and require a drawdown suspension.

If you've a reduced life expectancy why expose yourselves so highly to the volatility of the wider equity markets. Particularly at a period of time when the upside may be limited. 

Portfolio is positioned to provide front-loaded drawdown for a few years and then 0-2% drawdown going forward. We are lucky to have sufficient guaranteed income to cover all projected expenses after SPs kick-in, be that net of the high costs of owning a listed home. We didn't build that into the plan.

I just checked our wrapped asset allocation and it's 75/7/18 so not quite that high equities. 18% in cash to cover short-term drawdown if/when earned income dries-up or reduces. 7% in bonds to provide a few years income top-up in the medium term if we choose to take something from the fund when the market isn't looking good.

Low/zero withdrawal rate means we can afford to take more risk and my nephews will inherit the balance of my SIPP. That won't be for at least a decade I hope. My SIPP is therefore mostly invested to meet their long-term, rather than my short-term, goals - i.e. growth and not wealth preservation. Likewise the bulk of Mr DQ's SIPP will likely be inherited by his daughters. That was the plan. I may need to revise if we go ahead with this purchase.

Do you think the sums add-up?

Won't Mr DQ inherit your SIPP if/when you pop your clogs? 
What if you changed your thinking and invested/planned with the aim of the two of you having the best possible retirement and (to be blunt) s*d anyone else?  Your nephews/his daughter will inherit whatever property the survivor leaves anyway.  Increase that 0-2% to 2-3 or even 3-4 and you're home and dry (hopefully literally with an old listed building).

How will you feel when you've passed on your dream home and are moving into your nice, sensible, energy efficient, uPVC double glazed bungalow ?  Thought so...

  

Hit nail on the head.

OldMusicGuy

Sounds like this place will be great for a few years and then become a potential burden. We were planning to downsize and move into a "dream home", ok it was a new build but it was in a beautiful position in a small village, surrounded by fields, big garden and quite large. Also a chalet bungalow, with 2 beds upstairs but also downstairs bedrooms and a bathroom. It was also being built to our spec. It really was the "dream" retirement home.

For a whole bunch of reasons it fell through after 18 months and we rapidly had to find a new place just as COVID was hitting. We are now buying a new build semi with a small garden, still in a small town/village. We constantly say "thank goodness we didn't go through with the other place." The place we are buying is better designed, the small garden will be easy to maintain and we are within half a mile of a main line station. It's also more affordable, which means we can kit it out with nice furniture that should last us until we need to move to a flat/retirement home.

We now realise the garden at the other place would have been far too big for us, the room sizes were too big (a large lounge for example, which we just didn't want) and we got a bit carried away with the "lovely" location. We would never have looked at the place we are buying now because it didn't fit the "dream" but we realise now it will be a much better place for the next 20 years plus than our "dream" place. The development we are on isn't massive and we felt it will be nice to have people around us as we get older. Many of the other residents seem to be a similar demographic to us (retired with grown up kids).

So just wanted to share that our experience was that the "dream" can sometimes colour your vision regarding the reality of downsizing and retirement. It certainly did for us.  

cloud_dog

I can only offer my feelings on the matter.  I wouldn't do anything that would impact on enjoying the (limited) retirement time ahead to its fullest. If  hand on heart I could say it wouldn't, then I would go for it, otherwise my logical side would overrule my heart.

gwynlas

If it is your dream home then go for it. No one knows what is around the corner so make time to own the house and garden with plans to sell up if all becomes onerous even without one of you dying, 

crv1963

Several things spring to mind, I'm not going to comment on the affordability as only you and Mr DQ can decide on how much you want to spend maintaining a listed house.

1) If it ticks all of your boxes (jointly) then why not take the plunge? 

We have our dream home, it probably is someone elses nightmare property- each to their own. We have spent a small fortune preparing it for our retirement, and have more building works to come. When we've finished we'll have spent more than its' resale value on the house and garden. That for us does not matter, it will be as we want and we will (hopefully) be able to enjoy it well into retirement, with enough space to accommodate our hobbies and interests without tripping over and interrupting each other. Mrs CRV now has a large dedicated room for sewing without having to clear the table before we eat!

Our thoughts are the additional space and room add to the saleability rather than the value! 

2) It is all very well inheritance planning and very generous of you but you have worked for it so should enjoy the benefits. You are both unlikely to spend everything so there will even if subject to care home fees be something left over! 

We've told my sons and our nieces that whatever is left when we go is simply split 4 ways, excepting a few personal items which stay within the respective spouses family. My youngest getting the first choice of the jukeboxes, oldest niece first choice of the sewing machines!

3) Lockdown has made an awful lot of people review what they do, where they live and what they now want from life, if space and peace and quiet are your goal, and IMHO travel opportunities are limited for probably quite a while then diverting one budget to supplement another makes sense.

It may sound opportunist but we've both worked additional shifts to save into pensions and spend on our home, with the unexpected bonus that finally stopping work may be able to be brought forward for us. We haven't had time to enjoy our home or time together but can see the benefit of our labour as we return home. 

I hope Mr DQ enjoys gardening, we have just shy of a quarter of an acre on several different levels and lots of hedges and it takes some time to maintain. In our retirement plans we've included an amount from income to pay for gardening services to keep these in order. Mum age 81 has over the past few years had someone in to cut her hedges and hang wallpaper, otherwise she remains able to do everything she wants, at a slower pace I'm sure but she says time is what she has to spend!

4) I had an uncle who moved out of London when he retired, bought a 7 bedroomed house from the proceeds of his detached London house, it is listed and he tried to future proof it. Since his death some years ago my aunt still lives in it and says she loves the place but has to pay to keep it and the four acres of garden to a decent standard. She's now 84 and annually goes abroad for 2-3 months.

So it can work out.

Hope my ramblings help in your deliberations!

[Deleted User]

OldMusicGuy said:

Sounds like this place will be great for a few years and then become a potential burden. We were planning to downsize and move into a "dream home", ok it was a new build but it was in a beautiful position in a small village, surrounded by fields, big garden and quite large. Also a chalet bungalow, with 2 beds upstairs but also downstairs bedrooms and a bathroom. It was also being built to our spec. It really was the "dream" retirement home.

For a whole bunch of reasons it fell through after 18 months and we rapidly had to find a new place just as COVID was hitting. We are now buying a new build semi with a small garden, still in a small town/village. We constantly say "thank goodness we didn't go through with the other place." The place we are buying is better designed, the small garden will be easy to maintain and we are within half a mile of a main line station. It's also more affordable, which means we can kit it out with nice furniture that should last us until we need to move to a flat/retirement home.

We now realise the garden at the other place would have been far too big for us, the room sizes were too big (a large lounge for example, which we just didn't want) and we got a bit carried away with the "lovely" location. We would never have looked at the place we are buying now because it didn't fit the "dream" but we realise now it will be a much better place for the next 20 years plus than our "dream" place. The development we are on isn't massive and we felt it will be nice to have people around us as we get older. Many of the other residents seem to be a similar demographic to us (retired with grown up kids).

So just wanted to share that our experience was that the "dream" can sometimes colour your vision regarding the reality of downsizing and retirement. It certainly did for us.  

This kind of thing is very personal. We bought 33 acres about 4 years ago. And a tractor. Its a retirement project, although I am still working. The nearest neighbour’s house is 1000m away (great people, we visit regularly). I know its many peoples’ nightmare.  We love it. Our dogs love it. Our ducks love it. Our bees love it. At some point we’ll have to sell. Hopefully not too soon. 

mgdavid

AnotherJoe said:

DairyQueen said:

The property is listed (Grade II) and it’s large.

Strike One.

Madness to buy as a retirement home but this is our dream home.

The cost of maintenance and insurance is likely to add at least £10kp.a. to our non-discretionary expenses.

Strike Two.

Our planned starting ‘number’ was around £45kp.a. from 2021 to include a generous holiday allowance and a lot of fat. This property would eat all of the fat and (I suspect) the holiday allowance if I was widowed

Three strikes.

I entirely fail to see why this is a dream home, sounds like a nightmare  to me, but then again I also fail to see why you both are continuing to work when you have limited life expectancy (genuinely sorry to hear that  )

Wake up before you sleepwalk into a nightmare house.

Retire now, into a house that isn't a whacking big boat anchor on your truncated retirement plans

Thanks for saving me typing a lengthy reply - I agree with every word !

Pile_o_stone

We have a lovely looking grade 2 listed home built circa 1750. It has 400mm thick sandstone walls, exposed beams, large bedrooms and reception rooms and large gardens and we are beginning to find it a huge burden and we just about in our 50s. The last thing I'd advise someone looking to retire would be the money-pit that is an old home in large grounds. We are looking to downsize and build/buy an eco home with small or zero utility bills, no damp, no drafts, no cold rooms, no huge heating bills, no isolation from being away from people. No stress every time we spot another crack in the wall, no expensive tradesmen specialised in Lime mortar, etc. etc.

From your post, it sounds like the issue is that you are apart from your OH. With the money you have now, you could buy a nice, comfortable eco house and retire today. Enjoy the hard work you have put in now rather than later - don't put it off and don't buy a money pit that will just cause you stress!