How much to live on

Albermarle

 I don't know how much the current work pension will be worth then.  (I find it very difficult to understand the annual figures they send and in the last year I've switched to a USS pension where about 11% of my £27k-ish salary is taken and matched by about 20% from employer? whereas on the previous scheme I think it was 3% from me and 6 or 11% from employer).  

The USS pension is a DB (Defined Benefit)type pension, that will pay you a guaranteed income from the NRA ( Normal Retirement Date) The income will be calculated from a formula related to your salary and how many years you have been in the pension. Typically they are very expensive to fund, hence the 30% + being added. You can probably take a reduced amount before the NRA.

The previous pension sounds more like a DC ( Defined Contribution ) pension. In simple terms you build up an invested pot of money, that you can use in various ways once you reach your late Fifties ( or later if you want) . DC schemes are more flexible, but all other things being equal are not as good as a DB pension and you can see less money was going into it.

I am guessing a bit about your exact details, but you need to be clear that there are two quite different types of pensions and you need to be sure which ones you have. This site is useful.

Pension basics | Help with pension basics | MoneyHelper

Albermarle

The only other thing to mention is that at some point in the future we will need to trade down to a smaller property as our current house and garden will be too much work and the council tax is quite high, we estimate this will release about 250k equity after buying a smaller house or bungalow, this would be in 6 to 8 years time around 2030. Ideally somewhere by the sea.

You may want to be more conservative in how much equity you will release by downsizing. Typically although the search for a smaller cheaper property starts with good intentions, you will probably soon find yourselves looking at nicer and bigger properties, in better more expensive locations ( like somewhere by the sea ) than you first envisaged. It is just human nature.

You might find this article interesting.  Downsizing: why the dream rarely matches reality (fidelity.co.uk)

Roger175

I agree with the above comments on downsizing. I know lots of people who have made the comment over the years that their home is their pension. Easy to say this but not so easy in practice. Obviously one can consider equity release, but downsizing is always going to be very emotive - a lot of people, me included, have moved up the ladder not just to get a bigger house, but to get a better location etc. Our current house, is not huge, but it's in a superb setting on an isolated country plot with outstanding views and with practically every one of our boxes ticked in terms of it's layout and performance etc. so it should be, we built it ourselves to meet our requirements. (Sorry, not meaning to sound smug!). To release any money from it we would either have to go down the equity release route or sell up and move somewhere else and the thought of doing that would break my heart - we didn't end up with where we are by accident and I just couldn't go back to a terraced/semi/estate house having got used to living where we do. I actually think most of the people I know who say their home is their pension will also find it incredibly difficult when it comes to the crunch.

hugheskevi

I've been making lots of downsizing considerations, as we will move from London out to somewhere around the Chester / Wrexham / Shrewsbury region. I very much agree with the comments above.

There is obviously a huge price difference between these areas. However, we want to move to a detached house, rather than our current semi-detached house. We also want a different house layout with more downstairs space, which will probably entail a larger overall house. 

We would also want everything in good, modern condition as we will live there for a long time, so there likely to be some level of building and/or redecoration, although nothing very extensive.

Then there will be stamp duty and moving costs to take into account. We will also need a different car.

With all the above factored in, I hope that the move will be roughly cost neutral, ie, the sale cost of London house will cover everything above. Obviously in many ways we are actually upsizing and could release a decent amount of cash if changing for a like-for-like property, but for the reasons in the above posts, I wonder how often that will actually be the case.

Roger175

Hugheskevi

You make an interesting point about moving locations. I hadn't actually considered this, but I suppose it's obvious that one might very well move to a similar house in a cheaper area of the country and release a good size chunk of equity.

OceanView

Albermarle said:

The only other thing to mention is that at some point in the future we will need to trade down to a smaller property as our current house and garden will be too much work and the council tax is quite high, we estimate this will release about 250k equity after buying a smaller house or bungalow, this would be in 6 to 8 years time around 2030. Ideally somewhere by the sea.

You may want to be more conservative in how much equity you will release by downsizing. Typically although the search for a smaller cheaper property starts with good intentions, you will probably soon find yourselves looking at nicer and bigger properties, in better more expensive locations ( like somewhere by the sea ) than you first envisaged. It is just human nature.

Hi Albermarle Yes you make a good point here, we found this out a few months ago, we carefully researched the areas we liked both online and physically visiting to see how we felt. Set up a Rightmove alert for properties in the areas and am an expert now haha. Initially we thought £350k to £400k would buy what we needed however this is more like £450k and maybe close to £500k now to get what we need/ would like as we want 2 beds, detached and a garage. So thankfully the £250k to £300k equity is based on the higher prices and factors in moving costs too.

GunJack

hugheskevi said:

I've been making lots of downsizing considerations, as we will move from London out to somewhere around the Chester / Wrexham / Shrewsbury region. I very much agree with the comments above.

There is obviously a huge price difference between these areas. However, we want to move to a detached house, rather than our current semi-detached house. We also want a different house layout with more downstairs space, which will probably entail a larger overall house. 

We would also want everything in good, modern condition as we will live there for a long time, so there likely to be some level of building and/or redecoration, although nothing very extensive.

Then there will be stamp duty and moving costs to take into account. We will also need a different car.

With all the above factored in, I hope that the move will be roughly cost neutral, ie, the sale cost of London house will cover everything above. Obviously in many ways we are actually upsizing and could release a decent amount of cash if changing for a like-for-like property, but for the reasons in the above posts, I wonder how often that will actually be the case.

Good choice of areas   If you're coming out of London, just avoid the cheshire set areas and you'll pocket a shedful of cash. Good road links, lots to do within 100 miles, and it's just better up here than darn sarf

Albermarle

GunJack said:

hugheskevi said:

I've been making lots of downsizing considerations, as we will move from London out to somewhere around the Chester / Wrexham / Shrewsbury region. I very much agree with the comments above.

There is obviously a huge price difference between these areas. However, we want to move to a detached house, rather than our current semi-detached house. We also want a different house layout with more downstairs space, which will probably entail a larger overall house. 

We would also want everything in good, modern condition as we will live there for a long time, so there likely to be some level of building and/or redecoration, although nothing very extensive.

Then there will be stamp duty and moving costs to take into account. We will also need a different car.

With all the above factored in, I hope that the move will be roughly cost neutral, ie, the sale cost of London house will cover everything above. Obviously in many ways we are actually upsizing and could release a decent amount of cash if changing for a like-for-like property, but for the reasons in the above posts, I wonder how often that will actually be the case.

Good choice of areas   If you're coming out of London, just avoid the cheshire set areas and you'll pocket a shedful of cash. Good road links, lots to do within 100 miles, and it's just better up here than darn sarf

If you look at the Wrexham/Chester/Shrewsbury area, I think I would prefer the 'sarf' bit of this area though. Shropshire /Shrewsbury rather than Wrexham/Deeside.

GunJack

Albermarle said:

GunJack said:

hugheskevi said:

I've been making lots of downsizing considerations, as we will move from London out to somewhere around the Chester / Wrexham / Shrewsbury region. I very much agree with the comments above.

There is obviously a huge price difference between these areas. However, we want to move to a detached house, rather than our current semi-detached house. We also want a different house layout with more downstairs space, which will probably entail a larger overall house. 

We would also want everything in good, modern condition as we will live there for a long time, so there likely to be some level of building and/or redecoration, although nothing very extensive.

Then there will be stamp duty and moving costs to take into account. We will also need a different car.

With all the above factored in, I hope that the move will be roughly cost neutral, ie, the sale cost of London house will cover everything above. Obviously in many ways we are actually upsizing and could release a decent amount of cash if changing for a like-for-like property, but for the reasons in the above posts, I wonder how often that will actually be the case.

Good choice of areas   If you're coming out of London, just avoid the cheshire set areas and you'll pocket a shedful of cash. Good road links, lots to do within 100 miles, and it's just better up here than darn sarf

If you look at the Wrexham/Chester/Shrewsbury area, I think I would prefer the 'sarf' bit of this area though. Shropshire /Shrewsbury rather than Wrexham/Deeside.

Oy!! Wrexham's not too bad - Deeside, on the other hand...

Shropshire's very quiet and full of snobs'n'farmers 

PennyForThem_2

If moving to Wales - just a heads up about England's reason for NI increase (which will prob go bottoms up) ---- but this increase in England was to limit care home fees to a reasonable amt (80k ish? in total).  

Wales has not yet supported this.

But it may all go tits up in England too.