Head spinning, pls help! £300K home at 64years, retirement option?

chapfromessex

Hi folks, 48yr old self-employed musician with annual NET profit £20K. Living alone in mortgaged property valued at £250K, with 16yrs and £82K outstanding. 

I like my lifestyle, I play my gigs. Very nice. I don't spend too much, and have enough left over to buy the occasional £1K accordion/piano/guitar each 6 months or so. No debts. I don't want to move yet, as I really like my home. Also, I don't want to get a different job. However, I anticipate earnings steadily increasing over time.

My current retirement plans at 68 are to live frugally on state pension, and sell/downsize/get lodger if things get too tight. But, I feel I'll by the time I'm 64 I'll be sitting in a £300K mortgage-free property, without much benefit from the value. 

What else could I do? 

Start paying into pension? 
Overpay mortgage ? 
Save for BTL deposit later on? 
Something else?

 

Any help/suggestions much appreciated - thankyou 

Albermarle

As they say in the House of Commons,' I refer to the answer I gave earlier' to another poster ( the same sort of questions get asked all the time so you could spend some time scrolling through the forum ) 
Late 40s self employed no pension. Help! — MoneySavingExpert Forum

chapfromessex

Albermarle said:

As they say in the House of Commons,' I refer to the answer I gave earlier' to another poster ( the same sort of questions get asked all the time so you could spend some time scrolling through the forum ) 
Late 40s self employed no pension. Help! — MoneySavingExpert Forum

Thanks for the link. The reason I don't search the forums too much is because each situation is so specific. 

The person in the link seems to have decided on paying into a pension. I'm hoping to get advice on what would be best in my specific situation. 

soulsaver

Could you give music lessons?  £20 - £30 an hour. Always people on piano/accordion/guitar web sites looking for teachers.

And I've sent you a PM. 

chapfromessex

soulsaver said:

Could you give music lessons?  £20 - £30 an hour. Always people on piano/accordion/guitar web sites looking for teachers.

And I've sent you a PM. 

Thanks, yes I give a few too. I might have a look at some sites though - always nice to have a extra student.

penners324

Why not only buy that new musical instrument every 6 months to every 12 months and put that amount in a pension?

dunstonh

A £300k property doesn't leave a lot of scope for downsizing.

What else could I do? 

Start paying into pension? 
Overpay mortgage ? 
Save for BTL deposit later on? 
Something else?

Overpaying a mortgage doesn't help give you an income in retirement.  If the mortgage is affordable and ends before retirement then this is not currently the best option.
BTL is getting expensive and requires more knowledge of the market and having a single BTL is high risk.  The days of easy money on property are gone.  Still money to be made but you need to buy the right properties and have a pot of money behind you.
Pension is logical as it's the most tax-efficient of all the investment wrappers at your age.

At the end of the day, you get back what you pay towards it.  If you pay peanuts, you get back peanuts.   So, you need to do something but you need to be sensible with it.  Not just do a token amount just so you can tick a box in your head.  

 I'm hoping to get advice on what would be best in my specific situation. 

You wont get specific advice here (or any internet forum).  You will get opinions and discussion.

chapfromessex

dunstonh said:

A £300k property doesn't leave a lot of scope for downsizing.

Thanks for your response. Why would it not leave much scope? Currently there are smaller properties in my area for about 60% of the value of my one. I'm assuming this ratio would stay roughly the same over time. That would leave me a nice £100K or so to do something with. Do you not think this would be the case?

marycanary

First of all, congratulations on making a living from music, you must have been through a difficult time with venues closed and no face to face teaching. Is your mortgage about £500 per month? If you are saving £166 per month for musical equipment it doesn’t leave much out of £1666 per month for everything else.

If you can achieve £12k a year and be mortgage free in retirement you would have about the same lifestyle (minus the instruments). In today’s money, you would have the state pension of £9339 so you would have to generate £2661 per year

In your place, I would forgo new equipment every 6 months and instead use the money plus everything else I could scrape together to build up a cash emergency fund (if you don’t already have one). As a single person (you don’t mention a partner) and without access to an employer's sick pay scheme, you are running the risk of being unable to pay the mortgage if you are ill or injured so an emergency fund is vital. If you have a partner who will pay the bills if you can not it is less of an issue.

Forget all about buy to let.

Once you have an emergency fund in a place open a pension, keep it simple and cheap. Pay in as much as you can as your income increases. Even investing over 20 years, it won't grow to a huge amount but then you say you don't need much. If you don't want another higher paid job you might have to supplement your income in retirement by part-time giggling or teaching.

HCIMbtw

This is a risky suggestion (given your age), but you could stop paying off your mortgage, take a fixed rate interest only mortgage, and start maximising contributions into a pension.

Your money paying off the house services a 1.2% interest debt (at a guess). 

If you achieve annual rates of return 4%-10% growth on a pension you end up significantly better off. 

Your house value will fluctuate regardless of whether you pay the mortgage. 

Caveat - if rates on mortgages were to increase significantly, or your investments lose money, this might make you worse off than otherwise paying your mortgage. but the longer your pension is invested, the better your chance of good returns. 

dunstonh

Why would it not leave much scope?

You say its £250k at the moment.  By the time you pay legals, estate agent, moving etc then you lose some there. 
I wondered if your location was essex (from your name).  So, even the cheapest Essex prices don't give you much scope for much of a reduction unless you move to undesirable areas.  And Suffolk prices are skyrocketing at the moment which makes the traditional move from Essex to Suffolk to free up money less viable than it used to be. 

That would leave me a nice £100K or so to do something with.

It may help but not its too low an amount.     If your state pension is £10k a year and you are used to living on 20k, then the £10k difference would see you run out in 10 years.

You also say you really like your home.  Downsizing is not as easy as you think as it usually means not only in size but also the area in question.     Most people who say they intend to downsize end up not doing so unless they have no choice.