Do i have any hope in retirement discussion

BACKTOBACK

Early 50's own property outright with a value around £220k also £120k in savings accounts.
My dream is to retire to South East Asia if that could be possible but i know i would need a minimum income of £2k a month after tax to cover expenses.
I dont have a private pension, only the state one.
I know nothing about investing, or any private pension schemes.
Do i have a realistic chance of achieving the £2k a month income from my capital in the next few years?
How would you get there?

singhini

Not really!

If we look at current interest rates and say they are 4% and you want £2k a month. You need £600k invested earning that 4% 

So thats £24k a year interest, however you will pay about £1,100 in tax leaving you £1,900 a month

Interest rates could go up but also could go down.


in your scenario you could rent out your house for £1,000 a month and earn £400 a month interest but its still short of your £2,000 target (Also you have to pray nothing goes wrong with the rental considering your living in Asia and renting a house out in the UK)

Marcon

BACKTOBACK said:

Early 50's own property outright with a value around £220k also £120k in savings accounts.
My dream is to retire to South East Asia if that could be possible but i know i would need a minimum income of £2k a month after tax to cover expenses.
I dont have a private pension, only the state one.
I know nothing about investing, or any private pension schemes.
Do i have a realistic chance of achieving the £2k a month income from my capital in the next few years?

If your only available capital is £120K, then investing that in a way which would return a regular £27K or so a year (assuming you are a UK taxpayer) is wildly optimistic. If you're targeting a return of well over 20%, the risk level would have to be very high indeed - and put you at risk of losing the lot.

Even if you throw in the value of your property, after allowing for sale costs and assuming it sells for £220K (also optimistic in the current market), you're likely to have around £320K. Again, you'd have to be willing to take a significant amount of risk to make the necessary return.

BACKTOBACK said:

How would you get there?

Earn as much as possible, save as much as possible, fill in the knowledge gaps re pensions and savings, and take a realistic view of what is a dream and what could be achievable reality.

Martico

How much do you earn? (Will affect how much you can put into a private pension and qualify for tax relief, giving you a boost)
How much are you able to save every month at the moment?
How much longer do you plan to work for?

Storcko14

Without a lot more detail it's hard to know.  However, it looks like a significant income source will be the State Pension so check that you are on course for the full SP.  Also bear in mind that in SE Asia currently, only the Philippines has an arrangement where the UK SP is uprated each year.  That will likely prove crucial for you. 

That aside start by working out how much you will need to save to achieve a pot that gets you to your £2k post tax income per month.  You can start by using the 'safe' withdrawal rate rule of thumb of 4% to estimate the pot size needed then see what you need to save to get there.

You might have already considered these but in your retirement budget you will also probably need to factor in health cover and potentially care costs as you get older.  

kempiejon

BACKTOBACK said:

Do i have a realistic chance of achieving the £2k a month income from my capital in the next few years?
How would you get there?

Well £340k of assets would last 14 years at £2k a month, could eek out longer if the capital is in an interest generating accounts. Some equity investment and you could get more but there's the risk less. I don't think 14 years is the right number for a retirement.

jaybeetoo

A pension will give you free money in tax relief on contributions.  Also, only have savings means your money is unlikely to keep ahead of inflation.  You should think about investing some of it in a stocks & shares ISA.

Marcon

singhini said:

in your scenario you could rent out your house for £1,000 a month and earn £400 a month interest but its still short of your £2,000 target (Also you have to pray nothing goes wrong with the rental considering your living in Asia and renting a house out in the UK)

Depends where OP lives and what local market rental rates are. In (say) Northumberland a property of that value isn't likely to yield that sort of rent, according to up to date ONS figures it's likely to be under £700 a month (and OP would have all the costs of upkeep, insurance etc): https://www.ons.gov.uk/visualisations/housingpriceslocal/E06000057/

QrizB

kempiejon said:

BACKTOBACK said:

Do i have a realistic chance of achieving the £2k a month income from my capital in the next few years?
How would you get there?

Well £340k of assets would last 14 years at £2k a month

At current rates, £340k would buy a 65-year-old an RPI-linked annuity of £18,300 a year. That plus £12k pa from the State Pension would give the OP his £2k per month with a bit of headroom.

https://www.hl.co.uk/retirement/annuities/best-buy-rates

Marcon

singhini said:

Marcon said:

singhini said:

in your scenario you could rent out your house for £1,000 a month and earn £400 a month interest but its still short of your £2,000 target (Also you have to pray nothing goes wrong with the rental considering your living in Asia and renting a house out in the UK)

Depends where OP lives and what local market rental rates are. In (say) Northumberland a property of that value isn't likely to yield that sort of rent, according to up to date ONS figures it's likely to be under £700 a month (and OP would have all the costs of upkeep, insurance etc): https://www.ons.gov.uk/visualisations/housingpriceslocal/E06000057/

Its supposed to be for illustrative purposes only (obviously i don't know here the OP lives). Why bother with your comment when ive already told the OP their unlikely to achieve what their trying to set out!. 
I chose £1,000 as an example as it equates to less than their £12,570 personal allowance
Are you attention seeking or do people need to constantly write war-and-peace on every post

It's not 'illustrative' when it's based completely on guesswork, but is presented with words suggesting it's a definitive statement. Never forget that some of the people using this site will take comments such as yours as gospel - especially if they present a more favourable scenario than the one they are actually facing. 

GenX0212

From your post I'm assuming you would be selling your home so £360k in total.

What's your State Pension forecast.?
Is it just you or do you have another half? 

Do you need to live off your savings/assets for ever or just until SP age?
If forever then unlikely, if you are just bridging a gap until 2 full state pensions at 67 (2*£12,500 with no tax to pay) then maybe.