Can I retire now? (age 40)

ent_moot

>How will you get a mortgage with no employment?

Well, I don't think they (the bank) particularly care if you have the equity.  

>>And you want to borrow money to live and pay back the borrowed money?

Yes, though most of it gets paid back later after I have access to my private pension. So, it's basically a trick to get access to my private pension earlier, at the cost of interest on the mortgage, of course.

ent_moot

GunJack said:

The remortgage plan is flawed - you cannot get a 200k mortgage without being on probably 50k-ish salary, and most lenders will only do it up to SP age, which even if someone will go over that age will massively increase outgoings. 

I think you might be wrong on this. I literally spoke to my bank about it and was told it wouldn't be a problem, given proof of future income (i.e. private pension) and equity. 

Worst case, I could get a job, get the mortgage, than resign on day 1.  

 

QrizB

ent_moot said:

Aside from the originally stated assumptions, I also assume that my pension and S&S ISA grow at 5% per year, which seems reasonably conservative.

Is that 5% real (aove inflation) or nominal?

5% annual real investment growth is *not* conservative.

Most people would work with 1% or 2% real growth. The more conservative of us (myself included) work on 0%.

ent_moot

MyRealNameToo said:

What are you planning to do during your retirement whilst living on the breadline? 

What income are you going to have to satisfy the mortgage company of your affordability of the mortgage? 

I can see the attraction of retiring in your 40s if you are a millionaire and can afford to do what you want when you want, I can see the attraction of maybe going part time in your 50s if you dont need your full income. I seem to be in a small minority of really not seeing the appeal of having 40+ years of retirement on a low income. Maybe it's influenced by most the old boys I know who've retired and are lost, half of them shortening their lifespans with excessive drinking to have something to do. 

Having the average household income without housing costs seems a fair bit above the breadline, no?

I have very inexpensive creative hobbies that are more likely to generate income than cost anything. 

ent_moot

>Is that 5% real (above inflation) or nominal?

I assume 5% nominal.  I model for inflation by increasing my outgoings by 2% a year.

CarInsScams

ent_moot said:

>2) Your child is -  say 10 ?    If university beckons  still on your hands for another 12 years - uni cost £20k/year

True, I've not factored this in. I imagine she'll get a student loan to cover tuition fees, and then accommodation would be <10k? 

Depends where the uni is. I have one in Bath - 10.5k for accommodation next year, which is more than the max loan and then living costs on top. I couldn't give up work so early and not have enough to support my kids through uni. It is tough for young people at the moment. Driving lessons are also extortionate. My kids are costing me far more now than when they were little.

MarlowMallard

Another clear no from me.  There's a good chance of a stock-market slump in the next few years, your pension ages are not 57/67, it'll be minimum 58/68 ,
very likely 59/69 and might well be 60/70.     You haven't budgeted for uni fees or buying NI years in the future or higher costs of the £700k house. 

If you bin the house upsize and cut spends to £25k pa you can do it, but do you really want to live 40 years counting pennies ? 

Go part-time until 45-50 then reassess then.  

Isthisforreal99

Think your figure of average household income is out, especially if you are in an expensive area.

LHW99

So, the way I make the numbers work is that I assume I'm able to release up to 200k in equity in my house (i.e. take a mortgage out) at the point that my cash is close to drying up and before I reach private pension age.

We haven't had a good house price crash since the 1990's. What will you do if you end up in negative equity?

Isthisforreal99

LHW99 said:

So, the way I make the numbers work is that I assume I'm able to release up to 200k in equity in my house (i.e. take a mortgage out) at the point that my cash is close to drying up and before I reach private pension age.

We haven't had a good house price crash since the 1990's. What will you do if you end up in negative equity?

Unlikely on a £700k property with a £200k mortgage?