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Minimum Amount To Retire

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As a single person, if I own my house outright, I've been thinking I'll need £10K to £12K per year to live modestly but comfortably when I stop working. I don't know how that works out in terms of a lump sum.

Edited by oldsport

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As a single person, if I own my house outright, I've been thinking I'll need £10K to £12K per year to live modestly but comfortably when I stop working. I don't know how that works out in terms of a lump sum.

3% a year to maintain your lump sum is what is being quoted currently http://money.usnews.com/money/blogs/On-Retirement/2013/10/23/the-4-safe-withdrawal-rule-declines-to-3. I guess that would not work with a 100% cash sum.

10k is 3% of 333k.

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When you consider this question you can sadly see why BTL is popular.

A grand or two of inflation linked rental income vs a dwindling pension pot feels a lot more secure.

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Thou answer shalt seek in not monetary terms, but in tangible terms.

Ask thy right question, and one shalt seek the righteous answer.

The minimum amount to retire;

50 years worth of energy, food, shelter, health care stored away (somewhere).

OR

5 rental properties all paid for with an income with fat surplus to boot.

OR

A business or portfolio of businesses that pay for your daily, monthly, and annual expenses with a healthy surplus.

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What is the minimum amount of money in the bank to retire is 500k pounds enough to live modestly assuming that and state pension.

If you're saying is that enough at state reirement age (whatever it is now, 67?) with full state pension then absolutely it's enough.

Very few people will be in that fortunate position.

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If you're saying is that enough at state reirement age (whatever it is now, 67?) with full state pension then absolutely it's enough.

Very few people will be in that fortunate position.

With pensions and savings devalued but the basic state pension more generous than ever, £0 is a good pension pot to retire on, and may very well leave you richer than you were while working.

The return on anything more than that is miserly.

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I think for a single mortgage paid person £12k is fine,£15-18k better.

If the state pension is going to be around £7k you need £5k+ from other sources.If you have a work/private pension paying that job done.Or maybe 2 BTLs (that's why they are so popular) or in my view even better some cash and some dividend paying shares both domestic and out of sterling.

I don't think very many people will struggle at state pension age.The problem is state pension age is getting pushed back and back.Most people wont be able to work until 67,68,69+ .The main question is how to you get from say 60 to 69.

If you have a decent pension it could be worth running savings down over a certain period.

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When you consider this question you can sadly see why BTL is popular.

A grand or two of inflation linked rental income vs a dwindling pension pot feels a lot more secure.

Yes, in my area thay would buy 3, 3 bed houses at £700 pm each.

Even allowing for agency fees, repairs and voids you are going to easily clear £1k a month, effectively index linked and with you capital preserved.

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I think for a single mortgage paid person £12k is fine,£15-18k better.

If the state pension is going to be around £7k you need £5k+ from other sources.If you have a work/private pension paying that job done.Or maybe 2 BTLs (that's why they are so popular) or in my view even better some cash and some dividend paying shares both domestic and out of sterling.

I don't think very many people will struggle at state pension age.The problem is state pension age is getting pushed back and back.Most people wont be able to work until 67,68,69+ .The main question is how to you get from say 60 to 69.

If you have a decent pension it could be worth running savings down over a certain period.

I agree with that......the secret is to be mortgage and debt free at the time of retirement, or have a regular income that can cover rent plus ~ approx equivelent £10k in today's money to live.....a few pounds savings back up in case of a rainy day or unforseen circumstances. ;)

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If that 500k was a pension fund, then even at today's pathetic annuity rates you could get more than 6% (I just checked the first provider that came up on google and got 6%) so 30k plus the state pension is better than most working people would get. If interest rates normalise then the annuity rates would be higher.

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What is the minimum amount of money in the bank to retire is 500k pounds enough to live modestly assuming that and state pension.

I would say so! Even if you had 0% interest on that sum you could draw it down for 25 years to give you £20K a year, surely that'll be enough? - if you're still alive when it's running out spend the last few quid on a bottle of whisky and a shotgun.

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What is the minimum amount of money in the bank to retire is 500k pounds enough to live modestly assuming that and state pension.

Depends on where you want to live. In the UK where you can buy a £100k house for £500k or in another country where you can buy a £500k house for £100k.

Edited by campervanman

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When you consider this question you can sadly see why BTL is popular.

A grand or two of inflation linked rental income vs a dwindling pension pot feels a lot more secure.

If you say so. Go for it. At least with my business I'm not leveraged with debt, at risk of losing investment property and my own home (see below). (If I had my own home, and it's only refusal to buy at these prices why I don't own, and I certainly wouldn't have BTL.)

People-farming, trying to raise rents, greedily hoping banks will lend bigger mortgages to young people to push up HPI like past 30 years, and many other risks. Lot of people entering to do the BTL recent years, for their pensions, at really high purchase prices. Perhaps going to be many more people who lose their BTL (pension) and their own home, if and when HPC comes.

I was confident that I was putting money for my family's future in the best place - bricks and mortar.

Now look how bitter he is, against the bankers, unable to see the correlation that banks' easy lending pushed up the value of all his property investment over the decades, that was the main cause of his portfolio wealth.

Wonder why UKAR has £10s of billions of distressed BTL mortgages on its books, if BTL is so secure for pensions, and now other lenders said to be keen to appoint LPA receivers onto landlords for slightest breach.

Ask Dancing With Sheeple about the inflation linked rental income he pays his landlord, compared to over a decade ago.

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Yes, in my area thay would buy 3, 3 bed houses at £700 pm each.

Even allowing for agency fees, repairs and voids you are going to easily clear £1k a month, effectively index linked and with you capital preserved.

Since when were rents indexed linked? My feeling is that housing costs are going to fall massively as a proportion of wages over the next few decades as other costs increase (e.g. energy, food, transport) and swallow up available income.

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I would say so! Even if you had 0% interest on that sum you could draw it down for 25 years to give you £20K a year, surely that'll be enough? - if you're still alive when it's running out spend the last few quid on a bottle of whisky and a shotgun.

Why would you need to do that, you are retired and more equal, not a 25 year old youth entitled to nothing.................

Minimum income guarantee.£7000

Rent...........................................£5,000

Free bus Pass.........................£2,000

Council tax..................................£ 700

Winter fuel payments.................£300

Disability top ups......................£5000*

Total.........................................£20,000

*Nervous breakdown after futility of £20,000 draw down scheme becomes apparent because it didn't really matter if you had saved or not in welfare Britain.

Edited by crashmonitor

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The thing with BTL is that high deposits are required and interest rates are higher than for regulated owner occupied homes....insurance is high, maintenance is higher, fees for finding tenants good or bad, if managed, the costs are high, CGT if a gain, and there are the voids to account for .....do retired people want the hassle of tying up their cash into something that can be a pain in the backside, especially if they do not live in the area....when there are easier investments to be had for capital and income growth and where you can get hold of your money when you want it. ;)

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Why would you need to do that, you are retired and more equal, not a 25 year old youth entitled to nothing.................

Minimum income guarantee.£7000

Rent...........................................£5,000

Free bus Pass.........................£2,000

Council tax..................................£ 700

Winter fuel payments.................£300

Disability top ups......................£5000*

Total.........................................£20,000

*Nervous breakdown after futility of £20,000 draw down scheme becomes apparent because idle scum were getting 20k anyway.

perhaps one could take the 500K and buy gold bullion to be buried in the back yard. Claim poverty benefits while shaving a bit of gold off the bars each month to pay for additional sundries like hookers and coke.

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The thing with BTL is that high deposits are required and interest rates are higher than for regulated owner occupied homes....insurance is high, maintenance is higher, fees for finding tenants good or bad, if managed, the costs are high, CGT if a gain, and there are the voids to account for .....do retired people want the hassle of tying up their cash into something that can be a pain in the backside, especially if they do not live in the area....when there are easier investments to be had for capital and income growth and where you can get hold of your money when you want it. ;)

The do because they're taking their experience of house price inflation over the decades, extrapolating it to the future, and don't give a damn about younger people hoping to own their own homes. They nip in and totally outbid them. Article after article about how these younger people will be forced to rent from them.

I too see rents falling, and of course hope the more recent landlords chasing pension/yield suffer double HPC.

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perhaps one could take the 500K and buy gold bullion to be buried in the back yard. Claim poverty benefits while shaving a bit of gold off the bars each month to pay for additional sundries like hookers and coke.

Without getting into a gold price debate after buying a house and when I view gold as cheap I will start discreetly buying gold, over a course of years and in low quantities with several dealers, with the aim of impoverishing myself (on paper) in retirement and so make myself eligible for any means-tested benefits going which will add up to thousands a year.

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You're asking the wrong question; it's better to ask "how little do I need to retire?"

Because the driver is costs and the lower you can get them, the less loot you need. Being a bit of a zen-like frugalista, I think £1k (plus accommodation) a month is the high life. (NB, I spend a shed load more than that because of historic commitments - big house, private school etc - but my day-to-day living costs aren't far off).

Call it £12k per annum income - plus somewhere to live. Let's say the house is £125k of committed capital (buy a house or invest and rent). That means you need to ensure £12k pa income. I work on the basis of "forever" rather any capital spend element. So 12k pulling, say, 4.5% from a diversified holding of divi-paying shares requires £266k of capital. To allow for dividend droughts and general risk, let's add 25% to bring the total to £333k. So a total net worth of £450k-ish should do it.

You'll notice I don't include any state pensions in my calculations. That's because I don't believe in fairies or the long term promises of politicians.

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It would seem to me that there is an awkward situation between £23k savings and independence.

Below this one is entitled to benefits and the problem area is between this and having sufficient savings to be provide for oneself completely.

Income is of course the more major consideration rather than savings. Any capital sum is likely to be eroded by inflation if trying to live off of the income at the same time.

If you have time take care to make the income tax efficient.

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What is the minimum amount of money in the bank to retire is 500k pounds enough to live modestly assuming that and state pension.

You can live modestly on the state pension alone.

Without getting into a gold price debate after buying a house and when I view gold as cheap I will start discreetly buying gold, over a course of years and in low quantities with several dealers, with the aim of impoverishing myself (on paper) in retirement and so make myself eligible for any means-tested benefits going which will add up to thousands a year.

^^^^ This.

With the guaranteed top up thing it's twice what someone on the dole gets now (£140 a week).

Unlike most dolites you'd also get full HB as a pensioner if you had no savings etc, and I just can't see them changing that at all ever.

Pensioners are safe - it's everyone else below them that will get the kicking (and part of reason we'll never sort the benefit bill out in this country).

Not that I particular begrudge anyone elderly getting help from the state.

Spend your 500K, or at least invest it and hide it as best you can and leave the bill to the next generation to sort out. They'll doubtless kick to their debt can in the direction of the generation after them when their time comes (and on and on down the generations until something terrible finally happens).

Lord knows what the HB bill will be like in 30/40 years time when generation rent comes to retire and they all need help covering the costs of that. Mind boggles tbh.

I own outright (by complete fluke) but I'll be getting rid of all my assets before I'm of retirement age. Makes no sense at all having property or assets in this country come pensionable age as the political classes will never kick the pensioners and will continue to bribe them ever onwards.

Edited by byron78

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Now that my wife and I are getting our pensions after twenty years of frugal early retirement we find it difficult to spend the whole £1300 a month we receive let alone use up our capital before we die.Old habits die hard and I still go round turning down thermostats and we tend to eat whatever has a 50% off sticker at the supermarket shunning the mere 30% reductions.

I am finally starting to understand why some older people spend so much money on things like cruises and expensive motor caravans .It's just to use up the money before they die.

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