The Sunday Night Opinion Section - Early Retirement

[developer]

A pal of mine (yes, really, none of this Martin rubbish) is in his mid 50's.

He could sell his assets (property) and come away with net c£1.5m, whilst being entirely debt free (including mortgage).

He has enough interests to keep himself busy, so he feels boredom won't be a problem.

His lifestyle isn't lavish, but he and his family do like nice things and decent holidays, so there is a current lifestyle to maintain - I guess this is the bit that makes the question tricky for you guys to answer.

However, with modern healthcare, he could live to, lets say, 90.

So, will his net £1.5m sustain him/them for the next 35 years, if managed /invested appropriately.

Supporting rationale would be useful, as I'll show this to him.

I know there are many variables, but, hey, it's Sunday night and the telly is sh*te, so....

Ta.

 

[LTD]

The key question is how much money (cash) per annum does he need at the moment for the lifestyle he enjoys.

Only once that is answered can you determine if the capitol sum is enough to provide a suitable return.

He needs professional advice.

Saying that, I would happily retire on that amount of money.

 

[developer]

The key question is how much money (cash) per annum does he need at the moment for the lifestyle he enjoys.

I don't have this info to hand, and I'm aware that without it it's difficult .

What I can say is that he's grounded and sensible, and while he lives in a decent house with a decent car, he's never been flash with the cash.

 

[Stratman]

I took early retirement at 55 with a suitably commuted final salary pension.

As a very rough guide, in order to maintain your existing lifestyle, your retirement income needs to be between half and two thirds of your working income. Mine's about two thirds, maybe a bit more, and to be honest I reckon I'm better off now than when I was working. I did a lot of travelling, staying away and eating out when I was working, and although we received expenses for all these it didn't cover it, far from it, so with that no longer a factor it helps a fair bit.

The drop in stress is wonderful, and to be honest, in common with many of my contemporaries who did the same as me, I don't know how I found time to go to work.

 

[Deleted member 37751]

Just a basic observation...

If he earns 0% on the £1.5m and spends £50k a year on living then that would last thirty years...

 

[grober]

Tell him "It's later than you think!"

 

[renault12ts]

Yes.

 

[Deleted member 65149]

Assuming those property assets don't include the house he's living in, then he shouldn't hesitate in taking early retirement. £1.5m will last a long time without commuting expenses and other work related costs.

Unless you've omitted an important piece of information, I can't see how he's as grounded and sensible as you say if he hasn't been paying into a pension for many years. If he hasn't, then I believe that there are pension schemes that you can take up with a lump sum. I've no idea how the figures would work out, but surely it's something worth looking into, especially if he's not expecting to want access to the £1.5m (or what's left of it) in one go at any time.

I grabbed the opportunity to take early retirement at 50 when it was offered to me with immediate full pension. As Stratman said, the drop in stress is worth more than any financial rewards. After 17 years of retirement I still find plenty to keep me occupied and the days still fly by. The only difference is that every day is enjoyable.

 

[Meldrew2]

...., will his net £1.5m sustain him/them for the next 35 years, if managed /invested appropriately.....

The investment portfolio will need to be low risk, so that limits the income...

 

[developer]

Unless you've omitted an important piece of information, I can't see how he's as grounded and sensible as you say if he hasn't been paying into a pension for many years.

He always felt his property was his pension - it's just a question of when he cashes in.

He will retain his own property, mortgage free.

 

[WDB124066]

A lot of Brits are selling up and moving to the Med where they can put their left over money in the bank and earn 8 to 10 % interest. Top of the range villa in Cyprus will be a fraction of what you pay in the UK the rest goes in the bank on a term deposit, no need for tricky investments.

Here's one I stayed in, Brits who own this are absolutely loving life...


Do your research as to whatever mechanism you might be interested in though, as things can & do go wrong!!!

 

[JohnBar]

A lot of Brits are selling up and moving to the Med where they can put their left over money in the bank and earn 8 to 10 % interest. Top of the range villa in Cyprus will be a fraction of what you pay in the UK the rest goes in the bank on a term deposit, no need for tricky investments. Here's one I stayed in, Brits who own this are absolutely loving life... Do your research as to whatever mechanism you might be interested in though, as things can & do go wrong!!!

But how much cash did they lose a year or so ago when the Cypriot economy melted? Also getting 8%+ interest at the moment indicates high risk. This scenario is not for anyone with a nervous disposition.

 

[Colin_b]

But how much cash did they lose a year or so ago when the Cypriot economy melted? Also getting 8%+ interest at the moment indicates high risk. This scenario is not for anyone with a nervous disposition.

Very true. The LD element of the government is talking about their mansion tax again, reformulating it as an asset tax, rather than just houses.

Plus, if you are living off capital, inflation isn't your friend.

On the other hand, shrouds don't have pockets....

 

[davidjpowell]

Don't forget that there will also be a state pension..

Also as an option why sell the property to generate income? Presumably they are a diversified portfolio? Perhaps use agents and accept a lower return. Sell at a later date when or if capital is needed.

If property is not diversified, then sell and make it so.

 

[s88]

Buys shares in Glaxo, Shell, Aviva, HSBC, water companies and the like and the divi is close to 5%.

Surely enough to live on.

 

[WDB124066]

But how much cash did they lose a year or so ago when the Cypriot economy melted? Also getting 8%+ interest at the moment indicates high risk. This scenario is not for anyone with a nervous disposition.

Not a penny, they are in Northern Cyprus....

 

[developer]

If property is not diversified, then sell and make it so.

What do you mean by diversified property?
I understand a diversified portfolio, but not diversified property.

 

[s88]

How much would a place like the one in the pics cost?

 

[WDB124066]

Don't post here unless you have a fair idea of what you are talking about please.

 

[davidjpowell]

What do you mean by diversified property?
I understand a diversified portfolio, but not diversified property.

mind ahead of my typing. Diversified property portfolio.

Problem is how to do it. 2 or 3 commercial investments. Lots of resi? I'd suggest a decent £500,000 in commercial and then £750,000 in decent apartments, avoiding crap areas for both, not forgetting that void rates in commercial are now payable in full after 3/6 months.

That's how I'd do it, but property is what I know. I don't trust stocks and shares, and can't see the point of bank savings when interest is so low.