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Early Retirement Pitfalls, Requirements etc Your opinions


Kimbers

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In response to info given earlier, it's also important to remember that a pension is not part of your assets for inheritance tax but an ISA immediately attracts 40% tax. This is obviously important if you want to leave a legacy for your family.

I also have personal experience of the difference between council run care and private care. I wouldn't put my worst enemy into council run care.

:) 

It's getting there......

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If you really want to minimise Inheritance tax, invest in shares that fall under Business Property Relief - mainly the AIM market. They only have to be held for 2 years before they fall out of IHT. You would not believe the amount my Mum's estate paid in IHT due to this. All the shares in her ISA were tax free as well.

 

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9 hours ago, philcool said:

Wise words indeed but also remember that salary sacrifice into a works pension is also paid in tax free so if your like me rather than pay 40% tax stick it in the pension and I know I'll pay tax at 20% when I draw on it I'm still 20% better off.

Oh and would have also kept £6k child allowance as well if had started earlier 

Only if you earn less than £100k a year. More than that and your pension benefits and personal annual tax allowance get battered as your income rises.

As ever, the devil is in the detail which is why you need proper advice tailored to your own personal circumstances.

1 hour ago, Dan E said:

So, been looking after the MIL for at least 15 years worse in the last 5 years as she is house bound and 92 so we have to do everything and she has 3 care visits a day, oh and no life, now this brings me on to my solution (sorry @pete

Everyone gets to live to 85 and two days (to get over the hangover of your birthday), then we just take them somewhere nice and give them a very lethal injection with a pleasant Gin and Tonic. You know it is coming you can plan your birthday, live like you want because you know the date your aren't going to be here. This will solve pretty much all the pension schemes and NHS issues. 

vote for me 🤣

 

I would. Vote for you on this.

Sad fact is not all of us will make it to 85. Let alone 85 and two days.

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Alcohol. Sex. Tobacco. Drugs. Chocolate.  Meh! NOTHING in this world is as addictive as an Evora +0. It's not for babies!    

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1 hour ago, TAR said:

In response to info given earlier, it's also important to remember that a pension is not part of your assets for inheritance tax but an ISA immediately attracts 40% tax. This is obviously important if you want to leave a legacy for your family.

I also have personal experience of the difference between council run care and private care. I wouldn't put my worst enemy into council run care.

:) 

I do not intend to leave my family any inheritance other than the house, garage, and their contents.

I am supporting my kids now, whilst I am working, with deposits on houses, additional savings, cars, etc. Would rather they had the help when young and it was needed, than they have to wait till hopefully much later in my life. In essence, they benefit when I'm warm, not cold.

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Alcohol. Sex. Tobacco. Drugs. Chocolate.  Meh! NOTHING in this world is as addictive as an Evora +0. It's not for babies!    

The first guy to ride a bull for fun, was a true hero. The second man to follow him was truly nuts!   

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10 hours ago, Dan E said:

So, been looking after the MIL for at least 15 years worse in the last 5 years as she is house bound and 92 so we have to do everything and she has 3 care visits a day, oh and no life, now this brings me on to my solution (sorry @pete

Everyone gets to live to 85 and two days (to get over the hangover of your birthday), then we just take them somewhere nice and give them a very lethal injection with a pleasant Gin and Tonic. You know it is coming you can plan your birthday, live like you want because you know the date your aren't going to be here. This will solve pretty much all the pension schemes and NHS issues. 

vote for me 🤣

 

I've still got 30 years then

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hindsight: the science that is never wrong

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11 hours ago, TAR said:

In response to info given earlier, it's also important to remember that a pension is not part of your assets for inheritance tax but an ISA immediately attracts 40% tax. This is obviously important if you want to leave a legacy for your family.

I also have personal experience of the difference between council run care and private care. I wouldn't put my worst enemy into council run care.

:) 

I never understood this need to leave worldly possessions to your kids. For a start my oldest earns twice my salary (at least) and, to be totally frank, when I am dead I won't give a shit! So who cares?

Nope, like my dad, his dad before him etc etc, there will be absolutely nothing in the pot when I go, including no house. Our house is part of our retirement plan. Selling it for the £650,000 and buying a small retirement flat for £150,000 then equity releasing it, so we live in it till we pass, is the plan! Kids get nowt apart from some of Wendys paintings and maybe some Lotus stuff I will inherit from my father! 

My dad worked for his money, I have worked for mine and my kids will have to work for theirs! Like @C8RKHI have been supporting them the last 15 years paying for 5 years at Uni for oldest, regular support for the other 3 as they didn't work or lost jobs etc etc. They've had their money!

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For some years we had 2 full time carers and other support for them at home. Then eventually mum went into a care home as she could no longer be supported at home. I had previously had to take over my parents finances etc when my mum had a stroke in late 2015, at that time my father needed full time care.

In total I spent over £250k on care. Seeing both my parents gradually get worse until they passed away was difficult. If I had not retired early, I would not have been in a position to help - particularly if I was still living and working a couple of hundred miles away.

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4 hours ago, Chillidoggy said:

 

In this case, my mother is overdue by 4 years. But I'm not sure I could vote for you as I've seen the length of time any government takes to clear backlogs, and I can't wait that long.

If you think about it, it makes total sense for pension planning point of view and frankly 85 is way old enough (sorry again @pete)  

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5 hours ago, Kimbers said:

I never understood this need to leave worldly possessions to your kids. For a start my oldest earns twice my salary (at least) and, to be totally frank, when I am dead I won't give a shit! So who cares?

Nope, like my dad, his dad before him etc etc, there will be absolutely nothing in the pot when I go, including no house. Our house is part of our retirement plan. Selling it for the £650,000 and buying a small retirement flat for £150,000 then equity releasing it, so we live in it till we pass, is the plan! Kids get nowt apart from some of Wendys paintings and maybe some Lotus stuff I will inherit from my father! 

My dad worked for his money, I have worked for mine and my kids will have to work for theirs! Like @C8RKHI have been supporting them the last 15 years paying for 5 years at Uni for oldest, regular support for the other 3 as they didn't work or lost jobs etc etc. They've had their money!

Kimbers, be very careful with equity release, you may not want to leave your kids anything but with that you may well, easily and very quickly leave them with a massive debt. 

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2 minutes ago, Dan E said:

Kimbers, be very careful with equity release, you may not want to leave your kids anything but with that you may well, easily and very quickly leave them with a massive debt. 

Wife's parents had equity release, and after the last one passed away the interest keeps accruing while house for sale, and so it puts much more pressure on getting the house sold before costs go up an up. It means you feel under pressure to take whatever offer you can get.

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3 hours ago, Dan E said:

Kimbers, be very careful with equity release, you may not want to leave your kids anything but with that you may well, easily and very quickly leave them with a massive debt. 

In the UK all equity release policies are sold with a No Negative Equity Guarantee (NNEG) which means the equity release provider cannot get back more than the value of the house. 

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1 hour ago, Bazza 907 said:

In the UK all equity release policies are sold with a No Negative Equity Guarantee (NNEG) which means the equity release provider cannot get back more than the value of the house. 

ah never knew that. 

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11 hours ago, Kimbers said:

My dad worked for his money, I have worked for mine and my kids will have to work for theirs! Like @C8RKHI have been supporting them the last 15 years paying for 5 years at Uni for oldest, regular support for the other 3 as they didn't work or lost jobs etc etc. They've had their money!

Hoo rah!  100% Kimbers. Give it while you are warm. Enjoy giving it and enjoy seeing them prosper as a result.  

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Alcohol. Sex. Tobacco. Drugs. Chocolate.  Meh! NOTHING in this world is as addictive as an Evora +0. It's not for babies!    

The first guy to ride a bull for fun, was a true hero. The second man to follow him was truly nuts!   

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On 24/03/2022 at 12:00, gregs24 said:

I can give you an idea. I put £25k into a pension in 2008 and it is now worth just over £80k. Yes it went down significantly from time to time, but pensions are a long term investment. 

You do need to be careful to take inflation into account. That £40k per year will be nearer £50k after 10 years of inflation (even shorter at current rates)

Ideally you don't want to use capital to live off as if you start hitting your capital too soon it will quickly vanish. That is the reason for the £1m figure to generate £40k per year. 4% return is achievable on longer term investments.

so what i did on  2014 was I  dropped that 30k onto a 3 bed terraced house that cost me 130k. 100k repayment mortgage over 15 years..  gave it striaght  the council who were gurantee to pay £750 month at that time . to rent it .   used that to pay the mortgage . house now worth 260k and pays me £975 month as over paid as mortgae was abouot 650.. so should be paid off end next year..   yes i have had to spend a coupel of k on it over tthe years.  i then did this twice more after  i saved up enough deposit to reduce the mortgage  payments & inusrance  so the rent covered it  (although the next 2 aill not be paid off for another 4 & 7 years respectively  unless i pay off early.)  relise i cant sell them as capital gains and are second homes, but in future , rents go up as do house values.. wa sthat better than a pension?  i have no idea.  but it worked for me ,  and someone else was paying off the mortgage,,  and money just seem exceptional cheap to borrow ..  having been around people in 91 who were giving keys to banks, i fixed my mortgaes to reduce risk.. 

Yes we have had to pay tax ,  but between  Mrs J & myself  we combine tax allowances so its was pretty small & manageable  with the rent income . im sure an accoutant could make it more benificial and some point may take some advice..  

it was drummed into me from young age, money safe in bricks and mortar..   if that  turns out to be true or not  only time will tell ...

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1 hour ago, andyj007 said:

so what i did on  2014 was I  dropped that 30k onto a 3 bed terraced house that cost me 130k. 100k repayment mortgage over 15 years..  gave it striaght  the council who were gurantee to pay £750 month at that time . to rent it .   used that to pay the mortgage . house now worth 260k and pays me £975 month as over paid as mortgae was abouot 650.. so should be paid off end next year..   yes i have had to spend a coupel of k on it over tthe years.  i then did this twice more after  i saved up enough deposit to reduce the mortgage  payments & inusrance  so the rent covered it  (although the next 2 aill not be paid off for another 4 & 7 years respectively  unless i pay off early.)  relise i cant sell them as capital gains and are second homes, but in future , rents go up as do house values.. wa sthat better than a pension?  i have no idea.  but it worked for me ,  and someone else was paying off the mortgage,,  and money just seem exceptional cheap to borrow ..  having been around people in 91 who were giving keys to banks, i fixed my mortgaes to reduce risk.. 

Yes we have had to pay tax ,  but between  Mrs J & myself  we combine tax allowances so its was pretty small & manageable  with the rent income . im sure an accoutant could make it more benificial and some point may take some advice..  

it was drummed into me from young age, money safe in bricks and mortar..   if that  turns out to be true or not  only time will tell ...

You can of course invest in commercial property and letting through a pension. This gains the tax relief on the initial cash used, as well as tax free growth on the property (no CGT) and no tax on the rental income. 

You can also invest in general property based funds in a pension

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