Savings but no house in retirement

[inthemudwithyou]

Hello,

I'm thinking ahead 15-20 years when I would be thinking about retiring.

Me (38) and husband (44) currently have £600k in S&S ISA and SIPP. Roughly 50-50 in each. We don't own property. We've been living abroad for the last 2 years, have 2 young children and happy not to be tied down to anywhere right now. Don't currently pay rent as housing is included at the school we work at.

I'm wondering if anyone has been in this sort of position when they've retired. I think we're looking to have 1m + in savings when we retire, but may have to rent, use a significant portion of our savings to buy a house, or maybe move into a house currently owned by parents. My mum and dad have a house each, husband's parents own two houses.

What's the best thing to do here?

I am in a similar situation, returned from abroad and bought a house with savings, I plan to do equity release to fund my living costs, but I am older than you.

Your still very young
Are you both only siblings? What if parents have to go into care and use house to pay ?

depends if you come back into the UK and where you would reside? North , south ?

15 years? At 38 you don't hit the state retirement age for 29 years

And it's likely to go up by then too

Well unless you do something daft like spend all your money on a home in a high cost area or a luxury high cost lifestyle so you need a high income, you're going to be more than fine.

You'll be able to use some of your money to buy a home if you want to and the rest to provide an income for life that will cover rent if necessary.

Plus there's a good chance that you'll inherit a reasonable amount, Mumsnet always talks about how it will all go on care fees but the financial advisor who does the Meaningful Money podcast says that in his experience its a very small percentage who use most of their assets this way, around 5-10% max, so likely not a consideration when there's 4 houses to potentially inherit plus any other assets, because its unlikely that people who own 2 houses each don't have money as well.

But obviously you need to talk to a financial planner who will be able to show you illustrations of how to use your assets to provide an income, with or without buying property.

By the time you retire your children will be grown up and you can buy something sensible and suitable. Or rent somewhere.

I think this is a non problem as long as you keep up the savings.

have you considered buying a house, renting it out for now so it’s low cost to you and then you have a base for retirement

I don’t understand the dilemma. You have every option. Are you worried about your assets being in cash instead of property? Feeling a bit rootless? No point in buying now when you don’t know where and you might get a free house anyway.
Retiring that early and also buying a house in the UK with 1m between two might not be feasible but sounds like an inheritance or help might be there.

With plenty of time to retirement I would say your savings will be well in excess of £1m by then before any inheritance.

When the time comes it makes sense to buy a house so start thinking that some of those savings are for a future house purchase.

I would continue to save and allow the savings to grow over a million. It sounds like you would inherit a house maybe more between you (yes I know not 100% but highly likely). You sounds money wise well set up.

I would recommend seeing a financial advisor. This is one of the biggest financial decisions you will make, and getting advice early (ie now) whilst there is time to make changes and implement their advice, puts you in a powerful position.

However generally, (not specific to your situation) the advice is to aim to minimise all expenses heading into retirement - no credit card debt, no personal loans, car loans etc paid off and home loan paid off. Meaning you don’t have to pay rent/mortgage and have the security of somewhere to live.

It’s wise to set a budget, again the ‘general’ figures say people generally live on about 60-70% of your pre-retirement income, in retirement. Less costs of transport for work, work clothes etc. more travel done in the early years of retirement, but substituted by less travel and more spent on medical costs/caring needs when aged, when older. So do a budget to see what you need, and obviously it will be lower if you own a home. However, your own circumstances might be such that you can afford to rent for the rest of your lives and you don’t mind the variable costs and uncertainty/insecurity of ownership.

I would keep maxing out your ISAs, pensions, savings all of that. Presumably you have up to 20 years more to work so you can significantly increase your investments by then.

Once you are in a position to retire then use some of that money to either buy a house. Or you could rent.

Thanks all, yes, I think I'm wondering whether I will rent for life or use a significant part of the savings to buy a property. I do all the finances in our marriage.

Husband is one of 3. I am one of 2, but my father remarried and she also has 2.

Hoping to have quite a bit more than 1m, and retire early. I am loosely following FIRE, but hard with 2 kids in an expensive country 😊

If you are planning to retire early, I think having a paid-for home is even more important. As what may happen with inflation and rental prices may be even more variable if you are retired for 40 years, as opposed to 20 years. Owning a property removes that source of stress.

i found it interesting that Sam Dogen retired early (FIRE movement) but chose to return to work after 10 years as unexpected costs had arisen (in his case, choosing to have children and their college costs). To me this supports the argument that it is very important to reduce all debts before retirement, minimise all bills, and plan for as many unexpected expenses as you can (eg Emergency Fund and regular contributions built into your budget for ‘sinking funds’ to cover the cost of replacing predictable items such as vehicles/boilers/ovens etc).

I think in your case, from the limited information you have stated, owning a home before you retire early, would be quite important. More information could change this view, which is again why I recommended seeing a financial advisor.