Guest SJP17 Posted August 26, 2010 Report Share Posted August 26, 2010 How much money would you need to retire and live off the interest ? Quote Link to comment Share on other sites More sharing options...
daveh Posted August 26, 2010 Report Share Posted August 26, 2010 The interest you can earn right now is pee-poor compared to about 2 years ago. Much will depend upon what your outgoing expenses are and what other income you have. Quote Link to comment Share on other sites More sharing options...
Guest SJP17 Posted August 26, 2010 Report Share Posted August 26, 2010 I mean to have no other income , only to live off the interest with no mortgage to pay , i reckon its about £500000 but depends on your quality of life and levels of spending , that would get you about £1600 a month at 4% interest , i could live off that no probs Quote Link to comment Share on other sites More sharing options...
daveh Posted August 26, 2010 Report Share Posted August 26, 2010 Don't forget the 20% tax deducted at source. Quote Link to comment Share on other sites More sharing options...
Guest SJP17 Posted August 26, 2010 Report Share Posted August 26, 2010 How can they tax you on your savings ? Quote Link to comment Share on other sites More sharing options...
daveh Posted August 26, 2010 Report Share Posted August 26, 2010 The interest that you receive will have 20% tax deducted at source and you would receive the balance. Quote Link to comment Share on other sites More sharing options...
Guest SJP17 Posted August 26, 2010 Report Share Posted August 26, 2010 So a 5 year fixed rate bond gives you 4.75% interest , that includes the 20 % off at source or not ? Quote Link to comment Share on other sites More sharing options...
daveh Posted August 26, 2010 Report Share Posted August 26, 2010 If you are being quoted 4.75%, then that is probably the gross amount from which the 20% tax will be deducted.If you were to lock money away for 5 years, you are gambling that the record low 0.5% base interest rate won't rise during the term. I think that is a hell of a gamble but you would be locked into the bond and would be stuck with that rate taken. Quote Link to comment Share on other sites More sharing options...
Spinner72 Posted August 26, 2010 Report Share Posted August 26, 2010 How can they tax you on your savings ? They tax you on every ******* thing! (sorry, OT, interesting topic please continue!) Quote Link to comment Share on other sites More sharing options...
Guest SJP17 Posted August 26, 2010 Report Share Posted August 26, 2010 Jesus is there no end to this misery ! tax tax tax ! Its just something im looking into at the moment , and anyway i dont have half a mill ! you can always dream though ! Quote Link to comment Share on other sites More sharing options...
Guest SJP17 Posted August 26, 2010 Report Share Posted August 26, 2010 So 20% of £1600 is £320 , That would leave you with £1280 a month clear , then your grub and other household items , electric , council tax , phone , tv , broadband , house insurance , heating , so its probably enough the way the interest rates are at the moment but there wouldnt be much left for luxurys , and you probably get very bored sitting at home everyday drinking tea and eating balti biscuits whilst watching tv and finding things to discuss on Shetlink ! Quote Link to comment Share on other sites More sharing options...
lerwick Posted August 27, 2010 Report Share Posted August 27, 2010 Interest my bank hbos has to offer at the moment is only 2.6% you would need a million pounds to earn 26000 in interest, less tax that would leave you 20800 but your capital would not be keeping up with inflation. Depending on how long you are going to live you could spend your capital and blow your children,s inheritance. You could invest in rental property and get a better return on your money but that brings a few of its own problems. Maybe buy a croft and but and ben with no electric or running water and grow your own food that would be cheap but hard living. Quote Link to comment Share on other sites More sharing options...
Guest CyprusPluto Posted August 27, 2010 Report Share Posted August 27, 2010 You only get taxed on savings if your total income exceeds the personal allowances. So your £1600 per month income would come with about £500 tax free so you'd only pay 20% on about £1100. Another thing to think of though is your state pension (plus any private pensions you may have). That is also taxable, but would supplement your income from about age 66 onwards. If you haven't got a full set of stamps though you won't get a full basic state pension - you need 30 years. And if no private pension you may also be entitled to SERPs -State Earnings Related Pension. You won't be entitled to any benefits because you will have such vast wealth ie £500k. Another thing to think of is the capital. Why have £500k in the bank when you die. You can also spend some of the capital each year to supplement the interest. This supplement would have to increase each year as the interest earned would decrease each year because of a lower capital base. You would only need to do this until the basic state pension kicks in at 66. And as your capital decreases there may come a point in time when you can start to claim benefits. So there are lots of variables to 'how much to retire'. How you want to live? At what age are you likely to die? Where you live? What age are you when you retire? I think as a minimum for a 50 year old £250k would suffice. For a better lfestyle and aged 40, perhaps £500k is needed Quote Link to comment Share on other sites More sharing options...
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