Any suggestions on a future course for a 50yo renter with £50k savings
March 2, 2018 10:26 AM Subscribe
I am looking for feedback on the plan I have in mind, and hoping that others can offer fresh perspectives which may help me improve this plan, or perhaps alter it completely. I am in the UK.
I've lived a fairly mixed up life, but no point in regrets. I now find myself just over 50, living in a rented flat. I got a small inheritance recently, bringing my savings to around £50k. I have no pension. I have no debts. I don't have a great credit history, but it seems to be in the past now, my actual rating is quite good. In recent years I have been working as an IT contractor so am fairly well paid, but work is not particularly regular. My salary averages around £35k. I don't expect to get much more of this work in future, I'd also like to do something different, my best hope is to find something a bit more stable but probably less well paid.
My health is not great, and with my family history I guess I have another 20 years at best. I have no dependents. I'd like to think I will not be struggling to pay rent in my 60s. I assume I will always have to work but if I can keep expenses low then I can work less.
I'd like a bit more stability in my living arrangements. I have lived in my rented flat for many years, it is very cheap, the landlord is flexible, and it is in a nice area. But I am all too aware that this situation could change very quickly. I live in an expensive city, good rented accommodation is hard to find and not cheap. Flats like mine cost £200k here. Ideally I would stay in the city but I think it is unaffordable.
I have considered buying. In theory I could buy a flat outright in a smaller town. Or I could take a small (£50Kish) mortgage on for 10 years and hopefully get a bigger place, again in a smaller town. My reasoning is that I have the stability of owning, also building up some store of equity which might be useful later. But I keep my mortgage payment low, so I can manage it even if my income is much lower, and in 10 years I won outright, reducing my expenses.
I do wonder if there are other possibilities I am not considering though. Any thoughts?
I've lived a fairly mixed up life, but no point in regrets. I now find myself just over 50, living in a rented flat. I got a small inheritance recently, bringing my savings to around £50k. I have no pension. I have no debts. I don't have a great credit history, but it seems to be in the past now, my actual rating is quite good. In recent years I have been working as an IT contractor so am fairly well paid, but work is not particularly regular. My salary averages around £35k. I don't expect to get much more of this work in future, I'd also like to do something different, my best hope is to find something a bit more stable but probably less well paid.
My health is not great, and with my family history I guess I have another 20 years at best. I have no dependents. I'd like to think I will not be struggling to pay rent in my 60s. I assume I will always have to work but if I can keep expenses low then I can work less.
I'd like a bit more stability in my living arrangements. I have lived in my rented flat for many years, it is very cheap, the landlord is flexible, and it is in a nice area. But I am all too aware that this situation could change very quickly. I live in an expensive city, good rented accommodation is hard to find and not cheap. Flats like mine cost £200k here. Ideally I would stay in the city but I think it is unaffordable.
I have considered buying. In theory I could buy a flat outright in a smaller town. Or I could take a small (£50Kish) mortgage on for 10 years and hopefully get a bigger place, again in a smaller town. My reasoning is that I have the stability of owning, also building up some store of equity which might be useful later. But I keep my mortgage payment low, so I can manage it even if my income is much lower, and in 10 years I won outright, reducing my expenses.
I do wonder if there are other possibilities I am not considering though. Any thoughts?
I don't have any problem solving ideas, but all the flats I've seen in the UK are more than 100k in general... anything less will be in an area where it might be difficult to find a new type of work... they're often over an hours commute from a larger city. Maybe if you were more specific geographically people might have some more ideas?
posted by catspajammies at 11:26 AM on March 2, 2018
posted by catspajammies at 11:26 AM on March 2, 2018
Response by poster: catspajammies, yes the smaller towns I am talking about would involve at least an hour commute to a city. I think I could handle that for a while at least. I currently live in Edinburgh, the areas I am looking at are in the central belt (Falkirk-ish) with access to Edinburgh, Glasgow and Stirling, and in Fife, which is really only commutable for Edinburgh. There are flats in these areas for £50-100K, not perhaps great flats, but they do exist and you get a lot more for that money than you would get in any of the cities.
posted by zingzangzung at 11:42 AM on March 2, 2018
posted by zingzangzung at 11:42 AM on March 2, 2018
You say your health is not great and you don’t have high hope for future earnings. If your health failed then a commute might be difficult and then you’re stuck. Owning a home would, from my understanding, hugely impact on your ability to claim benefits (housing benefit in particular) so I think you ought to be careful. Maybe renting is better. Maybe other people will have ideas about how best to use this money.
posted by catspajammies at 12:57 PM on March 2, 2018 [1 favorite]
posted by catspajammies at 12:57 PM on March 2, 2018 [1 favorite]
Your fifty and you have no pension. Save the money for when you are 70. Or put a conservative investment fund.
Also, can you use a bit of it for more training so you can get a higher income?
posted by SyraCarol at 4:17 PM on March 2, 2018 [1 favorite]
Also, can you use a bit of it for more training so you can get a higher income?
posted by SyraCarol at 4:17 PM on March 2, 2018 [1 favorite]
The big problem with owning rather than renting is that you can have a sudden huge expense. So if you rent and your apartment needs a new furnace or a new roof, you just tell the landlord. If you’re the owner, you can suddenly have to come up with a lot of money. So if you’re at all cutting it close in buying a place, you’ve actually put yourself in a much less stable situation. Owning also makes it harder to move if you need to relocate, since you are stuck until you find a buyer.
I’m not sure if you have actually run the numbers on renting versus owning, but owning definitely has a lot of potential for unpleasant surprises.
I’m not in the UK, so I don’t know what the social safety net is like, but you should also consider the possibility that your health could deteriorate to where you can’t work. I was blindsided by a cancer diagnosis last year, and while I’ve been able to keep my job, some diagnoses and treatments would have made that impossible.
So it might be best to continue with your cheap rent for as long as you can and put the money aside for when you really need it. I think there can be a cultural assumption that it’s always better to own, but that really isn’t true. Sometimes renting makes more sense.
posted by FencingGal at 4:52 PM on March 2, 2018 [2 favorites]
I’m not sure if you have actually run the numbers on renting versus owning, but owning definitely has a lot of potential for unpleasant surprises.
I’m not in the UK, so I don’t know what the social safety net is like, but you should also consider the possibility that your health could deteriorate to where you can’t work. I was blindsided by a cancer diagnosis last year, and while I’ve been able to keep my job, some diagnoses and treatments would have made that impossible.
So it might be best to continue with your cheap rent for as long as you can and put the money aside for when you really need it. I think there can be a cultural assumption that it’s always better to own, but that really isn’t true. Sometimes renting makes more sense.
posted by FencingGal at 4:52 PM on March 2, 2018 [2 favorites]
Best answer: My health is not great, and with my family history I guess I have another 20 years at best.
It's a huge mistake to make this assumption, I guess unless you're a Glaswegian male with an atrocious diet? Otherwise, life expectancy is much higher than it was for your parents and grandparents.
Anyway, my partner and I are in a reasonably similar situation to yours, and my thoughts are a bit different than some other folks' and also more UK/ROI specific:
* When you say you've no pension, have you checked if you qualify for the new state pension? It's currently £676 per month which ain't nothing.
* While it is not ideal, you can live on that with the support of additional OAP supports (fuel allowance, etc) *if you are not paying rent.*
* One way to not be paying rent is to yes, put your 50K down and get a 10 year mortgage with payments at or about what you're paying now in rent.
* Once the flat is paid off, it gives you the option of getting a reverse mortgage on the property value to pad your retirement income. You have nobody to leave the house to so who gives a fuck about that?
I think it's worth remembering that for most people on marginal incomes, predictability and security are more important than maximising potential income. If that's how you feel, that's okay.
posted by DarlingBri at 4:59 PM on March 2, 2018
It's a huge mistake to make this assumption, I guess unless you're a Glaswegian male with an atrocious diet? Otherwise, life expectancy is much higher than it was for your parents and grandparents.
Anyway, my partner and I are in a reasonably similar situation to yours, and my thoughts are a bit different than some other folks' and also more UK/ROI specific:
* When you say you've no pension, have you checked if you qualify for the new state pension? It's currently £676 per month which ain't nothing.
* While it is not ideal, you can live on that with the support of additional OAP supports (fuel allowance, etc) *if you are not paying rent.*
* One way to not be paying rent is to yes, put your 50K down and get a 10 year mortgage with payments at or about what you're paying now in rent.
* Once the flat is paid off, it gives you the option of getting a reverse mortgage on the property value to pad your retirement income. You have nobody to leave the house to so who gives a fuck about that?
I think it's worth remembering that for most people on marginal incomes, predictability and security are more important than maximising potential income. If that's how you feel, that's okay.
posted by DarlingBri at 4:59 PM on March 2, 2018
A wise person told me once, when you are a person without resources and you don't have family or friends of means you can fall back on, you should buy a home and work in the food industry. Meaning, that a home is an important investment and nobody can kick you out. I see you are male and maybe you don't have this problem, but when I was a single female and renting I had constant harassment from landlords and that was my priority for buying. If you are not harassed then maybe renting is better although what about a tiny house on wheels that could be moved when circumstances change?
About food, if I can work somewhere and get free food, that's a third of my budget! But you say your health is not so good. (although a recent study said environment is more important than genes for longevity) What I was thinking, tho, is what about spending half that money on a food truck business and then hire a young person to do the actual hard work. And you just manage it and you always have access to food.
Then put twenty five thousand down on a tiny house.
It doesn't have to be all crampy. I've seen some that make a ladder to the roof and they have a kind of patio with lawn chairs. And you could grow a garden up there!
posted by cda at 8:58 PM on March 2, 2018
About food, if I can work somewhere and get free food, that's a third of my budget! But you say your health is not so good. (although a recent study said environment is more important than genes for longevity) What I was thinking, tho, is what about spending half that money on a food truck business and then hire a young person to do the actual hard work. And you just manage it and you always have access to food.
Then put twenty five thousand down on a tiny house.
It doesn't have to be all crampy. I've seen some that make a ladder to the roof and they have a kind of patio with lawn chairs. And you could grow a garden up there!
posted by cda at 8:58 PM on March 2, 2018
Best answer: I now find myself just over 50, living in a rented flat.
I don't know much about social housing in Scotland, but if I were (in my job at Shelter) advising a client in England, being just over 50 would be a trigger for me to suggest looking seriously at getting on the housing register. Local authorities and housing associations often reserve a not insignificant part of their housing stock for over 50s or over 55s, and being able to "bid" (as the terminology is in "choice-based lettings" these days) on these properties often lets people secure social housing relatively quickly. The advantages of social housing are pretty extensive, in particular longterm security of tenure and the certainty that your rent will be covered by benefits if you find yourself unable to work. Owning a house when you're in overall precarious financial shape is often actually more risky, because public funds to cover mortgage payments are much more limited and harder to access quickly.
I'm suggesting this so you don't have to necessarily choose between your financial security and your housing security, particularly because the latter so often depends on the former, especially when you're an owner-occupier.
If you want advice on social housing options, you could start by contacting Shelter's helpline on 0808 800 4444. You'll get a Scotland specific adviser who can give you some actual advice on how things stand where you are, rather than my somewhat general suggestions from across the border.
The other people who might be able to help you are Age Scotland (part of Age UK) whose helpline is 0800 12 44 222. Retirement planning is a big part of their expertise, and they might well be able to offer additional insights into your situation.
posted by howfar at 12:20 AM on March 3, 2018 [3 favorites]
I don't know much about social housing in Scotland, but if I were (in my job at Shelter) advising a client in England, being just over 50 would be a trigger for me to suggest looking seriously at getting on the housing register. Local authorities and housing associations often reserve a not insignificant part of their housing stock for over 50s or over 55s, and being able to "bid" (as the terminology is in "choice-based lettings" these days) on these properties often lets people secure social housing relatively quickly. The advantages of social housing are pretty extensive, in particular longterm security of tenure and the certainty that your rent will be covered by benefits if you find yourself unable to work. Owning a house when you're in overall precarious financial shape is often actually more risky, because public funds to cover mortgage payments are much more limited and harder to access quickly.
I'm suggesting this so you don't have to necessarily choose between your financial security and your housing security, particularly because the latter so often depends on the former, especially when you're an owner-occupier.
If you want advice on social housing options, you could start by contacting Shelter's helpline on 0808 800 4444. You'll get a Scotland specific adviser who can give you some actual advice on how things stand where you are, rather than my somewhat general suggestions from across the border.
The other people who might be able to help you are Age Scotland (part of Age UK) whose helpline is 0800 12 44 222. Retirement planning is a big part of their expertise, and they might well be able to offer additional insights into your situation.
posted by howfar at 12:20 AM on March 3, 2018 [3 favorites]
I should add that the fact that you're willing to live in such a wide range of places would stand you in good stead when bidding on social housing. The personal factor that most holds people back when trying to access social housing is feeling unable to move out of specific locations or property types.
posted by howfar at 12:24 AM on March 3, 2018
posted by howfar at 12:24 AM on March 3, 2018
My husband used to have a really nice two bed flat in Livingston for around £100k that was walking distance to the train station so it can be done. Of course if you're commuting to Edinburgh/Glasgow that's a big expense, especially by train. You could probably find a smaller, less nice flat in Edinburgh itself as long as you're willing to be less picky especially about the area. I used to rent a place off Easter Road that was a small one bed and it went on the market for about £90k. Renting in Edinburgh is tough, so personally I'd choose buying a place for long term security. Not sure why you want to change career but there are still lots of IT jobs here.
posted by maybeandroid at 12:25 AM on March 3, 2018
posted by maybeandroid at 12:25 AM on March 3, 2018
Response by poster: I have marked DarlingBri and Howfar as best answers. DarlingBri because of the suggested improvements to my plan and Howfar because they have opened up alternatives which I can consider. But all answers have been helpful I think. Thank you to you all.
posted by zingzangzung at 12:14 PM on March 3, 2018
posted by zingzangzung at 12:14 PM on March 3, 2018
« Older Low hum tinnitus in one ear, tests revealed... | Help for ADHD and larger-scale time/project... Newer »
This thread is closed to new comments.
posted by pharm at 11:20 AM on March 2, 2018 [1 favorite]