67 years old....is it too late to get serious about future?

dunstonh

So full set of stamps.

Although if you are self employed, you are not qualifying for the second state pension (what used to be SERPS). Depending on how long you have been self employed, you may be on track for less than you though. For example, someone qualifying for full state pension but self employed their whole working life will get just the basic (£5000 a year). An employed person is likely to be closer to £8000-£9000 a year due to SERPS/S2P.

dougz_2

Might the OP also be barred from Pension Credit if it is deemed that the home they own is too valuable, however that is decided?

sleepless_saver

dougz wrote: »

Might the OP also be barred from Pension Credit if it is deemed that the home they own is too valuable, however that is decided?

No, the value of the home is not taken into account in assessment for pension credit so that's one less thing to worry about.

margaretclare

The OP states that she has approx £40K in savings so I would think that the discussion about pension credit is a 'red herring'. She won't qualify for pension credit.

To me, age 67 is no age at all and with present trends, she could live another 20-30 years at least. Once there is no longer the possibility of work, she will still have needs. We may all have needs connected to declining health, and in my book, it's always better to have money to pay for one's own needs rather than depending on what may or may not be available in the state sector.

It's possible to save for later needs either in the form of a SIPP or in a stakeholder pension. What to do on reaching age 75 is then the question - do you want to put it into the form of an annuity or into drawdown? I think these are the type of questions that really need to be discussed, rather than focusing on pension credit.

FWIW, I'll soon be 74 and I'm still saving, I haven't yet thought that it's 'too late'! Most of the savings I have now have been accrued since I was the OP's age.

SnowMan

To clarify:

For someone with only a state pension, about to retire and with 40K in savings and about to invest in a pension, pension credit MUST always be considered for the reasons already stated. Sleepless saver was right to bring up the issue.

Subsequently the OP has supplied the information that his state pension, because he has a significant level of SERPS and S2P, is already about £15 above the guaranteed pension credit threshold of £130 (for a single person), so presumably about £145 per week. If this is the case this means that the pension credit issue is not really relevant and the discussion can progress onto how to invest the 40K in a pension or otherwise. However the issue always needs to be considered in this sort of scenario to avoid mistakes being made.

dunstonh

For someone with only a state pension, about to retire and with 40K in savings and about to invest in a pension, pension credit MUST always be considered for the reasons already stated. Sleepless saver was right to bring up the issue.

£40k of savings will take a big chunk out of pension credit qualification. Every £500 over £6000 classes as £1 per week income. So, £40k -£6000 = £34k. 34k/500= 68. So weekly income from savings is equivalent to £68.

I did a quick calculation based on the information we have on this thread and you may be entitled to a Pension Credit payment of £7.10 per week.


This is based on the following information:

• You are 65 or over.
• You have savings of £40,000.00.
• No one else lives with you.
• State Pension: £95.25 per week

Moving some of the money out of savings into a personal pension would probably increase the amount of pension credit whilst actually increasing the income.

SnowMan

That is an excellent point you make dunstonh.

I was guessing reading between the lines that the OP was receiving £145 pw in state pension (OP says receiving £15 per week above the pension credit level and I am guessing he is male and single) but no actual figure has been given so far. At the £145 pw level it is hard to see the OP initially qualifying for savings pension credit as the upper theshold is £181pw (although theoretically it can happen later if additional income from purchased pension and notional income from savings is less than £36pw).

But if it is £95.25 then every £1,000 of savings (above 6K) will be treated as notional income of £2pw for the pension credit calculation whereas in reality it might buy £1pw as an index linked pension. That creates a number of complications afffecting savings and guaranteed credit which can work both ways. So I would slightly disagree that purchasing a pension increases credits and income throughout retirement. It would only definitely increase credits if the OPs income never fell below the guaranteed credit threshold. But falling below the guaranteed pension credit threshold is quite likely to happen as capital diminishes.

It is too complicated to cover every scenario and almost impossible to explain, could do with knowing amount of OPs current state pension in payment.

dunstonh

So I would slightly disagree that purchasing a pension increases credits and income throughout retirement.

Perhaps the word potential would have been better used.

£500 as capital hits the income harder than £500 in a pension. £500 as capital is treated as £1 income per week. £500 in a pension would be grossed up to £625. That £625 at 6% annuity rate = £37.50 p.a. That is a weekly equivalent of £0.72 pw.

In a savings account £500 x2% interest = £10. £10/52 = £0.19pw (nowhere near the £1 that the pension credit reduction figure)

So, the pension in that scenario would increase the tax credit payment (as the pension income of 72p is lower than the £1 capital reduction figure) and provide a greater income than a savings account. That gives an income boost on the pension credit side and the personal saving/pension side.

dougz_2

What about means tested benefits additional to the basic pension credit amount, such as housing costs? (council tax, ground rent, mortgage interest etc). Would I be right in thinking such things add to the basic £130, and thus could raise the bar further where a pensioner potentially loses out by achieving a savings income in a particular band that only just disqualifies them?

dboswell

thanks everyone, but I am pretty sure I wont qualify for any additional help, even when I stop working as my pension is about £600 per month.

what I want to know is with my £40k, what kind of things should I be thinking of. I expect I will add about £25k in the next three years from my earnings. I really dont want to go beyond years as it will be 51 years in work and I dont think I really can.

I want to keep about £10k in the bank, but the rest I am happy to be more adventurous without being too silly. Currently, Im getting 2.5% in the bank and this is likely to go down soon.

I am happy with some risk so I was thinking of corporate bonds (via funds) gilts (someone said index linked) and a couple of ftse trackers as I believe over the next few years there is growth potential there. Where can I find out about returns from gilts and bonds? Would a 6% return be too ambitious? I read from Hargreaves Lansdown that they felt bond prices were low (fearing the worse i.e. depression) and there was potential for capital growth. Does this seem reasonable?

I realise that I could probably get potentially more in more risky areas, but at this stage of life I dont really want to do that.