Pensions Planning: The NUMBER

OldMusicGuy

enthusiasticsaver wrote: »

Watching our savings going down instead of up will be hard but we have to remind ourselves that this is why we saved.

I'm happy with concept of spending what we have saved, the issue is how fast to decumulate. My goals is for both of us to basically leave nothing when we die but planning for how much we might need for later life care is a tough one.

enthusiasticsaver wrote: »

Our number is £30k net per annum or £2500 per month.

Thanks for this! I'm working on a number of £30 to £35K net, hopefully closer to 30K, for two people living relatively modestly (no expensive holidays or consumer goods).

stoozie1

Oldmusicguy it's good that you have that provision made but assuming you are now mortgage free I think your budget will allow for more than just modest living.

For reference our budget after DHs work costs is 1500pcm and we have 4 children living at home.

I think you'll be able to have quite a lot of nice treats, well deserved I'm sure :beer:

OldMusicGuy

stoozie1 wrote: »

Oldmusicguy it's good that you have that provision made but assuming you are now mortgage free I think your budget will allow for more than just modest living.

For reference our budget after DHs work costs is 1500pcm and we have 4 children living at home.

I think you'll be able to have quite a lot of nice treats, well deserved I'm sure :beer:

Thanks for that, I'm hoping that will be the case. I reckon our costs will be in the 20 to 22K range and that does include some things like expensive pet insurance that we could decide to drop. But you never really know for sure so I've been running plans at the 30 to 35K level and we should be ok.

Northamptonblue

I remember how useful this thread was to me when I was trying to decide whether to take early retirement or not so thought I would update. Net income is £2800 pm which seemed likely to be enough. I retired two months ago at 59 and so far we have not come close to spending that much with about £600 pm left over. That will reduce when the summer holiday needs paying for but looking good so far. Still running two cars and two houses (mortgage free). No kids at home so that helps. Early days of course but looking good so far.

DairyQueen

I recently discovered this interesting thread. It has been very helpful in planning income requirements for the first 10/20 years of retirement but the costs associated with living to a grand, old age seem to be on the fringe. The numbers quoted rarely include the income/capital required to support age-related care needs, and I would welcome comments from the forum re: how they think such needs will affect their number.

This Age UK report confirms the reality of my experience within my family/community. The likelihood of requiring some form of care increases from age 75+ and the majority of those age 85+ are dependent on carers/domestic support to a lesser/greater extent.

The report confirms that demand for elder care will rocket over the next 20 years as baby boomers join the 80+ club, but it also makes clear that families and taxpayers will not have the means to meet such a demand. Their limits have already been reached and the system is creaking.

The bottom line: those of us still on the perch in our 80s (and beyond) are likely to need care of some type at some time, and we must rely on our own ability to pay. As the majority of those now age 65 will live at least into their mid 80s, it’s more likely than not that most of us will need care at some point. Given the high cost, and the lack of social funding/family carers, the income requirements of older retirees are likely to dramatically increase in the last 5/10/15/ years of life. There is therefore an inverse relationship between living expenses and old age. Age 80+ living expenses don't reduce, they soar!

The cost of residential care is often highlighted by the media but no such spotlight is directed on the costs of care-at-home. Given that personal care costs anything from £10-£30 per hour, depending on the provider and area, three visits a day totalling two hours is conservatively around £12k+ per year. That’s the absolute minimum level of care required for an elderly, immobile person to stay in their own home and government support (attendance allowance) will fund approx. £3k. The need usually exceeds this but the need is not being met in over 50% of cases - presumably as the unlucky cohort are minus partners/spouses/children to pick up the slack.

Unsurprisingly widowed/single people are the biggest recipients of socially-funded care, and women are much more likely to be recipients than men. Those extra few years of female life are bestowed at a cost.

Care at home (currently) excludes the house from means-testing but, in reality, only the lucky ones have the capital/income/family support required to maintain that status quo for any length of time. Local authorities are stretched to breaking point and anyone relying on social funding to provide all/most of their care needs in their own home can expect a pretty tough time.

The issues/costs of residential care are widely reported but Age UK’s stats are a stark reminder of the dire future awaiting those who can’t self-fund. The taxpayer can no longer afford to meet the full cost and care homes can’t afford to subsidise the deficit. Unsurprisingly more-and-more nursing homes have responded by refusing to accept socially-funded residents. Those that still offer such places simply increase the cost to self-funders to compensate. Self-funders are therefore paying an unofficial tax as they are not only paying for their own care costs but are also indirectly subsidising others. This may/may not be fair/reasonable but I suspect when the mainstream cotton-on there will be some kind of public backlash.

It seems that care costs are an expense that those planning for retirement ignore at their peril. The options seem to be:

1) Have lots of very caring children. Ensure that they adore you, all live locally, and at least one is willing to live with you (or have you live with them). Bribe them if necessary.
2) Die at a conveniently young age – and definitely before you reach 80. It helps if (unlike me) there are no long-lived ancestors in your tree.
3) Be born male but, to be safe, men should consider marrying a younger female regardless of their own sexual orientation.
4) Include at least five years of care-at-home costs in your retirement plan. The extra capital/income required will vary depending on where you live, and whether you have achieved 1) and 3) above.
5) In addition to 4) plan for four years of nursing home fees (and I mean the comfy type that costs £900 per week).

As I am a childless female and OH is older and male, I am seriously considering a Swiss clinic. This may be a viable alternative to the approx. £20k p.a. cost of 3 hours of daily care (3 visits) plus 3 hours weekly for a cleaning service (attendance allowance having disappeared by the time I qualify). Or equity release may be an option (apologies to my nephews). Then, of course, I will need around £47k p.a. for that comfy nursing home when I can’t be left alone for 21 hours each day (sorry kids, forget any notions of inheriting the house).

Has anyone considered how/if these needs will affect their number?

k6chris

DairyQueen wrote: »

Has anyone considered how/if these needs will affect their number?

Yes I did give this some thought and came to the conclusion that the cost is likely to be large but unknowingly so, especailly given very likely policy changes over time. If you factor in a larger NUMBER requirement to cover this, you are almost certainly going to have to work longer to reach that number and by implication have fewer good years in retirement. Death and the risks of growing old are not a risk you can mitigate, making the most of your healthy years is an opportunity you can grasp.

Mnd

I will come to Switzerland with you!

justme111

money previously spent on holidays/presents/social life/clothes/car would be redirected to care costs so those 9 k are likely to be covered and if not one could consider downsizing , equity release , drawing the capital , emigrating to a country with cheaper living costs and dignitas options rather than factor in funds specifically and solely designed for a 40 k a year care home for 5 years which would result in a marked delay or never achieving retirement in order to provide for a very unlikely scenario where all optiins listed above failed.

crv1963

Four years is too high in my opinion, the median uk care home stay is about 20 months, but average residential care is about 30 months so even at 47k pa 125k should cover it and should be able to be covered by loss of spending in other areas, in my view!

Stubod

.I would be happy to join you on the coach trip to Switzerland....may be get a good holiday in on the way...