Pensions Planning: The NUMBER

DairyQueen

k6chris wrote: »

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.

Very good point. Plan A = Scotland (don't they have free nursing care?). Plan B = Switzerland.
All aboard the Dignatis Express.

Northamptonblue

I would agree with other posters that figures for care are so difficult to plan for that we might all never retire trying to build a lump sum against an unknowable and very uncertain potential cost. Sometimes, a leap of faith is all we have. Otherwise it is very possible that we start planning for a future zombie apocalypse, nuclear war, alien invasion etc.

OldMusicGuy

DairyQueen wrote: »

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

Yes. We have one son aged 22 and have made it very clear to him that he should expect nothing when we are both gone. We are planning to use all of our money to fund later life care if needed.

We are going to downsize when we retire and that will release £250 to 300K of equity from our current property. We will give £75 to 100K of that equity to our son as his "inheritance" to help him get on the housing ladder, he should then assume there won't be anything else to inherit.

We plan to stay in our next (downsized) house about 20 years and then plan on moving to a flat at some point after that (depending on health). There will only be one of us left at some point and if that one needs to go into care the flat would be sold which should cover 4 years of full time care in today's money. There will hopefully be some investments left over as well which should provide additional funding if needed.

That plan could get disrupted if we both suffer ill health sooner, but we invest a lot of time and effort in healthy eating and healthy living to try to minimize the ravages of age. That's a big reason behind me retiring early.

I should add it hasn't had a huge effect on "the number" as I know that will go down as we get older. But the plan involves using property to provide a backstop for care. My own view is that our generation has done very well from rising property prices so it's only fair that we should use some of that money to fund our care and later life and also help our son get on the housing ladder.

Esox

DairyQueen wrote: »

....I 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......

Gawd, at this point, I thought you were referring to Dignitas

DairyQueen

OldMusicGuy wrote: »

But the plan involves using property to provide a backstop for care.

I have reached the same conclusion.

I have no issue with funding the care I may need in later life. The concern for me is how best to plan for the possibility of funding care at home. Using our home to finance residential care is part of the plan but my experience with elderly relatives suggests that people resist moving into a care home. Most would stay at home if they could afford sufficient in-home care, but they don't have the income to pay for more than a couple of hours daily (and that level of support is rarely enough to keep someone safe and healthy). By the time they need support with daily activities their capital has been depleted over many retirement years, and cash-strapped local authorities are only able to provide the absolute minimum of help at means-tested, taxpayer expense.

A good level of care at home - plus living expenses - isn't that different from the cost of a decent residential home but, of course, you need to be able to fund this from income/capital or equity release.

In an ideal world I would like the option to stay in my own home so I am trying to plan accordingly.

I have no children and Mr DQ's two girls are adults and independent. He provided for them very generously until they completed post-grad and they are aware that any inheritance they receive from us will be a bonus. They are far better placed financially than we were at their age as Mr DQ opted to invest in their education rather than in a bigger property for himself. That £150k investment per child has paid-off as both are now established in good, well-paid careers, but there will be no surplus equity available to fund their house deposits.

They have also received their "inheritance" rather sooner than most children but in a different form from your son and, like you, we have earmarked our property to fund the care that it's likely we will need should we reach our 80s.

DairyQueen

Esox wrote: »

Gawd, at this point, I thought you were referring to Dignitas

I was (see misspelling in above post) but tongue firmly in cheek.:)

OldMusicGuy

DairyQueen wrote: »

The concern for me is how best to plan for the possibility of funding care at home. Using our home to finance residential care is part of the plan but my experience with elderly relatives suggests that people resist moving into a care home.

I think it depends on the individual and the care home. I certainly wouldn't fancy being forced to go a home not of my choosing because I didn't have the funds to pay for a "nice" care home. I had a relative who was much happier in a home than being on his own. However, when he had a serious illness he had to move from the residential home he loved into a care home and he didn't have the funds to afford a really good one. That was a bit depressing.

Part of our plan is to downsize to a retirement/assisted flat before we get too old (most likely there will only be one of us left....). I think too many elderly people hang on in houses that are too big for them and then it is too stressful for them to move when they cannot cope on their own any more.

I've seen this with my FiL. He was a sprightly man in his 80s living in a 3 bed semi quite happily. However, when he reached late 80s all of a sudden the house started to get too much for him. We could see this, so we encouraged him to move to a small flat closer to his family which he did, and is now into his 90s living quite happily on his own with a bit of support from the family and a cleaner a couple of times a week. But if he had stayed where he was he definitely could not have coped and I think he would have found the stress of moving too much. I think he would have been forced into a home too early if he hadn't moved when he did.

gadgetmind

DairyQueen wrote: »

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?

Yes, and that's why we're aiming for > £50kpa after tax. Hopefully we won't both need care at the same time!

DairyQueen

OldMusicGuy wrote: »

Part of our plan is to downsize to a retirement/assisted flat before we get too old (most likely there will only be one of us left....). I think too many elderly people hang on in houses that are too big for them and then it is too stressful for them to move when they cannot cope on their own any more.

... if he had stayed where he was he definitely could not have coped and I think he would have found the stress of moving too much. I think he would have been forced into a home too early if he hadn't moved when he did.

Your FIL is exceptional and wise. I know we are going rather off-topic here but my experience (and yours) suggests that advance planning is required to minimise the possibility, or at least delay for as long as possible, entry to a residential home. Especially so given that the taxpayer can't meet the costs of the current need for elder care at-home (and, arguably, should not do so for those who have assets).

My MIL is in the (much more common) 'move resistant' category. After several years of repeated falls, dizzy spells and collapsing, hospital admissions, high-speed car journeys (by her children) in response to the latest crisis, it has taken a fall which caused a head injury to belatedly catalyse a move.

She is now in her late 80s, frail and has complex health problems. For several years she has needed much more care each day than the few hours a week she has received recently. Her children visited often, and provided what support they could given that all live at a distance, but all considered it unreasonable/not feasible for any (plus family) to relocate given that MIL was able, but unwilling, to move. Her solution to her care needs being that one of her children (plus spouse) should move in with her.

Her home (small 4-bed detached in an expensive area) could have provided the funds for good at-home care, and more family support was available, had she agreed to downsize and move closer to one of her children.

She has recently moved into a care home as the fall was so serious and frightening that she finally accepted that she must have someone around 24/7, and that there would be no-takers for relocation within her family. It is a good care home and will be funded eventually by the sale of her house. Her remaining capital - plus pension - will meet the cost for around 18 months.

MIL was fully involved in the decision and in the choice of home, but it has taken several months to complete the research and for a place to become available. Even so, the day she moved proved very traumatic and upsetting. My sis-in-law (helping her with the move) was the unfortunate person to bear the brunt of MIL's anguish, and of harsh accusations from MIL that she was being forced to move against her will.

A very big guilt trip which left poor sis-in-law in a terrible state.

MIL wished to stay in the same area but this understandable desire means that family support remains difficult. Two children are still working, and neither of these live locally; one (retired) has no vehicle and lives 100 miles from MIL's town; and the other retiree is 260 miles away. For example, my sis-in-law drove 520 miles (round trip) to take MIL to a hospital appointment this week.

I am certain that had MIL followed your FIL's example then the move to a care home would have been delayed, perhaps indefinitely, and her quality of life and general health would have been much better. Also, she is completely unaware of the conflict and worry she has caused within her family over several years.

I now see the same thing happening with my parents. My mother - late 70s - has been severely disabled for decades. My very active dad was able to provide all of the care she needed until he reached his mid 70s, but he has suffered health problems in the last few years and now needs family support to care for my mother. My mother's disability is so severe that she is incapable of making herself a drink, or rising from a chair, or walking without extreme difficulty. She cannot be left alone for more than a couple of hours.

Her condition is progressive and as her disability increases my dad's ability to provide care diminishes. I was able to relocate close to them some years ago and have filled the gap in my mum's care so far. This would not have been an option had I continued to work and I wonder what would have happened had I been unable to step-in 24/7 on the occasions my dad has been hospitalised as an emergency. There have been periods when my dad has been recovering from surgery when both have needed 24/7 care for several weeks.

I now share mum's care with dad. However, housing has become a contentious issue between us all. Dad is reluctant to move although we all have valid concerns about mum's care going forward. The bungalow they downsized to 20 years ago is no longer suitable for my mother's needs, and that situation will only become worse. They are able to pay for cleaning/gardening but at-home care costs are beyond their means, and it's unlikely that the local authority could fund more than the typical, three, short visits per day to meet mum's basic needs.

I am able to visit several times each week but cannot care for my mother 24/7. My siblings all work. Parents have ruled-out something like an annexe or other multi-generation home. They have also ruled-out buying adjacent properties with us (which would facilitate providing support for them both).

Dad has identified a local retirement complex that includes apartments for those who can live independently, and it also includes a residential home for those who need 24/7 care now, or in the future. This seems a good solution except that dad has identified a specific flat that he wishes to live in - and no other will do.

This, of course, is a device whereby dad can legitimately avoid moving to a more suitable property, whilst appearing to seem willing to do so, until/unless (like MIL) the situation becomes so critical that safety is compromised. The (often denied) truism, I believe, is that dad assumes that I will care for them 24/7 if necessary - come-what-may.

He may be right.

Such examples of resistance to moving home are repeated over-and-over amongst friends and extended family, as is the gap between the supply of at-home care and the demand/need.

There is a family member (mid 80s) whose wife (early 80s) is struggling to care for him at their home. Her health is suffering. Same problems: lack of personal/social funds and children all living at a distance - many of whom have family/work commitments that consume most of their time.

Another (90s and suffering from dementia) is cared for 24/7 by her daughters in her home. One of the daughters has moved-in. The elderly lady's late husband suffered the same condition and for several years the daughters cared for both.

A friend's childless stepmum (late 80s) relies on neighbours to bridge the gap between her essential needs and the care provided by the council in her home. Her capital has run-out. There is no bedroom, bathroom or loo downstairs and she has resorted to using a commode.

All refused to move home when, arguably, it would have been a wise decision. Now, it is both logistically and emotionally too difficult.

I know of only one person who had the foresight to move into appropriate accommodation when they were no longer able to live independently without help (two if I include your FIL). I don't know of a single example of an elderly person self-funding the cost of their at-home care to a level which meets their need. Nor one example of local authorities adequately and entirely funding the very elderly with more extensive care needs.

The gap is always bridged by family and or neighbours.

I think that it is essential that we don't burden younger generations directly/indirectly with the escalating cost of caring for an increasing elderly (but not healthy) population. This is possibly the best thing we can do collectively to help those who come after us. It is a responsibility which should be born by the recipients and, as it's now likely that most of us will need help at some point, it can be factored into our plans.

My parents' generation seem culturally attuned to self-help but 'self-help' in this context also encompasses their children rather than society at large. Many of my generation seem to believe that the state (i.e. younger, working people) should pick-up the tab.

IMO both attitudes are already antithetical to contemporary lifestyles, social structures and social funding priorities.

Our retirement plans have recently been revised and the number has increased a little for later retirement years to provide for temporary periods when care-at-home may be needed (e.g. post-surgery recovery) and for domestic help/repairs. We have also accepted that we will downsize to an appropriate home the moment that either one of us cannot manage daily activities without the support of the other (let alone anyone else). The funds released should cover any at-home care fees for a reasonable period, and the remaining equity will be reserved for nursing home fees if necessary.

Of course, we both hope that we are amongst the minority whom live a long, healthy, independent life and then fall off the perch suddenly within a couple of months of each other. The nephews and step kids will be quids in. Realistically, I think that a lottery win is more likely (and I don't play the lottery).

I will now jump-off my soapbox and apologise for such a lengthy hijacking of the thread. I promise to stay on-topic in future and will add my two-penneth (i.e. my newly revised number) sometime soon.

DairyQueen

gadgetmind wrote: »

Yes, and that's why we're aiming for > £50kpa after tax. Hopefully we won't both need care at the same time!

I think that's in the ballpark of we are now looking to achieve but I need to go and play with my spreadsheet and see if it's do-able. Anecdotally, I only know of one couple (amongst the many scary examples of ageing I have witnessed recently) who have experienced the 'both needing care' situation. Talk about double whammy! :eek: