I am financially comfortable. Inflation is biting me hard. What next?

[Deleted User]

Could this thread please be allowed to remain as the title theme affects a lot of us older savers who now live off our savings

I started a thread on stopping savings and spending cash but it has been relegated to the back of beyond. It is very very important for many of us `non working older ones` because of the fact that we are losing value on a daily basis. For me it means spending now in order not to lose out when cash will be buying a lot less and so far we have only bought a top of the range brand new tv, which is fuure proof. Spending now could be used for small items, funeral plans, white goods and so on.

This thread must be all inclusive, everyone who has a savings net, however small. Please join in

ceridwen

Hiya Kittie

Lets hope indeed this thread stays here. I shall be very inclined to nip over to the Board-that-raises-my-blood-pressure (aka "the Bankruptcy and Living With It Board") and let rip if MSE tries to "hide this thread away".

My "safety net" is only a small one so far - and I am struggling with how to balance the fact that there isnt actually anything else I require to spend money on (as the house I have isnt my "forever home" and I still hope that I might manage to have one one day somehow). With that - this house needs (even more) money spending on it - but I'm unwilling to do so, because of that hope-to-move.

I've bought everything I require in the way of possessions and these days am making sure that they are "good quality" - with the hope they will last.

Whilst I'm still in this house - there really isnt anything further I need (or even want) to spend on and I do want to put my "spare cash" into savings.

I worry that - even though I have private health insurance - that I might find myself having to fund hefty health care bills and want to know the money is there to do so if need be. I want to know that, if ever I need help to stay in my home and the Council wouldnt provide it that I could pay for things like someone to do the housework/taxis for distances I expect to walk normally/etc.

So - I certainly advocate people spending to save - as thats what I've been doing for the last few years - but the problem arises when one just wants/has to save after that and how the heck to do so without finding the Government is allowing inflation to "steal our savings".

All good ideas welcome from anyone as to how I can protect myself against future contingencies - without actually leaving the money sitting there in savings - welcome...:)

seven-day-weekend

Hello Kittie, what a good idea for a thread.

Our latest news is we have just taken out a small mortgage on our family home, something we said we would never do after we had finished paying for it.

The reason is, we are selling our house in Spain and were going to give our son the deposit for a flat out of the proceeds.

However, the Spanish sale is taking an inteminable time as there is so much paperwork to do (it should have been done by previous owners, but wasn't) that the flat we all liked would have disappeared as it was such a bargain.

http://www.whitegates.co.uk/property-details/west-midlands/wolverhampton/newbridge-crescent

So we raised the money for the deposit on our UK home and will pay ourselves back once the sale of the Spanish house completes.

Except......we have thought that as we can afford to pay this mortgage,(it finishes when my husband is 75, we have taken out an insurance policy to pay it off if either of us dies before then) and will have more income in a couple of years, it may be a good investment to spend the money from the Spanish house on an investment flat. Something like this:

http://www.findaproperty.com/displayprop.aspx?edid=00&salerent=0&pid=9142913

Hate the decor, but those flats are nice and area is green and leafy and ten minutes walk from the City centre.

If we found ourselves needing money we could always sell it again. We could maybe even live in it ourselves if we wanted to (much later on) and either rent out or sell the main house.

We are still considering this and will sit on the house money until we decide. Watch this space!

Errata

Good idea for a thread, Kittie. If people post on it then it will remain alive and lively, if they don't it will drift down further and further until it settles in the 'nobody posts on this thread' silt.

missile

Good topic for a thread. If I may comment:

1. Historically savings have rarely kept pace with inflation.
2. It is a shame NS&I index linked savings certificates have been withdrawn.
3. A brand new top of the range TV is not future proof. In my experience there will be a newer better, cheaper model next month.
4. Things could get much worse for savers, if those predicting rampant inflation are proven to be correct. http://www.bbc.co.uk/news/business-14895510
5. Maybe we shall see protests in London? http://www.reuters.com/article/2011/10/15/us-usa-wallstreet-protests-idUSTRE79A41E20111015

pollypenny

Good thread.

WE are wondering whether it's feasible to buy a condo near DS and DIl in Florida. We would use it, but I'm not sure whether the gulf beaches would be as easily rental as near Disney

[Deleted User]

lol missile, the tv is certainly enough of a future tv for us, having jumped from a bog standard cheapie. We weren`t looking for a forever tv as they, like computers, are becoming `old` very quickly these days. It is future (ie 5 years?) proof enough, in that it can get internet, apps and so on. Lol, all this from someone who doesn`t have a modern mobile phone.

There is already more than one way of thinking on this topic, which is interesting. Our circumstances are as in the opening post and last year we actually started veering away from forever saving. We had previously downsized to release capital and I saved the cash in various accounts, which was a fantastic stroke of good luck as getting our new house last july was almost an impulse buy. We upgraded, not in physical size but in location and in future proofing re energy costs. The house cost 50% more than we got for our old one but to heck with it. We no longer have energy bills and our water bills are reduced by at least 50%. What I am trying to say is that if you are happy in your home and will be staying put, then it makes sense to upgrade your home as much as you are able.

Ceridwen, you have a dream and mustn`t now put more money into your home. Your difficulty in getting value for cash is much more difficult. The one thing that may help is perhaps to think outside the box ie a home that needs quietly upgrading but I understand that location is paramount. Unfortunately you are the one who has to do the hunting and I wish it would fall into your lap

jennifernil

We have decided to stay in our present house as long as we are able, we like the house and the area, and moving is very expensive. We will make changes/improvements as required.

While we are still fit enough, we are spending about 4 months of the year away in our touring caravan, seeing Europe and UK. We would like to see North America, New Zealand and Australia too, but insurance may be too costly at our age.

After 32 years with the same company, we are in a very fortunate position, as OH has a decent pension, enough for our day to day needs, the long holidays, and quite a bit over to save. We have a good bit put by, so we are hoping that adding a little each year will be a hedge against inflation. We have some of our savings in the NS&I inflation linked certificates, so that will help a bit too.

As we feel we already have everything we need, we are presently helping our 2 children with housing costs, and putting by a bit for our grandchildren (2 so far), out of our "surplus".

As the value of our pensions will not keep up with inflation, there will come a time when we will no longer be able to do this.

If things get really bad, we still have downsizing to fall back on.

ceridwen

I wonder if there might be a snag to the idea of downsizing the house - as in if everyone else is also trying to do so then there will be a lot of mid price range to expensive houses on the market at once and the laws of supply and demand would then indicate one wouldnt be able to charge as much for them.

Hence - if I ever manage to get to a "reasonable house level" I will be planning on one thats "good enough" and not "luxury" and staying in the "good enough" place for the rest of my life. So - would still require to put any spare income I have into savings directly.

I think thats a scenario that a lot of people could be in - ie the not wanting to "protect" money by tieing it up in housing thats bigger/dearer than we actually want - but just putting it in savings as such instead.

Errata

At the moment consumer price inflation is 4.5% and expected to rise next month to around 5% . The basic SRP is tied to the retail prices index which is expected to hit an inflation rate of 5.5% shortly.
That only makes scary reading for people who really struggled three years ago when CPI was 5.2%. Those who didn't feel affected by it then perhaps won't feel affected by it now.

jennifernil

I am noticing that there are lots of price rises in food these days.

When you are shopping every week, I think it can easily creep up on you, a penny here, a penny there. But with us going abroad for 2 or 3 month stints, you really notice the differences! We were away in May and June this year, and I noticed lots of 30p jumps in July on things costing £2 or more.

I love to shop in M&S for food, the quality is good, but I only ever buy the special offers and stock up the freezers. Sainsburys is good too, but again we just get the special offers. Our main shop is probably at Tesco, but we do have a Lidl a few hundred metres away, and an Aldi about 3 miles away, so I always stock up with basics at them.

Our Lidl is great for milk, 79p for 2 litres. Their orange juice and bread flour is excellent too. We pretty much make all our own bread, even take the breadmaker on holiday with us! We also find them good for olive oil, yoghurts and desserts, margarine, wine, cold meats, eggs, cereals....... Tesco is getting less of our money these days!

OH's main pension only gets the CPI or RPI increases on around a third of it, so last year was only about a 1.5% increase on it overall.

Utility bills are rocketing, our gas and electricity has increased about 20% in the last year or so, which is very worrying. We are turning down the thermostats, being really careful about leaving lights on, but there is only so much you can do.

Quite difficult to sell a house here right now, unless you cut the price drastically. With prices of bungalows commanding a premium, we would have about £100k from downsizing, but with stamp duty and legal and removal costs, that would be reduced by about £20k, so not woth it right now when considering the huge hassle involved.