Income for the elderly

downshifted

I have a dear neighbour friend who is 82. He needs to invest for income and has some bonds maturing - I think about £25k which has been in Gilts for many years.

I am trying to encourage him to have a Santander 123 account (he is a non taxpayer) and put £20k in there, but older people often find it very difficult to make these kinds of changes. I have explained he could still keep his current bank account and have a standing order to pay in.

Other than that I don't know what else would provide the best safe return. He does not use a computer, so that limits things

I have said he could perhaps afford to use some of his capital now ....but he wants to leave that to his children (although I know they have told him not to worrry about that)

Any views on what else he should consider please? He also has a few thousand in easy access cash, a few thousand in a L&G Managed Monthly Income Trust R Account, and low living costs.

Daniel54

An obvious place is the NS&I pensioner bonds -although these close on 15th May

http://www.nsandi.com/65-guaranteed-growth-bonds

audigex

I'd agree regarding the Santander account, it'll just take some persuasion

And don't bother trying to persuade him he can spend some: from my experience once a pensioner decides the money is going to their kids/grandkids, you'd have more chance of stopping a cruise missile, no matter how much they insist they don't need it and would rather he spent it on treating himself in his twilight years.

xylophone

Persevere with the 123 and see whether his Council Tax, telephone and power and water DDs could be switched?

Find out whether he has taken advantage of being able to pay CT and water rates by monthly DD?

Remind him to set up a standing order from his existing bank account to fund the Santander and one from Santander to return any money not required for the DDs.

Remember the Santander "monthiversary".

If he does not pay tax, set gross interest on the Santander account.


He might want to invest the remaining £5000 in the one year pensioner bond?

downshifted

Thank you for these helpful replies. I have tried with the Pensioner Bonds, including showing him how to take an income from them (courtesy of Martin) but he doesn't like it because he sees it as reducing capital :-(

alanq

"Pensioner Bonds" only pay interest at maturity/closure so may not be the best choice for someone who has been relying on savings for regular income.

xylophone wrote: »

He might want to invest the remaining £5000 in the one year pensioner bond?

For a non-taxpayer the 3-year bond MAY be the better choice than the 1-year version. If withdrawing after one year the return is about the same as the 1-year version. (2.76% vs 2.80%) and there is the prospect of the better rate for later years. (For taxpayers the calculation is different as the 90-day penalty is taken from capital not by reducing interest paid. So if interest is £10 during a 90 day period the penalty would be £10 despite the fact that £8 or less would have been earned after tax)

http://www.moneysavingexpert.com/savings/pensioner-bonds?utm_source=MSE_Newsletter&utm_medium=hiya&utm_term=22-Apr-15-lt&utm_campaign=savings&utm_content=16

macman

Persevere with S123, and remember he'll need to set up or transfer 2 DD's over to it as well as the £500 monthly feeder.
The 65+ bond may be unsuitable for the reasons given above-no annual interest. (at least not on the 3 year one).

downshifted

Just an update - he has just told me he has made an appointment with Santander! Many thanks

badger09

Good result.

I had similar issues with my then 75 (soon to be 78) year old sister. She resisted my efforts for ages, and said she was happy to keep many thousands in a zero interest HSBC account .

I then soft pedalled and she came round to the idea herself, made the appointment and is delighted. She treats the £20 - £30 monthly interest as her guilt free 'craft spending' money

downshifted

A further update - all went smoothly apart from Scottish Power who failed to transfer his Direct Debit and cancelled it instead - resulting in letters demanding payment, which older people hate even more than most, and a need to make several phone calls and sort things out.