not enough to live on

Carolinemjs

Mojisola wrote: »

I did - the OP added all that information after I made my suggestions.

Apologies too

kidmugsy

Carolinemjs wrote: »

Not that rapidly 😊
I reckon I can make it last 5 years plus

If you really are burning through nearly £10k p.a. of capital then your lifestyle isn't sustainable in the long run, however much the suggestions here might help extend it. You probably know that already. But as everybody over 60 knows, there may not be a long run anyway.


P.S. The SIPP stunt transforms capital into income. So you'd perhaps be best not to continue the stunt once you are about to get pension credit. Whether the pension deferral idea seems bad in light of its effect on pension credit must depend on the arithmetic I suppose.

Carolinemjs

kidmugsy wrote: »

If you really are burning through nearly £10k p.a. of capital then your lifestyle isn't sustainable in the long run, however much the suggestions here might help extend it. You probably know that already. But as everybody over 60 knows, there may not be a long run anyway.


P.S. The SIPP stunt transforms capital into income. So you'd perhaps be best not to continue the stunt once you are about to get pension credit. Whether the pension deferral idea seems bad in light of its effect on pension credit must depend on the arithmetic I suppose.

No it isn't sustainable in the long term and in reality that 5 years could be 10 without too much bother.
My partner went from being fit and healthy to dead in 12 months despite his cancer being picked up early and every sign and test indicating an excellent outcome. Then, bang that !!!!!!! cancer misbehaves and suddenly there's nothing can be done and those years you thought you had are just weeks. We can never be sure of the future.
Thank you for all the information, it's given me plenty to think about

Linton

Carolinemjs wrote: »

No it isn't sustainable in the long term and in reality that 5 years could be 10 without too much bother.
My partner went from being fit and healthy to dead in 12 months despite his cancer being picked up early and every sign and test indicating an excellent outcome. Then, bang that !!!!!!! cancer misbehaves and suddenly there's nothing can be done and those years you thought you had are just weeks. We can never be sure of the future.
Thank you for all the information, it's given me plenty to think about

Sadly some people do die early. But dont let your experience lead you to spend too much too soon. Assuming you are of average health, at 66, according to ONS estimates, your chance of dying in the next 10 years is about the same as that you will live to 100.

jamesd

Assuming current income desire of 126*52 + 150*12 + 10000 = £18,352 a year. Do the paying into and taking out of a pension.

Do the state pension deferral. You can find that for 50000/(18352 -150*12) = 50000/16552 = 3.02, say 3, years. That produces a state pension increase of 3 * 0.104 * 125.67 = £39.20 a week, £2830.40 a year. Total state pension now 125.67 + 39.20 = £164.87 a week, £8573.24 a year.

At that point you're three years older so you'll get more income from equity release than now. Aviva has a calculator that gives an estimated equity release value. That currently says £103,500 at age 69 for a £300,000 property. £93,000 at 66.

In theory and ignoring inflation that could let you defer for another 103500/16552 = 6.25 years. That would increase the state pension by 9.25 * 0.104 * 125.67 = £120.89 a week to a total of £246.56 a week, £12,821.12 a year. Well above means tested benefit levels and for life.

Not an ideal answer but maybe an acceptable one.

The result is quite sensitive to how much you spend now. Cut that by say £1,000 a year and you can defer for 153500/15552 = 9.87 years. Lifetime income then £13242.72 a year. Cut it by £3,000 and the initial deferring time rises to 50000 / 13552 = 3.6 years so making equity release one year older once the pension effect is added in. That increases it to £108,000 at 70. Maximum deferring time is then 158000 / 13552 = 11.66 years. Total state pension income then £278.06 a week, £14449.24 a year. Vs assumed £13552 + £150*12 = £15352 now. No longer such a big difference between current and rest of life income levels.

But can you handle a cut of £3,000 a year now? Up to you.

It's also worth looking into the potential countryside downsizing options. You might find something interesting at some point that would make it an attractive option and it could substantially improve the sustainable income level. £50,000 freed up that way makes a substantial difference.

In the meantime do be sure to learn about P2P if you haven't. With rates of perhaps 10% after bad debt available it can help your £50,000 of savings last a good deal longer. More initial deferring time until equity release and higher sustainable income. Ablrate and MoneyThing are two good ones to get started with.

kidmugsy

By the way, in a couple of years time it may be worth thinking again about taking a lodger. A friend of ours has done it for more than two decades and is only now giving it up, in her eighties. She has delighted in the company.

Carolinemjs

Such a lot to take in here Jamesd and kidmugsy
I had heard about deferring my pension but it scared me to think of eating into my nest egg and if a disaster happened then I would in really tricky situation. Also I had no idea of the figures or where to start with them.
Am I right in thinking that the 'outlay' is 'compensated' by the benefit of deferring the equity release?
Apologies for the nursery level language, I don't know how else to express this.

michaels

greenglide wrote: »

You could defer (suspend, stop recieving) your state pension for a while and live on you savings for a while. Each year you did this would increase your pension by over 10%. This is assuming your state pension age was before 6th April 2016.

What would be an income level that would work for you?

Wouldn't any extra pension from deferral lead to a 1:1 reduction in pension credit once the savings were run down though?

jamesd

Yes, the cost of the savings spending is compensated for by both the higher equity release value and the higher state pension it can get you to.

At the start the state pension deferral doesn't get you above means tested benefit levels but after a few years it does and eventually ends up way above them. If you didn't have enough money available to do that I'd instead be suggesting not deferring.

There's also a fair chance of above inflation property price rises and knowing that if your health gets worse you'd have the option of spending money to buy annuities if that offered you more income than continuing to defer.

Worth remembering that you're already planning to eat into your nest egg. It's just about planning to make it sustainable and seeing what can be achieved, to guide your planning.

BobQ

OP you say "Downsizing is not on the agenda in the foreseeable future, one can never be sure but I want to maintain the lifestyle I have, i.e. Living in the countryside and enjoying it."

Are you firmly settled in Somerset? I was thinking that you could move to a cheaper rural area?