not enough to live on

Carolinemjs

BobQ wrote: »

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?

As I said, not considering this in the foreseeable future. As one gets older I think, for me anyway, it's important to have some constants in life. As my first post says I have no family so to uproots to a new area makes no sense to me.

kidmugsy

jamesd wrote: »

At the start the state pension deferral doesn't get you above means tested benefit levels but after a few years it does

In light of that I must say I'd consider not deferring, which is what michaels implies. But it's tricky because the longer the capital lasts the longer it is until pension credit kicks in. Is there any other way of spending capital that would bring pension credit sooner but would be seen by the authorities as legit and would help reduce outgoings in future?

Presumably legit expenditures: (i) if your current car is old and troublesome replace it using a cash purchase. Buy an electric bike. Buy a big freezer (if you don't already have one) to let you buy food when it is cheapest. (ii) is it possible to reduce your utility bills by installing further insulation in the house? Or by replacing one mode of central heating by another? (Are there still grants to help with this sort of thing?) (iii) I know, build up a stock of good wine.
(iv) Is there any investment in your health that could usefully be made now? Or investment in your earning power? (v) Or improvements or repair to the house? Double-glazing, say?

Suppose the OP got rid of £20k or so by buying a pension top up before 5/4/17. Then the extra pension bought by deferring thereafter would also include extra pension corresponding to the top-up. But again the problem is the consequent reduction in eventual pension credit.

I suppose that one should spreadsheet the deferral business but my inclination might be to think that guessing when to take equity release might be so big an uncertainty as to dominate the arithmetic anyway.

Am I right in believing that one could arrange an equity release at age 66 and then a second a dozen years later to exploit the bigger %age withdrawal available at age 78? That might be a useful stratagem.

Tentative conclusions (a) don't defer your State Retirement Pension (b) find a way of spending capital now that will reduce outgoings in future (c) explore equity release.

P.S. Beware; we've found that tinned food didn't last as long as we had hoped, so either don't overstock on the food front or store it better than we did (We just stuck it in the attic. Unwise!).

P.P.S. Here's a thought. If you do the SIPP stunt as explained above, you'd just be increasing your income and so (I suppose) be reducing your pension credit, or extending the period before pension credit sets in. It would be worth establishing whether if you contributed money into a SIPP and just left it there for the time being it would count as savings. I imagine it would; surely the authorities wouldn't be so dim as to overlook that, would they? But if it didn't count it might be a useful way of your feeling you've got some capital that you could get at in an emergency but which doesn't reduce your pension credit income by its very existence.

Carolinemjs

I'm not clear about this:-
"Wouldn't any extra pension from deferral lead to a 1:1 reduction in pension credit once the savings were run down though?"
What does it matter if the end result is the same? That is that I can continue to live pretty much as I am for a longer period?

My house is in good state of repair generally and I struggle with the principle of spending money say for a new kitchen, or bathroom, new boiler etc when it all works ok. It feels like I'm being encouraged to spend extravagantly just to get the pension credit to kick in?
��

BobQ

Carolinemjs wrote: »

As I said, not considering this in the foreseeable future. As one gets older I think, for me anyway, it's important to have some constants in life. As my first post says I have no family so to uproots to a new area makes no sense to me.

OK, but with no family a new area might release some cash from your home.

Carolinemjs

Having read through this thread several times I don't understand the importance of Pension Credit and how much this could benefit me.
Having completed the application form a few times wth different scenarios it seems I would have to have less than £10000 and earn less than £50 to get just £7.31!
My inclination is to defer my pension for a few years and then take out a lifetime mortgage ....... but I don't know how to justify this:(

kidmugsy

Any use?

http://www.ageuk.org.uk/money-matters/claiming-benefits/means-tested-benefits/

http://www.ageuk.org.uk/money-matters/claiming-benefits/pension-credit/6-pension-credit-myths/

By the way, is there any expenditure that you could make on the house that would increase its value?

michaels

kidmugsy wrote: »

In light of that I must say I'd consider not deferring, which is what michaels implies. But it's tricky because the longer the capital lasts the longer it is until pension credit kicks in. Is there any other way of spending capital that would bring pension credit sooner but would be seen by the authorities as legit and would help reduce outgoings in future?

Presumably legit expenditures: (i) if your current car is old and troublesome replace it using a cash purchase. Buy an electric bike. Buy a big freezer (if you don't already have one) to let you buy food when it is cheapest. (ii) is it possible to reduce your utility bills by installing further insulation in the house? Or by replacing one mode of central heating by another? (Are there still grants to help with this sort of thing?) (iii) I know, build up a stock of good wine.
(iv) Is there any investment in your health that could usefully be made now? Or investment in your earning power? (v) Or improvements or repair to the house? Double-glazing, say?

Suppose the OP got rid of £20k or so by buying a pension top up before 5/4/17. Then the extra pension bought by deferring thereafter would also include extra pension corresponding to the top-up. But again the problem is the consequent reduction in eventual pension credit.

I suppose that one should spreadsheet the deferral business but my inclination might be to think that guessing when to take equity release might be so big an uncertainty as to dominate the arithmetic anyway.

Am I right in believing that one could arrange an equity release at age 66 and then a second a dozen years later to exploit the bigger %age withdrawal available at age 78? That might be a useful stratagem.

Tentative conclusions (a) don't defer your State Retirement Pension (b) find a way of spending capital now that will reduce outgoings in future (c) explore equity release.

P.S. Beware; we've found that tinned food didn't last as long as we had hoped, so either don't overstock on the food front or store it better than we did (We just stuck it in the attic. Unwise!).

P.P.S. Here's a thought. If you do the SIPP stunt as explained above, you'd just be increasing your income and so (I suppose) be reducing your pension credit, or extending the period before pension credit sets in. It would be worth establishing whether if you contributed money into a SIPP and just left it there for the time being it would count as savings. I imagine it would; surely the authorities wouldn't be so dim as to overlook that, would they? But if it didn't count it might be a useful way of your feeling you've got some capital that you could get at in an emergency but which doesn't reduce your pension credit income by its very existence.

Off the wall, but I believe solar PV FIT payments are not considered when assessing benefit eligibility so could the OP invest in a shed load of solar panels using the capital lump sum to both run down her capital to bring forward pension credit eligibility whilst also locking in a tax free (of less relevance to the OP) but also index linked source of income from the funds.

Max pension credit seems to be £30 per week or £1500pa - obviously a fair bit less than the 10k pa (current) / 5k pa minimum you feel you need to take out of your savings but if 40k of the savings was earning 5% pa (3k inc 1k of capital effectively spent) in a way that made you eligible for all of the pension credits 8 years sooner that you would be with your current savings rundown then that would surely help.

jamesd

Carolinemjs wrote: »

Having read through this thread several times I don't understand the importance of Pension Credit and how much this could benefit me.
Having completed the application form a few times wth different scenarios it seems I would have to have less than £10000 and earn less than £50 to get just £7.31!
My inclination is to defer my pension for a few years and then take out a lifetime mortgage ....... but I don't know how to justify this:(

Your inclination is correct.

1. The issues with trying for Pension Credit instead include not being eligible for much because of the combination of work and state pension now.
2. You can spend your savings and get down to Pension Credit level, but if you do that without deferring you just end up leaving yourself on means tested benefit income level for life.

By contrast the defer, equity release, defer approach gets you to an ongoing well above benefit level income for the rest of your life.

Essentially your choice is spend your savings and get nothing long term from doing it or spend them to get that well above benefit income for life.

jamesd

kidmugsy wrote: »

Am I right in believing that one could arrange an equity release at age 66 and then a second a dozen years later to exploit the bigger %age withdrawal available at age 78? That might be a useful stratagem.

Yes, you can do that. I was thinking of one of the equity release products that allows gradual drawing. There's enough time involved here for there to be both a decent chance of age-related increase and some due to possible property price increases.

There will be a time for perhaps a year before the first equity release when she may become eligible for Pension Credit for a while. At that point she'll still be counted as having the income from the state pension even though she's deferring it but her work and the depleted savings may leave her eligible. There are still grants and free schemes for insulation and heating improvements and that's the time when she's most likely to qualify.

kidmugsy wrote: »

Is there any other way of spending capital that would bring pension credit sooner but would be seen by the authorities as legit and would help reduce outgoings in future?

None that I could come up with that won't just leave her on means tested benefit income level for the rest of her life after a while. Some opportunities but nothing big enough to make a practical difference.

kidmugsy wrote: »

Suppose the OP got rid of £20k or so by buying a pension top up before 5/4/17. Then the extra pension bought by deferring thereafter would also include extra pension corresponding to the top-up. But again the problem is the consequent reduction in eventual pension credit.

That would be a bad move. It gets her less income from her money than deferring and she won't be able to defer long enough to get to the age where top up even matches deferring in extra income per Pound spent, which is the early eighties. So it'd just leave her worse off long term. That's why I considered and rejected it.

kidmugsy wrote: »

If you do the SIPP stunt as explained above, you'd just be increasing your income and so (I suppose) be reducing your pension credit, or extending the period before pension credit sets in. It would be worth establishing whether if you contributed money into a SIPP and just left it there for the time being it would count as savings. I imagine it would; surely the authorities wouldn't be so dim as to overlook that

The authorities have thought of that one. From Pension Credit age money in defined contribution pots will be counted. I summarise the rules in DWP benefits and pension freedom.

The biggest potential improvement comes if she can find a cheaper place where she wants to live that meets her needs. There are probably some, though we're a bit early in the year for peak selling season so what's on offer probably won't be much at the moment.

waningsleep

I am sure you are feeling very upset and undecided abouut your options.Many of the reply are and will be more than helpful to youself but as suggested get pofessional advice.make sure it is investment advice.Taking out a Lifetime Mortgage should not be an option for a long time.When that time arrives make sure you are aware of the future depletion of your assets.MSE states that monies borrowed can double your debt every 13 years depending on the interest rate being charged.Take your time and I hope you make a decision you are happy with