Planning my parent's retirement

atush

While you are planning, how did your parents get into so much debt with no savings?

How sure are you that if they pay off loans with a pension lump sum, and still have no savings- that they wont get into debt again?

ent_moot

1) Have your parents any savings, life assurance that will add to the money pot post retirement?

Other than a trivial amount (few thousand) that my dad has in another country that we're trying to extract, they have nothing.

2) Is the mortgage repayment capital and interest so that in 8.5 years the slate is clean or interest only relying on an endowment or other savings to pay it off

It's capital repayment - after 8.5 years, the slate would be clean. Hence the large monthly payments of £1350 and my willingness to cover this in the medium term.

If your mother has a pension lump sum and uses this to repay debts that are not "due" she may be considered to still have this money for pension credit purposes which may mean they are not entitled.

They won't be getting state pension or pension credit for at least another 2 years. I think there is zero chance that paying off a loan now would count against them in 2 years. Besides, when is a loan ever not "due"?

While you are planning, how did your parents get into so much debt with no savings?

How sure are you that if they pay off loans with a pension lump sum, and still have no savings- that they wont get into debt again?

Don't even get me started! Carelessness, cluelessness, complacency and catastrophe, that's how. Mostly the former three. They've been high earners and high spenders their whole lives and have never made any sort of meaningful plan for the future.

I am now watching their finances like a hawk and will probably need to do so for the next few years until they establish some good habits. It's either this, or they will likely lose everything and end up on my or another family member's sofa, in a council house or on the street.

I'm trying to get them to a stable independent state so that I can get on with my life. It's extremely tempting to just let them sink, but I believe the situation is salvageable assuming they can change their ways: if they got their spending down to the level of my wife and I, they would be fine. The frustration is just how hard I'm finding it to get them to change.

stoozie1

I think it is laudable that you are helping them so much.

I did wonder though if how much you are assisting might lead them to still not take full responsibility? It maybe that they think 'oh xxx is on the finances, so we don't need to worry'?

Just a thought, you know them best

LHW99

It's capital repayment - after 8.5 years, the slate would be clean. Hence the large monthly payments of £1350 and my willingness to cover this in the medium term.

Be careful if you end up doing this.
Get your solicitor to draw up an agreement to protect your "investment", by putting a charge on the house. Otherwise the whole value could be regarded as their assets should one or both need care and the LA will expect the house value to be used to pay for that.
Whilst paying for their care from their own assets is completely just, you would then have to fight the LA at a very difficult time to establish your interest in the property, which could be considerable if you pay that amount per month for several years.

xylophone

Have your parents now requested new state pension forecasts?

Has your mother established her pension situation with TPS?

If your parents sold the property now and realised their equity, do you have sufficient capital to lend whatever sum would be required to enable them then to purchase (say) a suitably adapted ground floor flat/small bungalow, taking a first charge against the property?

badmemory

Definitely put a charge on the house to protect yourself. You never know they could be easily persuaded that equity release would be a good idea! That could leave you feeling obliged to pay for any care home fees in the distant future.

I know you are a relative newby but think you can take this! People who get to your parents age without being financially "astute" have a limited likelyhood of changing their ways. So please be cautious with your commitments. Whilst what you are trying to do is laudible, I would hate to see you drowning under THEIR financial responsibilities.