Is there any point to having assets at retirement?

IAMIAM

I have been thinking lately about future planning etc. The reason I ask, is because more and more people I am coming across at age 60 plus have sold all their assets and given it to immediate family and have then gone into rented accommodation. When I ask, they all say the same. To avoid having to pay for everything in later life (health, care, inheritance tax, etc etc) 

So, for me, who will have zero children. Is there any point to actually being mortgage free and having that asset at 60 plus. When I could potentially syphon my equity off into my civil service pension (well a good chunk of it, the maximum I can). Potentially enhancing my later life income to a good 50% more than what it would have been and live knowing I have an income for life that is practically the same as what it is now? Because ultimately, I cannot take my assets with me. 

Gary1984

I think the people you talk of are foolish as I wouldn't want to rely on the state in my old age. Security is the best feeling, being evicted by a landlord or having that possibility hanging over you at 75 doesn't sound great.

That being said, selling assets that you don't need and funneling into your pension does sound like a good idea. But in this case you're increasing your security, not decreasing it.

Moving into rented accommodation makes no sense (unless sheltered housing because you have a need for it) but perhaps downsizing, selling all your excess 'stuff' and reducing your costs would.

artyboy

As someone with children, I get the argument for a gradual generational divestment of assets in the interest of IHT efficiency. But as has been done to death on here already, it won't work for avoiding care costs because of Deprivation of Assets rules.

Given the OP has no children, I certainly understand the desire to maximise a guaranteed DB pension income, but that desire for security seems to be at odds with the idea of selling a house and renting - why give up a home you own every single brick of and throw yourself into the uncertain world of renting?

Malthusian

The reason I ask, is because more and more people I am coming across at age 60 plus have sold all their assets and given it to immediate family and have then gone into rented accommodation.

Health is free at the point of use, their family will have to pay for their care costs as this is "deliberate deprivation" (and what are they paying their rent with?), and anyone with more than a million in assets (for a married couple) who does this is an idiot.

Just to list some of the most obvious problems with this plan:

* You will always be at the mercy of landlords and never have any of the benefits of owner-occupancy, such as being able to alter the property as you wish, keep pets, have your own garden, etc.

*You will likely have the stress and upheaval of moving at short notice if your landlord sells up, wants to move in or otherwise wants you out.

*If rents rise faster than your pension, you lose out.

*The imputed income from home ownership (the money you save on rent) is tax free, so giving up homeownership in exchange for a higher pension means you have a higher tax bill. 

That said, if we are talking about the defined benefits Civil Service pension, you should already be maximising that as a basic expenditure (like your mortgage and utility bills).

Because ultimately, I cannot take my assets with me. 

It's even less possible to take a higher pension with you. Assets can at least be passed on to someone or something you care about (friends, charities, extended family).

Keep_pedalling

It would be a down right stupid thing to do. An asset like your own house provides long term security for your latter years, you can tap into the equity using equity release if you need it and if you ever need residential care it allows you to retain control in that you choose when the time is right to move and you chose where it is provided. The alternative is to rely on funding from a cash strapped LA which means you won’t get it until you are pretty decrepit and you risk ending up in over my dead body grange. 

As for IHT why are you worried about it, You will never pay it and you have no direct descendants to leave your wealth to. If you really don’t want HMRC to get their hands on any of just make a will leaving it all ( or anything over your NRB) to charity.

Mum161111

Gary1984 said:

I think the people you talk of are foolish as I wouldn't want to rely on the state in my old age. Security is the best feeling, being evicted by a landlord or having that possibility hanging over you at 75 doesn't sound great.

That being said, selling assets that you don't need and funneling into your pension does sound like a good idea. But in this case you're increasing your security, not decreasing it.

Moving into rented accommodation makes no sense (unless sheltered housing because you have a need for it) but perhaps downsizing, selling all your excess 'stuff' and reducing your costs would.

Our old auntie owned her flat outright but had very little savings.  She reached a point where she was nearly having a nervous breakdown and was ill with stress because of anti-social neighbours moving in to rented flats in her block.  The Factor flatly refused to do repairs (and somehow got away with it) and, after auntie living there happily for over 30 years,  it became a nightmare.

She moved into rented Sheltered Housing and sold her flat at a vastly reduced price - just to get rid of it.  Her savings (mostly from her flat sale) are dwindling but she is safe, secure and is really happy.  In a few years, when her savings become really quite low - she'll cross that bridge when she comes to it.  The dear old soul that she is, and with no prompting from any of us, paid 'outright' for a modest pre paid funeral plan once she had money from the sale of her flat.  We understand, this was to protect us from having any debt or financial responsibilities to pay for her after she's gone.

She has not intentionally deprived herself of assets and there will be a reliable 'paper trail' to show that, although living quite comfortably, she has not deliberately deprived herself of assets - should proof be necessary if the time ever comes, and hopefully not - that she needs 24 hour care in a home.

There will be nothing left for us (her family - she has no children) when she 'goes' and we are just glad that she can live in peace in her rented (not cheap) Sheltered Housing accommodation.

The jist of this post is that not all circumstances are the same and so much depends on the individual's circumstances.

eastcorkram

IAMIAM said:

I have been thinking lately about future planning etc. The reason I ask, is because more and more people I am coming across at age 60 plus have sold all their assets and given it to immediate family and have then gone into rented accommodation. When I ask, they all say the same. To avoid having to pay for everything in later life (health, care, inheritance tax, etc etc) 

So, for me, who will have zero children. Is there any point to actually being mortgage free and having that asset at 60 plus. When I could potentially syphon my equity off into my civil service pension (well a good chunk of it, the maximum I can). Potentially enhancing my later life income to a good 50% more than what it would have been and live knowing I have an income for life that is practically the same as what it is now? Because ultimately, I cannot take my assets with me. 

If renting at 60, paying rent with earned money , what happens when the earned money stops coming in?? 

la531983

eastcorkram said:

IAMIAM said:

I have been thinking lately about future planning etc. The reason I ask, is because more and more people I am coming across at age 60 plus have sold all their assets and given it to immediate family and have then gone into rented accommodation. When I ask, they all say the same. To avoid having to pay for everything in later life (health, care, inheritance tax, etc etc) 

So, for me, who will have zero children. Is there any point to actually being mortgage free and having that asset at 60 plus. When I could potentially syphon my equity off into my civil service pension (well a good chunk of it, the maximum I can). Potentially enhancing my later life income to a good 50% more than what it would have been and live knowing I have an income for life that is practically the same as what it is now? Because ultimately, I cannot take my assets with me. 

If renting at 60, paying rent with earned money , what happens when the earned money stops coming in?? 

He has a juicy civil service pension to look forward to, he wont have to worry about that for the rest of his life.

MEM62

IAMIAM said:

The reason I ask, is because more and more people I am coming across at age 60 plus have sold all their assets and given it to immediate family and have then gone into rented accommodation. When I ask, they all say the same. To avoid having to pay for everything in later life (health, care, inheritance tax, etc etc) 

Just because others are stupid does not mean that you have to be.  

p00hsticks

IAMIAM said:

 When I ask, they all say the same. To avoid having to pay for everything in later life (health, care, inheritance tax, etc etc) 

Personally I hope that I'll have sufficient assets of my own if and when the time comes to both pay for private healthcare rather than join a long NHS waiting list for conditions that are classed as non-urgent but can severely impact your quality of life (e.g. hip and knee replacements) and to move into a care/ nursing home of my own choosing rather than rely on whatever lowest common denominator option that the local authority sees fit.

 And as, like you, I have no children, then as long as I outlive my OH, what happens to my assets in terms of IHT etc is really not my concern, as I'll be past caring.

Bostonerimus1

Ridding yourself of assets like a house can simplify your life and house maintenance can be expensive and time consuming. Of course you need to take the money from a house sale and invest it so you replace the potential capital gain of a house and also to pay for rent.