Is there any point to having assets at retirement?

coyrls

IAMIAM said:

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.

I find that really hard to believe.  I have never come across anybody at 60+ that has done this and being 60+ myself means that I come across more and more people at age 60+.

Nearlyold

There's absolutely no way we'd do any such thing. As we told a family member (who seemed to think we'd jump at the chance to "permanently lend" them £100K as "otherwise it could all go in IHT or care home costs" ) we fully intend to use our assets to suit and benefit ourselves and don't consider it incumbent on us to arrange our affairs primarily to maximise our family's inheritance.

DietIrnBru

The problem with retirement planning in the world as a whole - is that it was designed in a time where you live maybe a decade beyond retirement - quick illness and pop off to the thereafter. Now lives are longer and more often than not, in ill health particularly in later years (yes we all know the 90 something aunty to drives to the shops), need intense care, hospital admissions for ever more futile treatments, houses that are value rich but inaccessible to most people (the economic illiteracy of housing policy over 30 years that saw so much wealth being poured into one aset) and can't be made available for other folk. It is a seemingly rational construct that comes up against the biological truth of the human body - nobody wants to talk about it - just look at Theresa May when she dared quantify what we already know is a problem.

katejo

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. 

I am 60 and a homeowner with no mortgage or dependents. I have no plans to sell my house and move to rental accommodation. Rent is extortionate here and well more than I ever paid for my mortgage plus there is no stability. I have been thinking about whether I might get penalised for having savings if I ever need to go into care. 

Scarum

An option might be to transfer house to sibling and then rent it off them.  If you live beyond 7 years from transfer there is no IHT to pay on house value.  I think you need to charge parents the "going rate" in rent or the discrepancy may be looked in the future when parent(s) passes on.  Get tenancy written up legally too.

Pat38493

Scarum said:

An option might be to transfer house to sibling and then rent it off them.  If you live beyond 7 years from transfer there is no IHT to pay on house value.  I think you need to charge parents the "going rate" in rent or the discrepancy may be looked in the future when parent(s) passes on.  Get tenancy written up legally too.

Before doing this, you should probably also be aware that there are deprivation of assets laws if you need to go into care in later life and there is no time limit on them.  You would need to read up about that also because social services may very well try to claim deprivation of assets if you have transferred a house to relatives.

It's probably also worth mentioning I had a few conversations recently with people who could not find a house rental and had to move in with relatives - not because they couldn't afford the rent but because there is massively more demand than supply in the rental market in some parts of the country right now.

Marcon

Anyone else wondering if that original post was a bit of a wind up, designed to spark all the huffing and puffing which it duly did (very successfully!)?

Grumpy_chap

Is there any point to having assets at retirement?

Well, I would say "most definitely, YES."

Certainly, better to have assets and be able to pay for the choices you choose than not have assets and be forced to spend the final years of your life at the whim of the local authority to control everything. Considering the matters the OP mentioned:

• You can spend those assets over time by living the best life possible so that avoids the issues around IHT.
• Paying for your own care home allows you to choose the home of your choice rather than over-my-dead-body-ville.
• Healthcare is free but, if you find you need a major operation (say, a knee replacement) that has a long wait, the assets might give you the option to have that treatment sooner and get to enjoy more of your final years in good and active health.

I find the OP's reference to divesting assets from the age of 60 rather an odd one.  At the age of 60, there could very possibly be another 30 years ahead of you.  That means a third of the total time on this planetary abode.
(As others have mentioned, gifting assets may mean they are considered to remain in the gifter's estate for matters such as care in any case - classed as DoA.)

Rather than asking "is it worth having assets?" then maybe the better question would be "what assets are the most appropriate for me to enjoy the best retirement possible?
Assets may include a home / property, pension, savings / cash, jewellery, artwork, vehicles.
What are the best form of assets to keep to ensure the best retirement may vary between one person and another and also during the retirement period of an individual.
Simply holding on to a house because "you must" may become less sensible once the individual's ability to manage that house declines.  But the decision to no longer own your own house does not equate to the decision to not have assets.

amanda1024

The benefits system seems to be set up such that it's best to go into retirement either fully self-funded - which OP probably be, with civil service plus state pension - or with very little income/savings (excluding a home to live in) and thus becoming eligible for pension credit and all the other benefits passported on. It seems like if you end up in the middle you get the worst of both?
On assets - I definitely wouldn't get rid of usable stuff (house, car etc.). It might be worth investing savings into pension (keeping an emergency fund etc) - depends how much you value a higher pension in retirement versus having the money to spend before then

dealyboy

Excellent topic.

Well you tell me was I sensible or stupid. I saved and prepared for my retirement at 66.

I worked in two minimum wage jobs for the last 8 years of my working life, these were tough. I gained a maximum new state pension + 5% deferred, bought a small park home for £50k out of savings and put money into an S&S ISA over the years for future care costs. I also have about £40k in a SIPP.

Out of my state pension I pay council tax, pitch fees, standard energy tariffs and pay full optician fees and NHS dental costs. This leaves me with about £7,000 £6,000. I expect to pay tax on my SP in a couple of years time. I have a basics only lifestyle.

On the other hand If I hadn't saved and ensured maximum state pension I could have received tax free pension credit. This would have provided with about the same as SP for income and I would not have the costs detailed above. Further if I had not bought my home outright I would likely receive mortgage relief. I would also be eligible for the Warm Home Discount and Cost of Living Payments. I would have a comfortable lifestyle.

Well you tell me was I sensible or stupid?