Is there any point to having assets at retirement?

theoretica

Planning your life around the negative - NOT paying IHT, care, whatever - seems backwards to me.  Trying to optimise what you do want seems a much better recipe for happiness.

thriftytracey

We have a large, detached, three bedroom house with a decent size garden.  However, it is impossible to downsize to a bungalow as the bungalows now cost more than detached houses, (in this area - South Worcestershire at least).

We have come to the conclusion that in old age we will probably have to adapt our existing house and add a downstairs shower room.

We are child free so could go for equity release of some type in later old age, but I did wonder if that is classed as "deprivation of assets".  

Pat38493

thriftytracey said:

We have a large, detached, three bedroom house with a decent size garden.  However, it is impossible to downsize to a bungalow as the bungalows now cost more than detached houses, (in this area - South Worcestershire at least).

We have come to the conclusion that in old age we will probably have to adapt our existing house and add a downstairs shower room.

We are child free so could go for equity release of some type in later old age, but I did wonder if that is classed as "deprivation of assets".  

One of my parents actually installed a lift in their house (not a stairlift an actual lift), and there seems to be an increasing trend for this type of thing so there are suppliers out there.  It was not for the above reason but just because they loved the house and didn't want to leave in spite of mobility issues.

Grumpy_chap

dealyboy said:

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?

If you hadn't worked those two jobs and hadn't saved then, presumably, you would not have the park home to live in, would not have whatever is in the ISA and would not have the £40k SIPP.

You would have a lower income on PC than SP but, as you say, council tax discount, energy subsidy, optician and dental fees reduced.  Though, AIUI, eye test is no charge for over 60 yo.
To counter that, you would have to pay for accommodation, would not have any savings / private pension.
What is the "left with" amount if you consider everything in the alternative scenario?

Your position seems different to the OP, whom appears to be starting with the asset of a house plus employment-related pension.

Albermarle

thriftytracey said:

We have a large, detached, three bedroom house with a decent size garden.  However, it is impossible to downsize to a bungalow as the bungalows now cost more than detached houses, (in this area - South Worcestershire at least).

We have come to the conclusion that in old age we will probably have to adapt our existing house and add a downstairs shower room.

We are child free so could go for equity release of some type in later old age, but I did wonder if that is classed as "deprivation of assets".  

Remember that deprivation of assets is only an issue if you want the council to pay any care costs.
If you pay all care costs yourself, then the council is not interested in what you have done with your assets previously.

Nebulous2

thriftytracey said:

We have a large, detached, three bedroom house with a decent size garden.  However, it is impossible to downsize to a bungalow as the bungalows now cost more than detached houses, (in this area - South Worcestershire at least).

We have come to the conclusion that in old age we will probably have to adapt our existing house and add a downstairs shower room.

We are child free so could go for equity release of some type in later old age, but I did wonder if that is classed as "deprivation of assets".  

Getting downsizing right is tricky. We looked at it, and considered moving from a house to a modern flat and found that the amenity we would lose seemed a poor trade-off for the modest amount of money we would free up. Instead we moved to a cheaper area, which was closer to older family whose support needs were increasing.

I worked in care and occasionally had to visit people in their own home. I've seen quite a few people who were unable to access part of their house. I even met someone who was unable to get downstairs and hadn't been outside in two years. I don't think that is for me, I'd hope to move to somewhere more suitable if the time comes that one or both of us are unable to cope with our current home.

dealyboy

@Grumpy_chap said:

dealyboy said:

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?

If you hadn't worked those two jobs and hadn't saved then, presumably, you would not have the park home to live in, would not have whatever is in the ISA and would not have the £40k SIPP.

You would have a lower income on PC than SP but, as you say, council tax discount, energy subsidy, optician and dental fees reduced.  Though, AIUI, eye test is no charge for over 60 yo.
To counter that, you would have to pay for accommodation, would not have any savings / private pension.
What is the "left with" amount if you consider everything in the alternative scenario?

Your position seems different to the OP, whom appears to be starting with the asset of a house plus employment-related pension.

Thanks grumpy ...

Yes it would appear that on the face of it the OP has a 'comfortable' prospect whichever choice.

If you hadn't worked those two jobs and hadn't saved then, presumably, you would not have the park home to live in, would not have whatever is in the ISA and would not have the £40k SIPP.

They were consecutive and were both minimum wage retail jobs without fixed hours, I didn't save anything when working those, indeed my costs probably equalled my income. Although I was a software engineer by profession I could get nothing else at 58. I was able to make contributions to my SIPP from savings and gain the tax relief. I bought the park home from savings as my private rented accommodation was proving too expensive (the landlord kept putting up the rent). My savings in the S&S ISA are lifetime savings for care in old age.

The alternative would have been to live off savings and not have a SIPP.

You would have a lower income on PC than SP but, as you say, council tax discount, energy subsidy, optician and dental fees reduced.  Though, AIUI, eye test is no charge for over 60 yo.
To counter that, you would have to pay for accommodation, would not have any savings / private pension.
What is the "left with" amount if you consider everything in the alternative scenario?

Correct me if I'm wrong but pension credit is only a couple of pounds less than state pension, council tax benefit is 100% of the assessment, housing benefit covers ground rent and mortgage interest plus there's social tariff for electricity and grants available for improving the home.

I have a special prescription for my spectacles which are varifocals and have coatings to help with my early stage AMD and cataracts, these would be paid for. My dental costs would be covered.

I would still have bought the park home and would have run down my savings. I would not have the SIPP, S&S ISA nor full state pension. I would still have some savings for emergencies but nothing for future care, however from what I read state care provision is actually generally better than private.

My question is unanswered as it relates to the topic.

badmemory

It all depends on how you want to live.  Live in your own home & buy in the help you may very well need or pay a landlord who will make you move out to suit themselves despite your advancing years.  If you are in your own home you can, when you finally need to, take equity release.  I made the mistake of telling 2 people my savings, less than a week & one was back with the begging bowl.  However all my assets will be left to my son with him being reminded about taking equity release if he needs it.  I am eyeing up stairlifts, that is what my assets are for, keeping me out of a care home.

Keep_pedalling

thriftytracey said:

We have a large, detached, three bedroom house with a decent size garden.  However, it is impossible to downsize to a bungalow as the bungalows now cost more than detached houses, (in this area - South Worcestershire at least).

We have come to the conclusion that in old age we will probably have to adapt our existing house and add a downstairs shower room.

We are child free so could go for equity release of some type in later old age, but I did wonder if that is classed as "deprivation of assets".  

No, taking ER is not DOA, you are just exchanging one asset into another one, you would have to go one step further and give it away before that was an issue.

sheramber

however from what I read state care provision is actually generally better than private.

I have not seen anyone state that view. Quite the contrary.