Is there any point to having assets at retirement?

Grumpy_chap

sheramber said:

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.

I agree that the prevailing view is that private care is (can be) better.  Sometimes, it is paying more for the same care.

It may also depend from where you are coming from.  If you have assets and can pay for the choice, you may form one view.  If you have very little and can pay for barely anything, then the state care that is available may well be better than you could self-fund.

katejo

Grumpy_chap said:

sheramber said:

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.

I agree that the prevailing view is that private care is (can be) better.  Sometimes, it is paying more for the same care.

It may also depend from where you are coming from.  If you have assets and can pay for the choice, you may form one view.  If you have very little and can pay for barely anything, then the state care that is available may well be better than you could self-fund.

Quite a few years ago I did read an article which mentioned the following situation: 2 people living alongside each other in the same care home. Both had had similar income levels and had bought properties while working. One had paid off the mortgage and so had savings. The other had only ever paid mortgage interest and had spent their money on other things like cars or holidays. Now they were together in the same home but the first one was paying twice as much as the 2nd one.

dealyboy

@sheramber said:

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.

I have read that somewhere recently, but I can't remember where (old age)  .

IAMIAM

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?

This is exactly my point! 

IAMIAM

amanda1024 said:

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

Exactly my point again! 

arnoldy

amanda1024 said:

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?

This is so true. I know people who are just above pension credit with their small works pension who are significantly and substantially worse off than those on pension credit...no £1000+ cost of living bung, TV licence to pay, no extra winter heating ££s, no "social" tariffs, no massive discounts on private and government schemes. etc etc etc. All wrong, so so wrong.

IAMIAM

arnoldy said:

amanda1024 said:

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?

This is so true. I know people who are just above pension credit with their small works pension who are significantly and substantially worse off than those on pension credit...no £1000+ cost of living bung, TV licence to pay, no extra winter heating ££s, no "social" tariffs, no massive discounts on private and government schemes. etc etc etc. All wrong, so so wrong.

I just do not get what the point is for qualifying years for state pension. it's best not to have qualifying years as you are then topped up anyway and given all the extras too. Basically, if you never save into a pension and even never pay NI at all and have no qualifying years at all, you get full state pension anyway. So you could live for now, self employed, cash salary for everything, save for no pension at all and pay no tax, declaring you earn exactly the tax allowance and still get full state pension.

It's the same with renting. Rent and become unemployed the government take over and pay your rent. Mortgage and become unemployed, you get the full throttle of no credit, bad credit file, no help, sell home etc etc. Talking worst case scenario. 

hyubh

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?

Genuine question - how come you only reached the maximum post-2016 state pension...? E.g., do you have a contracted-out pension as well - or perhaps, given in another post you reference being a software engineer by profession, you were an independent contractor paying class 2 NI conts...?

Grumpy_chap

IAMIAM said:

I just do not get what the point is for qualifying years for state pension. it's best not to have qualifying years as you are then topped up anyway and given all the extras too. Basically, if you never save into a pension and even never pay NI at all and have no qualifying years at all, you get full state pension anyway. So you could live for now, self employed, cash salary for everything, save for no pension at all and pay no tax, declaring you earn exactly the tax allowance and still get full state pension

Except, none of that applies to a person in this position:

IAMIAM said:

being mortgage free and having that asset 
civil service pension 

This person has an income in retirement above that many people have in work and a guaranteed roof over their head.  All of this means the individual has choice which becomes ever more of a luxury.  The obvious thing would be care provision, but that might mean healthcare provision.  Say, the individual reached around 75 and found mobility restricted by a fixable thing such as knee or hip joint but the NHS waiting list is 5 years (made up time period).  Would the individual choose to use their assets to get that operation done and enjoy all of the remaining years, or wait their turn and get the operation only after they are too late to make use of the improvement?

IAMIAM

Grumpy_chap said:

IAMIAM said:

I just do not get what the point is for qualifying years for state pension. it's best not to have qualifying years as you are then topped up anyway and given all the extras too. Basically, if you never save into a pension and even never pay NI at all and have no qualifying years at all, you get full state pension anyway. So you could live for now, self employed, cash salary for everything, save for no pension at all and pay no tax, declaring you earn exactly the tax allowance and still get full state pension

Except, none of that applies to a person in this position:

IAMIAM said:

being mortgage free and having that asset 
civil service pension 

This person has an income in retirement above that many people have in work and a guaranteed roof over their head.  All of this means the individual has choice which becomes ever more of a luxury.  The obvious thing would be care provision, but that might mean healthcare provision.  Say, the individual reached around 75 and found mobility restricted by a fixable thing such as knee or hip joint but the NHS waiting list is 5 years (made up time period).  Would the individual choose to use their assets to get that operation done and enjoy all of the remaining years, or wait their turn and get the operation only after they are too late to make use of the improvement?

They would probably take out a loan or a credit card to pay for private and then declare they cannot pay it back anyway, no assets.