Owning a house & saving for retirement or not?

Emmia

How old is the colleague? If he's expecting to rely on the state pension it also sounds like he's also not paying into any workplace pension.

Albermarle

reck_uk said:

Had a bit of a discussion with some guys at work today. One of them rents and only has a small amount of savings as he spends most of it each month on doing fun stuff he and his family enjoy or just spends it on the kids or going out. 

This is a deliberate thought out decision by him on how he spends his money as he believes if he doesn’t spend it on himself/family it could be taken away from him in later life during retirement. 

His view on wanting to rent is that when he comes to retire he’ll have his full state pension and he’ll be able to live somewhere where his rent will be paid for, or at least have some part of it paid due to his low income and lack of savings. 

On not saving money for retirement his view is why bother? If the time comes to when he may need to move into nursing home this will be paid for. If he’d bought a house and saved all his life this would have been drained away paying for this care and he wouldn’t have had the chance to spend that money on himself/family during his prime years. 

Im the complete opposite to him as I have a mortgage along with savings put away for ‘the future’ / retirement and it did make me think that if his view of things was accurate was I doing the right thing?

For instance if we both ended up in a nursing home I believe his viewpoint is correct. With no owned property and little to no savings his care would be taken care of while in my case all the money I’ve saved over the years and the value of my property will be spent on the things he’s getting for free when I could have used that cash on other things and still benefited from nursing care (for free). 

I don’t know about the rent side though. Do councils pay rent for people who just have the state pension with no other income?

What are people’s thoughts about saving for retirement and then possibly have your life savings and house taken away while others may have this paid for after previously spending their cash having fun earlier in life?

You have posted the question on a Pensions forum, so you can guess in which direction most of the answers will be. Most ( all) of the regular contributors will tend towards the ' save for tomorrow' types. However most are also quite sensible and pragmatic, as you will see from the replies.

It is a free country with a welfare safety net, so you can do what your colleague is espousing. 
However I think being in your seventies having worked until at least 67, being on the breadline, with almost no say/choice in your own destiny and being unable to give you older kids a leg up in life, would be pretty depressing in my opinion.

MEM62

reck_uk said:

Had a bit of a discussion with some guys at work today. One of them rents and only has a small amount of savings as he spends most of it each month on doing fun stuff he and his family enjoy or just spends it on the kids or going out. 

Absolutely living for today then?  He won't be the only one.    

This is a deliberate thought out decision by him on how he spends his money as he believes if he doesn’t spend it on himself/family it could be taken away from him in later life during retirement.

Taken by whom?  For what?  That's a ridiculous statement.  Perhaps with the exclusion of the taxman, nobody can just take your money.   

His view on wanting to rent is that when he comes to retire he’ll have his full state pension and he’ll be able to live somewhere where his rent will be paid for, or at least have some part of it paid due to his low income and lack of savings.

He will also live his twilight years is relative poverty and his lifestyle will certainly be very different from that which he currently has.   

On not saving money for retirement his view is why bother? If the time comes to when he may need to move into nursing home this will be paid for. If he’d bought a house and saved all his life this would have been drained away paying for this care and he wouldn’t have had the chance to spend that money on himself/family during his prime years.

There is also a good chance that he will not be in care.  The statistics show that most of us do not need long term expensive end of life care.  To set yourself to be deliberately broke in old age so that, if you are one of the few, somebody else pays for your care is about as dumb as it gets.  That whole mentality is asinine.        

Im the complete opposite to him as I have a mortgage along with savings put away for ‘the future’ / retirement and it did make me think that if his view of things was accurate was I doing the right thing?

For instance if we both ended up in a nursing home I believe his viewpoint is correct. With no owned property and little to no savings his care would be taken care of while in my case all the money I’ve saved over the years and the value of my property will be spent on the things he’s getting for free when I could have used that cash on other things and still benefited from nursing care (for free).

He won't be getting anything for free.  He is still likely to contribute and will have no choice in where / how he spends his twilight years.  He still be put in the cheapest home that the local Council can find.    

I don’t know about the rent side though. Do councils pay rent for people who just have the state pension with no other income?

It depends on their individual circumstances.  What is certainly true is that, if you are that poor that you are relying on that level of support life if going to be fairly grim.   

What are people’s thoughts about saving for retirement and then possibly have your life savings and house taken away while others may have this paid for after previously spending their cash having fun earlier in life?

Again, nobody is taking anything.  You are using your assets to make your twilight years as comfortable as possible.  And at that age what else are your going to be using it for?  If you are in a position where you need care you are hardly going to be choosing between spending on that and a month in the Bahamas.    

I will never understand this " I intend to have nothing so that everyone else pays for me".  The belief that wealth is taken from you in old age is, frankly, nuts.  We have our own house, we have money and we enjoy a good life.  In fact I shall be retiring this year at 62 and enjoying it even more and for may more years to come.  If, at the end, whatever is left pays for any care that my wife or I might need, I'm cool with that.  I will still be benefitting from my assets. 

If you believe your colleague has this all figured our and is right, by all means join him.  It is not the kind of life that I have or intend to live.         

kimwp

Albermarle said:

reck_uk said

It is a free country with a welfare safety net, so you can do what your colleague is espousing. 
However I think being in your seventies having worked until at least 67, being on the breadline, with almost no say/choice in your own destiny and being unable to give you older kids a leg up in life, would be pretty depressing in my opinion.

I agree with this. State pension is less than what I spend now - £12k ISH with mortgage paid off, living a fairly frugal life (no alcohol, mostly second hand clothes, shoes and cars used til worn thru, no gadgets except a laptop, no holidays, one restrained meal out a week, vegetarian (though organic))- fine for me because I'm happy living this life. So your colleague is looking at working til he is nearly 70 and then having a very restrained life.

Having said the above, I'm being encouraged by a family member closer to the issues to spend my money now because climate change means likely civil unrest and the collapse of civilization and the financial system within about 20 years. Having done some reading of reputable literature, I'm going to split the difference, save for a reasonable retirement, then have a think if there's anything I can spend on that will increase my enjoyment of life (or prepare for civil unrest I guess 😯)

Roger175

The point your colleague seems to have missed entirely is that if you are renting, you have next to no flexibility. You have to keep working until SPA because you are committed to paying rent, so no chance of taking early retirement and then you have the stress of needing to find that rent money till the day you drop. Ok, if you want to have to rely on housing benefit, but surely it's better to get a mortgage, strive to pay it off and then live rent free for the rest of your life. I often comment that I don't know how people can afford to rent for their entire lives, ultimately, it's going to cost you far more than buying. Besides which, I simply couldn't live in a rented property, where you're limited to what you can do to it and are beholden to your landlord etc. 

Bostonerimus1

I would not do what your colleague is doing in today’s Britain as it has a very poor state pension and poor state provision for the elderly and poor. I’d be far more sanguine about his approach in one of the Scandinavian countries or indeed where I live in the USA which has quite a good benefits system. But the deciding factor for me is freedom to live your life as you wish. Having money will not necessarily make you happy, but it will allow you to do what you want when you want without having to rely on the vagaries of government policy.

Bostonerimus1

Roger175 said:

The point your colleague seems to have missed entirely is that if you are renting, you have next to no flexibility. You have to keep working until SPA because you are committed to paying rent, so no chance of taking early retirement and then you have the stress of needing to find that rent money till the day you drop. Ok, if you want to have to rely on housing benefit, but surely it's better to get a mortgage, strive to pay it off and then live rent free for the rest of your life. I often comment that I don't know how people can afford to rent for their entire lives, ultimately, it's going to cost you far more than buying. Besides which, I simply couldn't live in a rented property, where you're limited to what you can do to it and are beholden to your landlord etc. 

I definitely prefer the home ownership route, but lit isn’t necessarily an inexpensive option. Rates, utilities and repairs on my house make it my largest expense even without a mortgage.

Emmia

Bostonerimus1 said:

Roger175 said:

The point your colleague seems to have missed entirely is that if you are renting, you have next to no flexibility. You have to keep working until SPA because you are committed to paying rent, so no chance of taking early retirement and then you have the stress of needing to find that rent money till the day you drop. Ok, if you want to have to rely on housing benefit, but surely it's better to get a mortgage, strive to pay it off and then live rent free for the rest of your life. I often comment that I don't know how people can afford to rent for their entire lives, ultimately, it's going to cost you far more than buying. Besides which, I simply couldn't live in a rented property, where you're limited to what you can do to it and are beholden to your landlord etc. 

I definitely prefer the home ownership route, but lit isn’t necessarily an inexpensive option. Rates, utilities and repairs on my house make it my largest expense even without a mortgage.

Paying for utilities applies whether you're renting or living in a home with or without a mortgage - with renting you are somewhat at the mercy of a landlord - if you own then you don't have that uncertainty.

Bostonerimus1

Emmia said:

Bostonerimus1 said:

Roger175 said:

The point your colleague seems to have missed entirely is that if you are renting, you have next to no flexibility. You have to keep working until SPA because you are committed to paying rent, so no chance of taking early retirement and then you have the stress of needing to find that rent money till the day you drop. Ok, if you want to have to rely on housing benefit, but surely it's better to get a mortgage, strive to pay it off and then live rent free for the rest of your life. I often comment that I don't know how people can afford to rent for their entire lives, ultimately, it's going to cost you far more than buying. Besides which, I simply couldn't live in a rented property, where you're limited to what you can do to it and are beholden to your landlord etc. 

I definitely prefer the home ownership route, but lit isn’t necessarily an inexpensive option. Rates, utilities and repairs on my house make it my largest expense even without a mortgage.

Paying for utilities applies whether you're renting or living in a home with or without a mortgage - with renting you are somewhat at the mercy of a landlord - if you own then you don't have that uncertainty.

Emmia said:

Bostonerimus1 said:

Roger175 said:

The point your colleague seems to have missed entirely is that if you are renting, you have next to no flexibility. You have to keep working until SPA because you are committed to paying rent, so no chance of taking early retirement and then you have the stress of needing to find that rent money till the day you drop. Ok, if you want to have to rely on housing benefit, but surely it's better to get a mortgage, strive to pay it off and then live rent free for the rest of your life. I often comment that I don't know how people can afford to rent for their entire lives, ultimately, it's going to cost you far more than buying. Besides which, I simply couldn't live in a rented property, where you're limited to what you can do to it and are beholden to your landlord etc. 

I definitely prefer the home ownership route, but lit isn’t necessarily an inexpensive option. Rates, utilities and repairs on my house make it my largest expense even without a mortgage.

Paying for utilities applies whether you're renting or living in a home with or without a mortgage - with renting you are somewhat at the mercy of a landlord - if you own then you don't have that uncertainty.

True, my point was that even without a mortgage owning a home is not inexpensive and there’s a lot more to do if you ever want to move that if you rent.

CrickJon

He's going to be forced to work until potentially 70, or whenever retirement age will be by then.

You may be able to end up retiring a decade earlier than him and you may well have more to spend pa.