Help me work out a plan for my mum's retirement

bright_bug

Hello - I need advice from you knowledgeable people especially as I am not based in the UK! I am helping my mum to financially plan. Currently she is 64 years old. She does not have any assets or savings - she rents an apartment and receives housing benefit which won't be sustainable into her future. She just inherited £100,000 and I will be able to give her another £20,000 to top up to help her buy an apartment or small house so she has some living security since she will only be living on State Pension of £221 per week from when she reaches retirement age. We are trying to understand:

1. If she uses the £120,000 to buy a shared ownership apartment, will she still be able to claim housing benefit cover the rent amount since she'd unlikely afford it if not? In that case are there limitations on claiming HB - for example does it need to be only a 1 bedroom property since she lives alone?
2. Should she think about putting the house in my name/my sibling's name, so the property cannot be taken off her to cover any possible care home costs should those be needed in future? 

Is there anything else we aren't thinking of? Do you have any other thoughts on how best to invest this wisely for her to live comfortably?

Rubyroobs

 If she has given away £12000 to her child to buy a property then a local authority can still investigate where the money has gone ( deprivation of assets ) should she need to pay for care in the future.

Robbie64

Does your mum work? If not, what income does she have for day to day living expenses? (i.e is she on benefits, if so, which ones).

p00hsticks

bright_bug said:

 she will only be living on State Pension of £221 per week from when she reaches retirement age. 

Has she confirmed this amount ? The £221 is not fixed and could be less or more depending on individual circumstances.
Check your State Pension forecast - GOV.UK (www.gov.uk) 

p00hsticks

bright_bug said:

2. Should she think about putting the house in my name/my sibling's name, so the property cannot be taken off her to cover any possible care home costs should those be needed in future? 

As Rubyroo said , this is unlikely to work as it would be considered deprivation of assets and she'd be assessed as if she hadn't given away the money. It is generally a bad idea for her, you and your sibling for a number of other reasons too - she gives away her main (only ?) financial asset and risks becoming homeless if the house needed to be sold - e.g. if you or your sibling divorced, got into financial difficulty or predeceased her, and you and sibling face a Capital Gains Tax liability if and when the proeprty is sold .

MikeJXE

I was in a similar situation 5 years ago, sold up and banked £130,000, did the maths and found my money would last 20 years if I rented, seeing as I was 78 at the time that was plenty long enough. After 2 years I realised my money wasn't going down as fast as I thought and I decided not to buy. I also decided I didn't need £120,000 in the bank so 3 years ago I gave my grandkids £60,000.

Since selling up I have moved 4 times and now in the place I intend to stay, a 1 bed rented ground floor flat that is cheap to run, I have been here 15 months and my landlady has not increased my rent, I can afford an increase if she does. Interest rates are better now and my savings are going up not down. 

Furthermore I would never consider buying a flat or any kind of shared ownership as you are not in control of rent increases or maintenance costs. Ok I can't claim any benefits but I don't need any thanks. 

peteuk

MikeJXE said:

I was in a similar situation 5 years ago, sold up and banked £130,000, did the maths and found my money would last 20 years if I rented, seeing as I was 78 at the time that was plenty long enough. After 2 years I realised my money wasn't going down as fast as I thought and I decided not to buy. I also decided I didn't need £120,000 in the bank so 3 years ago I gave my grandkids £60,000.

Since selling up I have moved 4 times and now in the place I intend to stay, a 1 bed rented ground floor flat that is cheap to run, I have been here 15 months and my landlady has not increased my rent, I can afford an increase if she does. Interest rates are better now and my savings are going up not down. 

Furthermore I would never consider buying a flat or any kind of shared ownership as you are not in control of rent increases or maintenance costs. Ok I can't claim any benefits but I don't need any thanks. 

Word of warning, it it is likely that at some point you need a care home and this was obvious at the point of giving away a sum of money, you will be treated as if you still have that sum.  For example if you are diagnosed with copd 5 yrs before giving the money away and then 10 yrs later need a care home then it was likely you knew youd need care at the point of giving the money away.

If you give the money away and then have a stroke 3 yrs later, and that leaves you needing full time care then this is lies likely to have been foreseen and so the gift is ok. 

itsthelittlethings

Could you look into older people's social housing? I don't know if she would be classed as having too much money for that but then obviously she could use the money to top up her pension.

RAS

It's not just social housing but organisations like almshouses, housing co-operatives etc.

MikeJXE

peteuk said:

MikeJXE said:

I was in a similar situation 5 years ago, sold up and banked £130,000, did the maths and found my money would last 20 years if I rented, seeing as I was 78 at the time that was plenty long enough. After 2 years I realised my money wasn't going down as fast as I thought and I decided not to buy. I also decided I didn't need £120,000 in the bank so 3 years ago I gave my grandkids £60,000.

Since selling up I have moved 4 times and now in the place I intend to stay, a 1 bed rented ground floor flat that is cheap to run, I have been here 15 months and my landlady has not increased my rent, I can afford an increase if she does. Interest rates are better now and my savings are going up not down. 

Furthermore I would never consider buying a flat or any kind of shared ownership as you are not in control of rent increases or maintenance costs. Ok I can't claim any benefits but I don't need any thanks. 

Word of warning, it it is likely that at some point you need a care home and this was obvious at the point of giving away a sum of money, you will be treated as if you still have that sum.  For example if you are diagnosed with copd 5 yrs before giving the money away and then 10 yrs later need a care home then it was likely you knew youd need care at the point of giving the money away.

If you give the money away and then have a stroke 3 yrs later, and that leaves you needing full time care then this is lies likely to have been foreseen and so the gift is ok. 

I have not been diagnosed with anything other than the 2 heart attacks 2003 and 2014

According to my 2 DiL i will live forever 

TBH I don't care if I live or die, I won't know anyway

What I do know is my kids will look after me.