My life expectancy has been reduced - is there any hope of retiring before I pass?

dawnofthedave

I have a bit of a depressing situation about my health and pension planning and I am looking for peoples’ thoughts on what might be realistic or preferable in my situation?

The short version is that I had been working towards retiring on a comfortable pension at 68 but I have recently found out it’s likely I won't live long enough to reach that age. I’m in my mid 30s and have little pension savings and I am struggling to find an option that gives me some sort of life back. Any advice or ideas would be greatly appreciated. 

Basic info about me

I am a single in my mid 30s earning 40k per annum. I’ve got a flat with a mortgage and had spent most of my 20s/early 30s pummelling all of my savings into getting a deposit together.

I’m in a catch 22 with my pension planning and health - when’s best to retire?

Because I was poorer and ill-educated when I was younger I just did the basic pension auto payments and so currently only have little in my pension pot - so I need to save hard from now onwards to have a decent retirement. However, I recently learned I have a gene which gives me a 50-90% chance of needing care in/around mid 60s and then likely dying a few years later. If this could be assumed to be a total certainty, I can see two options for myself:

1. Save hard and live very frugally for the next 22 years to try and get a big enough pension together to retire around 57 (if that’s even possible). The next 22 years of the 30 (or so) I could have left would be hard work and somewhat lacking in fun things - which is unappealing as the previous 22 years have also been far from fun. However, I would probably at least have maybe 5-10 years of a retirement to enjoy (if not unlucky) before I kick the bucket 

2. Do the opposite - cut pension contributions and mortgage overpayments from now on and use the extra money now to try and get some enjoyment out of whatever might be left of my life. However, I’d have to accept the likelihood of no retirement at all and working right up until I likely die and that I’d have a tiny pension pot to match

To complicate further some people with this gene will live into their late 70s/80s before this happens to them (about 10-50% chance of this). So, while that's less likely, it's still entirely possible. Which means, if I did 2, I could be a very poor pensioner. And if I did 1, I could end up wasting the few years I might have left doing hard graft just to pay for my own care before walking straight from a stressful overworked job literally straight into a care home and then my grave shortly after that. 

Obviously both are unappealing, can anyone see any third way here? Is there any hope here of making things stack up so that I can have some sort of retirement without working like a dog and enjoying very few luxuries for most of what’s left of my life?

Is retiring before I kick the bucket even an option for me?

My hope is to retire with a mortgage-free flat and an OK lifestyle where I don’t have to totally scrimp and save and that might afford me fairly regular social engagements and the odd European mini break every year or two. 

I had been starting / working towards a plan where I am more than doubling pension contributions (from the basic auto enrolment) and overpaying my mortgage so it ends at 55. It’s tight but doable, but does mean there's not much cash left to do nice things. Then I [planned to increase pension contributions a little bit in mid 40s when my student loan gets written off. And then I increase contributions massively once mortgage ends at 55. 

Based on an average 5% annual pension pot return, and taking into account my pension provider’s fees, the pension calculators tell me this could afford me a monthly income (based on an annuity) after tax of around the below for retiring at these ages:

57 -  £1,115

58 - £1,223

59 - £1,331

60 - £1,451

61 - £1,577

62 - £1,715

63 - £1,865

64 - £2,033

65 - £2,207

66 - £2,399

67 - £2,609

According to my state pension forecast, if I am lucky and still around at 68 I should get the full state pension then (provided they haven’t scrapped it or pushed it back again). So in total if I worked to 68 I could be looking at about £3.7k monthly, which was my original plan, but now I don’t know if I will be around to see that.

So basically, if I save hard I could get a monthly income of £1,115 after tax at 57 - it's small, but is it enough? I would have no mortgage by then but would have basic living costs and probably a yearly service charge on the flat.

To complicate matters further, I may inherit from my parents at some point, but realistically the amount could be anything from 0 to 400k depending on the tax regime at the time, their life circumstances, and whether they need care etc - so I can't count on that.

I guess I could do something like equity release on the flat after the mortgage is gone to pay for a more comfortable retirement at 57, but, I would be gutted and feel very guilty if I couldn’t leave something to my siblings and nephews/nieces.

Am I missing something? Is there another way?

Purplelady65

I’m sorry to hear about the bad news you’ve recently had. It sounds as if you have spent a lot of time planning out your future including your finances and that has now all been thrown into disarray. In terms of the options available to you it’s a very personal choice about what you do. If I had spent the last 22 years scrimping and saving I would not be spending the next 22 years scrimping and saving given the news you have had to then maybe have 5-10
years retired in reasonable health.

I would be enjoying life now as much as possible and worry about retirement when I was older. I’m not suggesting giving up making pension contributions. However if you will potentially be retiring in poor health with a shortened life expectancy then you could end up depriving yourself of enjoyable experiences now and over the next few years. You could pay in extra into your pension only to reach retirement with more money available due to all your saving but then not be in a position to enjoy it due to poor health. You are only in your 30s so that’s plenty of time for medical advances to be made so your genetic condition could be treated and you could enjoy a very long and healthy retirement. 

JayRitchie

Hi

I'm so sorry to hear about your condition. There are some great people on this forum who will have suggestions.

A few queries if I may:

- how much do you currently have saved in pensions?

- what are yours and your employers current contributions? 

- does your employer offer a salary sacrifice scheme for pension contributions?

- how much is your student loan balance?

- how much is outstanding on your mortgage?

FlorayG

Gosh what difficult decisions to have to make. I can only  speak for my own circumstances; I've had a great life, done low-paying jobs that I really loved to do ( I worked with horses) until I was in my 40s so zero private pension options. I'm now at state pension age, still working in an admin job to pay the bills while many of my friends of my age are retired on a decent private pension
I DON'T REGRET A MINUTE OF IT
You can't have fun all your life and a decent retirement - you can have one or the other. You can enjoy life now and be a poor pensioner or you can do what one of my friends did and work in a well paid, pensionable job that you HATE until you are 55 and then retire on a nice pension. In your case with such uncertainty of living to old age I would be leaving the future to care for itself. Best wishes, hope you find a solution that suits you

dawnofthedave

JayRitchie said:

Hi

I'm so sorry to hear about your condition. There are some great people on this forum who will have suggestions.

A few queries if I may:

- how much do you currently have saved in pensions?

- what are yours and your employers current contributions? 

- does your employer offer a salary sacrifice scheme for pension contributions?

- how much is your student loan balance?

- how much is outstanding on your mortgage?

Thank you for this JayRitchie. Pension pot is currently 18k. Employer contributes about 84, I do 300. Student loan is about 17k but gets written off at age 46 ish. Mortgage balance is about 153.5k. I don’t know about salary sacrifice but I could discuss it with them if worthwhile. 

ali_bear

Being in your mid-30s and having little to no pension savings is not unusual at all. You are actively considering them now which is good. You are even thinking about passing some on to your relatives. 

Even with your health being what it is, there is always a balance to be struck between saving for the future and living life for today. Possibly this balance would not even be very different if you didn't know about your condition, or you didn't have it. So possibly think about splitting your spare income three ways roughly equally as a starting point. A third on pension savings, a third on rainy-day or non-pension savings (think ISA?) and a third on enjoying life. 

Marcon

dawnofthedave said:

JayRitchie said:

Hi

I'm so sorry to hear about your condition. There are some great people on this forum who will have suggestions.

A few queries if I may:

- how much do you currently have saved in pensions?

- what are yours and your employers current contributions? 

- does your employer offer a salary sacrifice scheme for pension contributions?

- how much is your student loan balance?

- how much is outstanding on your mortgage?

Thank you for this JayRitchie. Pension pot is currently 18k. Employer contributes about 84, I do 300. Student loan is about 17k but gets written off at age 46 ish. Mortgage balance is about 153.5k. I don’t know about salary sacrifice but I could discuss it with them if worthwhile. 

If you're earning £40K then salary sacrifice would give both you and your employer an NI saving, so more than worthwhile.

Two thoughts. I know nothing about your condition, but many previously untreatable/fatal gene-related conditions are now being successfully treated thanks to advances in medical science, so there's always a hope that whatever you have might be ameliorated before it ever has a chance to impact on your life expectancy.

If that proves not to be the case, and you become seriously ill/incapacitated, there is always a good chance that you will be able to start drawing any private (ie non-state) pension at any age - no minimum - on grounds of ill health if you are too ill to work again. You would also qualify for various state benefits, although as this could be 20 years away, I doubt anyone would be willing to venture what those could be by then.

Also remember that if you have a life-limiting illness, you are likely to qualify for an 'impaired life' annuity, which means whatever is in your pension pot would buy you an annuity (pension) at much better rates than someone in normal health.

LHW99

Also, not to do with money, there is a great deal of progress being made with geneic diseases. Over the next 20 years there will undoubtedly be more.

The current prediction is based on current knowledge / treatment. What would you have been told about survival from eg HIV 20 years ago?

Simon11

A really tough situation for you, but you are in a small minority at your age that you are are thinking and planning for your retirement. Anything you do now, could make a bigger differences, so do give yourself a pat on your back.

An option you haven't considered is focusing on trying to increase your salary and use any additional salary gains towards your pension. Thus you can enjoy your life on 40k now and work hard to increase your salary which goes straight towards your pension?

powerspowers

That’s a lot to think about! It’s hard trying to work out the balance between living well now and looking after your future self, and everyone has a different way of looking at that. If you can strike a balance I think that’s the best option. 

Some things that might be worth adding to your thoughts-
how accessibile is your flat? Moving in the next 10 years might make a big difference if you do become ill and could keep you at home longer. 

What sick pay would your employer pay? Might be worth considering a public sector job with a typical 6 months full/6 month half pay. 

Fairly boring choices but could make a difference further down the line and don’t necessarily mean scrimping and saving in the short term. 

michaels

A few thoughts.  Part of your reason for scrimping/saving seems to be in order to pass on money to cousins/other relatives.  Would they want you to live a harsh life just so that you could effectively give a portion of your income to them?

Related to that, you don't say what your flat is worth but we certainly have a plan to downgrade our property in retirement to release cash, and that does not necessarily mean smaller, it could just mean a cheaper area.  A 2 bed flat in one town worth 500k might cost 100k in another.

Finally a left field thought, could you reduce your hours per week now - I call it take part of your retirement now by instalments and do your 'living not working' stuff that most would do when retired in those hours, funded by not worrying about pension contributions as you don't expect to need a pension in future.