Tell me if this idea is good or bad.

grumpy_codger

SneakySpectator said:

....

So over the 25 years (55 - 80) I'd pay £450 * 12 * 25 = £135,000 in rent that I'll never get back. Not only that but the amount of money I'll need to withdraw from my retirement fund each month to survive will have to include that £450 rent.

Or at 55 I could spend half my retirement pot and buy a private flat outright without a mortgage for about £200,000 which would obviously cut my retirement fund in half, but it would also eliminate the rent factor so I'll only need money for food and bills each month. ...

Don't forget that by spending £200K you lose the interest you can get on this amount. At, say, 3% it's about £500 p.m.

lincroft1710

As there is no mad rush to purchase a property now, I would look at these options nearer the time. A lot can (and does) happen in 20 years

NameUnavailable

If you are in HA/Council accom and get to the point of needing to go into a care home the costs will be taken from your savings (above a certain threshold). If you have no savings above that threshold then the state will be paying for your care.

Stay in rented and enjoy your retirement whilst still active/healthy with minimal savings left by the time you get into your 80's!

saajan_12

SneakySpectator said:

So over the 25 years (55 - 80) I'd pay £450 * 12 * 25 = £135,000 in rent that I'll never get back. Not only that but the amount of money I'll need to withdraw from my retirement fund each month to survive will have to include that £450 rent.

..

The way I see it is buying a flat at 55 is a no brainer because when I'm old and might need to go into a care home, I can sell the flat to pay for it. Whereas continuously paying rent to the council that will never be returned to me is just wasted money?

Right, but by paying rent and leaving the £X in your pensions or ISAs, you also gain the interest or investment returns on the £X. If you're invested in diversified stock index trackers, then historically that's made ~7% return each year. 

If you take the money out and put it into a house, you lose that return, never get it back. 

In theory, if we're talking about the same size/type of property, with no government subsidies or taxes then the rent vs the return on the investments could be comparable. 

SneakySpectator

NameUnavailable said:

If you are in HA/Council accom and get to the point of needing to go into a care home the costs will be taken from your savings (above a certain threshold). If you have no savings above that threshold then the state will be paying for your care.

Stay in rented and enjoy your retirement whilst still active/healthy with minimal savings left by the time you get into your 80's!

But won't I be at the mercy of the state as to what home I get put in? I think a private care home that you can pick might be of better quality than a cheap one the state picks for you? 

Like you hear about all these abuse stories from care homes run by a bunch of temp agency workers who don't give a crap.

Murphybear

SneakySpectator said:

*NameUnavailable said:

If you are in HA/Council accom and get to the point of needing to go into a care home the costs will be taken from your savings (above a certain threshold). If you have no savings above that threshold then the state will be paying for your care.

Stay in rented and enjoy your retirement whilst still active/healthy with minimal savings left by the time you get into your 80's!

But won't I be at the mercy of the state as to what home I get put in? I think a private care home that you can pick might be of better quality than a cheap one the state picks for you? 

Like you hear about all these abuse stories from care homes run by a bunch of temp agency workers who don't give a crap.

We live in an affluent part of the country.  All the care homes are good, there are no “cheap ones” run by temp agency workers.  Anyone needing funding by the council will get somewhere decent.  We had a friend who went into care, she wasn’t self funding and her care home was lovely.  We were in her room one day when a member of staff brought in her lunch, it looked really nice, 

There isn’t a magic 2 tier system, one for self funding and one for council funding.  Don’t forget that most people don’t go into care anyway,  for those aged 65 it’s about 4%.  

Murphybear

Why do you want to retire at 55?  Have you got plans and sufficient funds to do exciting things for many years?  It can be a big shock going from working full time to having 24 hours a day free.  

Bigphil1474

Op, I'm still not sure I understand your first premise - you can't get a mortgage? Or do you mean you can't enough of a mortgage to buy a property you like? Personally, I'd work on that first.

If you are flexible there are loads of properties at cheap prices. Just did a quick Rightmove search and there are 6,500 properties in Yorkshire alone that are £150k or less, and over 50,000 if you say within 40 miles. Depends what you are looking for of course.

comeandgo

Your rent is cheap, if your flat is not suitable for you for your later years could you swap it for something you do like? I know in our local Facebook page council or association renters try for swaps.

SneakySpectator

Bigphil1474 said:

Op, I'm still not sure I understand your first premise - you can't get a mortgage? Or do you mean you can't enough of a mortgage to buy a property you like? Personally, I'd work on that first.

If you are flexible there are loads of properties at cheap prices. Just did a quick Rightmove search and there are 6,500 properties in Yorkshire alone that are £150k or less, and over 50,000 if you say within 40 miles. Depends what you are looking for of course.

I'm located in the south of England, not the north where property prices are reasonable. 

When I was denied the decision in principle, it didn't state the reason. But the reason is almost certainly because my credit history is not good. I have 3 low value defaults on my credit file, despite having paid them off.