Renting into retirement - WIBU to spend my pension pot before age 67?

So we've got the millenniums and generation Z who have figured out how to claim benefits because they don't see why they should support themselves.

And now we are going to have generation X coming into the mix. Great....what has happened to pride! If you were my friend OP, I'd want nothing more to do with you with that attitude.

Pension pots don't usually count as "savings" when it comes to things like benefits entitlement. so the 16K rule probably doesnt apply here in the way it would if you had £86K in the bank. I'd get some proper financial advice before you do something rash!

Once you turn 67 UC benefits stop. You can no longer claim them instead it's pension credit which basically tops single people up to full state pension level. You can claim council tax reduction if living alone at any age.

I think it's interesting that OP hasn't responded to anyone questioning the morality of her scheme, which implies that she actually doesn't care about whether it's ethical, and is just looking for validation to go ahead with it anyway.

Whilst I do agree with OP about the loopholes the rich can get away with and people like Clarkson and his ilk buying farms for tax benefits, the problem is that the care and benefit system is already in a mess. People are living longer, and their retirements will need to be funded one way or another, whether by themselves or by the state. We will get to the point where there simply isn't the money to do that, especially if we have lots of people purposely depriving themselves of any assets and claiming support from the state. It's likely there will have to be a huge overhaul of the system anyway soon, for it to be sustainable.

OP, what will you do if you do deprive yourself of your assets, and either the system is then overhauled, or your case is investigated and you're found to have deprived yourself of your assets? How will you live? Will your children take you in? Or will you carry on working as long as you can?

OP it's your pension pot, meant to pay your bills in retirement. The figure you state might be minus a lump sum. You don't have to take a lump sum you could choose to boost your monthly income higher. You would get a state pension then this private pension on top. If you don't think it's high enough then pay in more. You still have 7 years before you retire. That is a long time to contribute plus you will have confounding interest so it could well be a lot higher by the time you are 67. Savings are completely different from pension. Have you considered there will likely be a different government by the time you retire. I think most likely Reform who might prioritise defence over benefits.

OP, I was kind of with you until you lambasted doctors and farmers.

A UK trained doctor is the best of the best of our youth. They are the A* genuises who eschew the opportunity to work in high finance, or take their skills abroad. We work them like donkeys, although they are champion race-horses. They save lives with their skill and hard work and it takes many years to approach a decent salary.

A farmer needs to pass on the whole farm to their children without inheritance tax, or its not a farm anymore. They work from dawn till dusk in a solitary job and never know if they will still have a farm the next year, as they are subject to the vagaries of weather, whatever the government will tax them, or the supermarkets will pay them. Just like the doctors, the pressure and long hours often causes mental health problems and high suicide rates.

You are not a doctor or farmer. You are simply a player, who wants to put her fellow taxpayer money into a thick gold chain and sovereign rings to drink beer on the beach. Don't try to dress it up. I know what you are and I am not like you.

Are you sure you’d get housing benefit and pension credit?
PIL only have 2 x state pension and a private pension of £30 a month, they rent a house at £500 a month and they are not entitled to housing benefit or any pension credit. I think they might get a small council tax credit. They and CAB have been through all the checks multiple times. We and BIL help with the rent, I personally wouldn’t risk it, rules can change especially if you are in your 50s and looking at living another 30 years. I would try to get more into my pension so I had enough longer term.

YABU your pension is meant to to be spent on lvingexpenses in reitement, it is not like ordinary savings.

She’ll be taxed on it when she draws it

Exactly, yet another diabolical outcome of the housing crisis. Which is the biggest driver of poverty and benefit dependency in my view.

Have not rtft but I just want to say that, ethically, it’s not just spending your own money sooner, and then having to be supported. It’s also that the pension pot is 25% income tax that wasn’t paid by the OP on the basis that it was going to support her retirement. So that’s £21.5 k that is morally , if not legally, tax fraud

I would be very wary of making a choice like this in the current climate.

If Reform get in or even another Tory Government the rules around benefits could easily change and you might be wishing you had that extra bit of money coming in.
It's too risky a strategy I would say.

So you can have a pension pot and, as long as you don’t touch it, you can claim UC and all the associated benefits? Am I reading that correctly?

Also you said your injury was two years ago? But doesn’t ESA only cover you for one year?

Wait until a whole generation that expects to be life-long renters reach pension age. They won't be able to cover their rent with their pensions, nor will there be any assets to sell to cover care home fees.

and actually if she doesn’t draw the full amount and takes it monthly, she’ll be entitled to housing benefit anyway. We’re talking about £6k a year (£500 a month) if she lives for 14 years past retirement, not millions.

@MyLuckyHelper I forgot to mention this last night and I’m glad you did - I think you the first person who has. It sounds perfectly fine to me, having two pensions and not paying rent, but I guess that’s not enough for OP and people like her.

I’d be very wary of doing this, just because the current rules around benefits mean you’ll be entitled to housing benefit doesn’t mean it will stay that way. If Reform get in the benefits system could be completely overhauled, the thresholds for receiving benefits could change etc. You might find in seven years time you’re not entitled to what you would be entitled to in the same position today and therefore can’t retire when you expect to.

this

OP’s proposal under the current system is perfectly rational - she is better off spunking away money before she qualifies for state pension. Not the same, BETTER off.

unless you are a v high earner, there is no incentive to work, save and maximise your income and financial security.

its why we’re fucked.

Is this a wind up? What message does it send your DC? That it’s ok not to save for retirement cause the state will look after you? Well you are doing them a disservice, they won’t have the option of doing it because there will be no bloody money left. If you are going to give them a bit, ensure they stick it in their pension funds, maybe that will ease your conscience when you are sunning it up on one of your holidays.

Perhaps. But the outcome will be the same anyway. She doesn’t have enough money to sustain a life paying rent, with her amount of savings.

and actually if she doesn’t draw the full amount and takes it monthly, she’ll be entitled to housing benefit anyway. We’re talking about £6k a year (£500 a month) if she lives for 14 years past retirement, not millions.

someone who didn’t have rental costs, would be free to keep that money (and more) for themselves to live on (car, holiday, food etc)

It’s entirely different. She’s considering doing this deliberately so she can absolve herself of taking responsibility for her bills.

True we’d all have more but many of us are not planning on reducing funds to be paid for by others

Well exactly, except @AnneShirleyBlythe is in the same position as the OP. They’ve both worked all their lives. We’re not even comparing workers and non workers.

Right, so she should spend it on cars and holidays. Makes total sense.

@AnneShirleyBlythe it's people like you who, while bleating about "benefits people" make a mockery of the whole thing. Because the system is predicated on people saving for themselves and where there is an exception to that and they could not or even were simply feckless, they are helped so they do not fall into absolute penury, because that is what a civilisation does.

And yet as soon as someone as seen as "getting it for nothing" all these terribly proud, hard-working people immediately get mad, seeing as it something they were entitled to and lost out on, so they should never have worked because they don't feel "incentivised." Why should you be incentivised to do the right thing? Why do you care how little Timmy standing next to you got his biscuit as long as you've got one as well? You want the system to be fair, and yet fail to see that it only CAN be fair as long as the majority accept they need to provide for themselves and we need fewer people to be provided for from the public purse - but instead they react with me too, gimme gimme gimme, they got it, not fair, where's mine.