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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

Cashing in pensions

16 replies

Bagofworries · 01/07/2018 23:36

AIBU to be concerned how my brother will cope financially when he retires?
He has made the decision to cash in as much of his pensions as he can, but has no intention of reinvesting or saving any of it.
I am concerned that he will struggle to afford to live on only a state pension when he is too old to work.
For the purposes of context, he regularly borrows money from me to pay for day to day expenses and appears to live 'hand to mouth despite earning a reasonable salary.
I cannot afford to support him throughout his retirement, but at the same time, I feel sad when he struggles financially.
What happens when you cash in your pensions and spend it all?
How are you expected to support yourself? Or are your family expected to support you?

OP posts:

NotSuchASmugMarriedNow1 · 01/07/2018 23:53

If you cash in and spend your private pension then I guess that just means you will have nothing except the state pension in old age. Family not expected to support, no.

NotSuchASmugMarriedNow1 · 01/07/2018 23:54

Whats he spending all the money on?

Original poster

Bagofworries · 02/07/2018 00:31

I'm not sure I can watch him live in poverty. That will be very difficult to witness.
He is planning on spending the money on a new car, a few holidays abroad with his dc, driving lessons and cars for dniece and nephew, bits and bobs around the house, such as new furniture, carpets and wood flooring throughout downstairs, and then hopefully having enough money to live on comfortably for a year or two.

OP posts:

Original poster

Bagofworries · 02/07/2018 00:35

My concern is that he hasn't thought beyond the next 5 years, and what he will do when he is expected to survive on a state pension when his outgoings will far exceed a state pension.

OP posts:

ReasonableLlama · 02/07/2018 00:36

He will be expected to live on his state pension. If he tries to claim benefits they may take into account the fact he's cashed in pensions and say he doesn't qualify for benefits. It's called deprivation of assets.

How old is he out of interest? Does he have a wife or partner who will have a good pension?

LighthouseSouth · 02/07/2018 00:54

As you keep loaning him money for fripperies, I expect he's planning to live off you.

Stop worrying about his pension and stop lending him money.

Original poster

Bagofworries · 02/07/2018 01:02

He is married but SIL has already cashed her pension in. DB and SIL are both 57.
I know I shouldn't worry or lend him any money, but if I didn't, then he wouldn't have the fuel to get to work or one of his utilities would be cut off.
Those are usually the things he needs to borrow for.

OP posts:

Walkingdeadfangirl · 02/07/2018 01:07

He will just have to learn to live on whatever state pension he has. Isn't their a minimum income guarantee for pensioners to top up pensions if they dont have enough?

Monty27 · 02/07/2018 01:45

Do they own their home? They could be investing in their assets. More money there than putting it in the bank?

LighthouseSouth · 02/07/2018 02:30

Do you believe he is borrowing from you to pay for those essentials? You say he earns well so he's probably using your money for something else. His wife cashed in her pension already, how can they be short of money?

Look at the plans you've said he has for the money - car, a few holidays, a whole bunch of new furniture....he doesn't need any of those things. Your money's going to the lifestyle he wants. I feel like there's some missing information...you should be asking for the loan money back now he's getting a lump sum.

But there isn't legal obligation to help him if he runs out of money, so don't worry about that.

HerRoyalNotness · 02/07/2018 02:41

stop giving him money!!! If he gets his utilities cut off that’s his problem and as soon as you stop enabling him he might sort himself out

crunchymint · 02/07/2018 02:49

I know various people doing the same. People with poor health who don't see how they can work full time till 67.

BarbaraofSevillle · 02/07/2018 05:58

I know I shouldn't worry or lend him any money, but if I didn't, then he wouldn't have the fuel to get to work or one of his utilities would be cut off. Those are usually the things he needs to borrow for

Sounds like he is borrowing for the electricity or petrol to get to work because he/they have spent the electricity and petrol money on other more interesting things. He asks you to give him money for the electricity because he knows that if he asked you to give him money to do his house up, you would tell him to get to fuck.

It's not money they need, it's budgeting and being a grown up advice. They won't starve or have to sit in the dark and cold on two state pensions, especially if they own their house outright, they just won't have the money to pay for everything they want as well as everything they need.

How much of this money that you have 'lent' him has he paid back? I would stop giving him money and tell him to get budgeting advice. I believe the likes of Christians Against Poverty do this.

Moneysavingexpert is also a good resource, but if they have spent all of their adult lives being bailed out and being spenders not savers, I suspect it is too late for them to change.

If he tries the 'you have money, I don't, so you have to help me' crap, remind him that the only reason it's like that is because he's already spent his and now he's trying to spend yours too.

NewYearNewMe18 · 02/07/2018 06:04

You can cash in 25% tax free BUT if you cash in the renaining 75% you will liable for tax, which will take you into the 40% tax bracket very quickly,

Are you sure you understand exactly what he's doing, because only a financial incompetent would cash in 100%. We've had to jump through hoops with our financial advisor, it's gone to a board to assess we haven't 'run risk of ruin' at 67 and over.

What will happen? The government will rightly expect him to sell his house and live off the proceeds if he cant support himself. Then we'll get a whole plethora of articles about the bastards not looking after our pensioners who have worked all their lives and spunked it up the wall

muffinthepuffin · 02/07/2018 06:22

I'd start managing expectations/stop enabling him before he retires (easier said than done, I know!) so that he is clear that you're not a back up plan.

Imchlibob · 02/07/2018 06:31

He is doing this precisely because he knows you won't let him suffer the consequences. He knows that if he spends it all now on holidays etc he will have no worse a life than if he kept it all and was careful.

Yes yabu but you have clearly been unreasonable your whole adult life as a crutch preventing your brother from growing up. It doesn't sound like you have the strength of character to start saying no now, so probably your path is going to be to plan for an impoverished retirement yourself as your own resources will continue to need to support him as well as you for the forseeable future.

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