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

[Artricha]

I am a housing association tenant and I'm 60 years old. I have a pension pot of £86000. According to best forecasts it would pay out an annuity of £6000 a year which wouldn't even cover my rent. I would then have to pay the remainder of my rent plus council tax from my state pension plus all my living expenses. I have looked into part ownership but that's even worse as the leasehold charges plus rent are around £800 a month.

If I have only £16000 at the point I claim state pension, I will be able to claim housing benefit and council tax benefit too. Day to day living expenses wise I will be no worse off under this scenario. Possibly even better off as there are other benefits that housing benefit is a passport to.

Plus, if I took the money now, I'd quite like to cut down on work over the next few years, give a bit of money to my kids (after all, there won't be anything much to inherit when I die), have a few nice sun holidays in winter, get a decent car, kit my kitchen out with white goods that will last me.

Running down money before retirement is the opposite of what we're told to do, so it feels weird. But I think in my circumstances it's sensible. AIBU?

Of course she can. A DC pension can be taken however you want.

I said we would have to grossly exaggerate his needs to claim - or lie, to put it clearly. That doesn't count as being 'entitled' in my world. It obviously does for many people.

Let's leave luxuries out of it then, which seems a bit pointless given that the OP clearly does want them. OP will have both a state and private pension. She admits that this will give her enough money to pay her essential living costs. She doesn't want to to do that and is seeking to use her money for non-essentials so that the tax payer can start picking up the tab. If you don't have an issue with that, then I do.

As I stated in a previous post, I dont judge OP. I would counsel her to get some sound financial advice before making any decisions.

If my taxes (which I am still paying at 81) go to support people like OP who have found a way to work the system to their advantage I say good luck. I would emulate them if I could.

OP was born in this country and has contributed to the community through work and taxes in the past. What I do resent is the money that is flowing out of this country to support third world countries - including Ukraine - with which we have no connection and from which we derive no benefit. And dont even get me started on housing and feeding so called "asylum seekers" who were not born here and have contributed nothing.

Let's say she takes the full pension out all in one go... She'd be paying upwards of £13,000 in tax on it. Spending on high value goods would incur 20% VAT. On the £500 a month extra she would receive if taking an annuity it would take at least 10 years for the government to get back the tax she had initially paid. OP may not be able to claim the full amount of her rent paid anyway. Depending on how long she lives, the state will have to pick up the tab somewhere along the line.
I'm all for being responsible, and it seems like OP has tried to be, but the system is broken.

@LaDoIceVita I am so pleased to hear that you will not lie and cheat. Well done you. It’s already difficult enough to claim disability benefits for genuine claimants with all the evidence required without charlatans.

I’m a little bit confused why you think lying and cheating would be successful and why not lying and cheating makes you morally superior - it almost sounds like you think genuine claimants (who have reams of evidence) are lying and cheating. Almost like those that receive disability benefits are all liars and cheats and that there are no legitimate claimants. I’m sure you didn’t mean it to come across that way.

This is the problem though, the OP has taken far more out of the system than she has paid in like many people. This is why economically the country is struggling.

Why are UK pensions so low?

Because people don’t pay enough tax and we have free healthcare. Where do you think the money comes from to fund state pensions and healthcare?

Thing is there are demands that welfare spending is cut - it will be a brave person that does this - but the benefits she might receive could be reduced.
Perhaps she could buy gold sovereigns to put away for a rainy day.

I think this thread is a great example of what many young people have come to realise - the system is quite easy to manipulate and you can lead reasonably comfortable life with little responsibility by not working or working very little. Who can blame them? Not having to get up and go to work, not worrying about having your house fixed (if in social housing, getting an inflationary ‘pay rise’ every year etc etc.

Everyobe should claim what they are entitled to. For many generations of their family have worked and built this country and all we see is money paid out to people who arrive here and won’t tell us who they are, where they’re from etc and being housed etc. If the government want to do something about it, they can except this government are just happy to keep increasing the welfare bill.

I'm absolutely confident that I could cheat the system in this instance. DH's chronic condition and level of severity are fully documented. I used to deal with sufferers of this condition every day in my former career and have extensive knowledge of how it can affect their daily life. I suspect there are not too many claimants - the majority of which are absolutely genuine - who would be in the same position. I have also been a full-time carer for a family member in the past and again, would know exactly what to say to make a successful claim.

I think the way the phrase 'morally superior' is used now says a lot about our society - it's become an insult and a sneer. I don't consider being honest and taking responsibility for my life and my life choices as being anything superior. I think it's just an attitude that's becoming increasingly rare.

This is quite a small world view though. If you look at it globally, why are people trying to come here in the first place?
Many asylum seekers are leaving countries we and other western countries have been historically messing around in & helping to destablise.
We don't exist in a vacuum and we have to accept our role in the inequality the world is now experiencing.

It can be, if money has just gone.

Well, I’m widowed, and living in SH. I live totally from my state pensions, my savings, and a couple of private pensions. I pay £1000 per month SH rent, plus everything else. No top ups, and I’m taxed.

But, I don’t have to tell officialdom everything, no forms to fill out, and no one to judge me on what I buy.

Worth it to me. 👍

Ukraine is not a third world country.

Tbh I would rather my taxes go to help genuine asylum seekers fleeing war and persecution than someone like OP who is going to spaff her entire pension pot on winter holidays and cars for herself and her adult DC so that she can claim housing benefit.

What OP has decided to do would be considered to be deprivation of assets by DWP:

Deprivation of assets for Pension Credit occurs when a person deliberately transfers or spends money, property, or income to qualify for or increase their benefit entitlement. The Department for Work and Pensions (DWP) can treat this as "notional capital," acting as if the person still possesses the funds, which may reduce or stop their Pension Credit payments.

“Genuine asylum seekers escaping war & persecution “ - we don’t get them. If we do it’s a tiny proportion.
We get economic immigrants who come here to fleece us, break the law, work as ‘carers’ and then access benefits/housing/health service, ergo costing us the tax payers much much more than they earn.
We can’t afford them -economically we are sinking faster than the titanic.
If you can’t see that then come up to the North East.
I’ll show you round the hell home that my hometown has become where people are too scared to use the bloody parks during the day with their kids.
Too scared to live in the town as the council has stuffed swathes of it full of ‘immigrants’ who seem to be mainly men, mainly not working and very intimidating. Too horrified by areas that used to be clean and nice that now have human shit on the pavements. Rubbish everywhere.
I sit and cry when I look at it. My nanna lived in a Victorian street house - she died in 1985 and genuinely would not recognise the area she lived in all her adult life. It’s dystopian.
We can’t afford this OR people like the OP.
Our kids are fucked unless you have lots of money.
My daughter will be ok as she will inherit - unless the greens get in and whop IHT up to 80%.
My grocery delivery driver today said to me “I’ve voted Labour all my life -like my whole family and nearly everyone I know- never ever again. I’m so worried for my girls”. We started by talking about the potholes in the roads (I live rurally).

What’s Labour got to do with it? The number of economic migrants went up under 15 years of Tory rule.

There is always a fly in the ointment in this woeful tales.

What’s Labour got to do with it?

Have you forgotten?

The economy was strong & growing under the Tories, immigration was low, taxes didn’t increase, salaries didn’t stagnate, lots of investment, oh wait…

I’m afraid Tony Blair (Labour) opened the doors and left them wide open.
Equally, I think people who are lifetime Conservative voters feel equally let down.
It’s just a massive shit show.

I agree that Tony Blair the knob admitted letting in too many EU migrants but what has that got to do with your previous post?

You seem hesitant about talking about the Tory shit show on immigration.

Me too. I had a case where a client had had a death in service payout of £20-something thousand on the death of her partner. She bought some new furniture and a second-hand car, had her flat redecorated, bought some gifts for daughter and GCs and took them on holiday.

A good 18 months later, she was summoned for a compliance interview by the housing benefit team at the council. They were actually totally ok about it and, like in your case, considered that it wasn't done deliberately and that none of the spending could be considered lavish or extravagant, and she just had to repay the HB that she shouldn't have got. There was no penalty or talk of prosecution.

I’m not hesitant. I think they are equally at fault.
I only mentioned Labour as that was who my delivery driver mentioned.
I think his issue was that after 14 years of Tory he was expecting better - and yet Labour are no different, or worse.

You effectively either use it to enjoy life more while you are relatively young or you give it to Rachel Reeves

Both DH and I were born to home-owners. I will inherit nothing as my mum's house belongs to a company who she signed it over to in order to pay off a debt she was left with when my dad died, and in any case would have sold for less than the cost of a deposit on a flat in the SE. DH's mum has worsening dementia in her early 70s so chances are there will be nothing left for him and his brother.

In contrast, my friends did inherit and so managed to buy a decade before we did, and when they inherited again - both money and a flat - bought a second place to rent out and are now one of their DC's classmate's landlords. I don't resent them for it - it was what they decided to do with the money they were given, and neither of them benefitted from wealth when those relatives were alive - but it's mad how different the outcomes will be for two children in the same class.

£12k will cover a year's rent if you're in the private rental sector. Depending on which part of the country you live in, that might get you a flat, or it might get you a room in a house share.

In five years' time, it will be unlikely to.

I don't get this. If you're entitled to benefits, it's not a flex to not claim them - in fact it's incredibly daft to struggle when financial help exists.

I would also recommend reading different news sources.