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?

Who are the people being kept alive?

Honestly couldn't give a fuck about potholes, we'd have less of them if people weren't driving to Tesco round the corner in what are essentially agricultural vehicles, too large and heavy for the road. Frankly I'm glad my council tax isn't making that easier for them.

We can carry on with the triple lock until 2052 if we increase the retirement age to 69. The state pension won't be removed but will be restricted to people who don't have a private pension or have minimal, which reflects OP's plans to whittle down her own assets. Basically another rehash of the pension credit/winter fuel fiasco with most people getting nada.

You aren't a Green voter but this is big on their manifesto right now. They are really educating younger voters about everything that will have been taken from them when they retire. Many are going to hit 70 and will struggle to pay rent if not in work. Home ownership was never an option for them. No assets to sell to pay for care. I'm 42 and am aware of what is coming in from Reform and the Greens right now. This is important as either of these sides will have to form a coalition as lead with the minor party (Tories/Labour) in 2029 so we are heading for a far left or far right government. I wouldn't count on anything that is here today being around in 5 years, yet alone 35, in terms of benefits including the state pension

YABU. If your finances were looked in to it would be clear you’d tried to get rid of your money so the state would carry the can. You don’t need to buy annuities anymore - look up draw down instead.

Go to a Citizens Advice Bureau or ring the Money Advice Service (whatever they’re called now) for real advice - not from people on the internet. Don’t leave yourself impoverished in old age - it’s no joke and the triple lock will go eventually.

What planet are you living on? There is no social housing. You pay the landlord £1500 a month for the property and that's that. Imagine you had that sort of liability hanging over you every month? Only 20% of 35 year olds own property and its stressful having a landlord hike the rent or evict you for no reason

Young people aren't having kids because they are fed up with entitlement from people like yourself. I won't get a state pension but I'd be very careful about biting from the hand that feeds you if you will need to rely on one

You've literally listed every trope going. Is your poison GB News, X, Jeremy Vine, TALK tv or the Daily Mail? The moment my dad starts talking like you, I know he's been left alone with unsupervised access to the TV.

We are heading towards a massive clash between people born before 1985 and people born after it give or take. The Millenials are the cut off point

First of all as of 1 May we have no fault evictions going out of the window so that will actually need to be a genuine reason why?
So that’s a positive as I see it.
Secondly, there is social housing available and the more people put pressure on the councils by joining the list. The more will be built.
I can think of one particularly very beautiful town whether there are empty Council flats might not be the best bit
But this is a town where a new build flat would cost you £400,000. There are Council properties available. They’re currently stood empty.
Because they’re not suitable for families, they won’t put them in them even temporarily

A really reliable, inexpensive to run car - definitely makes sense to me. You won't be able to afford to buy one after you retire so buying one before makes sense. You can draw down 25% tax free and use that for this.

Then you can do a flexible draw down on the rest. Again, white goods with a long lifespan is a sensible thing to do and buying a decent telly seems reasonable to me. I can't imagine that's going to cost more than £5k though.

However, before you do that, I would triple check that you'll be entitled to pension credit. It says here that the standard amount for pension credit is £238 per week: https://www.gov.uk/government/publications/pension-credit-technical-guidance/a-detailed-guide-to-pension-credit-for-advisers-and-others

But then it says here that the state pension is £240 per week:

https://www.gov.uk/new-state-pension/what-youll-get

I would definitely go and talk to CAB or Ge UK now as Age UK says that the pension credit team can look at historic spending and determine if they think it constitutes deprivation of capital.

To be honest it’s possible I’ll end up in the same position as the OP but for different reasons. I have zero pension as I’ve been self employed my whole life. Yes I could have started a private pension but I’ll be honest, it just never crossed my mind. I’m 46 now and was diagnosed as autistic as an adult. I’ve never really been good at “knowing stuff” if that makes sense. My parents never taught me about pensions and I just naively thought state pension was enough. I’ve learned in recent years that I should have started a pension but I don’t think I can really afford it. I obviously won’t have any employer contributions, and I don’t get sick or holiday pay so I need to fund those from my normal pay. I’ve seriously fucked up in the career I chose and being self employed I know that now. But at 46 I’m too old to retrain in a new career.

My plan is (was?) to sell my house and downsize to give myself extra income. I’m absolutely more than happy to do that. But everyone says property prices will likely fall/crash so I probably won’t get enough to fund hardly anything. So realistically I’ll be reliant on state pension only. (I’ve worked without any gaps at all since 16 so I’m on track for a full state pension at least. Even if they increase the years needed I’ll have done 50 years by 66). I think more education is needed for young people to start private pensions especially if in careers where they won’t get great (or any if self employed) workplace pensions. I honestly wish I could go back in time and not do my job. I have panic attacks regularly thinking about old age and of property prices crash. But I guess there’s nothing I can do about it now. Quite honestly I’m hoping for a short sharp illness to take me out before 70 like both my parents.

@FoxesOverHere Property prices are already falling (generally). If you don't have young children living with you could you get a lodger or two? And you're not too old to retrain, nobody is.

Falling prices a bit are fine it depends how far. And if they come back up again in the next 20 years. (Prices have come down before so it’s the general trend I’m worried about). I only have a small 2 bed house so it really isn’t big enough for a lodger as well. Plus I don’t do well with other people’s noise or living with other people generally to be honest (I already wear noise cancelling headphones all day and night if my neighbours are being particularly loud). The house is on the outskirts of London so like I said I was hoping in the future to sell up and move to a much cheaper area and use the profits as my pension. But if prices crash that much that that’s not possible then yes I will either be on benefits or living on state pension alone. I just need to face that really.

I guess yes I could retrain. But into what? Plus I don’t have thousands laying about to pay for it. Every other thread on here about young people is about how there are no jobs. That AI is taking over so many jobs. Companies are having 200+ applicants for entry level jobs. So what if I retrain (costing more money) and that job disappears into AI? What if I just cannot get a job in the new field? Because let’s face it if a company could employ a 25 year old or a 50 year old who would they choose? And there wouldn’t be much point me going into a minimum wage job simply for the pension because it will hardly grow into a decent amount at all in the 18/19 years I’ll have it. I couldn’t afford my mortgage on a minimum wage job anyway.

So realistically I’m just going to ride it out and whatever happens happens. I’ll enjoy what I can in life now just hope either property prices stay on the higher side or I die before I need to worry about it. Either option is fine.

I started my children’s pensions when they were born paying their child benefit into it
They should have well over 2 million in their pots by the time they your age with another 20-30 years to compound on top of that
I’m older than you so the information was out there. It just needed to be applied.

I get that. But I didn’t “get it” at the time. I’m autistic and struggled greatly at school and the early days of working life. I didn’t really have friends. I was incredibly naive and lacked a great deal of understanding about the world. My parents didn’t know I was autistic as it wasn’t really a “thing” for higher functioning people back then. They were constantly frustrated with me for not “knowing” things. I still feel like everyone “knows” things that I don’t! When I moved out I only ate a variation of 4-5 meals on rotation for years. I didn’t really know how to start learning to cook. I do get how ridiculous it all sounds. But that was my life. I went to work, I paid my bills. I thought that was what everyone did! I thought I was doing it all right at the time. I didn’t (don’t) have many friends and I have no siblings. My parents died before they were 70 (they had me late in life so I was only 29/33 when they died). I wish I could go back in time and be young again knowing what I know now. The internet helped me learn so much about life and other people. But that wasn’t a thing like it is now when I was growing up.

At the end of the day I can’t go back in time. I can’t change what I did, didn’t or should have known. I didn’t have parents who started a pension for me. I didn’t even think I needed start one. That’s done now. All I can do is hope I can either support myself in old age through the sale of my house or that I’ll qualify for a state pension.

@FoxesOverHere it’s actually not too late and I believe there are rules. Although please please check these that if you can only cobble together five grand you get the benefits of the tax-free growth that you get to withdraw it tax-free you need advice basically because it’s not too late to sort this out.

@FoxesOverHere Don’t let the perfect be the enemy of the good. Of course it would have been great if you’d started earlier but 46 is still young and you have 20+ years ahead to build a pot. If you could put £50 a week into a pension you could easily have over £100k.

How smug and not the most helpful post for the OP, she says she knows she should have started earlier. She can't change that now.

Maybe other people can learn from her mistakes then

I’m so glad everyone’s taxes have been used to provide child benefit for families who really need it…

They’ll pay tax on their pension when they withdraw it.
It’s the circle of life and it moves us all

There's really not. Most "social housing" tenants are in the private rental sector with the council covering their rents (housing benefit generally is not enough to do so - the difference between the LA rates for a room/flat/house and the actual rate charged is stark).

Not enough private landlords willing to take on a social tenant? Enjoy living with your family in one room of a BnB!

Appalling attitude to social welfare.

not really
it is like only working a certain amount of hours so as not to lose any benefits and ensuring you can pay for food!

Your reply is completely irrelevant to my comment. I am telling you and everybody else that there is Council owned properties stood empty.
They can’t put families in them, but they can put couples and singles in them
And they will if people go and ask

Huh?
Where in the UK are you?

Where I am and all surrounding boroughs/councils have waiting lists for housing of many years.
Properties may be empty for months (when perfectly good flooring and fixtures are ripped out and replaced) But the reality is there is not enough council/housing association properties AT ALL. And private landlords can charge what they like and give zero fucks if a proportion of that rent is payed by taxpayers via housing benefit.

My private rental is double what my council neighbours rent is for the same house, DOUBLE!
My house has the same windows that the council put in 30 years ago. My landlord took advantage of RTB, just a few years after.
Not one window shuts properly, and every pane has blown. He has zero intention of replacing them 🤷

I've got a feeling you know fuck all about social housing or the rental market in general.

I’m in the Midlands hopefully, quite far away from you.

You're hopefully in the Midlands?

Stop being silly.

Such a smarty-pants and yet living in such awful conditions perhaps you could redirect your efforts to making your life more comfortable. Youre wasted living like something out of a Wuthering Heights movie.