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?

Show me the re-electable government of any colour who will actually remove the state pension in its entirety? This will not happen.
There will probably be a further gradual increase in age entitlement, and the possibility of means testing, but any government who has the sheer audacity to remove the state pension, whether it’s a sensible fiscal decision or not, would be absolutely destroyed by the electorate. Even if it was a sensible financial and fair decision as many posters on here think, it would be absolute electoral suicide

I really don't want my life savings (which is what my pension is) to go on rent and council tax

What did you think a pension was for, if not to cover your living costs whilst in retirement? And what do you think other people’s pension is, if not their life savings?

Could you not just spend normally (not frivously) from your savings pot (no annuity) and once it falls below the threshold claim benefits?

Oh come offit. Go for the big fish not the ones a few thousand away from the breadline. Itmakes sense for op to kit her home out comfortably now buy a car , and yes help her kids ( it will go back into the economy anyway)cos she wont be able to do it in the future .

My dad had similar amount. He retired earlier than he wanted: 62. He moved his pension and it was a ln investment one which earned him more . It has lasted him so far till 75. There is still some left and he brought a car with it. Back when cars were cheaper.

He does receive some disability benefit for a work related health issue and he lives in a sheltered flat. So he does get some housing benefit. However he pays council tax and he pays tax on that pension! He wouldn’t have dreamed of what you are doing even though he would get more benefits. I understand where op is coming from but it’s not really right is it.

It’s a basket case of a country because people can’t afford to buy housing on the wages offered. If that box hadn’t been unticked 30 years ago by buy to letters this problem wouldn’t be occurring. Or if they sorted out service charges.

I just checked and you can get a nice retirement flat in my town for 60k, but annual service charges are potentially 9k. Bloody hell. That’s nearly half minimum wage.

The government was warned this would happen. Personally I’d rather support other people who’ve worked into retirement than the bloody whole-life benefit crowd.

Further up the rightmove list there are slightly more expensive flats that are lower maintenance charges (less than 1k / yr) and one freehold, so I’d have a good look around into those first op.

I am so sorry if this has been asked and answered but…..
Your pot from, what, an employee pension? Is £86k?
I would be very surprised if you could get an annuity of £6k on £86k, that would be a really, really great rate.
Alternatively, you don’t buy an annuity. You can put your pot into drawdown. You take as much or as little as you want each year. 25% of everything you take in a year is tax free, (you have to have NOT taken a tax free lump sum at the beginning) the rest you pay tax on depending on what else you’re earning.
If you take the whole lump sum in one go you will be hammered by tax.
Should you stop working you can take £16760 a year without paying tax.
The thing is, none of us know what you live on now?
Would that be enough?

i think buying a car, white goods, perhaps carpet? would be a good use of your money, also a funeral plan.
then see how much you have versus whether you get help.
as you need to pay rent as your spend your money your benefit will surely increase?

I have read this thread with interest as I am in a similar postion, however I have no idea about the way forward.

I am 57 and in a housing association property.
Because of having had an accident 6 years ago which left me with a brain injury, that now means I am disabled, I claim ESA, UC and PIP. This gives me a comfortable standard living.

Two years ago I was medically retired and as such do not need to look for work.

I have a pension pot of approx £180,000 which is managed by a financial advisor, who has advised me to not touch a penny of the pot until I absolutely have to, as all my benefits (except PIP) will stop.

This advice was confirmed by DWP.

Had I not had this advice, I would have presumed that it was my responsibility to provide for me, not the tax payers (although I was a tax payer for 31 years)

So, it stays in a pension pot, until.....who knows?

oh and get dentures, save any dental bills.

Op I think generally that benefits should be cut but what you are proposing is ok in my view given that presumably the alternative is you need to keep working to state retirement age. This is what you have saved for.

You mean act like it’s the (19) 30s and have them all taken out? 😂
Don’t think the nhs will do that anymore x

I can’t wait to pay tax when I retire to fund the likes of you - you have a pension that you could use to fund retirement initially until it runs out, but instead you are going to blow so you can be paid for by taxpayers. I think this is morally wrong.

This is where I am happy to pay tax - genuine safety net for instances like this

This!!!

So you will give money to your kids, do that those of us who work hard can subsidise your pension? This is why our Welfare bill is crippling us. Have some pride, keep working and try and increase your bank account.

You’re correct. It’s a thing - as it should be.

Your post is very black and white between two options, but surely there are other choices which would also improve your quality of life after 67 a lot.

For example, if you took your annuity from 65 or 67 instead of 60, it would be higher. And if you continued doing some work between 60 and 67 it would be higher still as you would continue contributing.

Why not do some work, pay your rent from income and gradually buy the car and white goods over the next couple of years. Working wouldn’t need to stop you having 3 months away in winter if that’s your dream and you choose the job carefully.

If you’re renting are you somewhere reasonably small? Or will you need to move?

Three years of winter sun ie a little apartment in the Canaries Jan-March plus spends = £8k x 3

I would check your lease agreement, most HA have a clause that your tenancy can’t be vacant for more than 28 days.

Yes you enjoy your holidays - the rest of us will cover your rent and council tax for you….

Hate the game, not the player. I dont know what the answer is but clearly the system isn't working if people can do this.

Having said that I dont blame OP or begrudge her some winter sun.

I don’t think it’s confusing. It’s clearly a pension - she said her employer has contributed.

She’s using life savings in terms of “this is the sum of all the money I’ve saved in my life - there’s nothing else”

By that token anyone who has spent money on anything “frivolous” in their working life should be lambasted. They’d all have more for rent, council tax, wouldn’t need a state pension, would have more to pay for their care home/carers in later life.

Yep. And yet she'd rather run down a real asset because - what? She thinks she worked harder than other people and it's not fair? Or she sees the chance to be a bit grabby and have it twice? It's all so juvenile.