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?

Well quite. Even more reason to do what she suggests. She shouldn't be worse off for having saved the small amount she's managed.
People are acting like she's a wealthy person taking advantage of the system when in reality there's not a lot to distinguish OP from those that would be considered legitimately in need of those benefits, just a car and a couple of holidays. Only difference is others would have spent on those things earlier in their lives to end up with no savings.

Has anyone mentioned UFPLS or Flexi Access drawdown? Or are all labouring under the illusion of her having to purchase a lifetime annuity?

You might be happy to fund this behaviour. I'm not.

I totally agree with you, I've never claimed a bean myself, nor have my parents and siblings, when homeless I had to make my own luck, didn't even consider benefits.

HOWEVER as benefits exceeds income tax nowadays and people just rock up to this country and after saying they are gay or whatever get free housing, benefits, ultimately pension credits etc then why not milk the system too? Why be the only mug left paying in?

She's not questioning whether or not she should pay in, she's clearly worked and paid in - hence the pension she's accrued.

No, people like the OP who have worked all their lives and managed to scraper together a small pension pot are absolutely not the cause of the country's problems, don't be so ridiculous.

Over 50% of all council tax plus the billions councils get from central government is spent on care for pensioners and pensions for council workers.
Pensions are the biggest proportion of welfare payments.
Billions given to people who can’t afford the 5 kids they have chosen to have.
Billions given to immigrants in housing/healthcare/universal credit.

We cannot afford to carry on like this.
Billions spent on keeping people alive who have little to no quality of life -yet parents have to fight like hell to get a £5k annual ECHP for SEN kinds -an investment that could help them become self sufficient tax payers.
Underspending for decades on defence has left us so very vulnerable.
Overspending on the NHS which gives worse outcomes than countries which spend much less per capita.
A billion bloody pot holes.

Then we have people like the OP who think it’s ok to spend £8k on a 3 month holiday for 3 years so the rest of us can pay her rent for however long she lives, then presumably ££££ every month on a care home.

I despair . I really do.
We are fucked, utterly fucked.

No but bonus points to @Zebedee999 for shoehorning gay asylum seekers into a conversation about a british woman who has worked here all her life.

You do understand that she likely won't be able to afford to pay her rent for the rest of her life anyway do you? This equates to 500/month if she only lives 14 years past retirement. Average life expectancy for a woman in the UK suggests she'd live longer than that anyway.

Then she uses HER money to pay her rent and other essential living costs until she is legitimately entitled to claim benefits. What is so hard to understand about that?

Of course but people can be annoyed about several things.

If you start a thread about corporate tax etc I will post there too.

Exactly. Seems like those us of who sacrificed holidays, days out, meals out so we can put money into a pension should be happy to fund those who didn’t want to do this.

@MyLuckyHelper yes but she should still contribute what she has then claim the top up pension. Not fritter it away to claim from the get go. Us that do own houses are likely going to have to give them to the state eventually when we need care. Everyone should contribute, otherwise we could sell our houses, travel the world, spunk our money then come back for state help.

The risk in doing this is that a future government decides that they're not going to continue to pay housing benefit at the level they do currently. It seems unlikely now, but who knows?

You'd be more than welcome to sell your house and travel the world wouldn't you? It's yours to do as you wish with.

She probably should contribute what she has morally yes. But in a world where you need to keep a roof over your head and have no assets to sell, you can only look after yourself.

If the the disparity between renters and homeowners was addressed, we might not have these loopholes to consider.

Don't be so ridiculously dramatic. When she is no longer able to pay her rent, she will rightfully be given help. She isn't going to be dumped into the gutter to starve.

I'm not being dramatic. People are saying she shouldn't use her pension for anything but rent. And that's ridiculous.

I have state pension plus a tiny DC pension and can't afford to do any of this,

Having kept myself short for years paying off a mortgage to keep a roof over my Dc head, and mine into retirement. Alongside paying tax and NI to support this sort of shenanigans. Basically you want to drip feed money to your DGC while my DC pays taxes and NI to support it?

Work for a few more years, building up your pension and savings. look at downsizing your HA home?

I do appreciate it is tough for people in the grey area being between OK and needing support but really.....

No it isn't. It's called life. Where do you draw the line? Suppose she owned her own home. Would it then be 'ridiculous' to say she should use her pension to pay council tax or utilities? To buy food? Your argument suggests you equate a pension with fun money. It's a nice idea and if that's what people want and can afford to provide for themselves, then they can crack on. They don't have a right to expect it as a state subsidy.

This is the problem with our country, too many people looking to fleece the tax payer

Indeed!

Presumably you know renters pay council tax and utilities too?

It's nothing to do with 'fun money'. It's to exist on at a point in your life where you can't work anymore. A renter will have to save over and above what a homeowner would, in order to just have a roof over their head. That's the point I've tried to make quite a few times.

No, they're saying that she should use it to fund her living costs, like everyone else has to. Those could be quite nice living costs and include lots of things other than rent. The issue is deliberately spunking the money up the wall in order to play the system.

Even leaving the morality of it aside, I would not want to be 67 with zero assets- no pension, no house- living in a country with very wobbly finances and the likelihood of a fairly radical change in government. Keeping the money and spending it sensibly on her costs while she can gives her a lot more security.

As a renter, I'm well aware of that. As retired renters, DH and I accept that we have bills to pay. Does that restrict our spending on other things? Yes, it does. I could sit down tomorrow and fill in a claim for Attendance Allowance for DH, and believe me, I could exaggerate his needs to the point that it would be awarded. I could then do the same so that I could claim Carer's Allowance. It would give us a decent increase in income and thanks to those nice taxpayers subsidising our essential costs, we could spend a good bit more on luxuries. But as I'm not a lying, cheating, entitled, self-centred kind of person I'm not going to do it. And I don't have time for anyone who does, or anyone who thinks it's ok.

Oh seems an odd thing to pick out then if you know both have those bills to pay, as it wasn't unique to one group or the other.

If he's entitled to it, claim it. It's not moral superiority to claim help that's needed. You wouldn't have to be a lying, cheating, self-entitled person to do that?

As I've already said (more times than I can keep up with now), I'm not talking about luxuries.