AIBU to wonder why a pensioner struggling financially would not use housing equity?

[Powerbungalow]

I'm not being unsympathetic

Theres a lady on the news at the moment, saying how times are tough and shes only cooking one meal a week - imagine she's eating cold food.

One thing that stood out though "I own my own house and it costs in maintenance" Depending on where she is, would you not get a life time mortgage or sell and rent? She has a big asset, why not use it to have a better life? I know I would.

She may be holding on to it for inheritance, but she didn't say - if so, then can her family help. It just seems totally crazy

None of which are means tested benefits. They’re disability benefits.

Anyone can cover the essentials when they're living in a paid for house of appropriate size for 1/2 people ie up to 2 bed.

Live in a larger house, or want a good amount of extra lifestyle and you probably can't, but if you want that, you pay for it yourself.

On NI contributions in relation to state pension, these used to be included when receiving CB until DC left education. Have a few well spaced children, as many of these 'poor widows' did in the 1960/1970/1980s and they could easily have 25 or more years NI contributions right there.

Add in a bit of work pre DC and you don't need much more after the youngest child leaves school to get a full state pension. My own 73 YO DM is a case in point as are lots of her friends/my friends DMs. She worked from age 16 to 19. Then didn't work until her early 40s. After which she did a bit of PT work for about 15 years until DF retired when she was in her mid 50s. She has a full state pension, no employers pension but she also has a small widow's pension as DF is deceased. I'd estimate her income is £1500 pm max and she has plenty of money. She still lives in the (owned outright) family home and is always having work done on the house or new furnishings, puts the heating on when she wants, shops at Ocado or M&S, has pets, goes on days out/weekend breaks/UK holidays, treats grandchildren. She doesn't have expensive hobbies or go abroad or run a car (but lives on a good bus routes and uses taxis at least a couple of times a month) but she has a good lifestyle given that her income is barely more than the minimum and she won't have paid income tax since she was a teenager.

Sorry, plus you won’t get both. AA replaces PIP when you’re older.

Yep.
Worked in welfare benefits and had a number of clients who opted for equity release, not realising they would lose their pension credit. Devastating.
That's before you even get started on the con that most equity release schemes are.

We must be shit with money then. We get 3k between us - we both retired at 60 but won’t get state pensions for 4 years for DH and 5 for me and we dip into our savings and interest to pay big bills annually. So we will have 5k when we get our state pensions.

I honestly couldn’t do 1k!

No they can't take your home.

I still maintain that in some circumstances, it's the least worst option. Don't do it too young, don't take a large percentage of your home's value and consider downsizing or taking in a lodger first. Also make sure you apply for pension credit first if you're entitled to it - it's very underclaimed, it's an entitlement for many that should be used if it's available.

But in the absence of all those, if you're a few hundred a month short for your needs/wants and you're in a valuable property, it's a good way to make life more comfortable and enjoyable.

And if it works out expensive, so what. A lot of people who could do equity release have hundreds of thousands of unearned equity due to lucky timing. Why not use some of it, even if it reduces the amount they leave to descendants.

Actually one of our clients was about to get kicked out of their home due to a clause in the equity release contract. We advised them to get legal advice and have no idea how it ended but it was a hugely stressful situation.

@suki1964 only younger pensioners who reached state pension age in 2016 or later get that amount. The basic state pension for older pensioners is about £185 per week, under £10k a year. And for many older women, who had children before Home Responsibilities NI credits began in the late 1970s, or who paid a reduced rate of NI contributions due to low pay, it’s even less. My state pension is around £5k a year. Luckily later in life I was able to contribute to an occupational pension. Of course, if I hadn’t, we’d get Pension Credit.

https://www.gov.uk/state-pension/how-much-you-get

Presumably its 2k for 2 people though? Its onky 1k for 1.

i would think that very tight but easier in a small property with council tax discount for 1. I dont think there'd be much going out for dinner or holidays.

But you were able to retire at 60. How many current 25 year olds will be able to even dream of retiring at 60? I find it a bit much that you’re complaining about how “little” you get in a pension when you have retired over half a decade before the state pension age. It’s like when my mum complains about how small her two houses are. She also retired at 60.

No you don’t have any empathy. I recognise your username. You are always on these threads about pensions going on and on about how “little” you have. You always focus the conversation on yourself, never on how other generations will manage in the future (or indeed on how other generations managed in the past). It’s always about you. You’ve done the same on this thread, and I’m sure you’ll do the same on the next one.

I’m not complaining. We have good pensions, no mortgage or debts. Savings. My son plans on doing the same. He’s 30.

What I said was that I couldn’t live on £1k a month.

I’ve never complained about how little I have, for the simple reason I have plenty of money.

I have said I couldn’t live on 1k a month.

I have adult children you know. They probably won’t get a state pension. Which is why they both have private ones - like we did.

Where is the 'con' in equity release? Having helped some friends to sort it out - the agreement is transparent, with multiple demonstrations of how the compound interest will work over the years. In the right circumstances it can be a sensible way for older people to use the property they are in to gain some security in the future. That could be paying off an existing mortgage, releasing a lump sum, or obtaining a monthly income boost. It could literally keep a roof over their head. Legally, the amount owed at the end of the contract (when the home owners die or want to sell the property) cannot exceed the value of the house. So no families left with an additional balance owed after the property is sold. No debt created to reduce the rest of the estate.
Equity release is going to mean that the family will inherit less when their parents die, but is that a con? I see it as one way that the people who paid for the home they live in can benefit from their investment in old age.

Yes - do the right thing and let the equity release scheme operator profit from you, instead. 😂
And, of course, you can’t lose your home, even if you go into negative equity - unless they claim you have breached any of their terms and conditions, in which case you can be chucked out. What could possibly go wrong with the combination of an elderly person and a long term finance agreement?

All you do on these threads is talk about yourself. You’re still doing it now. I don’t care if you’re a millionaire or living hand to mouth, it doesn’t change the point of this discussion, which is that currently in this country, different generations are given vastly different levels of support. Which is unfair, unsustainable and, from a fiscal point of view, incredibly shortsighted.

Whereas I have just under 1 5k a month myself and can pay my bills and go travelling each year

It sounds like she didn’t tell her children because she knew they’d try to talk her out of spending her own money as she wished. Good for her. If more pensioners used their own money to support themselves rather than relying on the state for everything we’d all be in a much better position.

I do think a government scheme of equity release would be a great option
the current schemes are total scams

they could pay for care have a better standard of living which in turn would improve there health
Then on death the local authorities given the option to buy the remaining share and turn it into social housing

Thats significantly more as a percentage though? Its nearly half as much again. When you say go travelling do you spend all of that almost 500 a month on travelling or is some of it spent on day to day too. Small amounts make a big difference when your income is low. Like if your boiler breaks do you forgo travelling that year or does that come out the 1k.

Im not saying its impossible as clearly many people do it, but i dont imagine there's much wriggle room things go wrong or need replacing.

Not really when you think that the £1.5k needs to support an entire household. That PP will have to pay for all bills etc. on her own, whereas a combined income of £2k at least splits the bills. Living alone is always more expensive.

It is infuriating that the elderly have the gall to complain about their situations that they have had an entire lifetime to prepare for, and they expect to be handed everything on a platter.
Yet if a young person dares mention things are tough it's "in my day" "stop buying posh coffee" "avocado toast" blah blah

My grandparents are in their 80s Grandad has had a stroke and they are absolutely slowing down now but their attitude towards the winter fuel payment was disgusting. We all knew for a fact they just spent it on Christmas presents. Lovely yes but not an essential.

They are not "wealthy" pensioners, they still manage holidays, cruises, meals out regularly.

Grandma was a part time dinner lady who stopped working before I was born (over 35 years ago) and grandad was a bus driver who retired at 60ish. They don't struggle at all but they still expect more more more and begrudge any help given to working age people.

Child benefit (and historically family allowance) has been available in some format since 1945 it was originally 5 shillings which was 12% of average working class weekly income. Child benefit today is less than 4% of the household income for a family in an equivalent financial situation.

The elderly who say they had no help "back in the day" are just liars.

Not to mention the old Child Tax allowance that was also available from the 1900s to the 70s - worth 6.6 shillings on an average wage, over doubling the family allowance so around a 30% income support package for parents.

Yes I agree that single living is more expensive so perhaps maybe most of that 50% is accounted for in that i hadn't factored that in fully. But that makes it all the more surprising that none of the extra 500 is spent on day to day living. Not less?

My mum lives alone in a retirement flat. The type everyone suggests down sizing too.

Its £300 month service charge and £124 a month council tax after her discount. £424 before she's eaten or used electric and water. When her immersion heater broke it cost a lot to have someone fix it, and the same when her toilet broke. I think its easy to say I could live of 1000 a month, but people often think there's zero housing costs and you only need food. Its clearly doable, as people do it all the time. But maybe they are the people that the government says are in poverty?

OH and the Family Income Supplement that was available from 1970 to 1986 to those earning under the threshold of £90pw (bearing in mind the average women's weekly wage was £65ish in the 1980s) of £23pw +£2 for additional children.