At what point is it sensible to spend minimal savings and be on benefits

[backatchababy]

So my MIL is struggling on a small pension barely leaving her with enough to live on. She has £30k in savings which gives her a £75pm top-up which definitely helps but is preventing her from accessing any sort of pension credit. She hasn’t had a holiday in decades and I’m thinking she might be better off spending her money for the next couple of years whilst she’s still fit & well ish then claiming benefits. Turn2Us suggests she would be entitled to £1,400 extra (pension credit, council tax and something towards her rent) if she didn’t have so much in savings which would be life changing for her.
I’m aware of deprivation of assets so she’d need to be sensible and careful but surely spending some money on some new furniture, a holiday and small gifts for a few years is acceptable? Anyone know about this or where she could get reliable advice as to whether this is indeed a sensible route to go down or too risky. We couldn’t care less if she has no money to pass on to DH or his siblings (although they may feel differently)

Why doesn't she just use her savings to "top-up" her pension and do the things she wants to do rather than deliberately plan to run them down in some short time frame (and of course spending the money in this way will run them down anyway, just less quickly)? After all, that's the reason she's not getting benefits - because she doesn't need them.

I don't think she should deliberately spend her savings to get below the threshold but going on holiday, household repairs and using it to top up her monthly spends by more that £75 are all perfectly normal ways to spend savings and won't risk being viewed as deprivation of assets.

Ok that makes sense. We just hadn’t realised quite how little she was managing on and has this money invested only giving a small income as she was worried about paying her bills once it has all gone. It sounds like some modest spending and increasing g her monthly allowance is the way forwards. She’s not a spender so if she managed to spend the full £30k in her lifetime is doubtful but sitting on it just seems pointless when there is help out there if/when it runs out.

She might as well enjoy herself with it and get house repairs etc to future proof the house as if she needs to go into a home that will be gone in 20 weeks of care.

It would be deprivation of assets.

It would be unfair to expect other people to pay for her when she has the ability to pay for herself.

If she's struggling on a small pension plus £75 from savings then is she living somewhere that is too large for her?

She doesn't need new furniture - why would she?

Holidays are luxuries that many cannot afford.

What you could do to help her is make sure she is living somewhere she can manage physically and financially.

She doesn't need new furniture - why would she?

She might need things like a higher bed or rise and recline chair; her old furniture may be broken or uncomfortable. Plenty of reasons why someone might need new furniture.

She's perfectly entitled to spend her own money enjoying life. Be it on holidays, meals out, new clothes, furniture, whatever. Why the hell not!

It must be really difficult as a pensioner to spend your savings. It’s literally what they’re for, but when ? It’s so hard.

dont spunk her £30k, but do dip in to it without guilt whenever she needs it over the next decade. It’s what it’s for!

It sounds like mil is living on the poverty line… I’m a tax payer and quite frankly I’d tell her to live her life, go on the holidays and enjoy the time she has left. She doesn’t have to blow it all On a 5 star trip to New York, but going for a lunch, putting the heating on and a week in Tenerife isn’t extreme… life is short and joy is precious

It definitely isn’t deprivation of assets to go on a holiday, buy replacement furniture etc.
She can also give small cash gifts away.

I would encourage her to future-proof the house as a pp suggested. So - what about a decent downstairs bathroom? Some ramps or dropping thresholds to allow flat access to all parts of ground floor and outside? A rise and recline chair (they are a couple of thousand). Getting hand rails fitted. There are probably also other things. Ooh, an expensive toilet with a higher seat and an integrated bidet function!

That would all be considered perfectly reasonable spending - and in fact is really sensible, as it may enable her to stay independent / in her own home for longer. So it is a win-win situation.

Yes most people would want to keep a bit of an emergency fund in case the boiler breaks or whatever but then again if she gets onto Pension credit she's likely get a new boiler free! The problem with these means tested benefits is if she starts getting Pension credit and all council tax paid for her etc the money can start to creep up again and she needs to be mindful of updating DWP when savings increase past 10k again.

What are savings for except for spending when you need money.
She could take say an extra couple of hundred pounds a month out of her savings to add to her pension.
My 92 year old MIL constantly talks about her rainy day savings. As I tell her, this is the fucking rainy day!

That is all sensible re: future proofing, but she's renting.

Absolutely she could spend the money and she’s still allowed £16k savings and £2k in current account. She can also gift money each year to family members. Take a look at age concern too as they assist with pension credit, attendance allowance etc. She may then be able to claim housing benefit and she should already be claiming single person occupancy.

How old is she? And what is her current health like? Is there any reason to believe that she might need care in the foreseeable future?

I am not going to get into complicated interest calculations, but on a simple level, if she takes £200 month extra to live on (£2400/year) it will still last at least 12 years. Spending a sensible amount each year on life, including holidays is what it is there for and would not be deprivation of assets. Getting rid of it quickly and in an uncharacteristic pattern could be construed to be.

It is the first 10k that is disregarded for Pension credit.

Thanks again for the advice. MIL is 81 and in pretty decent health so potentially/hopefully has a good few years left in her yet. She was widowed 2 years ago and just starting to find herself. FiL was a right miser so she’s only really coming round to the idea of treating herself a bit and we think a holiday would do her the world of good in terms of confidence plus a chance to see beyond her very small world - she’s never been abroad as FiL wouldn’t travel but she’s always talked about her dream of going to see the Italian lakes. Furniture needs are just a lower bed & new sofa and a reclining chair so hardly extravagant. She is absolutely not living beyond her means in a 1 bed flat in a pretty basic council owned 55+ development. She rents so no chance to downsize or free up any equity.

we are going to sit down and look at her finances over the weekend but I think booking a not lavish holiday, sorting her furniture needs and increasing her monthly allowance would go a long way to making her life significantly more comfortable & enjoyable. And if she lives for 10+ years and runs out of money, she can then rely on state help as she couldn’t afford private care for more than a couple of weeks now anyway.

I will look up the savings amounts As I thought it was £16,000 + £2k in current account but £10k is a long way off being spent so probably a non issue.

Just wanted to point out that she doesn't have to wait for savings to drop to 10k before she can claim Pension credit. many people are still eligible for pension credit with savings over 10k but there is a deduction on the weekly amount they receive when they have savings above 10k. Pension credit entitlement will depend on savings and weekly amounts from state pension and any private pensions. She may be The threshold is usually 16k for things like housing benefit so when savings drop below that she may be eligible for help towards rent and council tax at that point. Best thing is to just keep doing regular benefit calculations as her savings drop. Age Uk calculator is pretty accurate.

I’m all for personal financial responsibility and not leaning on the state unless you have to, but bloody hell, a pensioner should be able to take some savings and go on holiday. It’s not deprivation of assets ffs. I’d keep some for emergency house repairs etc and have the rest as a Happy Fund for holidays, flowers and chocolate. Life’s too short for sackcloth and ashes.

Is she paying rent at the moment? If her income is low enough to qualify for pension credit she will also be eligible for housing benefit, so she’ll be significantly better off.

Yes she needs to spend her savings on maintaining a decent standard of living, then claim benefits when she’s below £8k.

I would also look into whether she is eligible for attendance allowance. My mum was convinced she was far too healthy, but once we actually looked into the eligibility, it was very clear that she was entitled to the lower rate. She is same age as your mum.

Op has said her mum is in pretty decent health ! To claim AA you need to have difficulties with personal care several times a day or night or both. You need medical evidence of problems to claim.

It does not harm for her to investigate it. I did not have to provide any medical evidence for my mum.

Well they will likely have checked for medical conditions with her GP.