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)

I would call replacing furniture when needed and having an occasional holiday part of normal spending habits and not deprivation of assets. I would constantly see DOA if she gave it away, or gambled it or something. But can she not do both? Have a holiday, replace what she needs and also use it to top up her pension.

Do you all think the country has money to burn?

Encouraging people to spend money to gain more from the public purse, to claim attendance allowance when they have no need.

There is no money to waste. There is growing need.

People seem to have no understanding of the economic forecast for the UK - we urgently need to cut public welfare spending, not increase it so people can buy new furniture and go on holiday.

We’re talking about someone in their last years spending maybe £15k. I think you need to take aim at all the people falsely and/or tenuously claiming working age benefits, tax avoiders and evaders, people using loopholes to legally hide their money. Not someone having a small bit of enjoyment in their twilight.

What about her buying an annuity, she could get 6%+ on one at her age, so £1800 a year guaranteed income for life.

The first thing I'd worry about is that she might need private health. She has no idea what might happen healthwise. And with the NHS in the state it's in, that does seem to me to be a possibility - that she may want or need something and private is her best option.

If you said she was 90 I might feel differently.

This.

@SockFluffInTheBath No one knows if she's 'in her last years'

People are living well into their 90s and beyond which is costing us all an absolute fortune - far far beyond what anyone paid in.

You or I might be in our last years - no one is telling us to enjoy ourselves on the public dime. It's just work more, work harder, work longer to pay for everyone else.

No one should be spending beyond what they need so that they can gain more from public funds - no one.

She should book the Italian trip asap and bloody well enjoy it.

Just to add if you get pension credit you will be entitled to housing benefit and council tax reduction even if your savings are over £16000

OK.

I hope you also agree that nobody receiving child benefit should be going on holiday. And heaven forbid that anyone on disability benefits may need to buy some furniture that meets their needs.

An 81 year old spending some of her savings is not even on the radar of “things the country can’t afford”. She’s hardly looking at a gold throne and trip to Vegas to blow it all…

I was just going to say this.

What’s her housing situation? My DF is in social housing for over 55’s and he’s allowed to have up to 16k savings and get housing benefit. Is she private renting?

I would just advise her to top up her income from her savings and do what she wants to do then assess the situation when her savings go below £16k.

I'm normally on your side of debate but an 81 year old who needs some furniture..she has been prudent but may need some state help as she gets older. The state can afford this. It can't afford paying for those who could work but choose not to. Let's get the balance right.

Spending money on living is not deprivation of assets.

Sorry OP, didn’t see your last post about her already being in a council flat. As I said, my dF pays about half normal rent due to having less than 16k in savings.

I'd encourage her to buy the furniture and have the holiday too. I'd say different if she was planning to blow the lot on a round the world
cruise but a short holiday and some new furniture are the sort of things she's saved for. She may never need benefits but it is a good idea to look into the different requirements and thresholds.

She needs to draw enough from her savings to live comfortably each month, buy the furniture that she needs. She should go on holiday while still able to.

Then that way, her savings will drop organically, and when she reaches a level that she can get more help, it will happen naturally.

Why does she have so little coming in?
Did she and her husband work? Did they pay into pensions? Most people of that age had pensions that paid to their spouses in the event of death.

Yes both worked but low income jobs & then FIL had an accident in his late 50’s which curtailed income & meant what little savings they had soon got eaten up. Neither paid any extra into pensions because they could barely afford day to day living and they weren’t financially savvy so it just wasn’t on their radar. FIL’s very modest work pension has indeed transferred to mil and this is her small top-up. A state pension doesn’t go very far when you have bills including £500 a month in rent.

Unless you worked for the public sector or a forward thinking employer many of that age group don't have much pension. Compulsory pensions are relatively recent.

Turn to u isn’t always correct.
How much is her current pension and rent?

Yes, I know but SERPs was introduced in 1978, which was compulsory for anyone not paying into an occupational pension. I guess MIL wasn’t paying much into SERPs if she wasn’t earning much.

MIL should definitely use savings to top up her income and make day to day life more comfortable - including buying furniture and other home comforts. She can afford day to day luxuries that improve her life in the present to the end of her life. Supermarket delivery, finest microwave meals, TV subscriptions, taxis into town plus a nice meal when there, books, cinema, theatre, meeting up with friends etc. She also needs to check her existing entitlement to benefits.

But expecting an octogenarian to holiday abroad alone to reduce savings is a step too far. It’s not in her best interests.

The main thing is that MIL has sufficient money to live the rest of her life in comfort with whatever state benefit she is entitled to.

Being reduced to saving levels required for current state benefit is a scary place to be when state benefits are not guaranteed.

Why is it fair, then, that someone with savings is worse off than someone without? because of the benefits etc?

I don't blame OP for advising her MIL, to spend her money and enjoy it while she can.

This is the system we are in, OP, MIL would be silly not to play along with it.

Also, holidays, small gifts, and buying essential items are unlikely to be classed as a DOA.

I also have an elderly family member like this.

She needs a new kitchen, it hasn't been replaced since the 1990s. Her roof is leaking. Her boiler is ancient. Her car is no longer drivable because she "couldn't afford repairs".

She inherited a small pot from her father, so isn't currently eligible for benefits, but she is too afraid to spend it in case it is considered deprivation of assets.

She is living a lonely isolated life in poverty and squalor with ££ savings in the bank 🤦