What do other people do?

[DamnitImTired]

Can someone perhaps give me a few pointers in the right direction, some ideas I can pursue perhaps.

My parents are in the UK (I am not) and on the verge of retiring. My dad has worked for 21 years and has ‘added’ to his state pension. He has managed to pay off his house (value approx R300k).

My dad is adamant he cannot afford to retire and I can’t advise him without knowing much about the UK myself.

I obviously don’t have all the details and I’m struggling to have a conversation without knowing the details. But I thought maybe I could look at what other people do in his situation? Should he sell his house? Would he be able to invest the funds somewhere that give you enough return to live on? What do people do?

How old is your dad? 21 years doesn't seem like a lot. I'm 44 and this is how long I've been working - I fully expect to work another 21 years! I don't think you can 'add' to a state pension so I assume he means he's been investing in a private pension as well. But unless he's been investing a huge % of his salary over the last 21 years, I'm not surprised he can't afford to retire. Selling the house wouldn't be sensible - where would he live?

Do you know what his outgoings are?

Sorry I should have said. He moved to the UK when he was 46 so is now 67. His health hasn’t been so good and his career is coming to an end as a result.
He moved to the UK with nothing.

Has your DM been paying NI?

most people keep the house (move to a smaller one if needed) and then live off the state pension + any other pension they might have. If the house is paid off then living expenses should be a lot less, so even a small pension should cover it.

if he needs more funds, the best option is probably to downsize, i.e. sell £300K house and buy a smaller £200K house. that gives him £100K to either buy an annuity or to put in a savings account and draw down as needed.

he should NOT sell the house and rent because rent is generally much more expensive and you are just throwing money away each month.

here is some advice on how a £100K pension could be invested
www.unbiased.co.uk/news/financial-adviser/pension-income-from-100k-pot

I suspect he has just paid his National Insurance for the years employed (21 years) so will not qualify for a full state pension.

Tell him to get a state pension forecast :

www.gov.uk/check-state-pension

Even if he does not get a full state pension this is not the end of the world. I know an elderly person who does not get a state pension, so gets Pension Credit instead which pretty much adds up to the same amount.

And if he has a house worth £300k he could also consider moving to a cheaper area of the country to downsize.

It depends on lots of variables and what their priorities are? Lifestyle or being able to give up work.

Does your DM work, how old is she, what's her pension entitlement?

If they're above state retirement age and only have the basic pension, they might be entitled to pension credit, or extra benefits if health is sufficiently poor.
They should first check their pension entitlement, then do a benefit check.

What are their basic costs - council tax, heating, food, transport etc? What are their lifestyle expectations? If they get a full state pension, or somewhere near, then their income will more than cover bills, food and a little leisure spending. However, if their house is large/expensive to heat/maintain, or they want to run nice cars, travel etc, then their income may not cover their desired standard of living.

Is there scope to move/downsize to free up money and also reduce their living costs if they move somewhere smaller/better insulated, with good public transport links so they could live without a car?

In the past married couples could claim a state pension based on one person paying in, usually the man, but that changed so both the husband and wife (or both partners in a couple) must have made their own contributions to claim a state pension in their own right. There are other means tested top ups available and other universal benefits such as free bus passes and free prescriptions. How old is your mum and does she work?