Property or cash?

[BeAzureAnt]

Hi all. Seeking some advice here. We have a paid off house worth ca 400K and about 625K in the bank (NS&I direct saver), and 225K in private pensions. We'll also get UK state pensions and I'll get another 14K a year in workplace pensions. Husband is 60, I am 59. He plans to work another 3-4 years at 45K a year, and I am retired. No debts, no children/relatives to leave bequests to, and our estate will be left to charity. We live on about 25K a year for the two of us. We live off interest, some of DH's salary and bank the rest.

The house we are in is nice...we did it up and it suits us all right, but we saw a much nicer house for sale that would cost 675K...basically our savings and little more. It is slightly bigger but has a much larger garden and in a better area, and the house itself is so much nicer in terms of decor, layout and features.

I'm wondering if it would be better to buy the nicer house, or just stay put so we have enough for private care later and be grateful for what we have. I really like the house, but am getting cold feet about the loss of our savings. We are not great travellers, nor go on cruises, nor have fancy cars or expensive hobbies. Husband would like to buy a used electric car in the next couple years, as his car is about 10 years old. Thanks for any thoughts.

Sounds nice! My mum in law lived in the market town in question….right in the old centre. Nice place, but a lot of traffic through the town…there are newer builds more on the outskirts, but new houses aren’t my preference.

We have more established residential roads with a few Edwardian houses and very nice 1930s ones. Not much traffic on them as they don’t go anywhere!

This is a hard decision. My mum moved quite a lot in retirement. She mostly regretted not putting more into a home rather than have savings. She is now in care and it was really helpful that her previous move had left her with enough cash to meet her care home costs initially as it took some time to sell. However at the time she felt she would rather have spent more and gained a spare bedroom.

Each of her moves cost a fair amount. I am not sure whether she will have enough left to cover her costs for life so we are going to help her look at a care annuity and pay a big lump sum but have a guarantee that her care costs are covered for life.

On the figures you have given you should be OK either way, but you may need to factor in several moves to make each one right for each stage of your retirement.

Thanks for this. I figure we can configure the next house for retirement as it has a ground floor room that could be a bedroom and a large loo that could fit a shower. I'm figuring from 60-75 or so we won't need to change anything, 75-85 we could live there with some carers if need be, and release equity in the house as we don't have anyone we are leaving anything to (other than charity if we die early). Both my parents lived till 80. DH's mum was 91, his dad was 70, so if we go by the average, we'll both pop our clogs when we are 80 or so. DH could be an outlier and live to 90 or so like his mum, but I'll be long dead I expect by then.

I think when I put it in that perspective, and realise I have a bit over 20 years left, then maybe I'd better do something I'd like. Shrouds don't have pockets.

@BeAzureAnt Why would you, in effect, take out a mortgage? Equity release has to be paid for! Somehow. It’s a debt. It piles up a huge amount of interest. We don’t plan to keep moving and we are retired! Who wants the bother? You do have enough savings and I’d enjoy a bit of life!

I'm retired and would say enjoy your money by buying the house you like. I've continued to live in the family home, which is a 5 bedoom bungalow but not near any bus route. I know that once I cease driving I will have to move into a place within walking distance of shops, doctor etc but in the meantime, I have a cleaner and gardener and have done quite a bit of maintenance/updating work that I hope will cover the next ten years. I'm in my 70's, and comfortably off.

Based on averages, you ve both around 10 or 15 years of healthy life left, you have no children either.

I'd be doing what makes you happy/want to do, because a stroke or similar will alter everything.

Too many people in their 60s worry about money, without realising how little time they actually do have left.

Thanks for this. By the time we sell our present house after moving into this place, we will still have 200K in savings plus our private pensions to live on for retirement. That doesn’t count our workplace pensions or state pensions which is additional income. DH is also working for a few more years because he likes his job. That seems enough to pay for our expenses, which are 25K a year, and later any care we might need. If we later both have extensive care needs that require more than that, then we’d do equity release in the house to pay for it. Or we could sell the place if equity release is too expensive.

The new house is 10 minutes from here, and, well, we like it. It might be a hassle moving, but, well, oftentimes good things are.

That is a good perspective and thank you for it. I had friends who when they were 55 moved into a complex for OAPs. They had a lovely home, but they sold it for a small flat and guaranteed care for life (this is in the States). They travelled quite a lot and now are in their mid 70s, and admitted to me that while the flat was fine when they were away as a place to come back to, it feels a little cramped now. Of course, now they are seeing their friends they made there pass away. I guess I am hoping to not to recreate their experience.

Yes, that is what I am thinking. At some point your time is more valuable. I saved my whole life. It would be nice to do something for the sake of happiness for once, not just out of prudence. Thank you.

Based on the fact that what seems to bring you joy at this stage of your life are home and garden based and you don’t spend a huge amount annually I would absolutely “treat myself” to a house I loved. I often wonder what people are saving for, particularly without children or others to leave their money to ( we are in the same position by the way) once they get to our age.
For us our pensions /savings are there to make our retirement happy, in whichever way suits. It may be travel, it may be a lovely house.
it is your money, there are no pockets in shrouds, please give yourself permission to spend it.

Yes, I love to garden and have a nice home. So does DH. It just makes us happy, so we will go for happiness. Thanks for your comment.

@BeAzureAnt You cannot get equity release for care fees I believe. If you have equity release and move into a care home, they sell the property. It’s not a great idea to do equity release.

Thanks for this. If it got to carehome time, we'd probably sell the house anyway.

My experience of this sort of thing was with my MIL...we had her stay at home with live in carers. She passed away before things went any further than that. She lost her short term memory in the last year or two and need people to remind her to take medication, etc. Our plan was to sell her house if she needed care, but it didn't come to that.

Consider location - can you access essential day to day living without a car? The actual house, can it be adapted for flat access and one storey living?

You could be lucky, never need any help until you check yourselves into a lovely home for the last couple of years of your life but that isn't everyone's experience.

We have bought a home in a lovely location, it is flat with easy access to full sized supermarkets, pubs and restaurants, drs surgery, a few other shops and 3 mins from the bus stop to the city - basically my thinking was if one or both of us can't drive we will be fine, also being flat it's fine for a mobility scooter. I'm younger than you but through work I've seen so many people not future plan.

Thanks for this. Yes, it can be adapted for living on the ground floor. it is a mile to a bus stop and a mobility scooter would be fine.
I'm glad you found a solution that suits you so well. Sounds really lovely.

BeAzureAnt is 59, very similar to me. I expect to move house at least once more, it could be twice. I am definitely not worrying about whether my current house will work for a mobility scooter. Or about care needs. Without a private pension she would be in the workforce for another 8 years. She isn’t old.

I'd be surprised if you weren't in a position for your husband to be able to afford to retire now. An IFA would likely beat NS&I in terms of a safe income stream from your savings.

How future-proof is your current property and the one you're looking at? Investing in solar panels and a battery system, etc. would help with the future EV purchase, and could largely insulate you from future energy prices.

I think you should do it! It doesn’t sound like you have many luxuries, and this is something you want! You can afford it, you only live once, and you don’t have kids / feed your soul!

Thanks for this. Our current house has solar and battery back up. the next one we are putting panels on an outbuilding, same set up. Later a ground source heat pump. Soft energy is DH's line of business.

He could retire now. He loves his job!

Thank you. I was coming to the same conclusion. It is fine to be prudent, but deferring gratification too long is no good.

Thank you. My MIL didn't need carers till she was 91 and was in her own house. I mean, yes, you have to plan, but I'm not quite ready for the zimmer frame yet.

@BeAzureAnt Nice to meet another solar/battery set up owner! We have air source heat pumps. Decided not to completely uproot the garden for ground source. This will cost you some money! Even do, you will have half your savings left and more lump sums to come. It’s hardly a big issue re savings.

Also if you want to work, do so. My DH does some work at 71. Keeps his brain active and he’s well paid for his expertise. You will be fit for many years if you keep active!

As we have our batteries now, we have just bought a very very nice electric car! It’s 6 months old and it’s vastly below list price. It’s got 5000 on the clock and I’m actually excited about getting it next week. I’m not sure how much cheaper models depreciate, but let alone else take the hit if there’s high depreciation. Our neighbour is leasing theirs. Look at the sums though because we think buying costs less. It’s been good fun looking though and hopefully it won’t cost much to run.

Yes, ground source costs more, but we have the space, so I think we'll do that. We are getting stuff cheaper via DH's firm, so.... it is a little different situation. And the good news our current house valued for about 40-50K more than we thought it would, so that makes things easier for sure. The agent thought our place would sell fast, so that's nice. we'll see.

I'd be curious how you like your electric car. We thought about a slightly used BYD electric car. DH test drove one and liked it a lot. I think the main thing in depreciation is the battery.

We just sent the first of the paperwork to the solicitor, so I think it will be all systems go now. I'm feeling a lot calmer and happier about the situation, and it is really nice to see DH and I get stuck into another project together.

😊

Thanks to everyone for their comments.