How can I help my retired mum with money?

[Flame76]

Not sure what help I can get, but feeling desperate so it's worth a shot asking for advice here! My mum is close to 70 years old. Lives in a 3 bed house. She's single and very lonely, also has a history of depressing and anxiety/stress. Screwed over in a divorce decades ago so zero savings. Her pension covers basic living costs (council tax and other bills, small budget for food etc) but she has nothing left for one off expenses, like house or car repairs. Her fence blew over in the recent storm. The repair cost has to go on her credit card. Her credit card bill is gradually going up and up. She has no money to pay it off. Luckily it's zero percent interest. But this can't go on forever. How can I help? She won't be able to afford the energy price rises later this year. It makes me sick to see other people's parents going off on cruises while my mum is crying down the phone to me about affording a fence repair. Am I missing any obvious benefits she may be eligible for? Does she have to pay council tax despite her age? The only avenue I can see is selling her house and downsizing, which she would do. But the cost of selling/buying, I don't think this will free up cash to keep her going forever.

She will have to pay Council Tax, but make sure that she is getting the 25% discount for single occupancy.

@Smudgeis13

I suggest looking into Attendance Allowance. If she is entitled, it is £60 or £85 p.w. Also once a person receives AA they are entitled to a higher rate of Pension Credit, or, if not previously been entitled, they could then be. Plus she would pay no Council Tax.

that is not true about council tax unfortunately. it is on income and as she does not qualify for pension credit, it is unlikely she would get any council tax reduction, apart from the single occupancy 25% off. but it is worth asking the GP about whether they think she might qualify for Attendance Allowance, on mental health/stress needs. get someone who is used to applying to help with the form. i suggest she tries age uk, and christians against poverty or step change for debt advice. all the best OP. it;s so good to see AC helping their elders.

You can also go on entitledto.co.uk to check what benefits she would be entitled to if it's going to take you a while to see someone at CAB etc

Does she live in a desirable area? She could rent the house out as a holiday cottage and then rent a one bed house on a short term basis?

I know this does sound a bit complicated and maybe not viable

Your poor mum 🌻

what about downsizing to a flat in a sheltered complex.
but beware of service charges, which in some case is like having to pay rent, after having bought the flat.
and there are restrictions on how it can be sold on.

You or your mum can easily do an online benefit check yourself, either on 'entitled to' or the Age UK Benefit Calculator. This will be much quicker than waiting for CAB or Age UK to do it, and will be exactly what they will do.

Attendance Allowance is only awarded to people over 65 who struggle with everyday tasks (dressing, showering, preparing food, taking meds etc). You can find full info on it by googling Age UK factsheet Attendance Allowance

I would definitely look into a flat in a nice sheltered block, they tend to be cheaper than average for the area they are in and she would be able to stay there happily for years. It would spare her a huge chunk of worry over repairs, there will be other people around for her to talk to and she may even clear enough from her house sale to consider an annuity for some extra income. Both my grandmothers did this and it was totally life enhancing for them.

I’d look at downsizing. It will not only save on day to day living expenses but also on in going maintenance on the house. Living in a flat may allow her more contact with neighbours also.

@TheVillageShop

If your mum is happy living where she is it might be worth looking into equity release. It is regulated now and not the rip-off it used to be, and interest rates are reasonable at the moment.

Here is a link to equity release on Martin Lewis's website (he is not a fan of these plans but acknowledges that in some instances they are a reasonable option to consider):

www.moneysavingexpert.com/mortgages/equity-release/

The most flexible and affordable is a Lifetime Mortgage. She could release enough cash for repairs and to supplement her annual income - you can take the money in stages so you only pay interest on what you've taken so far. You still own your home, it is like any other mortgage so you haven't handed over your home to anyone.

The loan does grow because of compound interest, but you usually have the option of paying some of the interest which reduces the compounding of the loan so it doesn't grow too much.

The amount owed is taken from the estate after death.

Give some serious thought to this. It may well be a better option than downsizing if she is already at the lower end of the housing market. Selling costs might well eat up a large chunk of any gain.

You need to be careful about equity release, but in some circumstances it can make life much more comfortable if she is asset rich and cash poor. Get some proper advice about it.

She needs to sell the house and downsize. I would look at over 55 housing, they tend to be a lot cheaper

Alternative would be equity release

Make sure she gets some advice, try CAB

Don't guilt trip your Dad. I understand that you think she was screwed over in the divorce, however, what's done is done, by doing this you will just put pressure on your relationship with your Dad

How about moving into extracare as a tenant or sell up and she buy an extra care flat. She wouldn't have maintenance issues but have company and care then.

My dh friend took in a lodger
He was 62
He charged 150 a week inclusive of bills for a room with his own bathroom
I think it gave him a new lease of life
As the house wasn’t empty so much and he got to know his lodger well over the years
He put he wanted someone quiet full time work
And I think over 35 or something
He charged a small deposit and he had so many people contact him around 100 and this was a few years ago

One thing that is a must is decent internet

There is a housing crisis people can’t get a space to live in so a decent rent and a nice clean and tidy room and it would be snapped up straight away

A flat in a retirement complex might be a good idea, but like others have said, watch out for service charges. Or a lodger, a still working older single woman might be ideal, and would help out someone who might otherwise be unable to afford to live alone.

But are you sure she's struggling so much financially and the problem is more that she's lonely? My DM is in a similar position (widow in her own 3 bed house on a pension with minimal extras) and she has plenty of money. She doesn't run a car, but she has money to go out for lunch etc, get taxis when she needs to, doesn't worry about putting the heating on, is able to do her shopping in M&S and Sainsbury's, treat grandchildren, has a dog etc. Obviously when the utility price rises kick in, it's going to affect her disposable income, but in a paid for house, she's quite far from the breadline.

she was born just weeks after the cut off for better state pension rates and her pension is significantly lower than it would have been

What do you mean by this? One of the upsides of equalising pension ages, that women your DMs age were affected by, is that if they'd have qualified for pension at age 60, they'd have got less than they do because they didn't get their pension until after the new higher amounts came in.

It isn’t insane that we all pay council tax btw. It covers roads, rubbish collection, emergency services and so much more. We all need to contribute.

barbara there are 2 issues, firstly the WASPI change of age for women you refer to but there is also the issue with the ‘new’ state pension. The pension figures we see in the headlines are usually the ‘new’ state pension but those born before April 53 (women) or 51 (men) do not get this, they get a lower rate (£137 pw v £180). This point isn’t often mentioned, not sure why!

barbara I do get that yo7 clearly know this btw, but it does have the effect of getting a lower pension for longer which doesn’t help now!

How about equity release? Otherwise it's downsizing or getting a lodger in I think.

@Chewbecca

barbara there are 2 issues, firstly the WASPI change of age for women you refer to but there is also the issue with the ‘new’ state pension. The pension figures we see in the headlines are usually the ‘new’ state pension but those born before April 53 (women) or 51 (men) do not get this, they get a lower rate (£137 pw v £180). This point isn’t often mentioned, not sure why!

But that was the point I was making. The OP says her DM was born too late for the better state pension, but it is people who were born too early who do not get it, just like you say.

You say she would only gain £50,000 by downsizing and what then? You need to work out how long that will last i.e. how much extra per year does she need to live on?

For example I have worked out I need £7k per annum from savings to live on for eight years to top up my private pension until I get my state pension. No the numbers don’t add up for me either. The disadvantages of being single in old age. It’s a worry.

A lodger might be her best option as it's ongoing income. The max she can earn is £7500. Spareroom.com is the site bmi brother uses. You can interview, check references and specify female professional for instance - or if she's for instance near a major teaching hospital advertise there as they have young drs needing places all the time.

Btw way she will get the new stats pension, my mum is older and missed out by weeks

I’m no expert but isn’t your mum allowed to earn £12k before tax as well as taking a lodger for £4.5k tax free. So combined it would be £16.5k or thereabouts.

I think it would also be good for her mental health. You could look for lodgers who are not around at weekends for example.

@Flame76

Yes I have gone through money coming in and outgoings. Not really many avenues for savings. My statement wasn't meant to be dramatic. If the pension covers the basics and we free up £50k by downsizing, literally what happens when that £50k runs out?

Why are you assuming the 50k will run out? If she just uses it sensibly to top up her day to day spending, plus lives in a one bed flat which will have cheaper bills all round, it shouldn't run out.

So it sounds like does have a full or close to it state pension, as she doesn’t think she’s entitled to Pension Credit. She also has some private pension. Which might be what is topping up her state pension not to allow Pension Credit… but it sounds like she gets at least the equivalent of state pension AND whatever she gets you say it covers her regular outgoings.

The issue is it won’t cover extra costs like repairs and now the fuel rise.

Why would downsizing from a 3bed house to a 1bed flat only gain her £50K? Sounds a bit light.

But even with £50K, she’s nearly 70, that’s £5K a year for 10 years. That’s enough for the extras. Once she’s 80, she can move in with you or do equity release, or maybe some other change will have happened. You might inherit from your dad and can redistribute them wealth and make up for the divorce payment 😉

She needs to grab the bull by the horns and take housing action. It’s ridiculous to complain about not having enough money whilst you’re sat in a 3 bed with no mortgage.

You talk about bad luck on divorce and pensions, and jealousy on cruises… she’s got a fully paid off decent sized house and some private pension. She’s got options that many her age do not, and many younger than her with same relative jobs will never have.