What would you do about this situation ?

[Travelplease]

We are in our late 50 s early 60s. We have pensions of 2 k a month index linked and 25 k savings. We have no mortgage.
We both work 2 days a week .
We have never been money orientated people and we live rurally and a gentle life mostly with the occasional trip to london or other cities .
the house needs new carpets and we cant really afford them and so other stuff so we leave them !
We are surrounded by v v weatthy people who , despite cost of living crisis they go out several times a week , have second homes etc… and they are , its bot credit , they say so .
It has occurred to us that we are possibly in a vulnerable position when older . We have 25k savings . We only have the house to help the dc out ( and really hope we dont go into care and it has to be sold)

we are un materialistic people and wonder now if we should change our circumstances by working full time and building savings ?

we are a bit like tom on the good life 😂

Oh and we need new drain pipes and gutters! I forgot !😂( 2k plus ) thats why am avoiding carpet !

If you got everything done it might be 5 k but surely it’s worth it to feel comfortable and happy in your home every day.

it’s not like you need that 25k for anything

Thank you re tapi carpets ! There is one an hour away x

If you need stuff doing to your home do it! Don’t save for your adult children’s hypothetical wedding, they can pay for themselves. And ultimately by keeping your home in good condition that helps your kids inheritance in the future anyway. But unfortunately you can’t have it all. I’d up a day or two at work for a while if possible.

I’d also look at your monthly outgoings see where you are spending you are spending your ££££

With an income like yours and no mortgage I’d expect you to be able to eat out at least once a week and holiday a few times a year

Ok - here is what I would do:-

When you are 67 you will get a state pension. (Obviously check you are entitled to this.) Is your £2k per month plus the state pension (about £800 per month) enough for you to live comfortably for the rest of your lives? (Not allowing for “new car” and “new carpets” and other capital requirements.)

If so - great. If not - how much more do you need per month. So - assuming you both live to a grand old age of 95 - how much in total would that mean that you would need in savings? Or will you be saving a bit a month from that income that can go towards a new boiler etc?

Now look at from now until 67? How much more per month do you need on top of the £2k pensions?

Finally - look at capital things - how many new cars will you need from now until when you die at 95? How much will they cost? If you need new carpets - will they last you until 95? Boiler? Roof repairs?

Add up all the things that you need for “savings”. Add a bit of a buffer. Take off the £25k you already have. That is the amount that you need to earn. How much do you earn per day? Divide by that much. That is the number of days you need to work for. It doesn’t matter if you do that by working 2 days per week for 15 years or 3 days a week for 10 years. You have to work for X days. Completely up to you how you do it.

Obviously this doesn’t allow for care. But - to be honest - if one of you has to go into a retirement home then all your assets will be wiped out whatever. So plan on a nice, comfortable but relatively frugal, long but healthy life and accept that it may not work out that way.

@Travelplease I'm in my late 50s, single with an 18 year old son off to uni this year.
I have zero savings and am taking redundancy in May. I will have a similar sum to your savings.
I agree with others that you shouldn't sacrifice the maintenance of your home to pay for possible future events in your children's lives.
If your cottage is so small I can't imagine a loft would cost £1000 to carpet. It's a loft get a cheap offcut and spend more money on better ones in your living area. Get your drains done or you could be causing damage to your property.

I will buy my son a car from my redundancy pay but for the rest my priority is a new bathroom, cooker, few smaller renovations and £5k emergency fund.
I assume your adult children are working and can finance their own lives, as my son will have to.

You mention that you are worried about being vulnerable as you become older and needing savings for that. Part of that will depend on the pension situation - do you mind saying a little more about the £2k a month pension (presumably already in payment?). Is that after tax and does it have any kind of inflation protection? Is it 2k between you or does one of you receive all/most of it? Sorry for asking but will the survivor get any pension or does it die with the recipient?

The pension is
dh 1.6 k
after tax
and mine is£ 430 a month .

index linked .
when one dies , the other gets half of the others pension for life .

The house is ex council not a cottage and the loft , which is bedroom runs the top of the whole house .

I think this worry is because i come feom a family that always saved and was comfortable wereas we didnt do ot that way . We expected , stupidly , to be the same !

You could probably carpet your whole house for 3k, i would use some of your savings. Then go through your monthly budget and see if you can cut costs, get better deals on things.
I think your income/pensions sound decent.

If you can't afford the lifestyle you want on your pension then the obvious solution is to work to top it up

There's literally no point in retiring early and being unable to do things that you want with the free time you now have.

As you get older you'll want to go out less and be happier at home. But this isn't your situation now

You're both in good health so use this time constructively to give yourselves a good standard of living

You don't have to go mad with hours of work, but a day or two would really boost your income and keep you busy.

If your house is that small, how big is the loft space that you are looking to carpet?

If the room is say, 5m x 5m then you need 25m^ of carpet. To spend £1k you're looking at £40 per metre, that's really expensive even including underlay!

Measure the space, buy cheaper carpet.

You are asset-rich if your house is worth in excess of £300k with zero mortgage. If you really needed to you could downsize, even if this meant moving away from your wealthy neighbours 🤔

There's no point assuming the kids will benefit from house proceeds if one/both of you needs care in old age, that will go very quickly.

Jesus. My household income is less than this working full time and I have 2 teenagers to feed/clothe/support AND pay a mortgage.

AND you both work part time on top of this!!!

I think you need to have a really really good look at your expenses OP if you are struggling to be able to afford the lifestyle you want. OR manage your expectations about the lifestyle you can afford on the (actually better of than most households) income you have. If you want more, work more. It really is that simple.

You need to sit down and do a proper income and expenditure form. That way you can see exactly where your money is going on your essential bills.
Once you have worked out your disposable income, you can then make pots for budgeting - savings, holidays, eating out etc.

I would get quotes to do the house up and use the savings to get the house back up to scratch. When you do your budgets, you will be able to decide how quickly you recover the savings.

In the nicest possible way, you are in an extremely comfortable position. I would not over think it.

£2k a month plus earnings, and within 10 years, between you you will have a full state pension each?

Concentrate on building up savings.

Are you current paying tax because of your pension + earning income? In which case you might be better investing savings into a private pension where you will get the tax back.

We just refurbished a house and the carpet plus fitting for the stairs/landing/3 bedrooms was £700.

You're children are responsible for themselves, I'd hate for my parents to not live the life they wanted just in case they might need to help us out.

Well you’re only going to become less able to work so if you need more income or savings, you need to do it now.

realistically, you don’t have enough to help your kids out with weddings or house purchases so you need to get that thought out of your head (and tell them if you’ve hinted in the last that you would help)

I’d do more work now and spend what you need to on the house and have a lump sum set aside for the car. I would aim not to touch the £25k for a long time.

also, slightly off the point but some of your numbers seem crazy. I live hundreds of miles from london and advanced train tickets can be had for £22 each. Premier inns are often available for £100 a night or less.

If you're uncomfortable with your level of savings then yes I would work more whilst you can and save that. Further another advantage of working is that it 'fills' another day and you won't want to be spending money doing day trips etc to fill it.

I'd also suggest looking at nearer towns/cities for a day out rather than London as they'll presumably be cheaper to get to.

On your current incomes you should be more comfortable than you are. I earn only very slightly more, pay a 1k mortgage and have teens. And live in London. But still manage holidays....most house stuff I do do myself though.

Your biggest vulnerability is God forbid if anything happened to your DP. That would tank your income and one adult households do not cost half of two adult households if you see what I mean.

So, I'd be looking to build savings by working more. Or getting some sort of insurance policy for the over 55s that will pay out in case of early death. If that's a thing??

I think the question you should ask is - do you want to go back to work?
If not, it sounds like you have a comfortable but not extravagant lifestyle. You have a secure income, you have savings.

If you need things doing in the house, decide the level of savings you are happy with. Keep that secure as an emergency fund. Then set up a separate savings account for house upgrades. Save and spend from this, as and when you need to, then build it up again.

Hi OP,

I've worked in pension.

What you need to consider regarding the pensions is that your husband's income is 1.8k if you die, but yours will be 1.2k if he dies. Even £1.2k per month is a good amount of money, especially when you get the state pension too, but you definitely need to do some budgeting to see what you can afford to live on.

What you could do is put his income and some of your joint pension income into saving and put 100% of your earned income before tax into a pension pot. Then when you retire from your current minimum wage job you buy a single life annuity (one that does not pay out a spouse's pension on death of the pensioner). You would need the equivalent of £600 per month (index linked) (£7,200 per annum) to put you into the same financial position as your husband, which would cost over £100k. So clearly you'll not be buying as much as that, but maybe you only will need another £100 per month when you do your budget.

Alternatively you could take out life insurance just on his life, so you get the pay out if he dies first, and otherwise your children get it (or he stops paying the premium if you die first).

I hope that helps!