How much to keep in savings in retirement?

Cabbie21

There is no time limit for councils to look at. The rules and figures quoted above relate to IHT.
The key to looking at deprivation of assets for eligibility to LA funding for care ( or entitlement to DWP Benefits) is whether the assets were given away or spent deliberately to gain entitlement, by reducing funds. They can go back as far as they want, but the further back, the less likely it was that you foresaw the need for care and took action with that in mind.

That the point Cabbie21, if it’s over 7 years ago that you gave money away, councils wouldn’t pursue the person you gave it to because you couldn’t have reasonably predicted what would happen so far ahead. If it went to court, a council would be very unlikely to win a case on that basis.

My only child received , after discussion with my mother in a really good lucid day, half the proceeds of her house when it sold. That set son up very well. That was quite a few years ago. Husband and I didn't need all that cash and he did. Mum was penalised for gifting that large amount of money. She had enough pensions to pay her residential care fees. She had paid the bond pre to a July first substantial increase . Mum passed quite a few years ago now , dad had predeceased her
These are Australian rules .
Husband and I do still have a small mortgage however done so so much travelling and had experiences.
Husband does have a brain tumour which will eventually leave him with significant mobility issues. We are hoping he can continue to travel till he is 70, a couple of years off
We spend we are both retired now

There is no time limit for councils to look at. The rules and figures quoted above relate to IHT.
The key to looking at deprivation of assets for eligibility to LA funding for care ( or entitlement to DWP Benefits) is whether the assets were given away or spent deliberately to gain entitlement, by reducing funds. They can go back as far as they want, but the further back, the less likely it was that you foresaw the need for care and took action with that in mind.

Georgesgran

As I understand it there’s a 7 year rule for some financial gifts, but for residential care assessments, Councils can go as far back as they want.

Councils can’t claim it back if it was gifted over 7 years ago though.

My gifts to AC and DGC were out of savings and very soon after my husband died, very suddenly and I was extremely glad to have savings as a fall-back because I had no notice of being widowed. Now those cash gifts are completely out of IHT accounting and I know have been used very carefully. 7 years have gone by

Yes of course spend today to have a warm comfortable life with treats and holidays. None of us know when life can be cut short but many a time, end of life can be made much more comforable with a pot of savings to dip into. There is a big difference between being scrooge and being cautious

Yes tax allowance is £3000 per year, I used that last year, gave mine £1000 each and all told me `mum, keep it, we are working`. I took their words on board for my future

None of us know what will be, otherwise decisions would be easy

Reading further on my comment it says the amounts of gifts over and above the £3000 pa should come from income, be on a regular basis and not reduce your lifestyle. Should also be registered so that they won’t be added when inheritance tax is assessed. Complicated!!

As it was explained to me, you can give as generously as you like (and can afford) and there is no tax liability for the recipient(s). The tax issues arise if you die within 7 years of a gift of over £3k per recipient. If this happens, the gifts will be added to your allowance of about £350k per person, which amounts to £700k per couple, (which includes a deceased spouse) and after that, Inheritance Tax will apply.

So, if you have given £100k to each of three children within the 7 years before your death, your IT allowance will be reduced by £300k, and tax will apply after £400k instead of £700k. Those figures are approximate.

As I understand it there’s a 7 year rule for some financial gifts, but for residential care assessments, Councils can go as far back as they want.

I believe cash gifts to children cannot exceed £3K per parent, not per child

Agreed, but I read recently that more can be given legally as long as it’s from savings but that notes should be made of it ready for the financial assessment re inheritance tax eventually.
Can anyone else confirm that?

As someone said, I too, give generously to my family. Their needs are greater now. By the time I pop my clogs,(not just yet I hope) they will probably be well set up and will not be in great financial need. If you can spare the cash, give it now.

volver

Rainy days appeared in my DPs life quickly and dramatically. No amount of money would have given them any choice. It has reinforced what I always believed. Live now, let tomorrow worry about itself.

I don't mean be profligate, don't go mad with the spending, but I really believe that not buying things because you might need "choices" in very old age, is just false economy. Just my opinion 🙂.

Inclined to agree

Rainy days appeared in my DPs life quickly and dramatically. No amount of money would have given them any choice. It has reinforced what I always believed. Live now, let tomorrow worry about itself.

I don't mean be profligate, don't go mad with the spending, but I really believe that not buying things because you might need "choices" in very old age, is just false economy. Just my opinion 🙂.

Hopefully needing care will be a long time away for some of us - fingers crossed.
Are you in England Norah. I don’t know how generous you are with your family, but watch out for being ‘guilty’ of deliberately reducing your assets should you need any sort of financial assessment. From what I’ve heard ‘they’ dig back into your finances for many years, I believe cash gifts to children cannot exceed £3K per parent, not per child.
I’m sure someone else here knows the figures better.

I have at last worked out the difference between need and want and typically of many, prior to fixed income. I saw, I lusted and I bought. Not now, apart from craft stashing, I live comfortably but need to throw as much as I can into my savings

I have already given sums to AC, after my husband died and also bought lots of premium bonds for dgc so I look upon my house value and savings solely as a means to getting very good care, although hopefully never needed

Volver says: Spend the money you have now, having a nice life. The rainy day may never come.

Trouble is that rainy days can and do appear and often when least expected. Choice then will be paramount and savings will give me choices and if I can soften old age for my AC too, then well and good

Well - I spend what I need to and save the rest.

Thanks, Norah.

Cabbie21

Thank you Norah. But if a spouse is still living in the property it is not taken into account in the financial assessment. So that could mean the first spouse to need care gets LA finance. Does the other spouse then feel they should ( not must) use some savings to upgrade the Home to one of a better standard than the LA can finance? This is the dilemma of a friend of mine.

Not sure what your second sentence means.

I was brief, sorry.

We're almost identical age and health, I hope we don't need care or need care nearly the same time. Foolish hope. Yes, I assume our property would be sold if one needed care, other off to a small flat nearby. I'm not sure why we'd consider an upgrade, but well done your friend having options.

My second sentence means we're giving very generously to our children now, not hoping to leave inheritance beyond what little may be left.

The sums needed to be spent on care homes are scary. But if you don't have thousands in the bank, or an expensive house, the local authority pays. Then you get lots of people saying how unfair it is that people who have saved their money have to pay for themselves.

This is in Scotland, and from personal experience.

Spend the money you have now, having a nice life. The rainy day may never come.

my savings, including my house will be used for platinum standard care, if needed. Until then I live a normal life but have worked on my spreadsheets last week and I need to add to my savings. I am widowed

Moving 3 years ago, to a lovely new build, took 20k in fees, tax etc plus another 30k to make my house my home, all from savings hence depletion. I can see dd moving in seven years when the dgc finish school and assuming all is well, I will move then and more money will be needed so savings will be on-going

I cannot forsee any more big expenses on my house so saving wil be my objective as much as possible. Re savings? How long is a piece of string? It is purely down to individual circumstances and personally takes effort

Sister in law, her care home is £6000 a month

I want to keep enough in savings to be able to pay for help such as cleaning if I am unable to do it myself.
Care homes are very expensive so I hope I can manage at home for as long as possible.
I've no idea how much to keep as things change financially and what seems adequate now may not be in years to come.

I don't think there can be a figure put on something like this. We don't know what the future will bring, and in any case, most of us would probably prefer to have a large sum rather than a small one put away, but by the time we get to retirement age there's not much we can do to make the pot bigger. I left work with 8 years to go before my SPA, which obviously meant sacrifices, but I don't regret it at all - you can't put a price on freedom, if that's what you want. Not everyone does though, and you can't put a price on the things working can give you either.

Thank you Norah. But if a spouse is still living in the property it is not taken into account in the financial assessment. So that could mean the first spouse to need care gets LA finance. Does the other spouse then feel they should ( not must) use some savings to upgrade the Home to one of a better standard than the LA can finance? This is the dilemma of a friend of mine.

Not sure what your second sentence means.

We assume property, purchased over 60 yrs ago, would be sold to fund our care. We give and pay for our children and theirs currently. We choose to happily spend towards a reasonable 'rainy day' savings sum.

Ties well to other question re how much is enough to live on.

Well if a rainy day is a care home at £1400 a week ( that price was 3 years ago during Lockdown so might be more now) you will need a huge amount of savings or a property to sell.

If a rainy day is a leaky roof, you won’t need so much.

Do all the work on your house while you have the money and then hopefully ‘rainy days’ will be for small amounts

We always thought that to be safe you would need at least a years worth of earnings in the bank as savings.
Maybe we should now have at least a years worth of various Pension payments put aside in the bank?