Paddling like a swan, to stay afloat financially

Although I have no need or interest in Equity Release, TinSoldier your post is excellent and I’m sure will help many GNs.
It is always helpful when the real experts post on various topics.

Fancythat, I empathise with your post re the uncertainty that comes after retiring. Not having to fit into a plan of any sort

Hence eg I always go to bed and get up at the same times, that gives me an outline structure. Lunch is my main meal and always at 12, more structure. Generally I do my active stuff, garden, cycling, de-cluttering etc before lunch as I am always ready to start at 8. I then regard the afternoon as mine, for leisure. My body fits well into that structure

I do not spend my days scrimping btw, I do allow myself treats as the endorphins are good for me. I don`t need to justify however I don`t smoke, don`t like alcohol and have no wish to travel. I get a thrill from donating and got a thrill from two purchases that I want and will use but definitely don`t need. A leather knitting bag designed by a knitter, made in Denmark and not available until july. Yesterday I ordered a burgon and ball 5litre watering can, to speed my nematodes on their way, in accurate doses

Tinsoldier, I just want to say thank you for being so helpful to so many people

I’m not saying don’t do it but be very careful. Do your sums and bear in mind that you could live to a very old age which is what equity release companies hope for. The longer you live the more money they make, especially in the later years.

Equity release seems pretty pointless unless you have a specific need for a lump sum for a project and can take it under an agreement that lets you make repayments. If you are cash poor to start with, how would you make the repayments?

Taking a lifetime mortgage when bank rates are high is expensive.

Equity release schemes charge interest above the bank rate and the interest is compounded.

If you borrow to invest, to provide extra income, you will be accumulating more interest than you can earn.

Current information on equity release says the minimum you can borrow is £10,000. The best rate you can get currently is 5.34%. Best easy access savings rate (according to moneysavingsexpert) is 5.1%.

Say you borrowed £10,000, invested it in an easy access account and withdrew £1,000 a year to cover living costs. By the end of year five you would already owe £12,971 i.e. £2,971 interest already accumulated but you would only have earned interest of £2,040. Already £931 out of pocket.

Carry on doing that for ten years until all of the £10,000 is spent and you will owe £16,824 but will only have earned £2,804. You will now be out of pocket by £4,019. A very costly £10,000 already.

The debt will go on accumulating interest until you die or go into care, upon which you are usually required to repay the loan within twelve months or on the sale of your home whichever is sooner.

After 20 years you will owe £28,305 on that £10,000 initial release. £18,305 interest on just £10,000.

And you could have been exposed to reductions in the savings rate so you may not have earned as much at £2,804.

By contrast, the rate charged on equity release usually remains fixed at the inital rate unless the terms of your agreement allow you to negotiate a lower rate.

Looked at another way, it wouldn’t be a huge amount to repay compared to the sale proceeds of an average house but it is a very expensive way to borrow £10,000.

And that sum may not last very long if your pension is already not keeping up with the cost of living and fiscal drag starts to bite … and so you go back to borrow more.

Don't do it!

I wonder if anyone on here has thought about Equity Release? Obviously at the moment with high interest rates it is not feasible but if and when they go down, it may be worth thinking about. We're not too sure about it but maybe it could be an option.

karmalady

Perhaps I should sell my down-sized things but right now I treat them as charitable donations

We've a friend who now sells all her "Gently used, Vintage" china, birks, pretty glass, tea pots, etc on ebay and facebook (plus some other place?)

We'd given much of our excess to charities, bought much back plus more, for my brother's wedding. She's sold much of that excess wedding stuff quite easily. We're less cluttered whist people shop from home.

Perhaps worth a try.

That's it, fancythat!

I haven't really planned my life up to now, but I've known that it was largely up to me to make the best of it, and financially I've always been independent. Now I realise more and more that governments, bad luck or other changes of circumstances (mine, my husband's or my children's) could change things in a heartbeat, and it would be difficult, if not impossible, to replace expenditure. I'm finding that adjustment difficult.

Doodledog

*No real answer, it's choices all through life.*

Oh, without a doubt. It would just be so much easier if we could plan. We are doing up the house, and have already spent a lot, and there is more to do. I'm torn between wanting to have as nice an environment as possible to live in and wanting to keep the cushion that we built up. It's the classic wanting both to have your cake and eat it thing, isn't it?

I have been fortunate in life.
I have always been a person who knew her own mind. Since being a young child.
I knew what I wanted to do from the age of 14.
And my life has planned out almost exactly as I wanted/thought it would.

Not so now!

Now. DH retired early. I wasnt expecting that. Came out of retirement and started working in different things. Wasnt expecting that.
Health - realising as getting older, who knows what that will be.
Finances - who knows. See above re DH work/not work/ work.
Do up house? Who knows.

I am used to planning! I dont have that any longer! I want it back. I think.

No real answer, it's choices all through life.

Oh, without a doubt. It would just be so much easier if we could plan. We are doing up the house, and have already spent a lot, and there is more to do. I'm torn between wanting to have as nice an environment as possible to live in and wanting to keep the cushion that we built up. It's the classic wanting both to have your cake and eat it thing, isn't it?

raising autocorrect - I meant retaining

karmalady

Perhaps I should sell my down-sized things but right now I treat them as charitable donations

I think it might be a good idea to consider selling them.

Charitable donations are all very well but if you are concerned about raising your savings, then you must think of yourself.

Our water bill is down 😯 but I'd rather they spent that tiny amount improving the sewerage systems and stopped polluting our rivers and also mending the leaks.

While working, we're usually paying a mortgage, many are bringing up children and even if the mortgage is paid, perhaps wil be helping those children through university as there are no grants now. It's not easy to save a large amount until nearer retirement age and then we never know, either, if illness might befall us.

Doodledog

It's so difficult to know how much we should have in the way of savings (as opposed to income from pensions) as it's all a gamble on how long we will live, and what sort of expenses might crop up along the way.

I have tried to find a formula of some sort online, but all I can find are figures for how much people should have saved towards a pension pot, which doesn't help . Obviously people's circumstances differ, but something similar in principle to the advice for working people to keep three months' salary in savings would be helpful. The trouble is that it's not easy for the retired to make up money they spend out of savings, which is, of course, where we came in on this thread.

I doubt there exists a specific formula for how much to save prior to retirement. Many variables as to location, housing/mortgage and living costs, and wants/needs. Additional considerations such as who may pass first and pension - if one has a pension, if such pension is inherited, would matter for many people.

I suppose overall the idea to save as much as possible whilst working, no waste - so money is available for market downturns, illnesses/health problems and withdrawal needs during retirement.

No real answer, it's choices all through life.

A woman in our village was left on her own after her husband went off with a younger model. She kept the house but it was far too big with land. She rented out a couple of paddocks and got in touch with her local Vets who sent newly qualified vets to board with her until they got settled with accommodation of their own. She did that for a couple of years then sold up and bought a much smaller property.

It's so difficult to know how much we should have in the way of savings (as opposed to income from pensions) as it's all a gamble on how long we will live, and what sort of expenses might crop up along the way.

I have tried to find a formula of some sort online, but all I can find are figures for how much people should have saved towards a pension pot, which doesn't help . Obviously people's circumstances differ, but something similar in principle to the advice for working people to keep three months' salary in savings would be helpful. The trouble is that it's not easy for the retired to make up money they spend out of savings, which is, of course, where we came in on this thread.

karmalady

sandytoes, it is not a significant depletion of my savings, (yet) more of a drip process, little by little. The sort of drip that if it continues, will have some significance. Only my fixed income comes in these days

There are lots of empathetic posts on here. Thank you

Jollyjilly, that tax band being fixed at £12750 was very deliberate. Called fiscal drag, it will affect many more people year on year. Designed to increase tax revenue to the government

@karmalady, is there anything you could reduce slightly so your savings deplete less rapidly? .
I totally agree with a previous poster who said we shouldn't have to be looking at ways of making additional income after state pension age . We are lucky in that we have chosen to retire early and live on our current income, which is now just under SP equivalent for a couple , but I can only imagine how hard it must be to manage all the recent increases on a single income .

I think it's a case of making positive changes to remove the dreadful worry of financial insecurity - where possible. My neighbour disliked the idea of letting out a room - but then found that she enjoyed it, especially the £700 a month extra (mostly untaxed) income!

As we age we really shouldn’t have to look at renting out rooms, working part time and penny pinching, especially after grafting hard all our working lives. It’s not right. It makes me sick to the stomach. We have to pay for the incompetence of governments, an easy target because,mostly, we don’t protest or complain but just accept things.

www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

My neighbour rents out a spare room, weekdays only, to a woman who works nearby but goes home at weekends. She also rents out her driveway, as we are near the station. It's good to know that those options are available if needed.

Thank you karmalady. That’s very interesting. I hadn’t know about that scheme and see from other sources that it was only open until 5 April 2017.

I assumed you were adding missing years but I see now that that it’s a one-off top up to additional state pension - what someone would have paid SERPS or SP2 contributions towards; in your case, notionally between 1978 when SERPS began and when you were 60 in 2008. In other words, what you might have paid over a 30 year period to earn an extra £25 a week in additional state pension. Does that make sense?

I found this on another site:

State Pension top up scheme

If you are entitled to draw a State Pension you can increase your State Pension and get a guaranteed extra income for life with the ‘State Pension top up’ scheme.

The scheme allows you to pay a voluntary Class 3A contribution lump sum to boost your State Pension by between £1 and £25 per week. The cost for every extra pound of pension is based on your age. This scheme only runs until 5 April 2017 so if you wish to take advantage of it you will need to pay your voluntary contributions before 5 April 2017.

If you have gaps in your National Insurance record, it may be more cost effective to make voluntary NICs first.

Yes, what a malarkey. I’m conviced the only person who really undersands all this is former Pensions Minister for LibDems under the Coalition, Steven Webb, now a partner at law firm Lane, Clark, Peacock. He’s written lots of pension papers published on their website.

This chap:

www.lcp.com/our-experts/s/steve-webb

A man who says he finds pensions endlessly fascinating! It could well have been Webb who came up with the top up scheme so he would be the man to ask if you had any queries about it.

What a flipping minefield this pension malarky is

It certainly is.

I rarely advise anyone now about their pension.
Hard enough working out my own.
Not helped[not sure if I have written on GN or elsewhere] by whoever you have to ring up, sometimes.

And people have different scenarios going on.

sandytoes, it is not a significant depletion of my savings, (yet) more of a drip process, little by little. The sort of drip that if it continues, will have some significance. Only my fixed income comes in these days

There are lots of empathetic posts on here. Thank you

Jollyjilly, that tax band being fixed at £12750 was very deliberate. Called fiscal drag, it will affect many more people year on year. Designed to increase tax revenue to the government

Tin soldier, I think you will find this interesting. It explains the sum I needed to pay to get an extra £25 a week for life, bearing in mind that the £25 is escalating and equivalent to an annuity. It is on my pension statement as top up, it is now £30.91

taxvol.org.uk/index.php/category/pensions/

I decided I was healthy enough to take this on. I was 68, hence the £21k.

What a flipping minefield this pension malarky is

I resonate so much with many of the posters here, savings yes, a decent standard of living yes but having now to draw on the experience we gained when we were younger, knowing hoe to stretch a penny. Basically not wanting to be a financial burden to anyone and the potential to live another 30 years. Savings means choices and want to be able to make choices about my future

Bad advice re share trading fartooyoungforthis. I was a share trader in my spare time, did well, was asked to join the society of technical analysts. I used to manage my husband sipp and doubled its value. Anyway that is not the point, fact is that at a certain stage in life, it is sensible to invest in very boring, risk averse assets. I have know some who have treated share trading like gambling and have lost their homes. I was very objective, reading real-time graphs.

I would not recommend share trading for an amateur