What will happen if I spend my savings?

JaneJudge

could you use it to buy an over 55s retirement property? I live in a very expensive area and there are retirement properties for @60k that look like perfectly nice flats. It would at least solve the rent issue in the future?

The problem with this is, there is always a service charge.

My MIL lives in a retirement flat and the service charge is around £1200 a year, so £100 a month. Many are higher than this.

There must be loads of people in the OP position though. How do we not know she doesn't already live 'up North'? Where has she said she lives in Cambs or East Anglia?

I've well and truly lost the plot on this thread

and suggesting the poor lady move to Luton is just cruel

Apologies, should have read the whole thread. The service charge has already been mentioned.

PinkCosmos

JaneJudge

could you use it to buy an over 55s retirement property? I live in a very expensive area and there are retirement properties for @60k that look like perfectly nice flats. It would at least solve the rent issue in the future?

The problem with this is, there is always a service charge.

My MIL lives in a retirement flat and the service charge is around £1200 a year, so £100 a month. Many are higher than this.

thanks PinkCosmos, others on this thread have enlightened me to this also. There is always a 'catch' isn't there? no affordable housing for anyone

Took my 35 years to get disability benefits. And I was born disabled. On the advice of our then GP when my health got worse he said to apply this was 1988. Turned down no diagnosis.

My husband died in 2004 aged 47 his private pensions paid out lump sum . We had an endowment mortgage which just paid off what we own . If it had reach maturity 5 years after my husband died would have had lots of money . But death pays less.

Had my diagnosis in 2022 applied for PIP given zero on everything. Brain Charity got me solicitor pro bono and went to tribunal in 2023 18 months after receiving the PIP forms and won got enhanced PIP for living and enhanced PIP for mobility indefinitely back dated to when I had my forms. PIP is not classed as income .

Had my full state pension last and because I only had £5,000 in savings get £70. 04 pension credit per week . Plus 48p per week from what had been my husband's state pension. Thanks to the CA I get the pension credit. I own my bungalow out right . But having the pension credit means I get money off my glasses which needs changing every year due to my neurological condition. I paid for the adaptions in my bungalow myself . Should say my husbands money run out as I inherited half my mom's estate .

I am grateful for getting full state pension and my bit of pension credit and because of my PIP . I went on holiday for the first time in 19 years.

So the OP who has left only wish I had that kind of money. As without the PIP I would have been penniless before getting my state pension and pension credit.

As someone up thread said, buy yourself a small retirement flat. Renting is dead money.

I wouldn't rely on getting pension credit as with only the basic state pension I can't get it .
Housing benefit don't pay all your rent . If you own your own home you can't apply for a council property.
I'd save your money until you see what happens.

Don’t forget you can withdraw 25% TAX FREE from your pension pot. Then the remainder is liable to be taxed.

Sorry didnt take into account OP's age. Allira makes good points. I think it's just my own paranoia but the government does seem to be tightening up everywhere. Just go careful and I'd keep paperwork for any monetary gifts for tax purposes.

Buying a property would not necessarily be a wise investment if you haven't got enough savings to get repairs or maintenance done.
Any reasonable person would want to ensure that they had a safety net for care, Barleyfields, as to spend the money on something which will put you at risk of not being able to afford to live would be foolhardy.
We have found that trying to find £9500 per month for my mother's dementia care has put a whole different complexion on how we spend her money. Whereas we would have once bought her stuff because she wanted it, we consider everything much more carefully just in case she outlives her money. It has nothing to do with trying to claim benefits, it is to make sure we can't be accused of deprivation of capital. When she lived at home, she had windows with gaps you could get a hand through but when I told the Social Worker I was replacing them, he cautioned me to be careful. You can replace stuff, you can't improve it. When I upgraded her wheelchair, it was an anxious moment because I wanted her to be able to get around more so wanted an electric one. Would that be an upgrade? Who knows but I suspect once her money has gone, I'd be able to put up a good fight on that one!

Mouseybrown60

The current weekly amount of pension credit is £218.15 per week, more if you get DLA or PIP.
The only deprivation of assets I knew of was a case where someone received a large redundancy payment and spent the lot in a few weeks in order to qualify for JSAIB.
The DWP will not come after you. That would only come into play when someone fails to declare their savings or occupational pensions. That is not the case here.
I don’t know the rules regarding housing benefit and council tax though, but I think you should certainly apply. (Nothing ventured, nothing gained).
Anyway, good luck mrs nonsmoker!

There are actually a lot of deprivation of assets cases, but usually only where people with a diagnoses have disposed of their income, usually to their children to avoid paying for care.
If Op has not had a diagnoses and is not guaranteed to need care they should not worry about deprivation of assets. The money is yours and you can spend d it how you like. People hear of these cases but get their wires mixed up. So if no diagnoses do what you like but of course plan your finances so you can live in the best possible way till the end.

You seem to be thinking only of possible future care, win. I agree that at her age and not anticipating needing care, she need not worry about deprivation of assets in order to avoid care costs. However, what is exercising her mind seems not to be care, but the need for benefits to enable her to pay her rent and whether spending and giving away money would disentitle her to benefits.

M0nica

Since mrsnonsmoker has no reason to suppose she will go into care in the foreseeable future, as I said before she is entirely free to spend the money how she choses, including staking every penny she has on the favourite for the next Grand National.

Deliberate deprivation of assets only applies to people in a situation where they can reasonably be expected to know that they may have care needs in the foreseeable future and deliberately spend their savings ahead of that event, in order to get subsidised care.

Absolutely spot on Monica, sorry I only saw your post now.

I think you need to get the specific information rather than make an educated guess about this. I’m sure someone like citizens advice would be able to answer for sure as they have legal staff at hand.
I think you will certainly be able to spend your pension pot freely without being penalised but I’m not sure if there’s a time limit. Eg does there have to be a minimum number of years between spending that and receiving state pension (and qualifying for pension credit)?
I do see where you’re coming from. You’re wanting to spend that money and then be able to claim pension credit as you know that your state pension won’t cover your rent for example. I think timing is all important. I would call someone and explain your situation in detail asking for advice.
That said, I’m not sure it’s the way I would choose to do it as it leaves you vulnerable in the longer term if you have no money at all to fall back on and would therefore have to rely on the state for the rest of your life. Good luck.

Barleyfields

You seem to be thinking only of possible future care, win. I agree that at her age and not anticipating needing care, she need not worry about deprivation of assets in order to avoid care costs. However, what is exercising her mind seems not to be care, but the need for benefits to enable her to pay her rent and whether spending and giving away money would disentitle her to benefits.

I understand that but I was referring to the posters who state that it may be deprivation of assets if OP spends the lot and also the OP's own question whether it would be. I was not only thinking of care as a whole, as I also recommended she was careful with her spending, but pointed out that was the only cases where I have experience of Deprivation of Assets coming in to force. I thought I answered both questions. However Monica had already explained the facts much more clearly than I did.

This might help you regarding rules on “deprivation of capital”
www.gov.uk/guidance/universal-credit-money-savings-and-investments#:~:text=If%20you%20knowingly%20reduce%20your,off%20or%20reduce%20a%20debt

Hi. Thank u for all your messages, hope it help the other Lady, has helped me

It’s deprivation of capital , it would be decided by DWP if you claimed pension credit or any other income related benefits and local authority if you went into a home. As others have said it does depend on what you spend it on though.

Just as a quick comment. If you check with DWP for a forecast of your state pension and find that you are missing some contribution years it might be worth buying some additional years. I did this about five years ago with some money after my Mum died. It made an appreciable difference in my weekly income as I had to take early retirement so my work pension is lower and had some missing NI contribution years. Martin's Money site has more info on this.

I would also add be aware that retirement leasehold flats can have big service charges and they keep going up, although they can include heating and hot water where there are communal boilers. The main problem I found was trying to find a buyer for the flat after Mum went into a care home. Eventually she got financial help from DWP via Pension Credit as the service and care home charges were very high together, but it had to be repaid once the flat was sold. The flat eventually sold for less than my parents had paid!

Is the money in your pension pot still growing OP? If so, then I can't see why you wouldn't carry on living as normal. As others have said, buy yourself a new car if that's what you would like, and update all appliances, furniture, etc., then when you're down to the point where benefits cut in, which I think is generally £16,000, apply for Pension Credit.

Park homes, which are popular with older retirees, also have charges as the owner of the Park home rents the ground and there are also charges upon selling.

Please be aware councild can investigate far further back than the 7 years people quote if they are suspicious as they would be in this case. If you dispose of your savings, they will look into how you pay your rent as you are saying you cannot pay without your savings. Spend some but be careful.

I agree. The 7 year rule applies to IHT only.