Low income retiree, looking for options

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ThirstyLizard

Registered User
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Hi all,

I am filling this out on behalf of a member of my family who is looking for advice on how best to manage the remaining years after having retired.

He has some cash saved, and is receiving a pension but he is finding it difficult to make ends meet and looking for options that might help.

Personal details

Age: 70
Spouse’s/Partner's age: N/A

Number and age of children: 2x adult children


Income and expenditure
Annual gross income from employment or profession: €25k / yr (from pension)
Annual gross income of spouse: N/A

Type of employment: Retired

In general are you:
(a) spending more than you earn (Yes - spending is around ~€40k per year, which is ~€15k more than current pension received. Therefore his cash savings are reducing each year.


Summary of Assets and Liabilities
Family home worth €900k with a no mortgage
Cash of €280k


Other borrowings – car loans/personal loans etc

No loans or debt.


Other savings and investments:

Do you have a pension scheme? Yes, it is paying €25k per annum.


What specific question do you have or what issues are of concern to you?

He is concerned about his finances and whether there will be enough to see through remaining years. He lives alone and would ideally like to remain at home with in-home care if it is required in the future. Should care be required in the future he presumes that his cash savings will not be sufficient to sustain this.

The option exists to sell the PPR and relocate to a home of lower value but this is a last-resort which he very much wishes to avoid.

Question - He is wondering if there are any ways that he could put his €280k of savings to better use which would generate a further income for him.

Any suggestions would be greatly appreciated and will certainly be explored!

Thanks to all!
 
ThirstyLizard said:
Therefore his cash savings are reducing each year.
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But on track to last until he’s 87.

ThirstyLizard said:
Family home worth €900k with a no mortgage
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More power if he wants to stay in the house. But any €900k house in Ireland is superfluous to a single person’s needs.

He could put some of his savings into ETFs which might give a good return but might also fall in value.

In his shoes I would just keep savings in highest-yielding accounts, downsize PPR, stop worrying, and spend even more!

He should also consider estate planning as his kids are likely to be hit with a CAT bill as it stands.
 
First of all I don't consider €40k a "low income" for a person in the 70's with no debts and no dependants, he's doing alright ;)
Secondly I don't think he should be looking at better or risky income streams for the €280k, he should be looking at preserving it
And thirdly if he finds he can't make ends meet he needs to look at where the income is going and adjust his spending accordingly

Dr Strangelove said:
In his shoes I would just keep savings in highest-yielding accounts, downsize PPR, stop worrying, and spend even more!
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I agree with the Doctor here, but I'd only look at downsizing if the house is not fit for purpose and a financial strain on the income
 
How suitable is his home as he ages? A healthy 70 yo can manage stairs, gardening work etc with ease. but this may change quickly. Is there a downstairs bedroom and bathroom? Is the house comfortable in terms of heat? His wish to stay in his own home may be offset by the home not being suitable. So it might not be a last resort issue, it might lead to him having to leave anyway if he can't be cared for at home. If he is to consider downsizing (and maybe that's not the correct word, upgrading but to a better but smaller, less valuable property), it should be sooner rather than later, as the older you get the harder it is, even with the help of relatives.

As he ages he will probably spend less...not sure what his discretionary spending is now, but if travel, sports, eating out, nice cars etc is he likely to maintain this level of spending into his 80s? If the spend is going on heating and electricity to stay comfortable in his current home, then those costs will only increase. So his pot could last longer than his current spend rate depending on what that basket is.
 
Protocol said:
The income is 25k, it's the expenditure that is 40k.
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Agreed, but they are well able to afford the expenditure from savings
They saved up enough income to provide a pension income of 25K and a lump sum also to supplement that pension income
 
It sounds like he might just know what he's doing. He appears to be matching his expenditure to use up his savings and pension that will get him to mid 80's.(Life expectancy) His house will be more than enough to cover a nursing home should he need one in his later years and probably still leave a nice inheritance when he does his final retirement.

Hopefully he enjoys his remaining years and is in good health for all of it. Taking a wider view of things he appears to be in a better position than most his age I would say.

For the 280k in cash. Deposit in banks + post office or something that pays interest at least. (Not all in one place)
 
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Find some good fixed rate savings accounts for 230k without exceeding 100k deposit protection per bank. Put 50k in Trade Republic for instant access and 4% interest. Spend the money as they are.

But watch out for inflation.
 
A lifetime loan might be another option to release house equity.

Update on Spry Finance's Lifetime Loan

Interesting article here: https://www.rte.ie/news/business/2022/1214/1341765-explainer-whats-a-lifetime-loan-and-how-do-they-work/ The rate has gone up to 6.45% fixed for the life of the loan. Spry Finance has written 400 loans here in Ireland worth €70 million since it relaunched back in...
www.askaboutmoney.com

€40k a year expenditure does seem fairly high for a single person. I wonder is he availing of all available State supports for seniors?
 
I'm also baffled as how a single pensioner is burning through 40K a year, is he collecting Fabergé eggs? Spending the winter on the Cotê D'azur in 5 star hotels?

Anyway, my superficial skimming of various personal finance forums would suggest it should be possible to generate 4% return on that nest egg, that's another 11K a year with no DIRT because of his age.
 
If he has accumulated a large lump sum in cash on deposit, he is unlikely to start investing now.

He should sell his home and buy a smaller home and live off the tax free capital that he has left over. He should be able to buy a lovely house with the money he gets and have lots left over. It solves all his problems without him having to learn about the volatility of the stock market.
 
I suppose an assessment of the €40K pa spend is worthwhile to see where the money is going would be the first place to start.

Health Insurance
Medicine
Subscriptions
Therapies
Food/Drink
Heating/lighting
Telephone
Socialising
Car
Holidays/weekends away etc
Gardening services

I am thinking that a say for a golf player, 12 weekend away, playing on expensive courses, a lot of eating out and socialising, running a high end car could rack up €15-€20K a year, as well as normal running costs for the house plus maintenance and running of the home.

Having said that the savings should get him to 88 so he is doing good there and this is what your savings are supposed to be for, for your retirement.

But if he is very worried about the amount of money he is spending it does not sound as if has a lot of discretionary spending. Maybe he is pay for stuff for his kids - would he be paying their health insurance or something?

But step 1 is a review of current spending.
 
Seems like the retiree has plenty of options.
1. Do nothing - probably has enough resources as it is.
2. Invest the cash for a better return.
3. Take in a lodger to share the costs.

On the lodger suggestion - what about a final year student? The won't be there during the Summer or over holidays. Less likely to party if in final year. Gone after 9 months if there are issues. The bit of company might be appreciated. No long term commitment.
 
Ensure he is claiming all his entitlements (does he qualify for state pension, widows pension, living alone allowance etc)
Expenses: ensure he is claiming the household package, fuel allowance, medical card etc.
As said above review his expenses to ensure he is not paying over the odds …his expenses seem high given available government supports.
Spread his cash between different banks ensuring he is getting the benefit of the best interest rates and maybe fix a portion for 2 or 3 years. He may not have completed the relevant paperwork for DIRT (form DE1).
In summary review everything!
 
Sarenco said:
A lifetime loan might be another option to release house equity.


€40k a year expenditure does seem fairly high for a single person. I wonder is he availing of all available State supports for seniors?
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Did this option myself.

My need was a little different but I didn't want to downsize and leave somewhere I have lived all my life, mainly as getting suitable homes to downsize to in the area is not an option. As a lady in her 70's the thought of renting my room to a lodger didn't appeal at all. I am all for economizing when required, but one has to live one life too! Especially at my age, while I can.
 
Mamamia22 said:
At age 70 one should have ideally not have to face the inconvenience of a probable much younger lodger and their issues, habits and lifestyle. I’m thinking parties, overnight guests, substance use, dirty laundry, clutter, noise, mental health issues, mood swings, sharing cartons of milk etc etc. Not to mention increased utility bills from room heaters, hot water etc. A friend of mine in his 60s has all these issues from his low rent paying lodgers. You would need eyes in the back of your head. No thank you very much.
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There are older people who need somewhere to live too. Plenty of people in their 60's who need to rent. Lots of examples of people whose marriages break up in their 60's when the children have flown the coop and they have nowhere to live.
 
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