Low income retiree, looking for options

Dublin Walker said:
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.
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Dublin Walker said:
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.
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Great Product.
 
The approach to a case like this is to establish what sort of house he wants and how he wants to spend his money.

I am guessing that most 70 year olds want to live in their own home. He has absolutely no need to downsize if he does not want to. He may at some later stage want a live in minder/company and having a bigger house makes that more feasible.

So that is what he should do. If he needs different housing later e.g. because of mobility issues,he can make that change then.

If his current house is uncomfortable and draughty, he can spend money on making it comfortable and warm or else he can switch to a more suitable house.

I would not tell anyone that they should not be spending €40k a year if they have the money. Let him decide how to spend it. If he is travelling a lot, then it's money well spent. If he were in danger of running out of money, then he could revisit that.

So what if his €280k lasts only 14 years?

As Sarenco has pointed out, at 84, he will be able to release cash through a Life Loan.

So he will not run out of cash/assets spending €40k a year.

Brendan
 
ThirstyLizard said:
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.
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Sorry, I had missed this. Absolutely keep the house and he can afford in-home care. But he can revisit that when it arises.

Brendan
 
So what risk is he facing?

The big risk is sustained high inflation above the deposit rate of interest.

He can swap this risk by investing in shares. That is clearly the right thing to do but as Steven has pointed out, most elderly people will not invest in shares.

I would encourage him to put half his money directly in shares - not through an ETF or fund or anything else. That spreads the risk. He might run out of liquid cash before 14 years or after 14 years. Inflation and his health will be a key factor in determining that.

Which is another key reason for keeping his family home. It's a very tax-efficient investment. Any gain between now and when he has to sell it, if he has to sell it, will be tax-free. It's probably a good hedge against general inflation as well.

If he sells a €900k house and buys a €450k house, he might well see the €450k cash freed up eaten up by inflation or by a stock market fall. Of course, house prices could fall as well.
 
Dr Strangelove said:
But any €900k house in Ireland is superfluous to a single person’s needs.
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tomdublin said:
Not just superfluous but maybe even a bit selfish IMO. In a housing crisis the tax system should be used to get people out of vastly oversized houses.
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There has been no mention from the OP of any details of the property other then it's worth of €900K
So we don't know whether its a 10 bedroom palace in ballygobackwords or a two bed town house in some posh Dublin suburb
So IMO the above two comments are indeed "superfluous" in themselves ;)
 
Hello,

I see no logical reason for not downsizing, immediately:

* reduce day to day running and maintenance costs,

* release equity to enjoy in life, it doesn't all have to be left for the kids,

* prepare for a lesser level of mobility, and perhaps future care needs.

I appreciate that there can be emotional ties to a property, but emotions are not always logical, or best to base a decision upon.
 
MrEarl said:
* release equity to enjoy in life, it doesn't all have to be left for the kids,
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He does not need to release equity. If he releases €300k equity, he will have to invest it. Investing it in his home is about as good an investment as he can get.
 
Brendan Burgess said:
It's not just ties to an inert property.

It is knowing your neighbours. It's a sense of home. It's having it the way you want it. It is absolutely logical.

Brendan
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Hello Mr. Burgess,

I'm sorry, but we see this one a bit differently - for me, you make a property your home, and lay down out as you want to, you make your friends (maybe the are your neighbours, maybe not, do you really need to be on particularly good terms with them, or just have a reasonable "working relationship" with them?) .

In retirement, I'd rather have significantly more cash available to me, and live in a more modest house, just in case I ever needed the cash, but to each, their own.
 
Brendan Burgess said:
But then sell it when you need the cash, not when you have €280k in the bank and don't know where to invest it.

Brendan
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Easier said than done, at short notice. I'd suggest that it might take a good six months to sell a property, perhaps longer.

The value of the property may have dropped, when the funds are needed.
 
tomdublin said:
Not just superfluous but maybe even a bit selfish IMO. In a housing crisis the tax system should be used to get people out of vastly oversized houses.
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Totally agree.
If you work hard and but a property you like. Your selfish.
If you choose to drive a nice big car you like your selfish,
If you work save hard and buy a holiday home your selfish.

I live in a nice big house with my wife. I own a second property. I drive a new car every few years. Nothing about the forty odd years we both had to work. Sometimes two jobs when work or money was scarce.
Oversized houses. Go out and work two jobs the way we did for many years. Maybe you could one day be selfish and own somehting you worked hard for and aspired to. This nanny state nonsense does my head in.
 
tomdublin said:
Not just superfluous but maybe even a bit selfish IMO. In a housing crisis the tax system should be used to get people out of vastly oversized houses.
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So eviction by tax? How many times over must a person pay tax for something they buy and maintain using their own nett pay?

It is maddening the mindset creeping into Ireland. There is a growing minority that appears to view others prosperity as the direct (& only) cause for their hardship.

The country has many problems, particularly with housing. Nailing OAPs to the cross over the perceived under utilisation of their home is in no way part of the solution…IMO.
 
  • It depends on his risk tolerance. There are various option you could consider such as bonds and ETFS. If you invest in ETFs, in Ireland the rules are contrary to what you would expect.
  • I think renting a room would be a good option as you can earn up to €14,000 per year tax free with the rent a room scheme operated by Revenue. As it's under a license the notice periods need to reasonable but can be more flexible than under tenancy agreements.
  • If living with someone isn't an option could he use the funds to build a separate living unit? If it's built within the original property you can still qualify for the rent-a-room tax relief of €14,000 but you need to register tenants with the RTB.
  • I have a Spanish friend who receives English lessons online from a man in his late 60s. So if he'd like a par-time job working from home it could be an option.
  • Also, if he has an interest in part-time work to supplement his income while he still can work there are options available. I knew a man in his 70s who still works as a photographer. Does he have any skills, interests he could apply to a part-time job? Eg mentoring young business owners, handyman for locals, gardening or minding children.
 
The only option is to have HSE help in few times a day.

If he wants to be well taken of, then I think downsizing would be a good option for future proofing.
The last thing he needs is to be drafted into a nursing home in the later years of his life.

Just my tuppence
 
Downsizing is easier said than done. It is not impossible of course but for the average (wealthy) person it will involve giving up a house on a private site that is not overlooked by other people. Housing estates even in the best areas bring risk of adult scumbags and yob youth next door, even in mature estates.

Bungalows in some areas are scarce if desired (often a reason to move is being unable to manage stairs) and have their own expensive micro market due to scarcity - so you can trade down from a big home with private site to a bungalow in a denser populated area and secure almost no financial gain.

Asking someone who has never lived in a denser populate area/house overlooked by someone else's etc is a very big ask in many cases, it can be very intimidating, especially if the financial windfall isn't actually that great.
 
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