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You are though. A savings account last year was getting you 1% or so. You can get 4% now. So if Granny has £200k she’s gone from £2k a year to £8k. That’ll cover your food and heating bill rises no bother, and she’s probably not out buying a new car or a clothes or whatever else.
The gap between interest and inflation is a problem if you are living off your capital.
Gangsta Granny has 200k from the sale of some jewels she happened to come into her possession. At todays prices she needs 10k/year to pay for blue rinses and Werther's Originals. If interest rates and inflation are both zero she will spend all her capital in 20 years. If she gets 4% interest but inflation is 10% she is out of sweets after 15 years.
Of course living longer than 15 years may be out of the question without some will timed medical interventions that were missed when granny couldn't get seen by her GP.
jellybaby-
Meh, you can sustain 4% real terms drawdown almost indefinitely. I suspect Granny will be OK with £8k pa plus state pension plus (presumably) a paid-off house.
This assumes of course that the concern is really about Granny not what inheritance the sprogs can get their hands on.
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You forget the 50+k a year that granny will need for care.
[Edit] looks like I'm a day late to this
NickCJ
NotThamesWater
You are though. A savings account last year was getting you 1% or so. You can get 4% now. So if Granny has £200k she’s gone from £2k a year to £8k. That’ll cover your food and heating bill rises no bother, and she’s probably not out buying a new car or a clothes or whatever else.
Assets m8. That’s what separates rich from poor and what they’re trying to trick you to not buying. Lease a car instead of buy one, Spotify instead of CDs, rent Microsoft office’
“Hey! Why buy stuff! Possessions are so millennium! Live for today!
Oh. Sorry, it’s tomorrow now and you can’t stop paying or we take your car, software and music away because it’s ours not yours you pleb.”