Dads Retirement Plan - Advice/Comments appreciated

J_Devon

Good afternoon ladies and gents! I'm hoping those with more knowledge than myself could give your thoughts and any comments/suggestions on this situation. My dad is 60, 61 next month and wants to retire this year.

Current situation:

• Owns home outright
• Very small mortgage to pay on a property in Turkey (which may well be paid off by now)
• Approx. 100k pension fund (not huge by any means)

Plans:

• Sell our house, and downsize to gain approx. 100k "in the bank"
• Take 25% tax free lump sum from private pension(is this the best option in this situation?
• Mum will probably continue to work for another year, possibly 2 (she's 59).

They're also throwing the idea around of perhaps using the 100k change from the sale of the house we're in at the moment to purchase another property and rent it out to add to their monthly income.

I'm sure there are things I've left out so if anyone needs further information I will try and post it, but I'd be really grateful for any comments on what people think of this. Is there a better way of doing things?

Many thanks in advance

J

EdInvestor

What's the position with their state pensions?

Get forecasts here: www.thepensionservice.gov.uk

Their income position is really quite poor.

J_Devon

Thanks for the link I'm asking them both to register to get a more accurate calculation but dad will obviously be able to claim it at 65, and mum could claim it in December this year if she were to retire (which is looking unlikely).

On a side note, once havce your xx number of years of NI payment to receive state pension, do NI payments automatically stop or do you have to fill in forms etc?

EdInvestor

J_Devon wrote: »

... mum could claim it in December this year if she were to retire (which is looking unlikely).

She doesn't have to retire to claim her pension. State pensions are taxable (which may be a factor) but don't attract NI

On a side note, once havce your xx number of years of NI payment to receive state pension, do NI payments automatically stop or do you have to fill in forms etc?

NI is still payable for people still working regardless of the number of years accumulated..

J_Devon

Ah okay, that makes sense Thanks for the reply.

Yes, I've just been reading for them about deferring your state pension. In this case it will probably be for a year or two. Are there any disadvantages of doing this? The thought being that with her income from her job, and also the money from downsizing, money shouldn't be too much of a problem whilst she's still working.

Overall, can anyone see any points that I've missed in my first post, or perhaps an alternative way of doing things?

Cook_County

1. Very limited asset allocation - almost entirely in one class (real estate)

2. An unusual currency mix (Sterling & Turkish Lire both of which are down significantly)

This is a very unbalanced portfolio overall.

EdInvestor

They need to invest the money from the downsizing to provide an income, not spend it.They appear to have only 200k of investable funds in total , including the pension - that will only produce around 10k a year in income over state pensions, and one of those is 5 years away.

That's very little for 2 people.

J_Devon

Okay, so the opinion is to invest what ever money is left over from downsizing rather than buy a 2nd property and rent it out. Noted.

I guess it would be difficult at this stage to suggest places (or ways) to invest the money as it probably won't be for a least another year or so yet. Are there any definites to consider or avoid?

The place in turkey was not bought as an investment, more just so they could escape the rubbish weather here at their will

Cook_County

I assume father has a Turkish Will and sufficient insurance to pay the Turkish estate tax on his death (Turkey is one of many jurisdctions with forced heirship laws. See here: http://www.globalpropertyguide.com/Europe/Turkey/Inheritance )