Living off savings

vigman

Unfortunately, redundancy seems to be looming at age 58, and I will not get much of a pay off.

However, I have saved enough in ISAs and fixed term savings accounts to last approx 4 years if I drip feed 2K a month into a current account.

My question is about the logistics of how to cash in 4 lump sums of say 25K, incurring penalties and also losing interest.

What is the best way I can cash in my various savings accounts for this purpose over a 4 year period, please, and optimise remaining savings?

TIA

Vigman

Linton

vigman wrote: »

Unfortunately, redundancy seems to be looming at age 58, and I will not get much of a pay off.

However, I have saved enough in ISAs and fixed term savings accounts to last approx 4 years if I drip feed 2K a month into a current account.

My question is about the logistics of how to cash in 4 lump sums of say 25K, incurring penalties and also losing interest.

What is the best way I can cash in my various savings accounts for this purpose over a 4 year period, please, and optimise remaining savings?

TIA

Vigman

I take it you will not be receiving any income so that any interest you make will be below your tax allowance.

You havent said how where your savings are now, but assuming that they are all accessible I would suggest putting £25K in an instant access account and the use the other trances of £25K for a 1 year, 2 year and 3 year fixed term deposit. You wont need to worry about ISAs.

Eco_Miser

Commiserations. I was made redundant at 58. and two years on, I've found I've actually spent less than I've earned in interest/dividends, so maybe I could keep this up forever

Why do you want to get £25k at once? Do you really need £2k a month? Depending on the T&Cs you may be able to withdraw your £2K every month rather than £25k a year.

If your current account is a Lloyds Classic with Vantage, and you have between £5k - £7k in it and pay at least £1k a month in, you get 4% interest (about £20 a month). With £3k-£5k you still get a nice 3%. You are allowed three such accounts, (and can use the same £1k pay-in for all three), which gives you plenty of scope for juggling .

First, live off the money in easy access accounts, if you have them, then the accounts with the lowest penalty for early closure. Give notice now for accounts that need it. You didn't say what the remaining terms on your fixed term accounts is. You may be able to survive until they mature. If you've just put it all into 5-year bonds, you've got problems.

Make a list (spreadsheet) of when and how much money will become available at maturity, and at minimum notice. See how well this matches your projected spending, and if you can adjust your spending to better match availability.

If you have to withdraw a large amount, put the excess in the best easy-access, notice, or term account that will make it available again when you need it.


EDIT: At some point, perhaps not in the first year of redundancy, depending on earnings to date, you will become entitled to receive interest without deduction of tax. At that point, fill in and send a form R85 for each account deducting tax from your interest. Info here

organic_wanabe

First thing I would do is put £21,000 (3 x £7,000) into 3 Lloyds TSB Classic (with Vantage) accounts which pay 3.2% net. I would then transfer the interest each month into another account to use. If you are married then get your wife to do the same. Your money is not tied up if/when a better rate comes along.

Edit - cross posted with above, who gave far more detailed advice which you should consider following, in my opinion.

Good luck!

vigman

Thanks for the replies so far.

I should get the 64GBP pw Jobseekers allowance. I actually opened a Lloyds account but never activated it. I like the idea of the Vantage system for myself and my wife.

My 2 x 25K accounts are 1 x 2yr ISA and 1 x 2yr fixed saving and my wife's 2 x 25K accounts are 1 x 3yr ISA and 1 x 3yr fixed savings.

I could cash in the lowest rate 25K account and put into Lloyds Vantage accounts first year and then move on through accounts from there.

Of course, I could always get one of the new senior positions..mwahhhhhhaaaaaaahahahaha

TIA

Vigman

Loughton_Monkey

Regarding your pensions, the fact of having 4 of them helps.

As part of a 'general strategy' I would consider the following...

1. Maximise use of existing resources (using ways suggested above).
2. When you have spent all but a 'safety net' savings amount, opt to take Pension 1, with lump sum.
3. Optimise interest on lump sum and draw slowly to supplement small pension
4. Opt to take Pension 2 with lump sum....

and so on.

Eventually, you will be getting 4 pensions plus state pension. Work out what this will be. This will be your 'ultimate' income. Look at what you spend now. If lower, then you're basically OK. If higher, then you need rapidly to reconsider cost of lifestyle....

missile

I would suggest you need to work out a detailed budget. £2K per month sounds like a ball park guesstimate and IMHO a couple who are not working should be able to live on less. A spread sheet detailing your expendite may highlight those areas where you can ecconomise.

Mojisola

vigman wrote: »

I should get the 64GBP pw Jobseekers allowance. I actually opened a Lloyds account but never activated it. I like the idea of the Vantage system for myself and my wife.

This will only be paid for the first six months so plan ahead for that stopping.

Nanpy

Throwing an idea out here. Tactically would you be better off ring-fencing your savings in a pension and maximizing what you can get off the state? Which I think is what Loughton Monkey was suggesting but I'm afraid I wasn't able to follow exactly what he meant.

dunstonh

Nanpy wrote: »

Throwing an idea out here. Tactically would you be better off ring-fencing your savings in a pension and maximizing what you can get off the state? Which I think is what Loughton Monkey was suggesting but I'm afraid I wasn't able to follow exactly what he meant.

yes. If you are going to erode the capital using savings then you may as well consider investment options to see if they can be better placed to meet objectives.

vigman

Thanks, again.

The 2K per month is 400GBP less than what I am getting at the moment. We have a daughter at Uni for the next 2.5 years and are paying the accommodation fee currently although this would change if I lost my salary.

We live in one of the most expensive parts of the country....and no, we won't be downsizing having spent a lifetime restoring our current property!

I didn't know Jobseekers allowance stopped after six months

I have four saving pots but not four pensions. I will get a small work pension based on 15/80ths of my current 40K salary which I will try and hold off taking until 65. There will also be a lump sum. My wife will not get a work pension and only earns minimum wage for short hours.

I wish I'd had the courage of my convictions as posted here a few years ago and bought more gold as my savings would now be doubled!!

TIA

Vigman