Advice needed for inherited money investment please

blue_cat_4

Hi

I'm due to inherit about £50,000 from my mum's estate in the next few months and instead of it being frittered away on holidays , new kitchens etc, I would like to invest it and use it towards my pension. I'm 49 and want to retire at 60ish when my youngest will have hopefully finished university. I work part -time in the NHS and have just received my pension forecast which will give me a lump sum of approx £25000 and an income of £8000. We have £25,000 left to pay on the mortgage which we are hoping to start overpaying soon and I have a couple of credit card debts of £4000 which I would like to get rid of once and for all!
Any advice gratefully received as I've really no idea and have only recently realised I've actually got to start dealing with these "grown up" problems.
Thanks

atush

For help in reducing your outgoings (great for paying off debt and saving and will give you practice at budgeting for when you are retired) go to the Debt free board and post a Statement of affaris (a list of income and outgoings) and people there will help you shave money off your spends with their suggestions. It would be a great help to your savings/mtg if you went back to work full time for a bit-.

Pay the CCs off first, before you start overpaying the mtg.

I assume you have no other savings as you have some debt? Can you live on 16K? (your pension plus the state pension). How will your children afford University? Do you have a partner and do they have a pension or savings?

When you get the money, put 15K into an NSI ILSC that will pay you inflation plus .5%. then fill up your cash ISA. You could do more of this if you were married as your OH could take one out too and hold one in trust for you. fill up your cash ISA each April with the rest, which you can put into Easy access and one year bonds.

Then I would try to work more and continue to save to help the children and to give you more income in retirement.

jem16

atush wrote: »

Can you live on 16K? (your pension plus the state pension).

As the OP is a member of the NHS scheme, the pension plus basic state pension will only amount to just over £13k.

OP - you will need to decide whether you want to save the money or invest the money. Getting rid of the credit card debt first would be a good idea then think what to do with the rest.

atush

I was thinking they were retiring over 10 years from now so was assuming that the 8k pension would be supplimented by a State pension that is larger than todays rate as it has an uplift?

In any case I do agree they need to tackle debt and then decide on the lever of risk they want to undertake with the inheritance. But even with that money I fear they have too little to live on so would suggest saving as much as possible in the next 11 years.

jem16

atush wrote: »

I was thinking they were retiring over 10 years from now so was assuming that the 8k pension would be supplimented by a State pension that is larger than todays rate as it has an uplift

It probably will do but then so would the NHS pension so it's really best to look at them both in "today's money".

blue_cat_4

Thanks for the replies. I have been taking control of my spending over the past 6 months with the help of the boards here and I am intending on paying credit cards off and just keeping one for emergencies with a low limit. I will hopefully increase my hours to full time over the next few years as the kids are becoming more independent This is easier said than done at the moment as the hospitals are getting rid of staff but I do try to take up as many extra hours as I can.

My husband has a small teachers pension from a few years ago but has recently returned to teaching so this will increase slightly. He has also been wondering about AVCs- do you think this would be a good thing to do or would the money be better put elsewhere? He will also have money from an inheritance ,approx £100,000 once a property has been sold.

I am fairly risk averse -my dad had an Equitable life policy which ended up being worth hardly anything so I don't really know who to ask for really independent advice pensions. I really do have very little idea about this sort of thing so any advice is great as it is making me think of my options and giving me a focus.

I would like to think I'm going to be able to help the children through uni but i think we've kind of accepted that they will need loans to do it.
What I really want to do when I retire is do some VSO work abroad and do some travelling.
I envisage that we will sell the house we are in at the moment and downsize once the children have left- this is supposing they do leave home!

atush

So you need to add up your individual pensions, and the state pension each if you will get one (you can get a pension forcast from the DHS). You have given us only your details and as you are married that will change things slightly.

What I really want to do when I retire is do some VSO work abroad and do some travelling.

Great idea and could give you a whole new lease on life when you need one. But I would concentrate on both you and your OH working as much as poss (with you going to FT when the children are old enough) now as when you retire your income will plummet. And you want o help your children and keep them having lower loans if you can. After all, you guys seem to be struggling a little bit and you had acess (or at least your IH who is a teacher) to higher eduction w/o the huge fees your own children might face.

jem16

blue_cat wrote: »

My husband has a small teachers pension from a few years ago but has recently returned to teaching so this will increase slightly. He has also been wondering about AVCs- do you think this would be a good thing to do or would the money be better put elsewhere?

AVCS are more or less obsolete now unless there is a tie in which allows you to take the whole AVC pot as your tax free cash instead of taking it from the main scheme. The Teacher's Scheme is not one that allows that.

Unless he is a higher rate taxpayer, then using a S&S ISA instead of AVCs would probably be better.

I am fairly risk averse -my dad had an Equitable life policy which ended up being worth hardly anything so I don't really know who to ask for really independent advice pensions.

An IFA is who you should be asking and advice should be looked at jointly. If you have no personal recommendations from family or friends then go to https://www.unbiased.co.uk for a list in your area.

noh

jem16 wrote: »

As the OP is a member of the NHS scheme, the pension plus basic state pension will only amount to just over £13k.

OP - you will need to decide whether you want to save the money or invest the money. Getting rid of the credit card debt first would be a good idea then think what to do with the rest.

Plus, if the OP retires from work at 60, there will be at least six years until she starts to receive the state pension.

vax2002

Pay the entire mortgage off.
Interest rates have been as high as 14% and can be so again very quickly.
You have a once in a lifetime chance to clear your debts, dont screw up

kidmugsy

1) What's the interest rate on your mortgage?