Mums payout from Death of Stepdad

skeane1973

Hi All, I need to give my Mum advice on what to do with her money following the death of my stepdad.

She basically has 120,000 K from which to live on for the rest of her life.

Flat she lives in is paid for and hers, she has a £3500 a year pension and a job that pays £350 a month.

She will not and indeed I don't want to do anything fancy as this will be her only money really for the next 20-30 years but obviously need to move it from her current account.

Any suggests would be grateful

Thanks in advance

Simon

tom188

Put it in a high interest savings account like IceSave whilst she considers her options.

If she knows little about investment options it would be a good idea to see an IFA, but a proper untied one, not the sort you find in a bank.

dunstonh

She needs to be very careful and look into this quickly. With that level of income, £120k in the bank or certain investments could wipe out her benefits (such as pension credit and allowances). Some of these benefits may not be applicable now but will be in the future. Certain investments are not included in the means test for pension credit and she may be an example of someone where getting the right investment is very important (its always important but this could just be a case of getting the right tax wrapper).

EdInvestor

How old is she?

she has a £3500 a year pension

Is that a widow's pension she is already receiving? Is she due to get any pension later from her job?

How much will she get in state pension when she retires and when will that be? Forecast here:

https://www.thepensionservice.gov.uk

computerwoman

she could open a citibank account with that amount and live off the interest,
http://www.citibank.co.uk

ukmike

She basically has 120,000 K from which to live on for the rest of her life.

Thats £120 million! Think you mean £120k.

skeane1973

EdInvestor wrote:

How old is she?



Is that a widow's pension she is already receiving? Is she due to get any pension later from her job?

How much will she get in state pension when she retires and when will that be? Forecast here:

https://www.thepensionservice.gov.uk

Yes Widows, she is 53 and will get a small pension through work + state including a bit of my stepdads if she doesn't remarry in between (that's what the pension service told me).

Cheers

skeane1973

ukmike wrote:

Thats £120 million! Think you mean £120k.

Opps, yeah be no problems if that much!!!!!!!

Ian_W

computerwoman wrote:

she could open a citibank account with that amount and live off the interest,
http://www.citibank.co.uk

NOT good advice IMO as:
1. The rates OK for 6 months but then 5% which is pants - why wouldn't you go for a market leading 5.7% if it's there?
2. The interest at 5.7% is £6840pa but after 20% tax [and OPs mum sounds like she's a BR taxpayer] this reduces £5472 or £105pw - hardly likely, even with her pension etc, to fund a lavish lifestyle!
3. Taking the interest will leave the lump sum and the income at the mercy of INFLATION. It's been very low for the last 10yrs but £120k 10yrs ago will only buy you £93K's worth of goods to-day and the income [assuming the same int rates] is likely to be worth £1200 less in spending power a decade hence.

As Tom said earlier she needs to see an IFA who specialises in investments not one who does everything - certainly not one tied to a Bank, they're sales, not advice. Get them to give her some options but also watch out for charges. You want their expertise and you should expect to pay for it but not an OTT amount. Post back what the IFA is suggesting and you'll get some very experienced posters commenting. BoL to her.

EdInvestor

skeane1973 wrote:

Yes Widows, she is 53 and will get a small pension through work + state including a bit of my stepdads if she doesn't remarry in between (that's what the pension service told me).

Could you possibly provide some more detailed numbers for this, eg

Total state pension(s) income
Total work pensions income

Is the work pension index-linked for inflation?

It sounds as though she will be well above the benefit level, but also fairly unlikely to fall into the tax net, at least from income so far , so don't put any of this money in any more pensions, as pension income is taxable.

She needs to have a programme to get all this money into ISAs, so that this income will also be tax free when she retires.She can do this at the rate of 7k a year for the maxi ISA, 14k can go in over the next few months as we are coming up to a new tax year.This money should be invested in a selction of funds .She should have most of it in by the time she retires.

For the time being I would suggest she put most of the money in high interest accounts reinvesting the interest.This means the money will at least keep its value.

But she (or you-or both of you -) need to learn a few basics about investment so that this money can grow in the long term.You have to remember she probably has another 40 years to live.If you left that money in the bank and spent the interest, at the end of that time it would be worth about 30k in buying power because of inflation.

You need to figure out how to invest that money so it grows, but without taking excessive risk.