Lump sum or pension question (again)

fairleads

Bellabee wrote: »

Sorry, I know this is a recurring question, but I'm having a problem getting my head round it. My husband is due to take voluntary redundancy, aged 61 and in good health. He has been offered the following options - Annual Pension £23,844 or reduced pension of £20, 912 plus tax free lump sum of £53,398. As I understand it, his pension is subject to RPI increases up to max 5% and max 3% for service prior to 6th April 1997. His service commenced in 1980 so this is a fair chunk of his total service.

We have savings of around £150,000 and would hope to downsize our house to release further equity. (How long it would take to sell though is anyone's guess!)

In addition to this, I (aged 58) have a Civil Service Pension of £18,000, and we own a BTL property which provides an annual rental income of around £5000pa, taking into account voids etc.

With any extra cash, we would intend to buy further BTL property in order to provide ongoing income. We are not investment savvy and would feel very uncomfortable investing in stocks and shares etc.

So, here's the question. Would we be better going for the lump sum or for the higher pension? The greatest unknown in this is the length of time it will take to sell the house. It is far too big for us and costs a fortune to run.

Many thanks for any views on this.

If its not broken don't try and fix it, is not a bad maxim. So take the lump sum and invest it in the asset class you're most comfortable with. If the stock market plunges then maybe test the water, but don't do it now if you don't have the experience. After all, the focus should be on increasing our income if and where possible - and living life - not diversifying just for its own sake.