In need of advice

rebeccatom

I am asking on behalf of my mother. Her situation is she is 55 and recently seperated from her husband. She has sold the family home and now has that money to buy a new house and live on until retirement. She is currently suffering from stress due to the breakdown of her marriage so is unable to work. She has nothing in the way of personal pension so the money will need fund retirement in 8.5 years

Money from house £263000
New house circa £150-£160000
so she will have about £100,000 left.

her out goings are about £1100 a month so this is the golden figure to try and get to.
she will also be getting spousal support of £475 a month for 5 years.

What is the best way to live off this money and also have it make some for when she retires?

Jegersmart

Hi

Sorry to hear this. I am not surprised that she is suffering from stress but hopefully this will only be a temporary condition. What is her working background? The reason I ask is that working will be the very simple answer to all of this when she is able. I would certainly suggest seeing a fully independent financial advisor, but would probably suggest she takes 12 months of outgoings in cash and depositing in a bank paying interest with instant access if possible, and then the rest into a Pension for her retirement or similar. The IFA can help with selecting some suitable investments.

It is never easy but as soon as she is able she should start working and turning this into an opportunity!

Good luck

J

Hooloovoo

rebeccatom wrote: »

her out goings are about £1100 a month so this is the golden figure to try and get to.

That seems incredibly high to me for someone who will have no mortgage or rent to pay.

Have you gone through her finances to see where she can save money?

I would have expected a figure half that value with no mortgage.

gadgetmind

At what age will she get her state pension and how much will she get?

If she doesn't know the answer to the latter, she needs to get a state pension forecast.

McKneff

My OH and I have no mortgage.

Our outgoings are tops £300 per month without food.

What is she spending £1100 a month on.

At 55 she is still comparatively young. No reason why she should not be able to work till or past retirement.

Thousands of divorces happen every month, not everyone leads to stress. It's peoples ability to deal with it.
Stress passes in time if you deal with it positively.

I'll never understand spousal support, people should be responsible for themselves not be dependant on an ex spouse.

Jegersmart

Hooloovoo wrote: »

That seems incredibly high to me for someone who will have no mortgage or rent to pay.

Have you gone through her finances to see where she can save money?

I would have expected a figure half that value with no mortgage.

What??

I guess it depend on where one lives etc. but £1100 is pretty low when you consider council tax, electricity and gas, car tax, insurance, fuel, food, clothes, haircuts, holidays and everything else.......? I am pretty sure that many spend at least 10% of that on coffees every month?

What I am saying is that whilst it is possible to live on next to nothing, why would one wish to do so if one could avoid it (hence asking about working background, because an income would turn this into an opportunity...imho).

J

Jegersmart

I'll never understand spousal support, people should be responsible for themselves not be dependant on an ex spouse.

---

Thats a bit harsh if the relationship was such that the woman stayed home and subsequently has very little experience in employment as a result. I.E. her husband was totally dependent on HER to raise kids, cook and clean and all the other important stuff that would cost a fortune in a housekeeper......?

J

rebeccatom

Her out goings at the moment include rent until she finds a house to buy so they will reduce by £300ish at some point. In regards to the outgoings being high, they are not, I have been through the budget with her and this is the basics. I would like for her budget to include hobbies, a holiday or entertainment once she starts to enjoy life again.

Regarding work, she does plan to go back to work once she is settled but due to health reasons this is only likely to be part time.

We are in the process of getting a state pension forecast. I think there may be some missing years of contribution so might have to top that up.

Jegersmart

Does she have health problems not related to stress? If not I can be reasonably confident in reassuring you that this phase will pass. Do you know what her income potential is?

J

rebeccatom

Yes, health problems are unrelated to current situation. She does have a good work history but has not been able to do full time work for the last 8 years and unfortunatly this is unlikely to change.

A part time job could bring in around £600 a month which will be great as then the outgoings are totally covered. but until then i guess she will have to eat away at the capital whilst trying to make as much interest on it. not easy with rates being so carp at the mo.

grey_gym_sock

she could generate a more sustainable income by investing a large part of her capital.

as you say, interest rates are low. and she should also consider inflation, as she may (hopefully, will) need this capital for 30 years or more.

investments in a mixture of equities, especially equity income, and corporate bonds, could give a yield of 4% or 5%, with both income and capital value likely to at least keep up with inflation in the longer term. both income and capital value would go up and down, though. a buffer should be kept in savings accounts to cover variations in income. capital value is more volatile than income; you have to learn to live with the fluctuations (and not sell everything when it's gone down). this could be done via funds (unit trusts / OEICs).