house sale proceeds

paul_taylor_2

Hi All, We are going to sell our house & downsize. Our current house is worth approx 350k & we are looking to spend up to 150-200k for the next one, we have no mortgage to settle & we have no other debts so I was wondering what is the best thing to do with the money that's left. I am 60, working(prob until 65) & in good health, my wife is 58, disabled(not able to walk far). All of our pensions are sorted out by our IFA & are in an Aviva wrap, my personal pension has an approx value of 60k & my wifes pension plan is worth 58k. We will have no other income.
TIA Paul.

dunstonh

so I was wondering what is the best thing to do with the money that's left.

Could be many things. You need to consider risk profile, capacity for loss, objectives, knowledge and understanding, tax wrappers, circumstances etc (in no defined order).

All of our pensions are sorted out by our IFA & are in an Aviva wrap

Good value wrap platform. So, that is a good sign.

What does your IFA say about what you should do? After all, they know more about you than we do.

kidmugsy

In hand-waving terms, you could consider maximising annual ISA contributions for you both and annual pension contributions. You should both get the official estimates of what your State Pensions will be, but check whether you should expect to draw your pension under the current rules or the proposed new rules - and keep an eye on the news to see whether the proposed new scheme will come in at all, and if so whether it'll come in on schedule in 2017.

Roughly speaking, a good target for retirement would be for each of you to have enough pension income (including the State Pension) to use up your personal allowance against income tax, and then ensure that any further income comes from your ISAs and is therefore tax-free. You would then have been as effective at tax-avoidance as the denizens of Bermuda. But without the sunshine.

jamesd

Best to ask the IFA but the first question that comes to my mind is whether you have a need for the capital. Then I wonder whether pension or ISA investing may be best and with what risk tolerance.

Pension partly changes capital to income because of the restriction on how much you can take out, but it produces a slightly higher income usually at basic rate, can be significantly more at higher rate or with salary sacrifice. The S&S ISA keeps the capital available but is't quite as efficient for income production.

I also wonder what the anticipated total pension income is from the state pensions, any defined benefit work pensions and possibly partial annuity purchase. That might take your guaranteed income to £20,000 and allow Flexible Drawdown instead of Capped Drawdown or annuity purchase. Flexible Drawdown gets you access to the whole pension pot, eliminating the loss of access disadvantage of a pension.

paul_taylor_2

Thank you all. I have not spoken to my IFA yet as we have only just decided to uproot, I just wanted to try & get it in my head what's best. It's also handy to know what you lot think before I go to see him(forewarned & all that). I will also ask him about the state pensions. I will keep you informed, but it may be a few weeks away.

Thanks, Paul.

atush

You need a cash pot if you don't already have one. And then the pension and ISA allowances to fill (pensions are looking a bit low ATM). Your wife can have a pension, if she doesn't have one she is currently paying into (presume the one listed is a work pension) as it will make sense to use up her personal allowance in retirement.

But until you sell, get a price, and buy a new place we and you don't know the sum you are talking about. You could sell for 300K after costs and not find a place under 225. You could sell for 350K+, and buy for 150K. So no one can say where to put how much.

Good luck with the sale, and get back to us once you know.