Helping an older lady

J._Jones

I have a really awkward family problem emerging and would welcome help from the Brains Trust on how to proceed.

My mother-in-law, approaching retirement, is, according to my wife who shares my trepidation, about to ask me for some critical financial advice. The situation is that she is in the process of selling her old family home (we helped her put it in let when her mother died, though she later sacked the very good agent and it fell vacant some time ago because she found being a landlord too difficult to cope with; she currently lives in work-related accommodation but this will of course stop with her retirement). Her unshakeable resolution, violently rejecting any alternative suggestions from others, is not to use the proceeds to buy her own place but instead to invest the capital to provide her with more income in retirement (including helping pay the rent she will therefore need to find).

Some complications arise, however. In particular she is militantly anti-Internet, profoundly ill-informed about money, carries a whole series of mistaken assumptions around with her (and has made many really dreadful financial decisions in the past, such as with abandoning the letting which had been profitable), and is at all times an exceptionally difficult person to handle. Moreover, although she is going to seek my initial input (she is allergic to talking to IFAs, sadly), there is no chance she'll allow me or my wife or anyone else to have any on-going involvement in her affairs: in short, once set up for retirement she will insist on doing it on her own though will certainly blame me/us if things then go wrong.

I therefore take it as read that she is going to have to follow the simplest and most plain-vanilla, low-risk investment strategy, even if this means probably accepting dismal returns. A cash savings account is the obvious way forward for someone like this. But what in particular would anyone recommend, especially for someone who is, being as polite as I can possibly be about her, an "unsophisticated" investor?

In case it matters to your thoughts we're talking about, say, £150,000. (Oh, and she's already let it be known she "wants" about £6,000 per annum!!)

And I'm going away for a week now, so apologies for not responding quickly to anyone who is good enough to venture a reply.

Gadfium

There is no law saying that you are obliged to or have to help. Especially if she is so hard to deal with.
No matter what you do, it sounds like it will end messy, and you will carry at least some of the can.

If it was me, I'd be very firm but polite. I'd let your wife know that you're not qualified to advise on that sort of amount and that its unlikely to be heeded. Explain that you are worried about it jeopardising your relationship with your wife. I'd then then thank the MIL for the opportunity, but gracefully decline it.

ChiefGrasscutter

I'd stay away for longer than a week - much longer in fact!

JohnRo

You can't help someone who doesn't really want to be helped.

mvarrier

Easy- she wants six thousand a year. That means with 150k she's allowed to live another 25 years by stuffing it under a mattress. Maybe 27 years in a savings account. If she wants to live longer, then she'll have to listen and compromise but it's no skin off your nose.

xylophone

Has she yet found a place to live or is she planning to move in with you?:eek:

Stubborn she may well be, but I assume that she can read and do basic arithmetic.

You might show her the savings tables for "safe" cash deposits and she should soon be able to work out that she will not receive £6000 a year.....

She will receive an occupational pension?

When will she receive state pension?

You might ask her to check the above/get a state pension forecast if necessary.

She knows how much the rent of a suitable property would be?

If you know what she wants, you could collect details from local agents and leave them with her.

Other than the above, any involvement will end in tears and recriminations?

jimjames

£6000 (4%) is perfectly achievable with a mix of investment trusts and corporate bond funds.


Whether that is a good idea or not is only something she (you) can judge but if the risk is being blamed then I'd walk away too.

sparkiemalarkie

From bitter experience I suggest you smile sweetly and don't get involved.


People like this do not want to listen to any other opinions but want someone else to blame if things go wrong.
It may well end up putting a strain on your own marriage.


sparkie

kidmugsy

mvarrier wrote: »

Easy- she wants six thousand a year. That means with 150k she's allowed to live another 25 years by stuffing it under a mattress. Maybe 27 years in a savings account.

Premium bonds will accept £50k.

By the way, O/P, what is she going to live on? State Retirement Pension? Occupational pension?

If she gets, or is about to get, an SRP her best "investment" would be to defer it for a year or five and live off some of her capital.


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372517/dwp024-102014.pdf

She could, if she's the right age, also buy a £1300 p.a. extra income from a "pension top up" aka Class 3A National Insurance Contributions, available from the autumn to April '17.

But you have to tell us how old she is.

Silian

If she wants £6k from £150k it might mean that she has heard of the 4% rule - so she might not be as clueless as you think. It should be fairly easily achievable with stocks and bonds with some safeguards in place.

Edit : And a btl investment isn't a great idea. Especially for someone who isn't interested in being a landlord. I might even agree with not buying a property at this stage of her life. A property that she lives in won't pay the other bills she has.

kidmugsy

More than 4% p.a. is paid by both the pension deferral (10.4%) and the top-up (age-dependent). They are probably good non-frightening places to begin. She should also be plunging £15240 p.a. into ISAs and probably the permitted maximum into personal pensions of some sort: £3600 p.a. gross in any year when she has no earnings. What the funds in those wrappers will then be invested in will depend on her loopy personality I suppose.

Good luck, O/P, and best wishes.