Generating Income from 80K

dutchism1958

Hi,


A relative of mine has recently divorced.He is 65,no pension,renting a property,just started doing up classic cars to earn some income and has £80,000 he wants to draw an income from.
He cannot afford to lose this money & is struggling to think of ways he can generate extra income from this pot of money.
I have looked at all options but obviously nothing generates the £25,000 annual income he is trying to achieve.
My thoughts were to see an IFA for advice?.
Any help is much appreciated.
Thanks.D

Futuristic

He cannot afford to lose this money

You will not generate £25k/year without high risk. The no-low risk option is current/savings accounts but will not generate anywhere close to what he wants.

dutchism1958

Thanks Futuristic!.

princeofpounds

25k is totally unrealistic from 80k, sorry.


That requires a 31% annual return on investment. That's triple what even relatively high risk stocks might hope to provide (in the years they don't lose you money).


He needs to be thinking about working if he wants to subsist on more than a state pension + £3200p.a. drawdown from these savings (a 4% drawdown rate, which is a typical rule of thumb).


The extra income needs to be generated by himself (or his business ideas), as the money won't do it.

redmalc

The numbers do not add up,the most he can hope for is £3500/£4000 if he is lucky

dutchism1958

Thanks Prince of Pounds and Redmalc,this is exactly what I have said to him,but I said I would put the question out to others who know more than me so I appreciate you confirming my feelings.

Pincher

State pension from age 67.


Hard to believe he has absolutely no personal pension.
If he did, he can draw down ~£20k tax free before state pension kicks in.


I seem to remember there is some tax rebates you can attract by making a big pension contribution and then draw down thousands tax free. Plays on the personal tax free allowance and the fact that draw down is considered income.


I can't play this game, because my base income is far too high. Sigh.


So it's not all bad.

colsten

Pincher wrote: »

So it's not all bad.

Tell that to the guy who has only got his state pension and £80K cash.

bigfreddiel

Pincher wrote: »

State pension from age 67.
So it's not all bad.

huh! He's 65 now what's 67 got to with it?

fj

Pincher

bigfreddiel wrote: »

huh! He's 65 now what's 67 got to with it?

fj

Sorry, 66 is still the state pension age. 67 for me, unless they change it again.


Still a year's worth of personal allowance to play the rebate game.

xylophone

He is a man of 65, surely he has already reached state pension age?

If he can't afford to lose the money, he might consider the current accounts system for at least getting reasonable interest.

1 TSB, 1 Nationwide Flexdirect, 1 Lloyds Club, 3 x BOS Vantage, 2 x Tesco, 1 Santander 123 (move all cash back DDs here) - he could also use the Flexdirect linked saver.


He might consider deferring the state pension and living as frugally as possible on the £80,000 until it ran out, then drawing the state pension and seeing what state benefits he might be eligible for at that point?