Lock the money away before its all gone

sairpowell

I would like your help with regard to a lump sum. My mum who is in her 60s will be shortly getting a lump sum of £45,000 from sale of house. She has been useless with money all her life and it just seems to disappear. What is the best way she can lock up this money so it can provide an income for her retirement and she cant waste it .. Many thanks for your help .

Linton

A bit drastic perhaps but a Purchased Life Annuity would do the trick. This uses a non-pension lump sum to provide a steady income for the rest of one's life with very little tax to pay. Once bought there is no option to get at the lump sum, ever.

Plenty of info from google.

xylophone

Is she drawing her state pension?

Does she have other pension income/investments/ savings?

Does she own her own home or does she rent?

sairpowell

Thank you I will look at that :j

sairpowell

Yes she is drawing her pension

Yes she has a liitle income from a part time job

No she lives with a friend so doesnt own her own home and doesnt rent.

Thank you for your reply

PasturesNew

If she's useless with money, she might like the "fun" of chucking it into premium bonds - and being able to spend any winnings that happen along. That way there'll be the added 'excitement' that something great might happen.... as opposed to having 'boring savings, sitting doing nothing, out of sight'.

Compared to some savings the returns aren't great, the odds have reduced in recent years, but it does give a little "fun/who knows" aspect to what's a dry subject.

Flobberchops

That's a tricky one. A 5-year bond maybe?

xylophone

She might consider taking £5000 now and splitting the cash into 1,2,3,4,and five year bonds taking the money on maturity to supplement her income for that year.

http://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

She should make sure that she has the best current account(s) for her needs.

greenglide

Use the capital to fund deferral of State Pension for a couple of years?

Buy extra State Pension entitlement (SP Top Up) via class 3a voluntary contributions? You can get up to £25 per week of extra pension this way see here https://www.gov.uk/statepensiontopup

This is the equivalent of a return of around 5.8% index linked for life which you couldnt get anywhere else. Normally the deferral is a better buy but in this particular situation it puts part of the lump sum totally out of harms way and provides a nice income.

kidmugsy

greenglide wrote: »

Normally the deferral is a better buy but in this particular situation [top up] puts part of the lump sum totally out of harms way and provides a nice income.

Deferral is such a good deal that it's a pity that her silliness precludes it. I'm stumped for a way to get around the problem, short of getting someone sensible to act as a trustee for the money. But who would take on such a thankless task?

Biggles

Is it her that wants to 'lock it up' or you that thinks she should and is going to have to persuade her?