Investing pension lump sum

slc1963

Any tips and advice for investing £200,000 lump sum that I will be receiving on retirement in three months time. I owe about £90,000 on my mortgage and should expect £2500 a month in pension payment. I have also got a small consultancy job when I do retire which should pay around £3000 a month.

So as you can see I wont actually need this lump sum for a while so can invest for a few years without needing to get hold of it.

Linton

If you have no significant experience of investing, for that amount of money you should consult an IFA. If you want to get the unregulated thoughts of a few strangers you need to tell us a bit more.

How old are you?
Do you have a partner?
When will you need to access the money?
How will you access the money? If its a steady drawdown, how much/year will you need to take to achieve your desired standard of living? Presumably this will change over time when you get your State Pension and stop your consultancy job.
Other than retirement income what other objectives do you have for the money?
What other savings/investments do you have?
Have you any reason not to expect an average life-span?
What is your mortgage interest rate?

At the top level you should put some in cash and the rest in some sort of investments held with some sort of broker. More than that is impossible to say without extra info. It may or may not be financially worthwhile paying off your mortgage.

Suggest you put together a year by year plan from now til death showing expenditure and income from each source.

bowlhead99

Sensible comments above, one other thing to add is that if you don't really need the money, and are only going to have to find another home to invest it (where most of the gains or income from it will be taxable if you can't fit it into tax wrappers), then is there an option to defer taking the lump sum, and take a larger lump sum later?

That can sometimes be quite lucrative- even though people often have a natural inclination to grab the cash ASAP because "why wouldn't I?" and then struggle with how to deploy it sensibly.

dunstonh

So as you can see I wont actually need this lump sum for a while so can invest for a few years without needing to get hold of it.

So, why are you taking it as a lump sum?

If its a money purchase scheme then it would be better to only part crystallise what you need and leave the rest until later. If its a defined benefit scheme then its likely that the taking a lump sum is the worst option (not always but commutation factor for most means that income is better than lump sum). So, taking greater income and reduced lump sum should be considered.

So as you can see I wont actually need this lump sum for a while so can invest for a few years without needing to get hold of it.

Ok, a few years suggests you have plans to spend the remainder of the lump sum in 2 or so years time. Is that correct?

2 years is not enough to invest. You would stick with cash savings for that sort of period.

You really need to be forward planning your spending in retirement and looking at solutions that fit that. That includes the existing pension before you make decisions on how to take the pension as you cannot unwind them after the event.

atush

with 5500 as month coming in, do you need any more?

What type of pension is it, a DB/FS pension? If it is, do you have to take the 2o0K LS, or is this just the most you can take?

Do you have other savings and investments? If so, can you take a lower TFLS and get a higher pension instead?