What to do with £120k without future plans

bostonerimus

TCA wrote: »

The Trinity Study was the piece of work that backtested the rule with different withdrawal rates and various equity/bonds splits to see how they did over different periods for a 30 year retirement horizon. From memory, across almost all equity/bond splits (I think), the 4% withdrawal had a very high probability of not depleting the funds over those 30 years (and made good gains in many instances) albeit with plenty assumptions built in. Worth a google.

300, 25x income, 4% withdrawal are all expressions of the same thing.

The Trinity study showed significant drops off in success rates as equity percentages were reduced. It used US data and did not account for expenses....so as UK market returns,and many others too, have historically lagged the US, and as it seems that many UK investors are ok paying 1% or even 2% in investment fees, then the 95% success rate for a 30 year withdrawal from a 60/40 portfolio is probably very optimistic for the UK.

kidmugsy

Thrugelmir wrote: »

Totally based on historical US data though.

Based on an era that started with the US thriving on a near-infinite supply of cheap land. Then flourishing by copying the industrial revolution from Britain, underpinning its huge success as a primary producer - coal, ore, grain, hogs, and eventually oil and gas. Then flourishing further due to the entrepreneurship devoted to developing mass-production manufacturing industries, and then finally - post WWII - gaining by a brain drain from Europe. And all of this under a largely competent common law legal system, and usually with negligible need to spend money on armed forces, being defended by huge oceans.

Who could doubt that such a performance is bound to be permanently sustainable, there and elsewhere?

aj23_2

coyrls wrote: »

Not sure what you mean. The annual (tax year) cap is still 100% of relevant earnings for that tax year.

You can't use carry forward to exceed the annual cap, so I don't see how the OP can use carry forward to make a pension payment of £118K with an annual income of between £12k and £0K.

Because I never said about making a one off payment of £118k....

CatLady13

Thanks everyone for all the input, it's certainly been very helpful. I guess the upshot is, I need to do something along the lines of:

£20k - to live on this year and get the new career underway
£20k - to do up the house as it really does need it plus will help increase its value for the future
£20k - maximise this year's ISA
£10k - as a lump sum contribution to this year's pension (I'll need to check the exact figure)
£20k - either, next tax year's ISA, or wait and see how much I earn next year and make another pension contribution, or both (which might require more than the £20k)

That leaves around £30k in various bank accounts chasing the interest and also serves as an emergency fund and a buffer for next year if things don't go well.

Not having regular earnings is the real sticking point but once I get there then I can work on building a decent pension and also think about moving house. That would put me in a very good position in life :beer:

coyrls

aj23 wrote: »

Because I never said about making a one off payment of £118k....

I was referring to the OP (Original Poster) in my second sentence; my first sentence was my reply to you.

kidmugsy

It may sound rather negative to say so, but while you are taking stock could you not find some part-time job that would at least let you earn enough to be credited with National Insurance Contributions - which count towards your eventual State Pension - while not exposing you to income tax?
https://www.gov.uk/national-insurance

CatLady13

kidmugsy wrote: »

It may sound rather negative to say so, but while you are taking stock could you not find some part-time job that would at least let you earn enough to be credited with National Insurance Contributions - which count towards your eventual State Pension - while not exposing you to income tax?
https://www.gov.uk/national-insurance

Thanks.

I will be keeping up with my NI contributions regardless but at the moment, I do have any gaps except for the years I was at university.

Without going into all the details, I need a break for a month or two and then I will be considering my next career move and my next job, A part time job is an option.