Another 'do I need an IFA?' thread but with unusual circumstances...

Nikkster

Hello!

I've seen quite a few threads about whether or not people need an IFA and I've been wondering the same.  However there are a aspects to my situation which are (thankfully) rather unusual and I think make the answer even less clear cut (or maybe more?) than for most people.

I am almost certain (I've not seen the final numbers yet) that I am about to receive a significant amount of money in the form of a tax-free lump sum as I am taking (serious) ill health retirement.  Unfortunately I am almost 3 years into a stage IV cancer diagnosis.  Whilst I am hoping to be around for a while yet, the overall prognosis is not amazing - indeed I qualify for serious ill health retirement as there can be deemed to be a prognosis of less than 12 months (this however is highly dependent on how the disease progresses and how successful treatments are/ for how long).

I am 38, single and have no dependants. I would like to be able to leave enough money to pay for my funeral but enjoy the rest of it for as long as I am able. Un/fortunately I have no idea how long this is likely to be, but we're maybe talking single digit years.  My current plan is to:

1. Pay off my mortgage - I'm mid-fix so trying to set up a spreadsheet to figure out when is best to do so considering overpayment allowances and early repayment charges (I need a hobby!  ). I don't feel like I have a 5+ year horizon to invest this money, plus I would like the security of knowing my house is paid off.  As far as I'm concerned it's when not if I do this.
2. Top up my premium bond holding to the maximum allowance. At least the money is safe (other than from inflation) and a bit of excitement each month waiting for a big win.
3. Put the rest into NS&I income bonds and hope the rate isn't slashed. I will then pay myself a 'wage' each month from this account. I also plan to undertake some home renovations which will come out of this money.

Is there anything you would suggest doing differently? Should I be looking for an IFA or because of the possible/probable timescales is it unlikely to be worth it?

Thanks for reading and in advance of your comments,
Nikkster (long time lurker )

El_Torro

Sorry to hear about your situation.

Based on your circumstances I’m not sure an IFA could help you significantly, especially if you plan to have all your money in savings rather than investments.

It may be Worth meeting with an IFA or two, to see if your current plan is sound. Don’t expect them to say much without you paying them though.

Nikkster

Thanks El_Torro. It's certainly not been how I thought my late 30s would pan out, but it could be a lot worse. I feel relatively well and am now looking at being financially secure.

I just don't feel like it is appropriate to invest this money - if circumstances allow, I don't want to fancy e.g. going on a big holiday and not being able to access the money or worry about the markets having tanked at an inopportune time. On the other hand I've always been careful with my money so still want to feel like I'm making the most of it

RetSol

Hello Nikkster. Sorry to hear about your health problems but glad that you are looking to make the most of what is available to you.  That's a very inspiring attitude.  I have found that most IFAs will  hold a preliminary meeting without charge.  I have met a couple of them recently on this basis and have found the meetings useful to flag issues and challenge my thinking.  I have come away with some new ideas even though I have not ended up paying for the IFA's services.  Incidentally, FWIW I don't hold out much hope that NS&I will maintain its current rates for long - they are so out of whack with the wider savings market. 

Nikkster

Thanks for your reply RetSol.

Yes, I am sure that NS&I will be reducing their rates soon. I bet they'll announce it the day I get my money!

Maybe I'll have an initial chat with a couple of IFAs as you've done and see how I feel. I guess I could tie up some of the money for a bit but I'm not convinced it's the potential positives outweigh the negatives in my case.

Thrugelmir

Is there a need to repay your mortgage fully? Given you say that you've no dependents. Or have you plans to bequeath money elsewhere. 

Nikkster

Thrugelmir said:

Is there a need to repay your mortgage fully? Given you say that you've no dependents. Or have you plans to bequeath money elsewhere. 

Not specifically I guess. But I would like to  - since taking out my mortgage I had a plan to pay if off in x years and I like the thought of my house being completely mine whatever happens (though obviously I won't need to worry about losing my job any more).
What else would I do with the money? The interest rate is higher than is available in savings accounts, and I'm guessing will be for a considerable amount of time (I could probably have done a bit better when I remortgaged but it was easier to stick with the same lender - and I've got 3.5 years of my fix left now).

RetSol

One downside of repaying the mortgage is that the cash is "gone", you cannot easily get it back again and your options may thenceforth be unnecessarily limited. Not sure whether this is what the ever-wise Thrugelmir is thinking.
I certainly would take your time over the decision. 
Re the first paragraph of your original post, I think that the answers are less clear cut in your circumstances.  Establishing your own priorities is both especially necessary and especially difficult. 

AnotherJoe

I wouldn't repay your mortgage, as said it's money that will be gone. Suppose for example there's an experimental drug that's looking promising that NICE hasn't approved yet that's £100k and you've just irrevocably put that against your mortgage? Or a treatment you can get in say Germany that's not available here? 
How many years of mortgage payments would the lump sum cover?
 Will there be other income coming in after you stopped working ? Have you claimed PIP? If your diagnosis is severe enough there is a payment you can get which is not  means tested, you just need your doctor to sign it off. 

I also agree an IFA isn't needed or appropriate, you shouldnt  be investing anything. 

Also, have you made a Will?,are there relatives or charities you'd wish to benefit?

Good luck. 

Nikkster

AnotherJoe said:

I wouldn't repay your mortgage, as said it's money that will be gone. Suppose for example there's an experimental drug that's looking promising that NICE hasn't approved yet that's £100k and you've just irrevocably put that against your mortgage? Or a treatment you can get in say Germany that's not available here? 
How many years of mortgage payments would the lump sum cover?
 Will there be other income coming in after you stopped working ? Have you claimed PIP? If your diagnosis is severe enough there is a payment you can get which is not  means tested, you just need your doctor to sign it off. 

I also agree an IFA isn't needed or appropriate, you shouldnt  be investing anything. 

Also, have you made a Will?,are there relatives or charities you'd wish to benefit?

Good luck. 

Thanks AnotherJoe.

 Yes, it has occurred to me about having the money to access other treatments (not like I'm going to get medical cover now...). Even after paying off my mortgage and mentally putting aside a generous sum to do up my house I would still have a decent amount of cash left (more than I've ever had at once before). Plus I have existing savings and some shares and my family would/could potentially help me. It's incredibly difficult to say how I might feel if I was in the situation where there was a potential treatment not available on the NHS, but at this moment I have quite a few potential lines of NHS treatment left and I'm not sure what lengths I would go to to stay alive longer. But definitely something to consider. I have just over 15 years left on my mortgage, I think my lump sum would pay it for over 40 years

Regarding other income - yes I am now claiming PIP (and it is under a DS1500 provided by my medical team) and ESA will start once I retire. I was preparing for 'standard' ill health retirement with a relatively modest monthly payment. I also have another small pension paid monthly as I thought that was better than what was offered to me as a lump sum for that pension. I'm grateful that I don't have to worry about how I pay my bills, though I would swap that without hesitation for not having a life-limiting illness.

I don't yet have a will (I know I should, everyone should!) in which case I would be happy for my parents to inherit what I leave. When I make a will I would include my brother, probably some friends, possibly some charities.

Nikkster

RetSol said:

One downside of repaying the mortgage is that the cash is "gone", you cannot easily get it back again and your options may thenceforth be unnecessarily limited. Not sure whether this is what the ever-wise Thrugelmir is thinking.
I certainly would take your time over the decision. 
Re the first paragraph of your original post, I think that the answers are less clear cut in your circumstances.  Establishing your own priorities is both especially necessary and especially difficult. 

Yes, that makes sense and I think is what Thrugelmir was getting at. I'm not going to make any hasty decisions, though as I said I've been working towards being mortgage-free ever since I took it out over 6 years ago and before that had been saving for a deposit so it's been a long-term project!
It's difficult to know what is the best course of action not knowing how things will pan out health-wise. Though even if someone did have a crystal ball I'm not sure whether I'd want to know or not really.

Thanks for taking the time to read and reply.