What to do with inheritance

george4064

duncan48 said:

Hi all, so I am posting with an update on the situation since this thread, if people are interested!
I took the advice to put 50k into Premium Bonds (and on the first month, October, I won 5 x £25.00, so a good start indeed!). 
I overpaid my mortgage by 10%.
I also have landed a job in the Civil Service, which starts in January, so that is hopefully a boost to my pension outlook down the line....., although income for first 21 months whilst working towards the qualification will be a lot lower than I was used to (so keeping redundancy sum in the current account to keep us going if needed).
That just leaves me with where to squirrel away the remaining c. 52,000 that I want to put somewhere safe for 2 years until I can pay off the mortgage without redemption penalties (if that is what I decide to do in the end). Very few options on the savings front now!  
Any suggestions? 
Thanks again, the original advice was great and appreciated. 
Duncan

Consider a 2 year fixed account.

AnotherJoe

If you are going to pay the mortgage off when the redemption period ends then a 2 year fix of that amount is a no brainer in the meantime. Financially it's not really the best plan but I appreciate teh peace of mind aspect. 

And if you do pay it off make sure to then put the money you were paying each month on the mortgage  into  pension. Either AVCs or a separate personal  one.  The CS pension is all well and good but one downside is the age when you take it, Id be looking at building up a seperate pension so that you can take that from an earlier age, allowing you to not have to take the CS one earlier with less money. Plus there may be rules on how much earlier you can take it anyway. 

duncan48

Good advice about the penalty for taking a CS pension earlier than state pension age. 
I think having read these replies and reflected, I will leave the 50k in the Premium Bonds, and think about the best way to use the rest to overpay on the pension front (either put a lump sum into my existing Aegon pension or to put maximum sums into the CS one, which I think does enable you to take the pension early without being penalised). So, seem to have decided that paying off the mortgage in full is not the way, will just to have persuade my wife now! 

DiggerUK

Mrs.duncan48, you are right, he is wrong and Mrs.D agrees with the both of us.
The pot for Premium Bond winnings ain't getting bigger anytime soon and a mortgage paid off now will increase your cash flow.

If him indoors then wants to use the extra cash to buy a pension, well that's your decision.
 

You are in a position to acquire a debt free, risk free asset i.e., the roof over your head. Don't pass it up..._

Bobziz

duncan48 said:

Good advice about the penalty for taking a CS pension earlier than state pension age. 
I think having read these replies and reflected, I will leave the 50k in the Premium Bonds, and think about the best way to use the rest to overpay on the pension front (either put a lump sum into my existing Aegon pension or to put maximum sums into the CS one, which I think does enable you to take the pension early without being penalised). So, seem to have decided that paying off the mortgage in full is not the way, will just to have persuade my wife now! 

Note that the 'penalty' for taking your pension early relates to the fact that your index linked guaranteed pension will be paid for longer. If you live to an average age, then they'll be little to no difference in the total amount that you receive from your pension. 

I have a lgps pension and the sweet spot for my personal situation is to retire early at 62, and prior to this, contribute as much as possible through an AVC, which can then be taken in full as a tfls (i.e. not just 25%, but the whole amount). There are some caveats but these will not be relevant for me.

AlanP_2

Bobziz said:

duncan48 said:

Good advice about the penalty for taking a CS pension earlier than state pension age. 
I think having read these replies and reflected, I will leave the 50k in the Premium Bonds, and think about the best way to use the rest to overpay on the pension front (either put a lump sum into my existing Aegon pension or to put maximum sums into the CS one, which I think does enable you to take the pension early without being penalised). So, seem to have decided that paying off the mortgage in full is not the way, will just to have persuade my wife now! 

Note that the 'penalty' for taking your pension early relates to the fact that your index linked guaranteed pension will be paid for longer. If you live to an average age, then they'll be little to no difference in the total amount that you receive from your pension. 

I have a lgps pension and the sweet spot for my personal situation is to retire early at 62, and prior to this, contribute as much as possible through an AVC, which can then be taken in full as a tfls (i.e. not just 25%, but the whole amount). There are some caveats but these will not be relevant for me.

How did you calculate your "sweet spot"?

Similar plan for me - 62'ish and paying ionto the AVCs, but my date is based on desire to leave more than a financial; sweet spot so interested in how you worked that through.

 

Bobziz

AlanP_2 said:

How did you calculate your "sweet spot"?

Similar plan for me - 62'ish and paying ionto the AVCs, but my date is based on desire to leave more than a financial; sweet spot so interested in how you worked that through.

 

I worked out what I think I'll need for a comfortable retirement, using as much detail as I could, and making some assumptions about CPI etc. I then looked at when and how I could achieve this figure, using my LGPS forecasts, and how my small DC pension pot has performed in the past 30 years, and how it may perform over the next 12 years. For me it's 62, but my assumptions are very conservation, so realistically I'm likely to be able to go earlier if I want to. I will get a full SP at 67, which will be paid for by 57.

I also did the maths to confirm the financial consequences of retiring early and taking my pension, retiring early and deferring, or working to full SPA.  My ONS life expectancy is 84, and if this is correct, then, as you would expect, they'll be virtually no difference in the total pension received through taking it early or deferring for 5 years. If I work to full SPA and die at 84 then I will have received £75k more than I would have had I not retired early. I can live/die with that though as £75k for hopefully 5 years of additional fun feels like good value to me.

duncan48

Hello again, I have been somewhat sidetracked over the last few weeks, and foolishly the large sum still sits in my Alliance and Leicester bank account! So, I am looking at the Al Rayan Bank for for this sum now. Anyone got any opinions on whether this is wise, before I make the transfer (doing that on Monday afternoon, after considering feedback). Cheers! Duncan

frayedknot

Alliance and Leicester?
Where do you live , the 1990s?

duncan48

Got to admit that is funny . Yeh, living in the past!