Investment for older people

Aged

Eco_Miser said:

If you want to die penniless, but not live penniless, buy an annuity with all your spare money. An insurance company will be pleased to bet (on their odds) that you'll die before they've returned all your money.

Can't you only buy an annuity with money from a pension scheme?

dunstonh

Aged said:

Eco_Miser said:

If you want to die penniless, but not live penniless, buy an annuity with all your spare money. An insurance company will be pleased to bet (on their odds) that you'll die before they've returned all your money.

Can't you only buy an annuity with money from a pension scheme?

No.   That is a rarely used option nowadays.

Aged

dunstonh said:

Aged said:

Can't you only buy an annuity with money from a pension scheme?

No.   That is a rarely used option nowadays.

So you can purchase an annuity with cash from savings?

Keep_pedalling

Mickey666 said:

What would people in their mid-60s be investing FOR?   Most people invest for their future when they are younger and have plenty of time.  By their mid-60s they should ideally be planning to reap the rewards of investments and start spending money rather than saving and investing it.

Other opinions are available of course, but I've always thought that any money you die with is money you might just have well never had.  If I manage to time things right I'm aiming to die more or less penniless, having either spent it all or given it away.

We are both the wrong side of 65 and are into savings run down mode, but still have the bulk of them invested. 

Rollinghome

Aged said:

So you can purchase an annuity with cash from savings?

Yes, you can buy an annuity.  If you google you'll find lots of firms anxious to give you a quote, such as https://annuity.uk.com/ . (You might prefer to not give them a genuine email or phone contact to get just an impression of what you might get.)

Whether you should is another question.  At 64, a single life, non-indexed pension would cost something like £500k for £25k pa. depending on your health and other factors.  Indexed-linked on two lives would cost a lot more.

The real problem for older people is the outlook for "low-risk" investments such as bonds in an era of low interest rates which is pushing them towards higher risk.  There's a case to be made for dividing your money between equities and a higher proportion of cash to reduce risk, and ignoring bonds completely.  As always, it depends very much on your personal position.

As to whether leaving money unspent is a waste, then it needn't be.  I'm a generation older than the OP's father but, some might say optimistically, I still invest for maximum returns using a high proportion of equities knowing that we can leave as much as we like to the charities of our choice without paying any tax on that money. What's more, by leaving just 10% or more to charity, the inheritance tax rate drops from 40% to 36%.  So our family understand that just the amount below the tax-free allowance will go to them. 

They're well positioned already.and we're lucky to have more than we can usefully spend on ourselves, but money that can be used elsewhere to save lives isn't wasted.

Thrugelmir

Eco_Miser said:

Mickey666 said:

What would people in their mid-60s be investing FOR?   Most people invest for their future when they are younger and have plenty of time.  By their mid-60s they should ideally be planning to reap the rewards of investments and start spending money rather than saving and investing it.

Other opinions are available of course, but I've always thought that any money you die with is money you might just have well never had.  If I manage to time things right I'm aiming to die more or less penniless, having either spent it all or given it away.

Well, I'm 71 and investing for an income for the next 20-30 years. No point in taking it all out now and letting inflation work it's magic disappearing trick.

Equities don't provide a guaranteed hedge against inflation. A combination of low inflation and low interest rates have made returns on equities attractive. How long will the favourable conditions last though? 

dunroving

monaymadlol said:

Hi, my parents (in their early/mid 60s) have finally decided to become less suspicious and give stock and shares a go via an ISA wrapper. Thing is they're in their 60s, so I was looking at not like a 20 or 30 year timeline, but something will grow more than the current abysmal bank interest rates.
They're open to a little risk, but obviously cautious.
Thinking the Vls 60 products...any thoughts on this?

I am 63, so probably also "old" in your book. I'm seeing lots of similar posts about wanting low-risk investments that will beat savings rates, but in this case, age is a definite consideration. You have given no other information about your parents' financial situation so some or all of this might not apply.

I'd largely ask why you are focusing on one investment (VLS60). Remember the importance of diversification. My own generic situation is as follows:
Money needed in short-term (0-5 years) - needs to be in very low-risk (e.g., premium bonds is my favorite, as I like the monthly prize draw).
Money needed in medium term (5-10 years) - can be in medium risk.
Money needed in long term (10 years plus) - can be in higher risk.
It's up to you to decide which investments fall into medium and high-risk, but just be sure to diversify is all I'd say.

As time passes, money will be spent from my low-risk pot, and other money will be moved down the risk ladder. The biggest conundrum in the puzzle is "When will I die?" Not knowing that, I prefer to go with, "When will I be past caring?" For me, I reckon in 15-20 years if I'm still on this earth, I will be content to stay put, not need expensive toys, will have a dog and little need for anything other than a modest income. At that point, I will probably have moved almost everything into low-risk. If inflation erodes the worth of my remaining savings, and I live another 10-20 years, I will be past caring.

Eco_Miser

dunroving said:

I'd largely ask why you are focusing on one investment (VLS60). Remember the importance of diversification.

VLS60 is diversified. It's designed to be the only investment needed.

It contains bonds and equities from around the world.

dunroving

Eco_Miser said:

dunroving said:

I'd largely ask why you are focusing on one investment (VLS60). Remember the importance of diversification.

VLS60 is diversified. It's designed to be the only investment needed.

It contains bonds and equities from around the world.

My point was that it is one fund. If everything is wrapped into one fund, you can't change the balance of your holdings, if you decide you want to. If the OP's parents are happy with the balance of sectors, regions, etc. in the VLS range and are confident that they won't ever want to change the balance, then fine. Two-thirds of VLS60 is invested in 2 countries - some might say that's not sufficiently diversified geographically, for example.

Aged

Rollinghome said:

Aged said:

So you can purchase an annuity with cash from savings?

Yes, you can buy an annuity.  If you google you'll find lots of firms anxious to give you a quote, such as https://annuity.uk.com/ . (You might prefer to not give them a genuine email or phone contact to get just an impression of what you might get.)

Whether you should is another question.  At 64, a single life, non-indexed pension would cost something like £500k for £25k pa. depending on your health and other factors.  Indexed-linked on two lives would cost a lot more.

Thanks for that link. I did as you suggested and for £250K they would pay me a fixed annuity of just under £50K a year for 5 years, which is basically just my own money back in 5 instalments! Or I could get £10-11K a year for 25 years or until death. It's made me think though. At my age I want security and peace of mind, and I don't want to be having sleepless nights about how the investments are doing and whether I'll run out of money in my old age.