Road traffic accident payout - how to invest?

LCCGH

Hello - I have just joined this forum and am looking for advice about how to use / save / look after an insurance payout after a RTA that happened 3 years ago. I have PTSD and physical injuries that are likely to continue to give me problems for the foreseeable future. I can no longer drive and I am only working 2 days a week. I will need to use some of the money now, but what I am really worried about is how this will affect me in the future and so would ideally like to save 50,000 in a safe place, hopefully for use in retirement, but possibly earlier. I am 52 now. I have teenage children. I have a long term partner / father of the children, but we are not married. We own a house. My partner is on a very low self employed income and does not have a pension. I am a part time teacher and have a teaching pension. Thank you for any advice. 

tacpot12

This question would be better in the Savings and Investments Forum. It may be moved there shortly, but in the mean time, here's my advice: 

Maximising the amount of pension income you receive from the Teachers pension and the State pension could be the best use of the money, so I would check your State pension entitlement first. Let's say that the forecast of your State pension says that you need to pay 7 more years of NI contributions to get the maximum State Pension you can. In years that you earn more than £6240 per year (before tax), you will be credited with a year of NI contributions towards your State pension, so you don't need to pay for these years. (Note that this figure is likely to rise each year). So, let's you expect that you can work until you are 55 but no longer. Providing you are earning £6240 9 (or the increased figure) per year, you will have earned an extra three years NI contributions, and will only need to buy a further four years of contributions by making voluntary Class 3 NI payments. These currently cost about £800 per year, so you will need to keep back about £2500 (you'll need a bit more than 4 x £800 because the NI rates will increase between now and 2024 when you would make these payments). 

If you are confident that you will remain with your long-term partner well into retirement, I would suggest you have him check his State Pension Forecast. It really is important for you that he has his own pension entitlement, so if he needs help to pay for extra years, I would consider putting money aside for this. I know less about the process for a self-employed person to make up their NI contributions for State Pension entitlement, but I do know that it is cheap for him to make Class 2 NI contributions while he is working, so encourage him to do this, and possibly supplement his income from your inheritance if you are confident he will be around for the long-term.

You should look into whether you can pay more into your teacher's pension, and consider using some of your inheritance to supplement your income if your employer takes greater pension contributions out of your salary.

Money you are going to retain to either pay in future or to use as income needs to be somewhere safe, like an Cash ISA. You should also keep an emergency fund in cash to cover unexpected problems with your income. You can deposit £20,000 into a Cash ISA this tax year, and another £20,000 in the next tax year, so on 6th April. I think you might consider investing bit of cash, say upto £10,000 in the Stock Market via a SIPP or AVCs as part of your Teacher's pension. If you leave it there for 20 year, it is likely to give you a good buffer against unexpected increased in the cost of living when you are less able to cope with such a problem.

I'm sorry about your accident. 

LCCGH

Thank you so much for all this advice, that’s fantastic. I will have a good look at all those suggestions. 

Murphybear

With £50k I would buy Premium Bonds, £50k is the maximum holding at the moment.

i have £10k at the moment and have won enough prizes to give me the equivalent of 2.5% interest. You never know, I might win enough to buy a brand new Lexus.