All at once

HIA

I quit my job last month aged 57 with the intention of taking time out to decide whether to take early retirement or look for a job. Meanwhile my mum has died and I now have to decide what to do with her estate as well as my pensions. She has left me a house with a mortgage of one third value. Between my pension lump sum and cash inheritance I could clear the mortgage and keep the house but it would mean all my assets tied up earning £9k/year on a £150k property. 6% seems more than I'd get investing elsewhere but I know there would be expenses and I don't know if I want the hassle of being a landlord. Should I just sell the house and put the equity elsewhere?

MX5huggy

I’m sorry for you loss, a day I dread. If you don’t want to be a Landlord then get rid. There are many costs and the income will be taxed any increase in property value will be subject to Capital Gains Tax after £12500. The property market seems good (for sellers) ATM depending on the property. Leave your pensions to grow, live off this while pushing it in to ISA/pension over the next few years.

HIA

Thanks, I don't know about adding to the pensions, I always worked public sector so they're both final salary, I think I need an IFA.

Albermarle

Being a landlord is better if you are a handyman/builder/ experienced landlord  and /or your are uncomfortable with financial products, pensions etc . Otherwise it can be a lot of work and be problematic.

Have you ever watched the Channel 5 programme 'Nightmare Tenants ' - a real horror show !

HIA

I just don't know where to invest the money for a decent return if I do sell the house. As mx5huggy says maybe I should be thinking of delaying taking my pensions. 

kuratowski

It sounds like you're not really keen on being a landlord, so let's assume you sell the house.

If you have two DB pensions in the public sector, then due to the various reforms, it's very likely you also have multiple pension ages.  Probably a mixture of 60, 65, 67.  Is that right?

Given that early retirement will result in actuarial reduction of one or more of the pension(s) then it could be attractive to only claim each chunk of pension at its normal age.  And alongside, you could just keep the house equity in a safe savings account (such as NS&I) and use it in the early years to top up the pensions.  Of course you would need to do some sums to see whether the numbers work out.

Edit: I'm suggesting savings rather than investments because thinking you would be using the money to live off in the next few years.  But of course you could invest some for the longer term too if there's enough.

MX5huggy

HIA said:

Thanks, I don't know about adding to the pensions, I always worked public sector so they're both final salary, I think I need an IFA.

If you are not working you can only put £2880 in a pension per year, which gets tax relief (even if you don’t pay any) to turn it into £3600. An IFA or a lot of reading and asking on here etc are really your options. Make sure you get a true IFA.

HIA

Both pensions have a retirement age of 65 and are reduced if I take them before that but I need something to live on between now (57) and then. I get my state pension at 67.

kuratowski

So the earlier you take them the more reduced they are.  If you could live off the house equity for 3 years or more that would give you a higher pension.

I'm a bit surprised you didn't get any preserved pension rights at 60 in there but I do know not all parts of the public sector were treated equally.

Terron

HIA said:

I quit my job last month aged 57 with the intention of taking time out to decide whether to take early retirement or look for a job. Meanwhile my mum has died and I now have to decide what to do with her estate as well as my pensions. She has left me a house with a mortgage of one third value. Between my pension lump sum and cash inheritance I could clear the mortgage and keep the house but it would mean all my assets tied up earning £9k/year on a £150k property. 6% seems more than I'd get investing elsewhere but I know there would be expenses and I don't know if I want the hassle of being a landlord. Should I just sell the house and put the equity elsewhere?

Being a landlord is not for everyone. If you don't want to be one then sell it.

However you wouldn't have to tie up all your assests. Since you are considering using your pension to clear the mortgage you would have an income so could remortgage it. Assuming £300pm on a mortgage and £200pm for expenses, that would give you £3kpa from £37.5 investment for a 8% return. But doing that for just one property is probably not worth the hassle.

Albermarle

If you want to invest some of it for the longer term ( whilst keeping some as cash to help fund you before the DB pensions start ) 
You can put £20K in a Stocks and Shares ISA this tax year ( and maybe some next tax year) As long as you are prepared to leave it alone for 10 years or more then the risk of losses is small and the likelihood of gains is high .

You do not really need an IFA ,and in any case they would probably be only interested if you planned to invest all the money rather than keep most of it as cash ( if that is what you decide to do )