100k Windfall for 60+ YO family member - best use?

BigBoss

One of my family members, who is over 60, is due to come into around 100k (net). She has long term health complications so if she's lucky (and I hope she is) has a maximum of 20 years left on this mortal coil. 

She has no other investments/assets and will get her professional pension in 6.5 years when she's 67.

What could she do with the money? 

Albermarle

Has she stopped working ? If so what is she currently living off ?

Most likely the pension could be taken early with a penalty . Have you any idea if that is possible ?
Presume she will get full state pension at 66?

We need to see a fuller picture before being able to offer some sensible pointers about the £100K .

BigBoss

No she is still working for another 6.5 years.

It's possible that she could take her pension early, but she is due a lung transplant within the next 6 months, so wants to see how things are after that.

Albermarle

Maybe with her health problems may be she could consider retiring early ?

Anyway assuming she carries on working , then some suggestions for the £100K ( without knowing all details ) are >
Spend some of it on something enjoyable before its too late . Holidays, home improvements, new car etc 
If she is the cautious type then she can just keep it in safe savings account(s) Fixed term deals are improving but still not great .
If she is unlikely to need the money for a few years , she could invest it ( or part of it ) either via a Stocks and shares ISA or she could invest it in  a separate pension to benefit from tax relief. Hopefully it would grow more than just saving it .
She could give some of it away to family members/charities . Or keep it all to pass on in her will.
Pay off any remaining mortgage/other debts .

Or a mixture of some/all of the above.

pjread

Really depends, if 60+ working for 20k a year with max 20yrs to go and a pension that'd cover my needs after 6.5yrs time, I'd certainly consider jacking it in and making good use of the time I had.

If 60+ working for 150k a year, suddenly living off 100k for 5-6yrs sounds like a likely lifestyle downgrade - maybe still something to consider, but more carefully.

If truly limited lifetime expectation, and a final salary pension, they might even be one of the very few people who might be better off transferring it to a DB scheme.  Then whack in the 100k too & retire once the tax relief is sorted; have a few nice years of "you can't take it with you" holidays or whatever else you enjoy.

Albermarle

If truly limited lifetime expectation, and a final salary pension, they might even be one of the very few people who might be better off transferring it to a DB scheme

I think you mean DC scheme .

xylophone

It's possible that she could take her pension early, but she is due a lung transplant within the next 6 months, so wants to see how things are after that.

Very understandable.

 At the simplest,  she might buy £50,000 of PBs (assuming that she doesn't hold the full allowance) and  deposit the balance in a  one year fixed rate?

https://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

She could then consider her position some time next year?

MalMonroe

If it were me I'd stop working. Especially if I was due to have a lung transplant, which is a major operation at any age.

When your relative reaches 66 she'll get a state pension and it sounds like she will also get a good professional pension. 

She should be able to manage very well even if she retires now, with that lump sum behind her. 

Would she be able to retire early on the grounds of ill health too? If so she may be able to enjoy her retirement for longer and without financial worry. My combined pensions are way below what your relative would receive even before she collects any of her pensions and I manage quite well and can also afford to run a newish car. It can be done - and I love my retirement. I'd rather use my money for my own comfort while I'm here than leave it for someone else to enjoy. Thankfully, my family agree!

I wouldn't want to invest any of it anywhere either. But that's just me.

Apodemus

She needs to make sure she gets very good personalised advice before making any hasty decisions.  As PJRead mentions above, she might be much better off remaining in work for the time being until she investigates her early retiral under ill-health terms.   It may also be that if she is currently not very well and then due sick-leave for her operation and recovery, that she will be accruing extra pension and drawing salary income for a period when she is not working - better for that period to be at her employer's cost than her own.  She might be well-advised to put money into her pension (if she can) or maximising her contributions to a SIPP for the tax uplift, but, again, she needs personalised advice, not generic input from this forum. 

Albermarle

She needs to make sure she gets very good personalised advice before making any hasty decision

£100K is probably at the bottom end of values where financial advice starts to become worthwhile.

In any case if she is not sure herself of what she wants to do about keeping on working/ill health issues, and/or she wants to keep some/most of it in cash , then the value of financial advice will be limited .

Probably Xylophones suggestion to keep it all in cash until she sees how the operation works out is probably sensible, and then review later .

Apodemus

Albermarle said:

She needs to make sure she gets very good personalised advice before making any hasty decision

£100K is probably at the bottom end of values where financial advice starts to become worthwhile.

In any case if she is not sure herself of what she wants to do about keeping on working/ill health issues, and/or she wants to keep some/most of it in cash , then the value of financial advice will be limited .

Probably Xylophones suggestion to keep it all in cash until she sees how the operation works out is probably sensible, and then review later .

Advice would be in terms of her current situation and helping her to understand her options, not necessarily about how to invest £100k.  This is one of these situations where in the old days a good old-fashioned lawyer, accountant or financial advisor, with a wealth of experience, would have been able to discuss all aspects with their client and give good advice - without the meter running.  There are still  IFAs out there who are willing to help in this way, understanding that some clients contribute more to their bottom-line than others.  I've certainly benefited from such professional input in the past, even though the advisor has understood in advance that I am not likely to be buying services through them on that occasion.