60 with 60k and what to do...?

JustAnotherSaver

"enjoy it"

"Spend it all"

Ok, now we've got those two & similars out of the way....

My mother is 60 this year with about 60k-80k cash, so we'll go with the lower of 60k for the question & she's just wondering how best to manage it at her age as right now it's all in easy access cash form - as in current accounts / lowly rate cash savings accounts.

She needs/wants an amount in a current/savings account that she can access if she needs (such as she's about to get an approx. 8k job done on her house which has come more out of necessity than anything) but beyond this amount she is asking me about basically having it work as hard as it possibly can (within her risk tolerance which isn't high).

She's aware that the current account & savings rates are poor & would prefer to beat those if possible...

BUT she has specified she doesn't want to pay in to a pension. Reason being what happened with my dads when he died. Paid in to a pension all his life, had 3 years of retirement & then died. None of us have crystal balls but if we had then he'd have been better not paying in to a pension at all, putting the money in an account that paid absolutely zero interest, having those same 3 years & then at the end of it it would've stayed within the family as it would've gone straight to my mother, the lot of it.

And that's the thing - she's specified that she would like any money left over to be split between her 3 kids, not get swallowed up and gone to whoever it goes to when you die.

My first thought was S&S ISA with a lowly risk fund but just wanted to run it by those in more know than I am.

If that's not such a bad idea then what would you be looking at at this stage?

If I had my wish then hopefully at 60 she's only half way through her life with plenty time to go yet but as I say, none of us have crystal balls. She's just asked me to look in to how 'best' to deal with her money.

Thanks.

Steve182

You don't have to chose a pension that dies when you die. You can invest money in a SIPP and on death pass on what you have not drawn from it to your family in their inheritance.

This is a tax efficient option if you are still working as you receive tax relief on contributions, dependent on the level of your annual income.

SIPP is not likely a good option for a large one off lump sum though.

Dazed_and_C0nfused

If you can persuade her to go with the pension option she will get at least a 6.25% return if she needs to pay basic rate tax on any withdrawals.

If she has unused Personal Allowance she could get up to 25% return (without needing to involve any investment risk).

How much she can contribute will depend on whether she has any earnings.

And as Steve182 says there is no need for this to be lost on her death.

cx6

You are asking a question a lot of people would like a definitive answer to

If your mother is not working, she can pay £2880 a year into a pension.

As for the rest, it is risk / reward. She can get interest in a savings account - low but they say it will rise - but this won't beat inflation. However it is 'safe'.

Or you can invest it. You will most likely get more but run the risk of the fund dropping in value. 

Albermarle

Regarding the pension issue 
Her husband must have had a final salary/defined benefit pension or bought an annuity . Normally the pension would continue to pay half to the surviving spouse but not always. In fact these are the best type of pensions, the exception being if you die early .
The pensions mentioned above are Defined contribution (  DC)pensions, where there is a pot of money that can be withdrawn from, or just left alone and passed on as an inheritance . Basically an investment account with a tax benefit.

In any case whether a DC /SIPP ( same thing really ) or a Stocks and shares ISA, the money is invested and can go down as well as up. Although you would expect it to go up in the long term .

I am wondering why your Mum has sat on this cash 'doing nothing' and at age 60 suddenly wants to invest it . It is probably a good idea to invest some of it, but you and her have to be aware that in a few months  time it could have become more or less.
Even a medium/low risk fund can drop 20% very easily .

Thrugelmir

Pension assets can be held in cash or something similar. No need to take any investment risk. While gaining the benefit of the tax relief. Is just a wrapper nothing more. 

JustAnotherSaver

Will have to be short & sweet for now as on my break at work but:

Should've added that she's not in work through disability. She stopped work in '03 (disability) at the age of 41, picked it up again for about 18 month around 2016-17 but is out of work again. 
Collects a benefit. I'd have to ask what name it was if that matters. 
On top of this should've also added that she does get a fraction of my dad's pension which was further reduced from what it could've been simply due to their age gap despite being married for about 30yrs.

Not pensions as such that she's against, just losing money to 'the system' which from what happened with my dad's is how she (& I) thought pensions would be on death. 

Hope that helps a little more. Anything else will have to be later as got to get back to work. 

johnrrose

Not now a financial services insider, but very money-savvy because a credit union activist for 30+ years.

Best (ie least bad) deal on instant access FSCSetc  savings = 2% on Virgin M+ current account.

Limited to first £1000 in account, but folk can have 'as many accounts as they want' so spread funds over several, if you're rich enough.
So that could handle the £8k 'soon' requirement?

johnrrose

Best cash ISA with no restrictions I know is Skipton BS 0.65% variable but clearly doesn't compete with Virgin on yield, even if savings interest  > £1k/year

tebbins

JustAnotherSaver said:

Will have to be short & sweet for now as on my break at work but:

Should've added that she's not in work through disability. She stopped work in '03 (disability) at the age of 41, picked it up again for about 18 month around 2016-17 but is out of work again. 
Collects a benefit. I'd have to ask what name it was if that matters. 
On top of this should've also added that she does get a fraction of my dad's pension which was further reduced from what it could've been simply due to their age gap despite being married for about 30yrs.

Not pensions as such that she's against, just losing money to 'the system' which from what happened with my dad's is how she (& I) thought pensions would be on death. 

Hope that helps a little more. Anything else will have to be later as got to get back to work. 

There is a seperate benefits part of the forum, in her situation you could look at Pension Credit and making sure her NI record is maxed out. As she's 60 now I *think* she'll get the New State Pension, you need 35 qualifying years to get the full state pension and if she's short (she shouldn't be due to receiving a benefit over a long period).

Search "national insurance record" - you can setup an online account on gov.uk to find out. Topping up your NI record with voluntary NICs

If a SIPP is not a possibility as a non-earner for the full £60k, she can put £20k into a S&S ISA this tax year and another £20k in next tax year (search MSE s&s isa). You could pick a medium risk, balanced multi-asset fund such as Vanguard Lifestrategy 60, HSBC Global strategy balanced etc (search monevator funds of funds).

youth_leader

I have a fantastic financial adviser and can give you his details if you'd like to PM me.