You inherit £500k, you're 63 and you're renting. What do you do?

non_cents

Advice appreciated! I’m currently internet researcher for my Dad (63) whilst he makes some big life decisions. He’s a Londoner. He has been lucky enough to inherited £500k in cash from the sale of my Grandparents house. He has a small amount of savings, perhaps around 20k or more, from working a minimum wage job, whilst being extremely frugal and cautious with money.

He bought a bought a house once in the 90’s, but since splitting with my mum 14 years ago has been living in rented, quite rough rooms in shared houses. He has never invested or taken any risks with money, and is unfamiliar with a lot of current financial thought.

His pension - government plus work - will be 11k per year on retirement, which is more than half what he currently lives on.

As an only child, with two separate, single parents living in different cities, I am worried about the logistics of caring for them both in the future,  particularly as my other parent is cash poor. Primarily I want to make sure my Dad is secure, happy and cared for going into older age. He has also mentioned that he thinks my grandparents would have hoped that he would have something spare to help me out in some way, and as someone who has been struggling financially for years, this would be incredibly helpful - but I understand if this is not possible.

The main thing is that I'd like to see by Dad have fun and enjoy his life.

If you were in his situation, what would you do with the money?

Great appreciation for everyone on this forum! 

Flugelhorn

He is my age, if I didn't own a property and inherited 500K I would try to find a small place to buy and have some money left over 

Marcon

non_cents said:

Advice appreciated! I’m currently internet researcher for my Dad (63) whilst he makes some big life decisions. He’s a Londoner. He has been lucky enough to inherited £500k in cash from the sale of my Grandparents house. He has a small amount of savings, perhaps around 20k or more, from working a minimum wage job, whilst being extremely frugal and cautious with money.

He bought a bought a house once in the 90’s, but since splitting with my mum 14 years ago has been living in rented, quite rough rooms in shared houses. He has never invested or taken any risks with money, and is unfamiliar with a lot of current financial thought.

His pension - government plus work - will be 11k per year on retirement, which is more than half what he currently lives on.

As an only child, with two separate, single parents living in different cities, I am worried about the logistics of caring for them both in the future,  particularly as my other parent is cash poor. Primarily I want to make sure my Dad is secure, happy and cared for going into older age. He has also mentioned that he thinks my grandparents would have hoped that he would have something spare to help me out in some way, and as someone who has been struggling financially for years, this would be incredibly helpful - but I understand if this is not possible.

The main thing is that I'd like to see by Dad have fun and enjoy his life.

If you were in his situation, what would you do with the money?

Great appreciation for everyone on this forum! 

The snag is that nobody here is in his situation...and a few paragraphs of background doesn't help much.

If I were in his situation, I'd spend some of the money getting proper, informed financial advice from a suitably qualified individual who has undertaken the necessary fact find. I'd also update my will, especially if he is still married ('splitting' doesn't clarify whether or not he is divorced from your mum).

Having made all those killjoy remarks, I hope he'll be spending some of it sometime soon to improve his enjoyment of life!

Sea_Shell

What would a small but private flat/house cost in a nicer area but still close to where he currently lives?

Alternatively, would he be prepared to move further to get more for his money?   Closer to you, perhaps.

Could he get something for say £400k (Inc costs) and then keep £100k to bolster his pension?

Pat38493

Based on the limited information provided, the first thing would be that a sum of money that large as £500K, shouldn't be left lying around as cash for a long time as it will be shrinking with inflation - especially right now where inflation is running 10%.

Therefore he should think about investing the money as soon as possible, either into a property as it seems like he does not own a property at the moment, or into some kind of investments like ISAs or suchlike.  If neither him nor you knows much about this, you may want to consider paying a small amount of the money to get some advice from an Independent Financial Advisor who would help highlight and think through all the issues involved.

You can get information from others on here about how to find a reliable and regulated IFA.

As a very rough rule of thumb, a fund of £500K wisely invested could deliver an annual amount of something like £17K per year during a retirement period.  However obviously if you spend a lot of it on a place to live, it would reduce accordingly.

He is also entitled to an appointment with Pensionwise to discuss retirement planning which also might be useful.

Kynthia

Calculate how much his annual expenditure is now and how much it could be if he owned a small property (including council tax and a small amount for repairs and maintenance). This should give you an idea of how much of the inheritance would be needed for living costs each year. Only what's left can be spent on a property including stamp duty, solicitors fees, etc.

sammyjammy

Has he actually got a state pension forecast?  IF not get one so you know what you are dealing with, a full state pension is from April just under £10k so you might find he has an income of more than £11k once retired?

Universidad

It's half a million pounds, he's been living on under 20K a year his whole life, and he's 63.

It's his money, so he can do what he likes with it, but if he doesn't change his lifestyle and invests it somewhere that just about keeps up with inflation it will last him till he's 115 years old (when you take his other pensions into account).

Without being maudlin, and if you're comfortable discussing this sort of stuff with him, it is worth incorporating into the plan some thought about to protect your inheritance. Because unless he discovers a new found love of vintage wines or sports cars, he's way more than set for the rest of his life.

But there are things you can't plan for that might eat it up.

First of all, a property is a good idea, because there's no more dead money on rent, and if he does start to need care later in life he won't have to sell his own house to pay for it, provided he's able to continue living there. And although your Dad has not tied himself to one place over time, it's still true that most people prefer to stay in their own home when they get older and start to need more help.

Secondly, he can transfer you a small amount of money each year as a gift without tax implications - I think that's in the region of 3000 per year. If he is happy to do that, you can put 3000 per year of your salary into your pension, either a work pension or a SIPP of your own, and in that way help set yourself up for your old age. Or if you're under 40 a LISA, that might help you get on the property ladder if you haven't managed that.

The other thing you said is that you'd like your Dad to have some fun with the money. I agree, but the one thing I would advise is that someone in their 60s who has not owned a home and lived a fairly simple life might have a very different idea of fun to you, so I don't think you can necessarily plan this out for him! 

I think the best thing you can do is encourage him to try a few new things - stuff he wouldn't have splashed out on, but nothing extravagent - and see if anything sticks.

diystarter7

Hi OP

Your idea of "fun" may be different to waht dad wants
Once people are set in their ways for years and at that age, I feel it will be hard to change

Ask dad what he wants, talk, sleep, talk and listen to his wishes and take it from there.

At 63 he should many years of active life left. Some people like watching the tv and drinking alone at home
due to past experiences etc

Chat by all means, suggestion but please do not forget to listen. Its his money his choice but you know that, so I wish you both
a good future.


Thanks

Albermarle

Secondly, he can transfer you a small amount of money each year as a gift without tax implications - I think that's in the region of 3000 per year

He can gift as much as he likes, to who he likes with no immediate tax implications. The only issue is if he dies within 7 years of making the gift, it will be included in his estate for inheritance tax calculations. Although £3K pa will be exempt.

Even then however large the gift, there will be no more inheritance tax to pay, than there would have been if no gift was made in the first place. 

In fact as he is 63 and likely to live a lot longer than 7 years, if he wanted to help out his son now, rather than after he had died, it would make some sense for him to give the OP a large gift now/or soon ( if he wanted to of course ) or at least once his own plans were more clear.

yp70479

What about a retirement living complex? They do have a large maintenance charge, but he wouldn't have to worry about doing any of that himself. If he is a sociable sort of person he would have plenty of people around to talk to. Some have restaurants or cafes and have events and clubs so he wouldn't be lonely and wouldn't have to cook if he didn't feel like it. I know he is relatively young for this, but you both need to think 10 or 20 years down the line - when he is less able to do things himself and may need some help. It''s not always easy to pop around to put up a curtain pole. or sort out some paperwork if you live miles away. You can either buy or rent such places and he should still have money left to enjoy the highlife while he is able.