What to do ?

Heytheremrblue

Hi all I recently had a bereavement and have found myself in a situation where I will shortly have around £300k in the bank.

I have absolutely no idea what do do with it.

I’m risk averse ( picked that one up in the last week ) so  whatever I do I want it to be safe.

I’m 56 and would love to retire early if it was at all possible but how early ?

Honestly I don't have a clue I suppose I will need to have some ‘proper’ paid for advice at some point but I think it will be fun and interesting project especially after such a sad time.

So I’ve hopefully joined the forum to point me in the right direction !

MX5huggy

Sorry for your loss. 

You need to add a little more information before anyone answers the “how early” question. Have you built up any other pension? Checked your state pension forecast? 

Risk is a funny thing to pin down if you put the money in a 0 risk savings account you would have the very real risk of inflation destroying the value of your money. 

Catplan

Heytheremrblue said:

Hi all I recently had a bereavement and have found myself in a situation where I will shortly have around £300k in the bank.

I have absolutely no idea what do do with it.

I’m risk averse ( picked that one up in the last week ) so  whatever I do I want it to be safe.

I’m 56 and would love to retire early if it was at all possible but how early ?

Honestly I don't have a clue I suppose I will need to have some ‘proper’ paid for advice at some point but I think it will be fun and interesting project especially after such a sad time.

So I’ve hopefully joined the forum to point me in the right direction !

Sorry for your loss.

you say you’d like to retire early? What current provisions do you have in place pension wise?

Using some of the inheritance to top up pension isn’t the worst idea, but read up on the rules, I think I’m right in saying no limits, but you can contribute up to 60k or your annual salary, to get tax relief, but you can use previous years to increase this, although it starts to get a bit more complicated (to me anyway) at this point. Then you’ve got 20k isa allowance which you can use as well. 

Head to the pension section of the forum next would be my advice…..

Bigwheels1111

Sorry for your loss.

I’m a low income earner.
I only get carers allowance.
This means I can get carers allowance and up to 14k of interest without paying tax.
So When I sold my house I opted for 5 year fixed and 7 year fixed rate savings with annual payout of interest.

If you earn more than £17,570 you will pay a minimum of 20% tax on interest.
So a no brainier is adding more to a pension.

 

tacpot12

Whether you can retire or not will depend on what income you need to live off.

While you wait for this money to arrive, you could start by developing a budget for what income you would need to live on if you do retire. Same costs drop when you retire, e.g. you don't need cover for commuting as part of your car insurance, and you might save money on not buying clothes for work or paying for meals or coffees.

Alistair31

Could you retire now, pay yourself £30k for the next 10 years, then rely on your other pensions + state pension? 

Just a thought. 

LHW99

You could put itall into an N&S account initially. Guaranteed by the Government and while not the best interest rate, better than leaving it in acurrent account while you think things through

boingy

Pension pension pension pension. 

VXman

Alistair31 said:

Could you retire now, pay yourself £30k for the next 10 years, then rely on your other pensions + state pension? 

Just a thought. 

This was my thought. At it's simplest you could put £300K into an instant access saver  (get 5% interest on it) and withdraw £30K a year to live on (that's worth more than £30K in employed income as you are not paying Tax/NI/Pension contributions on it) when that is gone you will be 66 so virtually state pension time.

Of course there are more complex things to be aware. You would be better off putting £20K a year in an ISA to minimise tax on your savings. You might want to put some of it in investment funds to make more than 5%.

Put it into a SIPP so you'll get tax relief on it. With a drawdown pension you could take out what you need as you need it.

Retiring - well it depends on your out goings.

Other thoughts - do you have a mortgage? - if so pay it off.  Renting ?- buy a house.

It really might be worth paying for a one off session with an independent financial advisor to help you out with ideas.

Shylock_249

Heytheremrblue said:

Honestly I don't have a clue I suppose I will need to have some ‘proper’ paid for advice at some point..... 

You might find that your high street bank will give you some free wealth advice?

My experience with every financial adviser is that they are more concerned with improving their wealth and NOT mine!  They ALWAYS want me and the wife to name/nominate (NOT sure of the term) them as advisors for our existing (150k+) stocks and shares ISAs.  I'm NOT sure but I think they would receive 0.5% a year, ie £750 and that's before they look at our cash savings.

About 10 years ago one advisor got quite shirty when I declined to put my money in stocks and shares and said I was doing the wrong thing.  I asked him if he had 870k in the bank and when he said no, I said then is it NOT for consideration that I've done something right?

ChilliBob

James Shack on YouTube has just released a video in which he shows the order in which most people should use their cash - e.g from debt to pensions, ISAs, general investment accounts etc. You may find this useful. Also, his videos in general are great to watch - some are quite technical but most are really accessible for a newbie, and lots cover retirement and timing.

As above though, along with knowing what assets and liabilities you have you need to think what sort of spending you project you'd do in a year and plan around it once you know more. 

Whether you need paid for advise is up to you, if you're situation isn't too complex you probably don't. But, it doesn't hurt to have some introduction chats with IFAs if it makes you feel more confident.