Start pension at 55

SunnySand

I'm 55 and have no pension plan, recently received an inheritance of 100K and would like to use this for retirement. Would it be best to keep this as savings or start a pension? 

Dazed_and_C0nfused

SunnySand said:

I'm 55 and have no pension plan, recently received an inheritance of 100K and would like to use this for retirement. Would it be best to keep this as savings or start a pension? 

Do you have any earnings which would allow you to call contribute more than £3,600/year?

Pension generally beats savings because of the tax relief but you may be limited to how much you can contribute.

dunstonh

Would it be best to keep this as savings or start a pension? 

The pension wrapper gets an immediate head start over savings account due to tax.

However, if you are not employed (no pension suggests that may be the case), then you are limited to contribute just £3,600 in a pension per tax year unless you are self employed.

What is best would depend on your circumstances and objectives but purely on a financial point of view, pension would be the best option.

SunnySand

Yes I'm unemployed, only income at the moment is the interest from inheritance.

SunnySand

dunstonh said:

Would it be best to keep this as savings or start a pension? 

The pension wrapper gets an immediate head start over savings account due to tax.

However, if you are not employed (no pension suggests that may be the case), then you are limited to contribute just £3,600 in a pension per tax year unless you are self employed.

What is best would depend on your circumstances and objectives but purely on a financial point of view, pension would be the best option.

Yes I'm unemployed, only income at the moment is the interest earned from inheritance

QrizB

Is your unemployment temporary, or is it likely to continue?

You can put £2880 a year into a pension (tax relief will top that up to £3600) but it's going to take a long time to get all £100k into a pension at that rate.

You can also put £20k into an ISA each tax year, which is probably the next best place for it.

Have you checked your state pension forecast recently?

SunnySand

QrizB said:

Is your unemployment temporary, or is it likely to continue?

You can put £2880 a year into a pension (tax relief will top that up to £3600) but it's going to take a long time to get all £100k into a pension at that rate.

You can also put £20k into an ISA each tax year, which is probably the next best place for it.

Have you checked your state pension forecast recently?

I may get a parttime job soon, depending on health. I did not realise that that would make a difference.

As for state pension forecast, I need to contribute about 2 or 3 years to be eligible for full amount of state pension payment.

Brie

If you don't get a part time (or any) job you could always use some of the £100k to buy the missing SP years.  

Albermarle

The main advantage of contributing to a pension ( as opposed to other ways of using the money) is that you get tax relief on the contributions. However the amount of tax relief you can get is related to the size of your employment earnings.

Sam_666

Well, if you stay unemployed, that 100K will burn out in next 10y(or less), as you wount get any state benefits.
If you dont own property or live rent-free, money will run out even quicker.
So, you wont be able to use this 100K for retirement.

As others have pointed, chase top paying saving accounts, to make money last.

LHW99

Sam_666 said:

Well, if you stay unemployed, that 100K will burn out in next 10y(or less), as you wount get any state benefits.
If you dont own property or live rent-free, money will run out even quicker.
So, you wont be able to use this 100K for retirement.

As others have pointed, chase top paying saving accounts, to make money last.

If you are under state pension age, surely any pension fund doesn't affect benefits, although money outside a pension will?