Financial Guidance

DogLover66

The old fella and me are thinking of selling our house.  We want to move nearer to his work, but don't want to buy in that area.  He retires in 4 years, so we're thinking of selling the house, renting a small place until his retirement and then with the sale of house money and his retirement payout buying a new home somewhere else (place yet to be decided).  We're unsure about what to do regarding any money from the sale of the house ie. Do we put in a high interest savings account for 4 years or what other options are there ?  please guide two old dears who are baffled :-)

Middle_of_the_Road

Seems that savings accounts would be most suitable for money you will need access to in that timeframe. 
Either notice accounts of fixed rate accounts for the majority of it, keeping a proportion in easy access for any unforeseen circumstances.
You could also try your luck on premium bonds, which might help if you're would be liable for tax on savings interest.

LHW99

For four years, use savings (not investments).

Assuming you receive more than £85k from the sale, then you should spread it around, ideally with no more than £85k in each institution (or for joint accounts £170k).

Open a cash ISA for each of you - that means interest on 2 x £20k is untaxed. That could be done in each year you stay renting.

You could put another £50k each into premium bonds. The prizes are untaxed, but the efeective interest rate will be lower than (eg) a fixed rate account from a building society or similar.

Any interest from savings accounts will be taxed if over your personal allowance / personal savings allowance. That means if one of you is eg a basic rate taxpayer and the other pays 40%, then putting more of the money in the name of the lower taxed person will save some tax.

Yorkie1

DogLover66 said:

The old fella and me are thinking of selling our house.  We want to move nearer to his work, but don't want to buy in that area.  He retires in 4 years, so we're thinking of selling the house, renting a small place until his retirement and then with the sale of house money and his retirement payout buying a new home somewhere else (place yet to be decided).  We're unsure about what to do regarding any money from the sale of the house ie. Do we put in a high interest savings account for 4 years or what other options are there ?  please guide two old dears who are baffled :-)

I'm sure you've thought the proposed plan through carefully, but just in case ...

Have you researched how easy it might be to find a place you're happy to rent nearer to his place of work until retirement? Can you get a sense of how much is on the market, how competitive the market is for the type of place you might want to rent, how many people are going for each place?

Also, be aware that the Renters Rights Bill is currently going through Parliament. It should be passed in the next 6 - 9 months, and then it will need to be brought into force. In anticipation of this, many landlords are selling up because it is said that it will become harder to evict tenants and also for taxation reasons. You may find yourselves in a challenging situation if the market for rentals drops off and/or your landlord decides they want to sell up and ask you to leave.

Have you done the maths to ensure that your rental outgoings won't deplete your savings too much in comparison to your current outgoings and income?

Are you confident that the retirement payout will be enough to buy a new property? If it's a Defined Contribution pension, are you derisking enough of it now so that you won't be too impacted by any possible market dip at the crucial time?

Have you identified what Plan B might be if your savings are outstripped by price increases of houses in 4 years' time? What sort of size property might you want to buy?

Eyeful

1. At the moment your house sale would have temporary high balance protection in a savings account for 6 months. 
https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

2. Your money would have 100% in a NS&I Cash ISA account or Premium Bonds.

3. You could have FSCS Savings Protection up to £85K in one of their approved savings providers:
 https://www.fscs.org.uk/check/
https://moneyfactscompare.co.uk/savings-accounts/
https://www.moneysavingexpert.com/savings/safe-savings/
https://moneyfactscompare.co.uk/savings-accounts/guides/uk-banks-who-owns-whom/

DogLover66

Yorkie1 said:

DogLover66 said:

The old fella and me are thinking of selling our house.  We want to move nearer to his work, but don't want to buy in that area.  He retires in 4 years, so we're thinking of selling the house, renting a small place until his retirement and then with the sale of house money and his retirement payout buying a new home somewhere else (place yet to be decided).  We're unsure about what to do regarding any money from the sale of the house ie. Do we put in a high interest savings account for 4 years or what other options are there ?  please guide two old dears who are baffled :-)

I'm sure you've thought the proposed plan through carefully, but just in case ...

Have you researched how easy it might be to find a place you're happy to rent nearer to his place of work until retirement? Can you get a sense of how much is on the market, how competitive the market is for the type of place you might want to rent, how many people are going for each place?

Also, be aware that the Renters Rights Bill is currently going through Parliament. It should be passed in the next 6 - 9 months, and then it will need to be brought into force. In anticipation of this, many landlords are selling up because it is said that it will become harder to evict tenants and also for taxation reasons. You may find yourselves in a challenging situation if the market for rentals drops off and/or your landlord decides they want to sell up and ask you to leave.

Have you done the maths to ensure that your rental outgoings won't deplete your savings too much in comparison to your current outgoings and income?

Are you confident that the retirement payout will be enough to buy a new property? If it's a Defined Contribution pension, are you derisking enough of it now so that you won't be too impacted by any possible market dip at the crucial time?

Have you identified what Plan B might be if your savings are outstripped by price increases of houses in 4 years' time? What sort of size property might you want to buy?

Thank you for this detailed response, we really are like a pair of fish out of water.  We'd be ok with the rent for the short term, we have somewhere secured already.  As hubby is working we can afford the rent without having to dip into any savings (if that make sense).  His pension gives him a tax free lump sum and then the usual monthly type payments.  We aren't weighing in heavy on the idea of using his tax free lump sum, or even if we do we certainly don't want to use all of it.  We will only be looking for a small 2 bed house when we buy again.  The area my husband works, house prices are ridiculously high and the cost of a 2 bed house in that area would buy a 4 bed in a city.  (I honestly think someone makes the prices up for a joke in the area he works). 
We had thought, in his last year of work, if we did spot somewhere that we could afford and really wanted, we'd attempt to buy and decorate to our tastes at our pace.

DogLover66

Just a quick note to say a huge thank you to all who have commented so far - if I could hug you, I would !
here's a virtual hug instead (((((( ))))))

Albermarle

 His pension gives him a tax free lump sum and then the usual monthly type payments.  We aren't weighing in heavy on the idea of using his tax free lump sum, or even if we do we certainly don't want to use all of it.

It sounds like he has a Defined Benefit ( DB) pension, sometimes called a final salary pension.
These are the best sort and nowadays usually only come with public sector jobs.
If it is one of those he would normally, ( not always) have a choice of whether to take the tax free lump sum with a reduced monthly pension, or not take the lump sum and have a higher monthly pension.
Sometimes you can say go halfway and take part of the lump sum.
Maybe something to think about when you are planning ahead.