What do you do when there is not enough money?

All the above is too heavily focused on the survivor for my liking. While the benefits situation does need to be taken into account, I wonder if it would not be worth investigating some means of added income for the terminally ill relative’s final months? It seems to have been their prudence that built up the sum and all we are talking about is how to let the survivor continue to live as well as possible with minimal need to work?

Terminal illness is expensive and I wouldn’t want my relatives to have to skimp on a few luxuries over the last few months. I’d look at drawing down (or equity release) just enough to come up to the means-tested capital limit to provide a pot of cash to make life as near to bearable as possible. In due course, the survivor can then go out to work to rebuild the pot for their own on-going living costs and retirement.

I am not sure if anyone has mentioned the 2880 grossed up to 3600 pension allowance for non-earners or if working and started drawing down the 4k annual allowance? Not huge sums but an extra 720pa until spa is not nothing either.

Joey_Soap wrote: »

You are an adviser, I presume? Kindly refrain from the insults.

It's no business of yours, but I do very successfully run several SIPP portfolios for my immediate family.

I repeat - I will not allow an IFA to leech money away from a relative who cannot afford to keep the typical adviser running his Mercedes E Class as they all seem to do.

Please do your maths - 25% of 4% is 1%. Leaving my relative with 3%. The other 1% goes towards the Mercedes.

I am Not adviser nor am I related to one. I do however know what they do. And if its no business of mine pulling you up on innaccuracies, dont post in an anonymous forum for advice?

And you c an find avisers who charge only .5% . Look for one, or be prepareed to be sued by all who you advise if things go wrong.

Advice is a regualted activity. And you are not regulated.

Having looked again at your figures it seems to me you are being inconsistent with regards to risk management and may be taking insufficent account of inflation.......

a) In the next 11 years
You are proposing extreme caution with the £70K by keeping it all in cash for the whole of the 11 years. On the other hand you are expecting to create a pot of £180K in that time. Is this at current prices or simply in £ terms? If the former relying on an average return of 5%+inflation is risky and probably would not be achieved with "a steady and relatively secure investment" and could well be missed anyway. On the other hand if it is in £ terms £180K would be worth only around £135000 in today's money in 11 years time with 2.5% average inflation.

b) 20-30 years of drawing down 4% of starting lump sum every year
Presumably this is increasing with inflation? If so, again, you will probably not be able to achieve this with investments that produce a steady return. You will need a significant % equity with the risk of occasional major falls in value.

Modelling the £180K/£7600 proposal on http://www.cfiresim.com suggests (based on historical US data) that with these numbers there is around a 50% chance that the pot size will drop below 60% of its initial value at some stage even with a relatively cautious 50% equity/bond split. Might your relative be getting a little worried were this to happen?

If you are intending to set expectations perhaps you should be rather less ambitious.

And finally - a £180K drawdown portfolio will require ongoing management for the rest of your relative's life, say for the next 30-40 years Who is going to provide this?