Stuck as to what to do
Discussion
This has obviously been covered lots, but I'm in a bit of a head spin, so am struggling to decide what's best.
I've no mortgage, no debts, couple of cars and bikes, but have a separate fund set aside for those should any big bills arise.
Just retired, and received my lump sum into my bank, its 100k and I need to do something with it.
I've a pension of 15k before tax so expect to be paying a couple of hundred quid or so a year, on the amount above the personal tax allowance, will then top up from my lump to around 20k, so thinking i need 6k ish a year.
Want to be able to offset inflation on the lump, my pension is indexed linked, so I'm OK with that, initially I thought premium bonds and 20k in a cash isa this tax year, then after April 6th, another 20k in .
Trouble is I can't seem to find anything that pays more than a pittance, 1.15‰ for a fixed 5 year is the best, most are around 0.4 to 0.6%, which still sees the money eroding. And obviously PB's need some wins to happen for any returns percentage wise.
If I took the 5 year fixed, its a gamble whether interest rates stay as low as they are currently over the term.
I will say I'm risk averse pretty much now. I was quite happy to take some risks whilst my pension was building over the years, but that was whilst I was still employed and had a decent wage ....... this is now my wage, so don't really want to stuff it up.
As I say old ground that's been covered lots, but would appreciate any input with suggestions as what to do.
I've no mortgage, no debts, couple of cars and bikes, but have a separate fund set aside for those should any big bills arise.
Just retired, and received my lump sum into my bank, its 100k and I need to do something with it.
I've a pension of 15k before tax so expect to be paying a couple of hundred quid or so a year, on the amount above the personal tax allowance, will then top up from my lump to around 20k, so thinking i need 6k ish a year.
Want to be able to offset inflation on the lump, my pension is indexed linked, so I'm OK with that, initially I thought premium bonds and 20k in a cash isa this tax year, then after April 6th, another 20k in .
Trouble is I can't seem to find anything that pays more than a pittance, 1.15‰ for a fixed 5 year is the best, most are around 0.4 to 0.6%, which still sees the money eroding. And obviously PB's need some wins to happen for any returns percentage wise.
If I took the 5 year fixed, its a gamble whether interest rates stay as low as they are currently over the term.
I will say I'm risk averse pretty much now. I was quite happy to take some risks whilst my pension was building over the years, but that was whilst I was still employed and had a decent wage ....... this is now my wage, so don't really want to stuff it up.
As I say old ground that's been covered lots, but would appreciate any input with suggestions as what to do.
Possibly Vanguard LS20 or LS40?
https://www.vanguardinvestor.co.uk/investments/van...
https://www.vanguardinvestor.co.uk/investments/van...
Low to moderate risk. Drop 20k in now and 20k in next month - stick the rest in PB then another 20k in next April.
https://www.vanguardinvestor.co.uk/investments/van...
https://www.vanguardinvestor.co.uk/investments/van...
Low to moderate risk. Drop 20k in now and 20k in next month - stick the rest in PB then another 20k in next April.
dan_87 said:
Forgive me, but if you are happy with your current investment strategy for your pension, why would you draw down (presumably) the tax free lump, and then not know what to do with it?
He's not drawing down his Pension. I think the £100k LS is in addition to the £15k per annum pension. OP wants to invest the £100k so that it generates £5k income plus increases by the cost of inflation (so effectively it needs to return 6% pa at today's rates)
Its a railway DB Pension, lump sum and yearly pension, not in anyway expecting 6% from anywhere, or to generate 6k per year and still have the 100k intact .
What I'm trying to achieve is to not have the lump sum erode over time, to the point it won't last till my state pension kicks in when I reach 67 in 12 years time, I'm trying to achieve 20k per year livable income, by drip feeding the lump to my regular pension payments.
I'm fully aware interest rates are pitiful currently, and what I'm asking is the best course I can take, to hopefully not loose too much by just sticking it in a bank account earning naff all interest, which is where it currently is.
What I'm trying to achieve is to not have the lump sum erode over time, to the point it won't last till my state pension kicks in when I reach 67 in 12 years time, I'm trying to achieve 20k per year livable income, by drip feeding the lump to my regular pension payments.
I'm fully aware interest rates are pitiful currently, and what I'm asking is the best course I can take, to hopefully not loose too much by just sticking it in a bank account earning naff all interest, which is where it currently is.
If you've not used this year's ISA allowance consider putting 20K into an ISA (don't necessarily invest it now, but the £20K allowance expires at the end of the tax year). One it is in an ISA, you can transfer it between ISA providers relatively easily.
If you're happy learning by reading, borrow https://www.amazon.co.uk/Living-Off-Your-Money-Ret... (review here https://monevator.com/review-living-off-your-money... from your local library, and you may find https://monevator.com/decumulation-a-real-life-pla... gives you some ideas.
If you're happy learning by reading, borrow https://www.amazon.co.uk/Living-Off-Your-Money-Ret... (review here https://monevator.com/review-living-off-your-money... from your local library, and you may find https://monevator.com/decumulation-a-real-life-pla... gives you some ideas.
Age 55, so 12 years away from state pension and 30 years of average life expectancy ahead.
£100k in hand.
£100 / 12 years = £8,300 p.a. which may fill the gap until state pension kicks in with perhaps a little left over.
Presumably you took advice from somewhere before pulling out that £100k as tax free cash - the Union should have been well switched on to pension matters and early retirement.
I'm struggling to see a realistic alternative to putting it on deposit, spending carefully over the next 12 years and seeing what, if anything, is left at the end. You can tell yourself you've saved 20% income tax compared with drawing it as pension although on the other hand it's no longer getting upward indexation in the DB scheme. And you've got a slush fund you can dip into during your, hopefully, active years.
£100k in hand.
£100 / 12 years = £8,300 p.a. which may fill the gap until state pension kicks in with perhaps a little left over.
Presumably you took advice from somewhere before pulling out that £100k as tax free cash - the Union should have been well switched on to pension matters and early retirement.
I'm struggling to see a realistic alternative to putting it on deposit, spending carefully over the next 12 years and seeing what, if anything, is left at the end. You can tell yourself you've saved 20% income tax compared with drawing it as pension although on the other hand it's no longer getting upward indexation in the DB scheme. And you've got a slush fund you can dip into during your, hopefully, active years.
Pension administered by RPMI who have nothing to do with union, and really you just get several options of how you'd like your pension payed, I chose Max (25%) lump to try to minimize my tax as my pension is over the personal allowance, so will be paying tax on that.
I'm just after trying to keep the money haulier over the period of time I need it, increasing it would be lovely, but I'm happy if it didn't erode its value.
I've whacked my premium bonds up to the limit, so I've still got 60k to put away.
I'm just after trying to keep the money haulier over the period of time I need it, increasing it would be lovely, but I'm happy if it didn't erode its value.
I've whacked my premium bonds up to the limit, so I've still got 60k to put away.
I'd put 50k in premium bonds, 20k into a low risk s&s isa now (either Intelligent money or vangaurd life strategy 20 or 40% stock exposure) then drip feed the remaining 30k into that same isa over the next 2 years on a monthly basis.
Edit just read your last post, but the same method can apply to the 60k remaining.
Edit just read your last post, but the same method can apply to the 60k remaining.
Edited by Rob_125 on Thursday 11th March 08:58
https://www.bankrate.com/calculators/savings/savin...
Use this to simulate returns and withdrawals.
I think you can get 80k invested in the next 25 months with tax free benefits.
I would not use cash ISA but I would use S*S ISA.
Something like Vanguard as mentioned will allow you to select something with a risk profile you are comfortable with.
Could you live on 15k? At a push?
If yes... I would go all in on VLS100 or a similar "fund of funds".
IANAFA!!!!!!!!
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