You have 100K to start life over from scratch, ground zero aged 50, wwyd?

[DeadFlea]

So you have a stable roof over your head, no partner or dependents & you're in reasonable health. You have no education, career or pension. You can take life in any direction you want. Every expense comes out of the 100K. What do you do?

I would consider what was most secure in your life and go from there.

Do you already own property? Could that be lived in in old age? If not, that's the first thing I would try to solve- by getting a one/two bed flat somewhere not amazing but ok, because I am not at all convinced that the state will be paying out housing benefit in 20 years time to all us oldies.

If you do own property, can you rent out a room? Lodger with cooking/extra facilities? I know one older lady who rents two rooms out, both rooms are self-contained but they share the bathroom. This is in a desirable area of the country where people are seeking Mon-Fri work though. Not everywhere has lots of people looking for lodgings, though I would guess most places have.

Then I'd see what pension provision you already have and pay NI as others have said.

Then I'd think about how you want to earn your money daily for the next 20 years- you don't want to be using capital to do that, so some of the suggestions here are good: cleaning, childcare, renting rooms out, working as a receptionist, starting in temp banks to begin, just to get something on the CV.

I would have a small amount (e.g. £500 a year) for treats- a haircut, charity shop some clothes (I find really nice ones), the odd cheap meal out, go and see friends, anything to make daily life more fun. My mother is not wealthy in old age but has joined clubs and gone on some really cheap but fun trips (coach, music type things) in great places.

This won't solve all your money problems for ever, but it's an amazing step up at just the right time for you.

I know someone who was an eyelash technician as an older person and she did a roaring trade! Very appealing to other mid/older life ladies.

I would put 90% into a pension

The main benefit of putting money into a pension is the tax free status of it and the potential for 25% tax free to take out later.

However, you can only put in £40k pa or as much as you earn, whichever is lower, for the tax free status. You can carry forward up to three years of allowance though, but you still need earnings in this year to cover it - hence, for the tax advantage, the OP would need to be earning £90k to do as you have suggested. And I reckon if they were, they would not have posted this question.

A pension is just a wrapper for an investment. If you've not paid tax on the £100k coming to you, and you have no or low income in this tax year, best to invest outside of a pension as pensions have higher charges than other investment wrappers. You can put £20k into an equities ISA, for example.

With £100k I'd put it into an investment trust paying 3%. I'd put £20k in via an ISA then move another £20k a year into the ISA each tax year.

I don't think £100k would change your life if you have no mortgage. It's not give up work forever amounts. And with the current economic uncertainty it's really just a useful fall back.

3% is a reasonable estimated income return. You can get more. Or you could simply choose to draw £20k a year to live on for five years. Then you'd be 55 and able to take your pension, if you have one.

Invest the £100k into a pension fund, backdating last three years' allowance

You can't, you need income in the current year to cover it.

True without work she can put 2800 onto sipp and get 750 top up only without working.

DeadFlea you have a stable home and no mortgage but is that stable home an asset you can leverage - do you own it free and clear and could you rent it out or sell it if you chose?

If it's your former family home and you own it I'd rent it out for the next 10 - 15 years and buy a smaller place for yourself potentially a much smaller place just to rest your head - studio or similar - if you'd consider the next idea; I'd also think about whether you'd be prepared to do any kind of live in job utilising your Sahm experience to save on bikes and hopefully save up, as well as to hopefully be enjoyable and build your CV.

Boarding house matron/ mother would be one idea.
Live in companion/ carer would be another.

Income from renting out your house plus minimum outgoings for just keeping a small place for your time off with consequently low bills might mean a decent amount of disposable income to travel and have fun...

Alternatively rent the house out, rent a studio in an attractive northern university town (northern for rent prices) and do an access course and go to university just for fun...

There's a lot you can do, especially if the 100k ist in addition to owning a family size house outright.

To save on bills not bikes, unless bikes are a major outgoing...

I'd save most but use some to re train a career that I could see myself doing from 50-67. I'm thinking possibly hairdresser, beautician of some type, childminder, TA, personal trainer, counsellor, cook/personal chef of some type, occupational therapist, cake decorator.Only you know where your skills lie really but you'll need to choose something that you can realistically do for the next 15+ years.
Maybe aim to use £25000 training and invest £75000 to cushion you in retirement.

Put all of it in a pension and retire.

You can't draw on pension until age 55. Also, they are not magic. If you put in £100k, you still have £100k (just with a lot of annoying rules about how you access it).

And £100k is going to generate about £3k a year income. Or growth. So, in five years when the OP is able to 'retire' (from what?) she might have c£115k if she's lucky and depending on the economic and political events upcoming. Which is, essentially, £100k now, but plus inflation. So, worth more or less the same.

With mortgage, no income (no tax to pay) and the ability to create £3k a year from £100k, I think I'd get a job and a lodger. Aiming for another £15k income from those two things. Also, there must be some benefits that can be claimed to live on.

I don't think you should make voluntary NI contributions. Check with the DWP what you have but the way things stand at the moment if you don't have sufficient contributions for the full state pension you'll get pension credit anyway to top you up to the full state pension. I can't imagine that will disappear as it would cause extreme poverty. Don't be surprised though if you get pressure to make these contributions - it's in the government's interest after all so don't solely take their advice.

When I was on maternity leave they contacted me to say I had a shortfall of x years and would I like to make up the difference so I get the full state pension. I said but I'll be going back to work anyway, already have 15 years' worth of contributions and will have to work for another 32 years so I'll have made my 35 years' worth of contributions to get the full state pension. It was like they were trying to trick money out of me, so look into pension credit first. Why use your money to make these contributions when you'll be entitled to pension credit anyway.

Do you own your own home outright? You say a stable roof over your head but is it yours? If it's not then it's not necessarily stable.

As someone else mentioned is this stable roof over your head your asset that you can use somehow? Perhaps to sell, buy a larger place with your £100k to take in lodgers. A larger place % wise will increase in value more than a smaller place over the years so you can downsize in the future, say in 15 years time. Or perhaps you can sell this stable roof over your head and together with the £100k buy 2 small flats, one for you, one to rent out.

Just seen your update that you currently have no job. Isn’t there some kind of rule about the amount of cash you can have before benefits are stopped and you are expected to use that money to live on? I think it was 16,000?!
You might want to check with CAB
So I’d get a job sharpish, anything to avoid losing all that money just to living expenses.

I don’t mean to sound snide but I don’t understand why posters who don’t even understand what a pension is/ does would give investment advice.

Theres advice and pensions/investment forums on money saving expert website. I would personally invest in both my pension and property if I had 100k. Oh and probably get a campervan too

OP, when you say 'no pension' does that include the state pension?

If you were a SAHM for decades, that means you could have a good few years of NI contributions via CB if you were a parent of an under 12 for a while - eg if you had 3 DC over 8 years that could be around 20 years of contributions. There is the facility to buy extra years, but I'd take advice as to whether this may be worth it and affordable. You can check your NI record and get a pension forecast on the gov.uk website.

Unless you are exceptionally frugal, the £100k is not going to last you until you receive your state pension, so you either need to work or make your property provide you an income, for example if it is possible to release money by downsizing or moving somewhere cheaper - if your property is valuable, that to me would seem to be the obvious thing to do.

However, if it looks like you will need to work, then don't top up your NI contributions as a long as you work enough - I think it is 16 hours a week, but check this, then you could gain enough NI credits over the next 17 years to give you a full state pension when combined with the credits earned due to CB.

I'd talk to the CAB, or post on the savings and investment boards of Moneysavingexpert with more detail - you seem to get better advice there and less 'idle musings' that you get here.

I would personally invest in both my pension and property if I had 100k. Oh and probably get a campervan too

Unrealistic expectations of what money buys.

I mean, you can put tuppence h'penny in your pension, invest in a doll's house and buy an ancient VW campervan. But £100k is not going to change your life or provide an income on its own.

Remember if you invest in property to rent out, you have to maintain it etc - do you want to be a landlord? It's sometimes not straightforward.

How do you live at the moment?

If you want a change, I would rent my current home out and go travelling/backpacking by myself once all the students are back in college. Start maybe interrailing in Europe from Oct for a month to see how you get on before venturing further afield. You've got the luxury of time and your rental income would subsidise your travel so why not?

I would definitely put an 20K into an ISA for this tax year plus start a SIPP with £2880.

Invest a small amount to get your current property into ship shape for letting. Possibly invest in another property - this really depends whether you buy in a cheap enough area with sufficient rental demand to generate a small income to supplement the rental from your home (if you do go travelling).