£100K - difference of opinion on how it should be spent.

[Wrinkledretainer]

Name changed. We’ve inherited (dh parent) just over a £100k. Both late 50’s with good defined benefit pensions of many years and good max lump sums if we want to take it of £200k or minimum of £50k tax free if we want to keep max monthly pension. Annual pensions will be £85K with state pension included. One child at uni whom we have saved £40k for towards flat deposit. Fees via student loan but we pay maintenance/halls/rent cost.

Dh earns a third more than I do, combined income £95k. Debts £20k as we needed some house works. Mortgage still £170k as we lost a business and had to sell up so didn’t re-enter the property market again in SE until 6 years ago. House worth £450k.

Over the years we’ve travelled extensively around the world and spent a lot on holidays. I’d like to pay off the debts, put a patio in (5K), buy a £10-12k car as ours is on its last legs and then put the rest towards the mortgage. Dh wants to pay off the debts, put a patio in, get the car then spend the rest travelling more whilst we can.

In my scenario, paying off the debts and paying down the mortgage will mean we can save an extra £1200 a month. With his scenario, it would be an extra £600 a month. We only have savings of £15k taking out dc savings of £40k above.

I think the longer term plan is to move to the South coast but houses there will probably be about the same as where we are price wise.

Dh thinks we should live a little now as we’re getting older and health wise things are creeping up. He envisages we’ll slow down in our 70’s and the pension savings will accrue then. I feel we need to be more sensible now to build more of a cushion. If there is another inheritance, it’s only likely to be about £20k.

What would you do?

I’d be going debts and mortgage.

Some of it depends what the interest rate is in your mortgage? No point if low interest paying it off if you can accrue better interest by investing the lump sum.

Personally I'd pay off the debts and mortgage and use the £1500 savings to put towards travelling. But I'm a saver and not interested in travelling.
The monthly savings would also give you more disposable income to enjoy life in other ways too, if you decide not to build it up in savings or spend on travel.

I realise when you’re married that it’s joint money but I generally think the person whose parent(s) died gets more say in what the month should be used for.

I assume the 20k debt is at a higher interest rate than the mortgage? If so I'd pay that off as a priority.

Well you are mostly in agreement.

car, debts, patio, then split the difference and half on savings and half on travelling,

he is right, it’s much harder and feels less worth it to travel once your health starts declining.

Ok, just read again. You both agree on paying off the 20k, putting in a patio for 5k and buying a car for 10k. It's just a question of mortgage v travelling?

I would take the chance to act out your plans. A couple I knew were really healthy in 2012, buying a camper and planning to enjoy retirement travelling around the globe. By 2020 they were both dead. Neither of them lived to see 70. I would always, always do the things now.

Goodness £85k pension per year? Why are you worried? I’m with DH, live now.

Can you do a bit of both? Pay off the debt and get the car and patio, then use half of what’s left for sensible financial things and the other half for fun stuff like travel. Or at the very least start overpaying your mortgage with the money you were spending on debts.

Yes, debt will be paid off this week. Sadly came off a very low interest mortgage and now on a tracker without penalties so can pay a lump sum off then re-mortgage. Or, as dh wants, will just re-mortgage current amount and pay off the balance with the retirement lump sum. Likely to be about £100k by the time we retire.

So you've got another 10 years to work and then £85k pension for life?

I'm quite prudent and normally would say mortgage first. However I think I would certainly think splashing on some big holidays whilst you can is very financially achievable. Assuming mortgage payments on your pension are affordable. When does your mortgage end?

Yes, basically.

Surely there's a happy medium - after you spend the bits you agree on, split the remainder and put half on mortgage and half on travelling?

This is what I’m worried about and has happened to older colleagues of mine sadly who didn’t get to enjoy their retirement.

This is what dh thinks, but …. what if one of us dies? With a defined benefit pension, the other would be left with only their own pension and a reduced widows pension plus them only one state pension on top. The uncertainty worries me.

I'm with your husband (but my husband would agree with you!). I just think you never know what is round the corner. If travelling is a priority I would do it sooner rather than later. Travel insurance is such a pain and you really can't get it if you are under investigation for anything so I would do it while I can!

Team dh! You’ll still be saving over £7000 a year - if you used that to overpay the mortgage you’ll probably clear it in a similar timescale to your plan. And you’ll have had some fantastic holidays.

I’m 57, dh 59. Mortgaged to 72 but we’re overpaying.

I would pay for my DC education and clear their student loans. Possibly ask them to pay back interest free at the same level as student loans.

Invest 30k.

Use the rest for fun.

Is the 60k pension (not state) equally split? 30k each? If one dies the other gets half so 15k?

So you’re doing some really prudent things but he wants to spend the rest on some fun. I do think, as it’s his inheritance, he gets to have a bigger say especially as you’re getting a lot of what you want too. And, as a retiree, I know a number of friends who never lived to reach retirement age. Tomorrow isn’t promised. Live a bit.

If one of you dies surely that’s a reason to travel now?

I’d be happy paying the mortgage on retirement as long as it wasn’t more than say, £300 a month.

Is there not a middle ground? Pay off a lump of the mortgage and save the rest for travelling! Takes a chunk off the finance debt burden but means you live now rather than one or the other?

Hate to say but “YOLO” isn’t an excuse if the worst happens as you’ve said - as someone whose parents lost a business in their 50’s/60’s - you’d rather have the mortgage paid off a few years earlier when I’m SURE you’ll be living fit and healthy a decade from now.

you don’t sound like you live so frugally now you look back with regret. If you regally want to cut money I’d get a very cheap, newish car as a run around as cars only ever depreciate 🤷🏻‍♀️ up to you both!

Well, assuming that it's the husband who inherited the money (as his parent died), then he decides what to do with it.
When my husband had a similar substantial inheritance from his late mother, I never asked exactly how much or what he did with it, because it wasn't left to me! I'm sure I've benefited from it in all the years since, but wouldn't dream of telling someone what to do with their own money.