£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?

Interesting. Will look into this but MSE seems to think paying fees upfront is not a good idea. Dc is at a top 3 uni so I’m hoping his prospects are good but I’ve heard the graduate market is crap at the moment. He makes about a £75 a week from a job to live off which we top up.

Enjoy yourselves now.

You never know what’s round the corner.

If one of you dies before 70, and you have travelled, at least you did that together. If one of you dies before 70 the remaining spouse may care less about the patio and wish they had had the chance to see the things they had talked about with their spouse. The widowed party of the couple I knew found everything less vibrant after being widowed, nothing was as enjoyable as it had been, and I know there was regret and sorrow until their own terminal diagnosis. At least if they’d managed to do the trips they’d planned together, there would have been some comfort there.

Appreciate all of the responses, thank you.
I think it’s just that dh is just a bit more live for today and luckily that’s worked quite well but the business loss hit us hard financially. All of our friends seem to be retiring early with £100’s of thousands so I feel a bit insecure. We are very lucky to have the defined benefit pensions and it was probably the only sensible financial decision we’ve made!

My understanding is in for a penny in for a pound.

You are in a hybrid weird half in half out situation with the students loans imo.

If I had spare cash from an inheritance and was wondering what to do with it I would clear the student loans and do it as an interest free loan or 2% or whatever you feel comfortable with.

Plus your DC is earning while at Uni this shows great character and commitment too.

I'm not really sure why it's one or the other. If you pay however much off the mortgage and have an extra £1200 a month, couldn't you spend that on travelling each year? That's enough to do some fantastic trips.

I would prioritise the debts, allowing you more free cash every month.
You've experienced travelling, you will again, debt free would be a huge relief.

What age are you planning to retire?

What are does your £85k a year kick in?

My guess is that once you hit 63 you will be ready to retire.

I would do whatever enables you to retire soonest and THEN do all your travelling. If you retire early enough you will have plenty of early retirement years.

In DH’s plan you fit your travelling in now in between work but then might be tied to work for longer.

What’s your plan for paying off your mortgage? And managing before state pension kicks in?

£85k a year with no mortgage to pay seems a v v generous amount to me.

I also wouldn’t worry about a mortgage on 85 k a year pension. If DH dies you will still be on at least half of that anyway.

Plus you will have 200k pension lump sum too.

yeah that...
plan B: split the money and use £50k towards each strategy.

Live now OP. You are comfortable already and no one knows what’s around the corner. Enjoy the money, esp as it’s DH’s inheritance and his preference

Given your ages, have you considered paying AVCs into your pension? I appreciate that you have a very healthy annual pension already but you could pay into AVCs tax free (you would get a rebate from HMRC assuming you haven’t maxed your pension allowances) then you would be able to draw this down tax free.

It’s probably worth a quick call with a financial advisor. It isn’t always best to reduce the mortgage but it’s nuanced and very much case- dependent

Surely it doesn't have to be all either mortgage or travelling. Can you not spend say £30k travelling and have an amazing time and put the rest left over on the mortgage?

@Wrinkledretainer I understand your nervousness. What you need to do is break the pensions down into what each of you would have if the other sadly died. This would partly inform how much lump sum each of you take as I would be aiming for the same pension/widows pension so who ever is the survivor has the same amount.

You have a house worth £600k once the mortgage is paid off. This can fund a smaller downsized property with lower running costs which cuts outgoings and potentially releases capital.

Life is about a balance and you both agree on paying off the debts, the patio and new car which is sensible. That leaves about £60k, personally I would probably go for £30k off mortgage and the rest on travel/savings. However, this is DHs inheritance so I would defer to him.

This calculator https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/ shows how much you can save by overpaying the mortgage. If you reduced the mortgage by £20 or £30k but keep on paying the same monthly amount how much would you save in interest and how many years earlier would you pay it off. Once you have no mortgage you have £1200 a month to save and use for holidays.

Travelling. It's your husband's inheritance, so I think he should get the deciding vote and you're in agreement with the rest of his plans for the money. Life is so short and you don't know what your health might be like in future. I would do the things you want to do while you can.

I definitely wouldn't consider paying off the student loans. They only need paying back if your child earns over a certain amount. Most people end up with some or most being written off. And it's your child who gets the benefit of the education so that should be on them to repay. You're already planning on supporting very generously.

How have you managed to get such high DB pensions on your salaries? That seems very strange.

Ultimately, I think it’s your dh’s decision, but I would pay off debts and mortgage, and then use the £1200 a month you save to travel.

I mean, unless you’re planning one of these £100k round the world 18 month cruises, saving for 6-12 months would give you a wonderful holiday.

I love to travel, but it’s a luxury. If you got sick tomorrow and couldn’t work (I’m 44 and have been off sick for a year). Would you be more grateful you took a holiday or more grateful you aren’t going to lose your house?

They’re not ‘comfortable’. They are late 50s and in debt to the tune of £190K.

My DP (57) has had bowel cancer and a stoma out of nowhere. We've had, healthy/average lifestyle friends die in their early 60's. I was widowed in my 30's. I'd travel now. I know on here posters think that healthy living equals healthy aging, but i.m.e it doesn't. It's very much a matter of luck. I think that you are being over cautious.

Could you do a mixture of both - what sort of travelling does he want to do that would be 65k? Or could you agree the money saved on mortgage payments could be for travel?

So much money gives too many options.

I would be looking at ways for you to retire early. Then you can enjoy the pensions and as many holidays as you want.

Do you work in the private sector and therefore have the option of a transfer value on your pensions? This would potentially offer ability to pay off the entire mortgage and debt then drawdown what you need. Therefore you can take more now when you are fit to travel and less later.

Surely work restricts your options with a fixed number of days a year?

Dh thinks we should live a little now as we’re getting older and health wise things are creeping up.

Until a month ago I’d have been with you all the way. Not any more. My bloke’s just had a cancer diagnosis and the friend I was going to India with in the autumn has had a heart attack so we’ve had to cancel. They’re both 68. My mantra now is “Do it while you can” and I’m solidly Team DH. I’ll add that it’s only things you haven’t done that you regret.

It's DH's inheritance so surely it's his choice at the end of the day? Obviously there would be discussion but surely you wouldn't expect your wishes to trump his?

I'm with your DH. Plus as it's his inheritance I think he should get the final say.