To not want to use DH's inheritance?

[AnnaQuayInTheUk]

Hi, I know this is a first world dilemma and we are in a very fortunate position.

DH is 63, work pension kicks in in just under 2 years time. He is 5 years older than me. For a while he's been suggesting that, when he retires, I should drop to PT or even give up work altogether. I've resisted this idea. My work pension doesn't kick in until I'm at state pension age, so 67 for me. I was thinking that maybe I'd go PT for the last 5 years of my working life.

However, two things have now happened. DH's mum died a couple of months ago, and my team at work are undergoing a consultation which will result in 50% of us being made redundant.

DH will inherit all his Mum's savings plus half the value of her house. It's just all been valued for Probate and he will inherit around £300k, maybe slightly more if house sells at more than expected

DH is talking again about me giving up work as, once the house sells, we will have a nest egg, but I'm really worried that (a) there are other things we could use the money for and (b) our standard of living will be much worse. DH thinks we will have much better quality of life as we won't have the stress/pressure of working.

I had thought that we could use some of the inheritance money to give to the DC for house deposits - they are in their late 20s and DS1 Iin particular is very unlikely to ever earn enough for a deposit. If we do that, what's left won't be enough to replace my salary for more than a few years.

So, AIBU to think that it would be better to keep on working - even if I'm made redundant I look for another FT job at a similar salary? Or should I be grateful that we will have some savings behind us, tighten our belts and - if I'm made redundant - accept that my career is over much sooner than anticipated?

What @helpfulperson said

I think you need to consider the age difference. 5 years isn't much but by the time you are 67 your husband will be 72 and will be less active, maybe less up for travelling etc. For every wildly fit over 70 year old there are others who are starting to feel their age.

DH is nearly five years older than I am and was always very keen for me to retire at the same time as him. He has a final salary pension from a previous employer that kicked in at 65, various other pension pots and was eligible for state pension at 66.

I have quite a decent amount in a pension pot but won't be eligible for state pension until I am 67, therefore I was a bit wary at first when he said he wanted to retire at 63. However, when we did the sums it seemed possible and I did in the end retire at 59.

Best decision. So far we have had a pretty good time and in the main area living off DH's pensions with me only having to access my pot for one off big expenses like holidays. You never know how long you have got to do these things.

My Dad worked until he was 65. More in fact because he carried on a bit after state pension age to help his brother out. He died at 67 and his last few months were pretty grim.

By contrast my FIL was able to retire on a good final salary scheme at 55. At 95 he has now been retired for longer than he worked. Tis true that the last decade and a bit have been less fun for him, extre8old age has its challenges. But he and MIL had the life of Riley for more than 20 years.

I know which of the two retirement experiences I would prefer

You’d end up with a massive tax charge if you did that in one year

I retired at 57, not a massive pension but enough. Never regretted it.
You are a long time dead imo, grab retirement whilst you can.

Thanks for that kind comment i feel really inadequate when I read some of the posts on here and have to remind myself that I raised a child and paid off a mortgage on one small salary and no child support and that this is an achievement. I have no debt and some small savings

I can’t imagine being the sort of person who’d happily give up my job earlier than planned at the expense of helping my kids to buy their own home, really baffling to me. Probably the same people posting “my kids are my world do anything for them” on Facebook.

Hopefully your financial advisor understands the rules better than you though…

Firstly, you need sufficient taxable income to make pension contributions from. Redundancy payments are, bar the first £30k, taxable earnings but an inheritance is not taxable earnings.

Secondly the annual allowance for pension contributions is £60k, and you can carry forward unused allowances from the previous 3 tax years. So, the most that would let you contribute is £240k gross. There is no way to get £300k net into a pension and get full tax relief.

Thirdly, at the values being talked about, if 240k was contributed to a pension it is far more likely to attract tax relief at 45%/40% than 20%.

Hope that helps explain why what works for you on, presumably, much lower numbers will not work for the OP.

I wouldn't be in a hurry to decide either way. See what kind of redundancy package you're offered and how big this inheritance really is.

Have you both done an account of how much money you spend over a year and where it all goes? And what do you and DH expect to do when you retire and how much will that cost? There are some people whose spending goes down when they retire but DH and I expect that our spending will go up.

The other thing to front up is how much time do you actually want to spend with DH and how do you expect to occupy yourselves? If you are used to leading very independent lives most of the time then this could be a bit of a shock for both of you.

I think he worries that, once he retires, if I'm still working FT he will get fed up.

That is 100% not a reason for you to stop working. If anything it's the opposite, it sounds as if you're worried that he's expecting you to retire to amuse him. So is he saying "I really want to do X and go to Y with you while we're both young enough to enjoy them" or is he just expecting to hang around the house with you, and is that how you want to spend your time?

I couldn't bear the thought of not having my own income and being beholden to and completely dependent on someone else just to buy basics and essentials I need. Let alone if I want to splash out and buy something more expensive, and feeling like I can't because it's someone else's money. Having to feel like you need to justify why you buy something. It would feel like a complete loss of agency.

I could never live with not a single penny of income... The sense of powerlessness would be absolutely awful. It would be worse than being on benefits

One thing you haven’t talked about is what your DH’s pension looks like and that surely is quite a critical figure. You have to both to some joint planning and understand likely income and expenditure and what is realistic. It sounds that you actually like working which might sway your decision but I think a lot of people in your situation would want to stop asap.

There are some great videos on you tube- I quite like the James Shack and I think you’d benefit from watching some of the ones about retirement and planning. One of the things he seems to say is that people have a fear and sometimes his biggest thing as a financial planner is getting people to actually spend their pensions and enjoy their healthier years.

I would stay working, at least for now. If you get made redundant it is nice to know there is a safety net, but I would advise playing your cards very close to your chest at work - you don’t want them to make you redundant just because they think you are in a better financial position. If I were you I wouldn’t share your husband’s retirement plans etc. My best financial decision was getting promoted in my late fifties, continuing to work full time (like you I worked part time earlier) and overpaying substantially into my final salary pension scheme. We gave DC a small amount towards a deposit and a small amount to pay off the student loan and wedding.

This isn’t about money you like the purpose routine and independence work gives you

keep working

How about using some of this money to pay into your pension?

You obviously need to reframe how you think about your joint finances. Sounds like you took a hit to your earning potential/ career - working part time for years - I assume taking on the lions share of childcare? This is why you should think about your pension

Wait to see how redundancies play out - don't miss out on a payout by jumping the gun. After that go to 4 days if poss, either in current job or elsewhere and see how you feel. 50% extra time off for only 20% cut in pay (less than 20% curt after tax)

The overwhelming majority of people buy cars and homes without using the bank of mum and dad.

Most of us actually don't have wealthy parents who treat us like princes/princesses.

With respect, you can help thinking this. You can give yourself a shake and think of all the child raising and household and family contributions you’ve made over 30 odd years and the vows you made and say get over it of bloody course his inheritance he wants to share is ours. Sometimes feelings are things you need to bang on the head and move on past rationally and this is one of those times. No more of this ‘I can’t help it’ rubbish. You can’t help it if you’re made redundant, you can’t help growing old and dying, but you can help this.

I would not give it to my dc as there’s a risk you are made redundant and struggle to find another job, and it’s a huge win to have backup. But if you think it’s more sensible to work, then work. As long as that’s why and it’s not becuase you can’t accept some help from your long term dh.

In London every parent I know has helped their adult child buy their first property. If they can, what's the issue. I could have watched my DD spend £800 plus a month excluding bills for a small room in a flat share with no opportunity to save for a deposit or help her. I chose the latter.

If you leave your current place of work, you don't have to be totally without your own money. I stopped teaching several years ago I started a small business that brings me a bit of an income, but isn't too time consuming. I also work 3 shifts a week in a local shop. The two together plus my husband's pension give us enough to live on. There isn't much difference in our standard of living from day to day, but we have had to cut back on things like long haul holidays. We can still do them, but we have to think carefully about it now, hunt for a deal and save for it . I still have my own money and life is much less stressful!

Bonkers to leave at your peak earning level.

It sounds like he just wants you to quit because he expects to be bored at home alone and that would put me off.

It's also not a case of quit now nor wait 9 years. There's plenty in between.

IMO you've worked your whole life on your own terms and should finish on them. Not his.

Just go part time then. That’s a nice compromise.

Read die with zero. Very enlightening.

If you aren’t ready to give up psychologically, then don’t. There must be a half way house though.

I've got so much less energy than I had 2 years ago at 60, it's frightening, and my ideal holiday has changed since then! I think that if you want to work then 3 days a week is a good compromise.

My FIL retired at 59 and died at 69. I'm so pleased that he had 8 years of happy retirement - the last 2 years weren't so good and if he'd worked to state retirement age he would have only had 2 years of good retirement

@Motnight In London every parent I know has helped their adult child buy their first property.

Because the people you know are not normal.

If they can, what's the issue.

Because buying things for children instills a "princess complex" and it comes across as being juvenile. When it comes to large expenses like cars and houses, people are supposed to save and buy those themselves.

So what retirement will you have as a couple if he has to wait until he is 70?
He could be too ill to travel much, or let’s face it, dead by then. You can’t take for granted you will both live to a grand old age.

Even if he’s fit as a fiddle at 70,

I think he really wants to spend ages 65-70 doing things WITH you.

Thats kind of romantic really and I think you need to prioritise having an enjoyable retirement while fairly young and active versus your DC getting house deposits.

You can always downsize or move to a cheaper area when retired because you won’t be tied to where there are jobs.

I can’t imagine being the sort of person who works til they are state pension age when they don’t need to…..life is far too short …..my kids bought their own homes in their 20s ….like many many young people do where I live …
kids here don’t rely on their parents for hand outs…they arnt selfish enough to watch their parents struggle on in work just so they can have it a bit easier….don’t get me wrong they get plenty from me….I took them all to New York this year….all DC and GC….I pick the GC up from school twice a week and take them 3 times a week to save them childcare costs……but I have no regrets about taking my pension at 55 ….I was done with full time work

? Peak earning level? On average women’s peak earning level is between ages 40-49. At 58, OP has peaked. She is right to worry about redundancy and declining income. It’s the most likely scenario.

https://www.statista.com/statistics/802183/annual-pay-employees-in-the-uk/