Career choices and finances - dilemma

[User65714563]

I've name changed for this as it's potentially very outing. I'll also keep details a bit vague. I am 43 and a lone parent to three DCs, eldest 16, youngest 11.

Tragic circumstances have meant that I have a comfortable sum of money tucked away. I own two properties outright and have investments in stocks and shares that are doing well. Total of everything is about £1 million. I receive a pension of around £10,000 a year, as well as about £10,000 income from the property I rent out and some temporary pensions and benefits of about £16,000 that will stop once my children reach 18/leave education. We can live on this without me touching any savings. I'm keen to keep as much capital as possible for my children's futures, uni etc., and my old age.

I recently retrained in a new career. My original plan was to work full time to supplement my income, fund holidays, save for old age etc. Then covid hit. The new career has changed beyond all recognition and the opportunities I thought I would have haven't really materialised. In this time I have hit perimenopause and my mental health has suffered a great deal from lone parenting during lockdowns. I'm now on medication and am improving. But I'm exhausted, I'm reassessing everything and my kids need more from me at the moment.

I could push ahead with the new career I've worked so hard for despite the current realities of it, my mental health and my difficult home circumstances. Or I could take my foot off the pedal, do it in a lower paid, entry level type way, part time. The latter option would be less pressured, even fun, but with little opportunity for progression and very bad pay. I'll miss the boat if I hang about too long with that option. I'm aware that I've still got over twenty years before retirement and I'm finding it hard to reconcile myself to the idea of giving up my career prospects, having achieved so much after major life upheavals. But I would have more time for myself, my health, family life such as it is with teenagers. But mainly my question is, can I afford to not push ahead? Will I be able to help my children later on and have enough to live on when I'm old if I don't earn much from this point on? I think I've lost all perspective and can't talk to anyone in real life about this. I'd appreciate any advice, thoughts - WWYD in my situation? Thank you.

In your shoes I would take the less pressured route. You have substantial assets already and it doesn't sound like you actually need a higher salary but rather want to increase your savings further.

Sorry to hear it sounds like you’ve all been through a really rough time.

Is your home included in that £1m of assets? Think that would change my view a little

Go for the less pressure route for the time being. Reassess in a year.

@Nanananani

Sorry to hear it sounds like you’ve all been through a really rough time.

Is your home included in that £1m of assets? Think that would change my view a little

Yes, it is. Just over a third of it.

Ok so you’ve got about 650k to play with, it’s probably not enough to do nothing else so you need to top up somehow. Especially once those child based benefits start to drop off. How much do you need a year to live on? Will you have tax to pay when you sell the properties?

I’d see a good financial advisor at this point to help you work out what you need. There has to be an option that isn’t too stressful

You don't mention what industry you have retrained for but perhaps there is a business that you can start that is indirectly connected to your retraining? So you are using the skills you have attained, without the pressure and stress? Just a thought

I would do original plan personally.

I'm always a fan of doing higher paid work when its available. You can always take breaks.

Do it for 1 year for example, burn out a bit due to some of the issues you mentioned, take 3-6 months off and recharge, then go back at it again with new employer or existing employer if they allow breaks.

I take long breaks all the time, I wouldn't be able to do that if I was doing lower paid work.

There's some things to think about there, thanks. I could potentially start a small business but it's something that could easily flop. I could do it alongside some part time employment to make it less risky.

I like the idea of working flat out for, say, a year and then having a break. It could work if I applied for maternity covers etc.

I can live fairly comfortably on my current income. When the DCs are independent I think I could live on around £20,000, but I'd like to travel later on so maybe £25,000 would allow me more freedom.

Ideally I'd like to sell the rental property. There would be CG to pay on that if I did. But the monthly income is very useful and I'm wary of putting everything into stocks and shares.

I find making these big decisions alone very difficult.

Could you do the “proper” job part time?

Can you give us an indication of the full time job? How much would you earn? What are the hours? Would you need to be 'on' all the time?

The pay isn't amazing. Maybe think similar to a teacher in terms of pay, conditions and stress levels. It's 9-5, more or less. Part time employment in the field does exist and is an option. I wouldn't need to be 'on' all the time, but it's intense work when there.
A friend asked me today if I would regret not doing the 'proper' work in a year or two, and I realised that yes, I probably would. So I'm leaning more towards doing that, but knowing that I can leave if it all gets too much. The experience would be useful if I then start my own business.

You've put the effort to get the training and I think you will regret not taking a bigger job. However, you have the funds to take your time looking for the perfect opportunity. In your shoes, I would take a break for a few months and then look for something that is 3 or 4 days a week.

There are 2 parts to this decision - how you will feel emotionally/self esteem wise about then choice to go ‘full on’ vs ‘easier’ and also can you financially afford to do so, with the financial goals you have.

You’ve had good advice about the first, but in relation to the second I always say, work backwards from retirement/what you want, and see if it works.

So at retirement, asset-wise you need a paid for house with all major works done (sounds like you have done this) and a relatively new, problem free car. You need an Emergency Fund of 3-6 months expenses - just in case there is a car or house problem you don’t foresee. You also want to be able to help your children (unspecified, but maybe uni fees and/or house deposits). Choose the lump sum amount you are willing to pay here (maybe in 2 chunks each - uni and house), and be sure you have this asset fairly quickly available to give out when needed (if you haven’t already by the time you have retired).

Then income-wise, you need a pension and/or shares and/or assets that will pay you (at least) 1/2 to 2/3rd of your final income before retirement. This amount is different for everyone. Most people only end up paying off their mortgage just before retirement, so often removing this bill means 2/3rd of their income (without paying a mortgage) is more than their income, with a mortgage.

Some people do this calculation and are very under, and they need to look closely at the type of retirement they will be living and can afford.

Diversifying income sources is always good - property and shares and pensions, but doing so can also increase fees.

Using this formula, you are in good shape, it really depends on what income and lifestyle you want for retirement and the first part of the equation - self esteem.

It's good that you've got a bit of clarity.

Could you use the extra money to buy in some help in terms of cleaning and gardening? Then you've got more time at home for the DCs.

I hate to say it but it won't be long until they are off to uni themselves. At least this way you'd be established workwise.

Thank you for all the helpful thoughts.

NorthStar, your suggestion to sit down and make proper projections and calculations is a good one. I have never done this.

I'm sorry for the drip feed, but yesterday afternoon I was offered the 'proper' job! I thought it might happen, which was why I posted in the first place. However, the big surprise was that they offered it to me part time (2.5 days). I wasn't expecting that. I told them I was really pleased but would take the weekend to think it over. It's a no brainer, isn't it?