What would you do with £65k

[Offthexmaslist]

This is the situation.

I live in an absolutely dream home .. makes me happy every day.. but I don't own it . I pay £1k in rent (3 beds but Uni kids /renting kids come home every 3-4 weeks) my landlords are the type renters would dream of... anything wrong is fixed immediately... been here 7 years.

I can take retirement next month. Lump sum is 70k but to have that o need to reduce my hours. To qualify I need to go from £43k to £31k..

My current expenses are £237 on my car . (6.8k owing) £220 on Dd3 car (£6800 owing ) £190 on credit cards (£2300 owing to clear)

Am I right in thinking that my best bet is to pay off expensive credit ? I think I am but need reassuring. As I see it I will have that amount to add to my very poor disposable income and can put a large amount into savings instead ?

Just to be clear - once I retire my pension plus my income equate to pretty much my income of £2200 now.

Am I smart to pat these off ?

I'm not.

Scheme retirement age for final salary is 60 so no reduction.
Career average (new pension) is 67.

I'm pretty sure you're NHS staff. Are you doing retire and return ? Or are you waiting until the October 2023 changes where your original contract T & Cs +employment rights will stand?
Presumably you're taking the higher lump sum /lower annual pension of the 1995 scheme? You're doing the right thing BTW, absolutely no point in not taking the 1995 pension at this stage 60 as it's a closed scheme.
Have you had any independent advice ? I think ? Wesleyan advise on NHS pensions OP. Good luck

In which case if you do take it to answer the question I would definitely look to repay the debt - you are being charged interest. You could save the equivalent repayments into a savings account it makes no sense to keep them. I'm not sure you should pay your DDs off in full though it's a lot from your available cash and that's go to see you through.

At 67 you will have state pension, final salary pension and average annual pension income? How much do you think this will all add up to? Don’t forget NHS pensions also increase with CPI inflation too so it looks like you are in a decent position to me.

I agree paying £1000.00 a month rent in a lovely area and in a home were you are happy is a good deal. I hope it lasts and in your circumstances I would not move either.

Definitely pay off your debts but then be very strict with yourself in relation to saving this money back.

You sound like you’ve done really well after a divorce robbed you of all your financial assets.

Close but not NHS . Civil Service.
Partial retirement. To get the closed pension lump sum and pension now.

There are definitely lenders that have mortgage products for age 60+.
If you are determined to start drawing pension lump sum then paying off the debts is a good move.
I suspect you'd be financially better off to stay in FT work as long as possible, but 1) understand you may not want to; 2) I'd have to put all the numbers in a spreadsheet to figure that out for sure.

This plus the "potential inheritance" and the willingness to keep renting . I would say a big NO to a fancy holiday too! The inheritance may never eventuate if your parents need to go to a retirement home or they need caring. Same for your landlord (anything can happen and you'll be given a couple of months notice). The cars are expensive and your daughter needs to start paying her own loan.Look for at least a shared ownership property as others have suggested but nothing bigger than a 2 bedroom property (your kids will have to share when they are home from Uni) . You said that you have been living paycheck to paycheck , this is not a long term sustainable way to live comfortably and worry free .Your own roof over your head and savings for rainy days should be your priority.

I would count 3/4 year old cars as expensive. Not sure where you get that older cars are really expensive to run particularly but perhaps you've been unlucky in the past.

The housing situation would be of concern to me, all it takes is one of the landlords dying or moving into a car home, the other one needing to downsize or move closer to family etc and you'd be looking at a huge increase in rent.

Definitely worth getting proper financial advice at this stage in your life and with all the different options you have to consider.

If it was me, straight into a savings account.
If I had more than 100k then I could have a side business (I'm not expecting major profits, prob just about break even.)

It really depends what you do (industry)plus what is expected ie your work goals. Just because you earn 50k it doesn't mean you should have to do any over time at all. I used to earn this and did little to no overtime.

Sorry wrong thread!

@lljkk
There is no point not taking the pension and lump sum with NPA 60. That pension scheme is now closed. The only pension scheme OP can pay into now is the new (from 2022) CARE pension scheme. If she delays taking the final salary pension until she's 67, she will have lost the 7 years of that pension payout and access to her lump sum.

Agree. It feels like a very child-like /dependent approach to life.

There's a lot of uncertainty in your life, OP. I know we all have different comfort levels with it but I'd be a bag of nerves in your situation. Don't fritter that money away, please. Pay off debt and then save hard for your future. Don't rely on your landlords or your parents or your adult children moving back home.

An assure you I am not 'child like' .. losing my owned home was cataclysmic.. I had owned since 18 years old but divorce happened in a housing slump (2008)...

I know not to 'rely' on inheritance.. but we are not a 'normal' MN family .. we actually love each other , enjoy each others company and seek each other out .. if my siblings weren't siblings I would choose them as friends.. (I know that is bizarre on MN but we actually do)... mum and dad come over once a week and I bloody love it .. I speak to them every day.. we have NEVER fallen out ! They are superb grandparents and parents in every way .

I have their WILLS as I am their executor. I am also POA should it be required.. so whilst it is always possible they could suddenly decide to write new Wills and leave it all to the Donkey sanctuary.... it is really pretty unlikely.

I am not relying on my parents .. it could be 20 years away !

I am not relying on my children - they could change their minds in a heartbeat...

However ... paying off debt to free up £8k income a year seems completely sensible to me ? Is it not ???

What if their home has to be sold to pay for a care home though? I don't think anyone has said anything about you falling out with your family or them changing the will have they? Its more the concern that elderly care fees would eat away at your 3rd of the inheritence, hence the don't rely on it advice.

WestOfWestminster i am pretty sure that won't apply. My brother, wife and son (at Uni) have lived in parents house (annex) since 2001. Brother will be 60 himself next year. exempting house from care assessment. ( Although Brother and wife are paramedic and nurse so chances they would go in to care is very slim ) We would want to care for them at home . House is large and if things got bad we have already discussed all three of us taking on a live in care rota.

What are the implications for taking your pension and still being able to pay in to the average salary one? I believe that usually once you have taken your lump sum you can only pay in a small amount per year after to stop you from putting the sum back in and getting tax back twice. It is a shame you can't afford to buy, especially with the bad luck you have had with the divorce. But if you can't, and taking the sum now is tax efficient, then pay off debt and put everything else you can into savings. Then you might have a chance to buy later, or at least have money for moving costs of your landlords decide to no longer rent their property.

Check that taking the lump sum doesn't limit you paying into your current pension scheme.

Paying off debt sounds sensible, esp that accruing interest.

In terms of savings accounts it is difficult as whilst you can earn interest, inflation is currently higher than the interest. So the purchasing power of your savings will go down over the years.

Options that will probably earn less than inflation are

• easy access savings accounts can be around 3 - 3.5% interest
• locking the money away for a year or longer could earn 4-5%
• cash ISA around 4%, and you won't pay tax on the interest (although I'm not sure if your savings interest would go above tax free amount anyway)

Options to try and stay above inflation are

• if you plan to invest the money for 5+ years, then a stocks and shares ISA would usually beat inflation over the long term by investing broadly across the global market.... however in the short term it can go up and down. So if you might want to withdraw some of the money in the next few years, it may have gone down in value
• property - for example a shared ownership house to live in. However I can see this would be less appealing to you as you love where you live now, which I can understand

Yes pay off l your credit card and get Dd3 to pay for her car ASAP. You house sounds lovely. Well done for creating a lovely life after your divorce. You sound like you know what you are doing with your pensiona and they sound like you will be in a good position. Take that holiday too. Life is for living. Sometimes we forget that.

Definitely pay off your debts first. The interest on them will be more than you can earn.
Then yes I’d take a holiday or some other kind of treat
Then I’d look at what to with the rest.
Investing would give the best return, but then also it’s not a short term thing.
I’d probably keep some in an easy access account for emergencies and put the rest in fixed rate bond at around 5% currently.

you cn buy one 55 and over 60 properties for just yourself, which would give you security

or put your name down to rent a property for the over 55 or over 60s with your local council - the rent is often much cheaper - £400 a month rather than £1000

Id pay of the credit card or move the credit card to a zero interest

then id put the £70k into a saving account - well 2 savings accounts

Id put £20k in coventry isa for this years - need to put it in before the 5th April
Id wait until April 7th and then put another £20k into the coventry building society - its paying just under 5% and is tax free

then id put £20k into a high interest account and move it into a decent isa account in April 2025

you are limited to £20k into an isa each tax year but the advantage is there is no tax to pay on the interest you make.

The coventry building society is paying monthly, so you could have the interest monthly and save or spend £160 ish per month on £40k

and if you can get 5% somewhere else you'd get another £80 is per month

so a total of £240 a month

anything left over id spend or pay of my car etc

Use 15k to pay off the debts/loans in full.
Then have 50k left as your holiday fund
50 holidays at 1k each (ok, probably 1400 ea at the moment)
10 holidays a year for 5 years
or 5 holidays a year for 10 years (be away 20% of the year!)
Travel while you are fit - there will come a time when you no longer have the inclination…