What would you do if you were me?

[Spendingmymoney]

Firstly, this is a NC for privacy. Secondly, it's not a brag, I'm genuinely interested in other (genuine!) opinions, and for that reason I'm not going into finer details. Thirdly, I'm not looking for savings/investment advice, more the opposite I suppose!

OK, prelims over. I'm retired, in my mid 60s (so hopefully plenty more years of health and foreign travel to come) and have more money and pension income than I need. (I know I'm lucky; but I had years of being very broke and learned thrifty habits which have stood me in good stead. Plus every penny I have, I worked for). I'm in the position of still being able to save a fair proportion of my money each month, without really having any reason to.

If you were in this position, how would you prioritise your money?

So as not to drip feed - out of choice, my LTP and I don't live together.
I have no debts at all. I own my house.
I have one child to whom I've already gifted a 6-figure sum so they are mortgage free.
I have small grandchildren; I could invest for them but I'm not sure that the amount I'd be happy to give, divided between them, would be enough to make a difference to them in 20+ years' time but might make me a difference to me as I age. Neither could I realistically afford private school fees for all. On balance I would rather my child made the financial decisions and provision for the grandchildren.
I have made my will, LPoA etc.
I may downsize at some point but I don't live in a mansion and there seems no rush to do so - If I do, that will only give me more cash anyway!
I don't have anything put by specifically for care as I age, but I could move into the most expensive care home in this town tomorrow and my savings and investments would cover 10 or more years of care before the house had to be sold. My mother and grandmother both lived independently into their 90s!

I could definitely spend more on holidays and on my house but I never really feel comfortable blowing large sums of money. And my partner doesn't like to travel, otherwise I'd go away a lot more.

What would you do if you were me? How much financial cushion would you want for yourself?

To your question about what I would do with enough surplus income: I'd consider things that bring me pleasure and/or time - often they are combined for me!

A cleaner (or more of a cleaner)
A better way of eating (perhaps Waitrose vs Lidl, or premium food delivery kits)
Someone to jet wash the drive / car / patio etc
If you have lots of commitments or administrative things, a PA service.
...That sort of thing, according to what you do and have in your life.

That said, I also enjoy being thrifty, so all these things would have to deliver value for money, not just any old cost, IYSWIM?

I wouldn't be arsed with all those silly "oooh someone to change my sheets every day" nonsense ideas - for one thing, the sheer wastefulness of daily laundry and second, it would very quickly stop feeling like a special treat!

To your question about financial cushion: for me, I am a natural worrier, so I'd want to ensure primarily that I have enough to live on and never have to depend on anyone else. That could include potentially funding care. I have not yet begun to fathom out how much that might be though, I just know my "healthy retirement" will be decently funded. But it sounds like that is not a concern for you?

Maybe a clear-eyed look at if or whether your current home could be easily adapted for life with (for example) stairlifts and other accessibility aids in future, and consider your housing plans on that basis?

But also slightly opposite to all that, I want to leave as much as I can to the younger generation in my family (indirect relatives, so I miss out on several of the key IHT-related exemptions for direct family). I am using my annual £3k allowance, but I also plan to use the unlimited "£250 from surplus income" option too, as it will do a lot more in their pockets than mine.

First thing I would do is 'age proof' the house and garden you are in now. I am early sixties, had a second hip replacement earlier this year and it made life so much easier to have an uncluttered house, a downstairs loo, safe bannisters on the stairs etc. You may be fit and well now, but life throws stuff at us out of the blue.

Think about what would help you easily cope alone after surgery. Having an automatic car also meant I was able to get back to driving quickly.

So that's a practical thing to think about.

As to travel, if there are places you want to go to, go! And go in comfort. I travelled on my own to a few places and had a brilliant time (in between husbands 😋)

And yes, better quality everything, food, bedding etc. (but you may already do that).

I will definitely be springing for a cleaner in a few years.

The Swedish Death Cleaning book is the only self help book that has actually helped me on any topic. It is basically about making life simpler for you now, and also for the people who have to empty your house later on, which I think speaks to the principles of age-proofing as well.

There are loads of sites and I think TV shows about it now too as well.

I would feel very conflicted! I am risk averse, and I don't understand investing, so although I would want to make my money work harder for me, I wouldn't know how. I'd want to hang on to whatever money I've got as tightly as possible. At the same time, events over the last few years have demonstrated how fleeting life is, and that we should make the most of it while we can.

This is what i would personally prioritise (it will understandably be different for everyone):

1. Secure housing - you already have this
2. Enough money to cover day-to-day needs and wants (e.g. bills, dinner out, cinema etc) - you already have this
3. Private Pension that meets my retirement needs and desires - you already have this
4. Sufficient savings to cover multiple, simultaneous emergencies (because when troubles come, they come not single spies!) - boiler break down, flood, fire etc. I would say at least £50k, but preferably more
5. Private healthcare and dental insurance, including enough to cover medication (or self-insure by setting aside separate savings purely for this) - each to their own, but I feel this is an absolute necessity in the UK
6. Financial security/nest egg for my child
7. Sufficient resources to pay for care as I age (but I don't know what that would consist of...I guess I would pay for a housekeeper and cleaner to make sure my bills were paid, do the laundry/cleaning, supermarket shopping etc., if I no longer could).

If you've got all the above covered and still have a shed load of money, I would speak to a financial advisor. Have a financial health check to make sure your pension will actually continue to cover the the lifestyle you desire (and any potential healthcare needs that may crop up), talk about investing to make the money that's just sitting there actually grow.

After you've done that, do things that bring you joy! If you've put up with silly things like a broken shower screen or dodgy over for years, get them replaced. If you think you're going to live in your home long-term, future-proof it for illness/old age. Travel more. See more. Do more. I'd do more training in fun (art-related) things, as I've always wanted to but could never afford it. I'd buy (even) more books.

I wish my mother had worked less and enjoyed her hard earned money more. She lasted less than 10 years after she retired. She hated her job but felt she had to stay past retirement age to continue building up her savings...which she then never really got to enjoy. She was so terrified of ending up with no money, that she refused to hire a cleaner, she wouldn't put the heating on, she wouldn't get the bath replaced with one she could actually get into and out of safely...

I guess my advice would be, work out what you need now and 20yrs from now, then split your remaining funds into a 'safety fund' you never touch, an emergency fund for general emergencies like new boiler etc, investment fund that you can safely not touch for at least 10 years, and the rest as a salary over 30 - 40 years. If it works out at 20k a year, you'll know what you can spend on desires rather than needs.

Things just for you:

Travel the world!
if you’re not in optimal physical shape, throw money at that
outsource jobs you hate doing
private medical insurance is a good shout

things for others:
you could start a SIPP for your grandkids. Far less money needed than private school fees, put a small amount in now, and time will do the rest
big family holiday every year that you pay for
gift money to your children

I'm in roughly the same position although probably less ££ than you.

After April 27, if you leave your money in your pension, the govt will take 40% in inheritance tax when you die. If you take it out and spend it on travel, and those you love, you will "only" pay 20% tax on it (up to £50k pa).

I've decided to take more than my absolute needs, as an income and:

• pay my ds' tuition fees
• give him the £3k a year I can without him incurring a tax liability
• help him with a flat deposit
• ensure he enjoys his youth more than I did mine
• enjoy foreign travel that I was unable to afford while I was working
• take my ds travelling when he's on holiday
• generally enjoy my retirement - think music, UK travel, clothes, visiting friends which will be fun for me, put money back into the economy, and generally benefit everyone.

I've worked since I was 13, worked for 50 years, was full time from 21 onwards and throughout my son's childhood. I don't feel guilty about enjoying my pension now and sharing it with those I love.

No point being the richest person in the grave yard.

Some interesting points and ideas here, thank you.

@meadowfinch - mine is a public service occ pension so, as I'm not married, it will die with me. So it's never been part of inheritance planning.

So it's a public sector pot that won't "run out" if you live to be 102.

In that case I would set up a SIPP for each of your grandchildren. You don't need to invest a lot for each of them, for it to make a massive difference to their old age, because it has so many years to compound up.

But make sure you have some fun

I’d talk to your solicitor, the one who did your will. Mine is brilliant and also can recommend financial planning advisor.

Spend as much of it as you can. Have the nice holidays, the nice cars, the new furniture.

You work your entire life putting money so that your money last you through retirement. Your children and grandchildren don’t need an inheritance so enjoy it now while you are alive.

Gift some to those who would inherit, see the benefit of the new bathroom they buy, or the new kitchen.

I tell my mum to spend the lot, I don’t need the money when she is gone (obviously it would be nice, but I didn’t earn it and it’s not mine) and I would much prefer her to see the world etc.

If you have that much spare, consider booking a holiday for the children and grandchildren so you can all make memories that they’ll treasure well after you’re gone.

If you say you could cover 10 years of care home fees from your savings/investments, then I'm guessing that's £750k+? And you're adding to it because you're not spending all your pension every month?

I came on to suggest what someone else has already mentioned - set up private pensions for your grandchildren (SIPPs). You can put £2,880 pa in and the govt tops it up to £3,600. They won't be able to access the money until 10 years before state pension age, and think about how much it will have grown by then if you invest it in a tracker fund! Once they're 18 you could put money into a Lifetime ISA for them (or whatever the new scheme will be called) - to be used as a deposit on a first home with a govt top-up.

You could pay for your DD and grandchildren to go on holiday with you every year. Make it an annual treat.

You could trade up all your current expenditure so you actually spend all your annual pension. Shop at M&S, have a weekly delivery of flowers, buy a subscription to the cinema/theatre/football - whatever makes you happy.

If you have enough money to pay for 10 years of care, how can you not afford private school fees? How many grandchildren do you have?

Travel travel travel.

You can go on your own without your DP. There are plenty of tour companies that take singles into all sorts of places. I’d go everywhere.

This.
Go without your DP. Travelling solo is wonderful, especially if you go on your own without a group tour: absolutely no compromising; you go where you like and spend as long as you like. No being chivvied along in an interesting museum or historical site because your partner is bored or tired, or the tour guide tells you it is time to go. No waiting around because your partner or the group is not ready to move on from the site yet.

If you are nervous, start with the UK. Get out an atlas or pull up an online map - what parts of the UK have you not explored yet?
Then progress, either to Europe if you are comfortable with foreign languages, or to other English-speaking countries.

Also:
Decide which are the chores you hate and find a way to outsource them.

Set up large monthly payments to charities that support causes important to you.

And definitely put money into appropriate savings accounts for the grandchildren - even if it is just large lump sums every birthday and Christmas.

I’m in a similar position to you. Trouble is , I got here by being frugal and watching every penny and I can’t change the habits of a lifetime. It’s just against my nature to spend a lot on luxuries.

And there’s the unexpected. One of my DC is going through a horrible divorce atm and needs help thar we didn’t see coming. So we’re glad to have the funds to do that. Same if one if us needed an urgent operation - we’d have the funds. Those suggesting private insurance should remember it’s very costly when you’re older, won’t cover pre existing conditions and can requite top ups.

I am going to invest in a cleaner when I’m 70 and am doing uogrades to the house. We travelled Business Class on a recent trip and that felt worth it. Higher grade hotels also a good spend.

For those pointing out inheritance tax remember a couple can leave £375K x 2 and the first £500k of the family home. So over £1m tax free - very few people will pay IT and it’s only on the amount over £1m.

My psyche tells me I need money in the bank to be ‘safe’ - so I help when needed, spend what I feel is appropriate and don’t worry about the rest.

When you go into a care home, your pension doesn't stop; plus, if you need a care home, you're almost certain to qualify for attendance allowance.

That amount (pension + AA) would cover a fair proportion of monthly care home fees; it means that the deficit which has to be made up by using your own money is nowhere near the total monthly bill, meaning that you don't need a million pounds to cover it! I think people forget that!

School fees to cover the DGC, OTOH, would take all my monthly income (or more) and I'd have to live off savings alone, meaning my cushion would run down. And I'd need to be sure that I could afford that for many, many years to come. So no.

I also plan to use the unlimited "£250 from surplus income" option.

These are 2 different things.

• you can make NORMAL (ie regular pattern of giving) gifts out of SURPLUS INCOME of any amount - the key points being capitalised.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231

• you can make SMALL gifts (currently £250 per tax year) to any number of recipient, but no more than £250 per recipient. This doesn't have to be from surplus income.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14180

There is also the £3k annual exemption, and the gifts in consideration of marriage or CP.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14131

I gift money to DC out of surplus income and they pay it directly into their SIPPs.

Another one saying it seems a shame to not travel just because your dp isnt interested.

You could go alone, join a group (there are loads for all different ages), go with a friend, with your child, take your grandchildren once they are old enough....

The first time I travelled alone it was nerve wracking but then I got the bug and tend to prefer it now!

Other than that, what are your hobbies and interests? Are there any upgrades or ways you could extend those?

E.g if you like cycling a new bike, cycling holiday etc.

If you like reading then a weekend at the hay festival or doing one of the week long residential courses various universities hold

Some kind of charitable legacy maybe. A girls' education one, so that more young women are able to access the kind of career you have.

I would maybe buy a small property and run it as an AirBnB. But I live in a seaside town, so I know it would be booked solid.

Other than that, max out your ISA and keep saving. Give regular money to kids and grandkids.

FIL is in your situation, and just hoards all his money for himself, even when loved ones are struggling. It's not a good look.

I would pay into my grandchildren's junior ISAs - the amount will compound by the time they're adults. You can pay in max £9000 per child per tax tear

This is an area that I’ve been pondering recently . I
have a largish estate and no-one to leave it to . I’m early 60’s so not immobile or ill at the moment but it’s how to future proof your life when on your own and you don’t know what life will throw at you . I will have to move at some point because I live rurally and there’s no public transport so totally impractical to get to shops , Dr’s , libraries etc . I have 2 dogs that will be provided for and plenty of friends aswell as charities but it’s that question of when to provide funds . Not everyone needs a care home . I need to start thinking things through .

Definitely travel while you can and are in good health. Leave the partner at home. Solo travel is the best.