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Due to receive big lump sum. Put it in pension pot or invest it (in property)?

2 replies

Scrumplet · 28/08/2009 22:19

At the moment, I work a couple of days a week doing odd bits of freelance stuff. This suits me, as I'm a single mum and it means I can bring in some money and still enjoy ample time with DS (5).

I'm going to be selling my share in the company I co-own with my ex. I will lose the dividends (which contribute to my income), but have a lump sum to do something useful with.

I have been advised that I could put a big, tax-free chunk (most of the payout) in a pension pot and go a long way to securing my retirement income right now. Could be a good plan, assuming I reach 65. The down side is that, by investing the money like this, I'd need to up my hours to nearer full-time for the foreseeable future (no more dividend payments), and thereby see a lot less of DS (who is also off with his dad a fair bit as it is).

So instead of the pension option, investing in a property and letting it would top up my income enough to be able to continue working part-time. The extra time with DS - being able to do school drop-offs and pick-ups and after-school playdates and fun stuff in the holidays - would be so precious to me. I would also still have the property in my retirement, to contribute towards my income, and to pass on to DC. But I wouldn't have quite enough to live on in retirement.

My head is saying sort my pension and work more hours. My heart is saying to grab all the time I can with DS, which is priceless and which I can't get back - and to work out another way, down the line, to top up my retirement income.

What would you do? Any other ideas?

OP posts:
Mousey84 · 29/08/2009 22:11

I would make sure I had the time with my kid now tbh. Plenty of time to work more/save for your pension when he is a bit older.

Do research carefully re income from property. Are you likely to be able to actually make an income, or will the rent you get just cover the morgage with a little extra to cover fees, maintenence on the house etc?

Scrumplet · 30/08/2009 22:01

Thanks, Mousey84. My gut feeling is that time with DS is more important, at least right now.

If I'm clever about it, I may be able to buy a place outright (mortgage-free), in which case the rental income - minus any agency and maintenance fees - will top up my income enough to be able to continue working part-time. If I had to get a mortgage on it, it likely wouldn't stack up, you're right.

Thanks again for your post.

OP posts:
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