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  1. #1

    Age 54, retiring soon, spare cash - ISA or Pension

    Hello, Firstly apologies as this is possibly a bit of a first world problem :-) But I wonder if anyone can advise me please?

    I’ve inherited about 60k from the sale of my late fathers house. I am 54 years old, no debt, mortgage paid off, no dependants.

    I am employed earning about 40k PA, with a work pension (contributory pension) pot of about 250k.

    I have about 50k of savings in cash ISAs, earning next to nothing.

  2. #2
    I would like to retire in the next couple of years, rent out my house which would give me an income of perhaps 20k pa and spend a few years travelling Europe in a motorhome (which I’d hope to buy for around 40k) I've already bought a small retirement flat for when I return.

    My question is, should I put my inheritance money straight into my pension and should I also move the money from my cash ISAs into my pension?

  3. #3
    Your total pension contributions are limited to your earned income in any one tax year so you cant put all your inheritance money straight into a pension.

  4. #4
    You need to keep a fair amount in cash because your income after you retire wont be that secure (eg tenant leaves or stops paying and it takes you time to find another), and you dont want to sell your pension investments during a crash, should there be one. So you need sufficient cash to live on for say 2 years at least, preferably more. Plus there is the cost of the motor home. Which leaves you about 20K of your inheritance left. This could sensibly be contributed to your pension.

  5. #5
    Putting more into your pension including money from your ISA would leave you open to the risk that if there is a major fall in share prices in the next two years you may not have enough money to retire as you wish.


 

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